REPTRON ELECTRONICS INC, S-3/A, 1997-08-04

REPTRON ELECTRONICS INC
S-3/A, 1997-08-04
ELECTRONIC PARTS & EQUIPMENT, NEC

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<PAGE> 1

As filed with the Securities and Exchange Commission on August 4, 1997

Registration Statement No. 333-31605

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

AMENDMENT NO. 1

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

REPTRON ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
---------------------

<TABLE>
<S> <C> <C>
FLORIDA 5065 38-2081116
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification Number)
incorporation or organization)
</TABLE>

14401 MCCORMICK DRIVE
TAMPA, FLORIDA 33626
(813) 854-2351
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

PAUL J. PLANTE, CHIEF OPERATING OFFICER
REPTRON ELECTRONICS, INC.
14401 MCCORMICK DRIVE
TAMPA, FLORIDA 33626
(813) 854-2351
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------
COPIES OF COMMUNICATIONS TO:

<TABLE>
<S> <C>
MICHAEL L. JAMIESON, ESQ. MARY A. BERNARD, ESQ.
HOLLAND & KNIGHT LLP KING & SPALDING
400 NORTH ASHLEY DRIVE, SUITE 2300 120 WEST 45TH STREET
TAMPA, FLORIDA 33602 NEW YORK, NEW YORK 10036
(813) 227-8500 (212) 556-2100
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please 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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]

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 WHICH 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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED AUGUST 4, 1997

PROSPECTUS
$100,000,000

[REPTRON ELECTRONICS, INC. LOGO]

% CONVERTIBLE SUBORDINATED NOTES DUE 2004
------------------------

Reptron Electronics, Inc. ("Reptron" or the "Company") is offering
$100,000,000 aggregate principal amount of its % Convertible Subordinated
Notes due August 1, 2004 (the "Notes"). The Notes are convertible at any time
prior to maturity, unless previously redeemed or repurchased, into shares of
common stock, par value $.01 per share ("Common Stock"), of the Company at a
conversion rate of shares per each $1,000 principal amount of Notes
(equivalent to a conversion price of approximately $ per share), subject
to adjustment in certain circumstances. On July 17, 1997, the last reported bid
price of the Common Stock, which is traded under the symbol "REPT" on The Nasdaq
Stock Market's ("Nasdaq") National Market, was $25.50 per share.

Interest on the Notes is payable on February 1 and August 1 of each year,
commencing February 1, 1998. The Notes are redeemable in whole or in part at the
Company's option at any time on or after August 1, 2000, at the redemption
prices set forth herein, plus accrued interest to the date of redemption. See
"Description of Notes -- Optional Redemption." The Notes are not entitled to any
sinking fund. The Notes will mature on August 1, 2004.

In the event of a Change of Control (as defined herein), each holder of
Notes may require the Company to repurchase its Notes, in whole or in part, for
cash at a repurchase price of 100% of the principal amount of Notes to be
repurchased, plus accrued interest to the repurchase date. See "Description of
Notes -- Repurchase at the Option of Holders Upon a Change of Control."

The Notes are unsecured obligations subordinated in right of payment to all
existing and future Senior Indebtedness (as defined herein) of the Company and
effectively subordinated in right of payment to all indebtedness and other
liabilities of the Company's subsidiaries. As of June 30, 1997, after giving
effect to this offering and the application of the net proceeds therefrom, the
Company would have had $18.5 million of Senior Indebtedness outstanding and the
Company's subsidiaries would have had no indebtedness or other liabilities
outstanding. The Indenture will not restrict the Company or its subsidiaries
from incurring additional Senior Indebtedness or other indebtedness. See
"Description of Notes -- Subordination."

The Notes will not be listed on any securities exchange or the Nasdaq
National Market and will only be traded in the over-the-counter market.

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

SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY POTENTIAL PURCHASERS OF THE NOTES.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
====================================================================================================================
PRICE TO DISCOUNT TO PROCEEDS TO
PUBLIC(1) UNDERWRITERS(2) COMPANY(3)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note................................. % $ $
- --------------------------------------------------------------------------------------------------------------------
Total(4)................................. $ $ $
====================================================================================================================
</TABLE>

(1) Plus accrued interest, if any, from date of issuance.
(2) The Company has agreed to indemnify the Underwriters (as defined herein)
against certain liabilities, including liabilities under the Securities Act.
See "Underwriting."
(3) Before deducting expenses payable by the Company, estimated to be $500,000.
(4) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional $15,000,000 principal amount of Notes at the offering
price shown above, less the Underwriters' discount, solely for the purpose
of covering over-allotments, if any. If the Underwriters exercise such
option in full, the Price to Public, the Discount to Underwriters and
Proceeds to the Company will be $ , $ and $ ,
respectively.
------------------------

The Notes are offered by the Underwriters, subject to prior sale, when, as
and if delivered to and accepted by the Underwriters and subject to the
Underwriters' right to reject orders in whole or part. It is expected that
delivery of the Notes will be made on or about August , 1997, against payment
in immediately available funds.

RAYMOND JAMES & ASSOCIATES, INC.
FORUM CAPITAL MARKETS L.P.

STEPHENS INC.

The date of this Prospectus is , 1997.
<PAGE> 3

[PHOTOGRAPH OF TESTING EQUIPMENT LOCATED IN TAMPA MANUFACTURING FACILITY]

K-Byte Manufacturing performs complex testing procedures on substantially
all products assembled.

[PHOTOGRAPH OF EXTERIOR OF TAMPA MANUFACTURING AND WAREHOUSE FACILITY]

Newly constructed manufacturing and warehouse facility located in Tampa,
Florida.

[PHOTOGRAPH OF SURFACE MOUNT EQUIPMENT LOCATED IN TAMPA MANUFACTURING FACILITY]

K-Byte Manufacturing has invested in advanced surface mount technology
equipment in its Tampa manufacturing facility.

[PHOTOGRAPH OF CONVEYOR BELT LOCATED IN TAMPA WAREHOUSE FACILITY]

Reptron Distribution has recently developed and installed a warehousing
system that combines bar code technology with sophisticated conveyor equipment.

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES OFFERED
HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT
COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information, the Financial Statements and Notes thereto, included or
incorporated by reference in this Prospectus. Except as otherwise indicated, the
information in this Prospectus assumes that the Underwriters' over-allotment
option will not be exercised.

This Prospectus contains statements that constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934 (the "1934 Act"). The words "expect,"
"estimate," "anticipate," "predict," "believe" and similar expressions and
variations thereof are intended to identify forward-looking statements. Such
statements appear in a number of places in this Prospectus and include
statements regarding the intent, belief or current expectations of the Company,
its directors, or its officers with respect to, among other things: (i) trends
affecting the Company's financial condition or results of operations; (ii) the
Company's financing plans; (iii) the Company's business and growth strategies,
including potential acquisitions; and (iv) the use of the net proceeds by the
Company from this offering. Prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those predicted in the forward-looking statements, as a result of various
factors. The accompanying information contained in this Prospectus, including
the information set forth under the headings "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business," as well as information contained in the Company's other filings with
the Securities and Exchange Commission, identify important factors that could
cause such differences.

THE COMPANY

Reptron Electronics, Inc. (the "Company") is a leading integrated
electronics company providing both value-added distribution of electronic
components and targeted contract manufacturing services through its two
divisions, Reptron Distribution and K-Byte Manufacturing. The two divisions are
complementary, enabling the Company to provide customers with a wide range of
products and value-added services, as well as a single source for their product,
material, assembly and test requirements. Approximately 44% of the Company's
1996 net sales were generated by customers utilizing the services of both
divisions. The Company believes that its integrated approach to manufacturing
and distribution distinguishes it in the electronics industry, provides a high
level of value to its customer base and enables it to obtain sole source
relationships with an increasing number of its customers. As a result of the
successful implementation of the Company's business strategy, it has increased
net sales from approximately $83.4 million in 1992 to $268.9 million in 1996 and
net earnings from $1.2 million in 1992 to $7.7 million in 1996.

Reptron Distribution sells over 60 vendor lines of semiconductors, passive
products and electromechanical components, including more than 35,000 different
stock-keeping units ("SKUs"). Reptron Distribution sells to over 9,000 customers
representing diverse industries including robotics, telecommunications,
computers and computer peripherals, consumer electronics, healthcare, industrial
controls and contract manufacturing. Services provided to these customers
include component sales, inventory replenishment programs, in-plant stores,
component programming and electronic data interchange ("EDI"). As a result of
two acquisitions completed in 1995, Reptron Distribution expanded its geographic
presence and currently has 20 sales offices located throughout the U.S.,
enabling the Company to market to approximately 83% of the total available U.S.
electronic components market (based upon 1996 industry sales). Reptron
Distribution's net sales have increased significantly from $48.9 million in 1992
to $168.3 million in 1996.

K-Byte Manufacturing focuses on establishing primary or sole source
relationships with OEMs in a wide variety of industries that require complex
circuit board assembly and turnkey manufacturing services, with low-to-medium
volume production runs. K-Byte Manufacturing leverages its relationship with
Reptron Distribution by utilizing Reptron Distribution's 85-person sales force,
large customer base, greater access to electronic components and advantages in
component pricing. Services provided to K-Byte Manufacturing customers include
concurrent engineering, surface mount technology ("SMT") and pin-through-hole
("PTH") manufacturing. The Company believes that K-Byte Manufacturing provides
Reptron Distribution a
1
<PAGE> 5

significant competitive advantage by broadening value-added services that can be
offered to Reptron Distribution customers. K-Byte Manufacturing, which operates
in two facilities in Michigan and one in Florida, has increased net sales from
$34.5 million in 1992 to $100.7 million in 1996.

The Company believes its growth has been fueled by several key trends:

- Manufacturers of electronic components are reducing the number of
distributors that are authorized to sell their products and selecting
distributors that are able to serve a larger part of the total available
U.S. market;

- Electronic components are increasingly being sold through value-added
services, such as in-plant stores, automated inventory replenishment
systems and the outsourcing of product assembly; and

- OEMs are increasingly outsourcing the assembly and testing of printed
circuit boards, as well as the manufacture of complete electronic
products, to contract manufacturing specialists.

According to the National Electronic Distributors Association ("NEDA"), the
total North American electronics distribution market grew from $10.2 billion in
revenue in 1992 to $21.0 billion in 1996, a compound annual growth rate of
19.8%. NEDA projects the market to grow to $23.6 billion in 1997. According to
the Institute for Interconnecting and Packaging Electronic Circuits ("IPC"), as
a result of the outsourcing of manufacturing services, the contract
manufacturing industry in the U.S. grew from $6.3 billion in 1992 to $14.5
billion in 1996, a compound annual rate of 23.2%. Based on IPC estimates, the
U.S. contract manufacturing industry will expand at a 21.0% compound annual
growth rate from 1995 through 2000.

The Company's principal business objective is to expand its presence as a
leading integrated electronics distributor and contract manufacturer. In order
to implement its objective, the Company has formulated a strategy based upon the
following key elements: (i) capitalize on the advantages of integration; (ii)
increase sales from value-added services; (iii) target contract manufacturing
customers in specific market segments; (iv) leverage investments made in the
Company's manufacturing facilities; and (v) expand through acquisitions and
internal growth.

The Company was incorporated under the laws of Michigan in 1973 and
reincorporated under the laws of Florida in 1993. The Company's principal
executive offices are located at 14401 McCormick Drive, Tampa, Florida 33626,
and its telephone number is (813) 854-2351.
2
<PAGE> 6

THE OFFERING

Securities Offered......... $100,000,000 aggregate principal amount of %
Convertible Subordinated Notes due August 1, 2004
(the "Notes"). The Company has granted the
Underwriters an option for 30 days to purchase up
to an aggregate of $15,000,000 additional principal
amount of Notes, solely to cover over-allotments.

Interest Payment Dates..... Interest on the Notes is payable at the rate set
forth on the cover page hereof, semi-annually on
each February 1 and August 1, commencing February
1, 1998.

Conversion Rights.......... The Notes are convertible at any time prior to
maturity, unless previously redeemed or
repurchased, into shares of Common Stock at a
conversion rate of shares per $1,000
principal amount of Notes (equivalent to a
conversion price of approximately $ per
share), subject to adjustment in certain
circumstances as described herein. See "Description
of Notes -- Conversion Rights."

Subordination.............. The Notes are subordinated in right of payment to
all existing and future Senior Indebtedness (as
defined herein) of the Company. The Notes are also
effectively subordinated in right of payment to all
indebtedness and liabilities of the Company's
subsidiaries. As of June 30, 1997, after giving
effect to the issuance and sale of the Notes and
the application of the net proceeds therefrom, the
Company would have had $18.5 million of Senior
Indebtedness outstanding, and the Company's
subsidiaries would have had no indebtedness or
other liabilities outstanding. See "Description of
Notes -- Subordination."

Optional Redemption........ The Notes will be redeemable at the Company's
option, in whole or in part, at any time on or
after August 1, 2000, at the redemption prices set
forth herein plus accrued interest to the date of
redemption. See "Description of Notes -- Optional
Redemption."

Repurchase at Option of
Holders Upon a Change of
Control.................. In the event of a Change of Control (as defined
herein), each holder of Notes may require the
Company to repurchase its Notes, in whole or in
part, for cash at a repurchase price of 100% of the
principal amount of Notes to be repurchased, plus
accrued interest to the repurchase date. See
"Description of Notes -- Repurchase at Option of
Holders Upon a Change of Control."

Use of Proceeds............ The Company intends to use approximately $58.9
million of the net proceeds to repay outstanding
indebtedness. The remainder of the net proceeds
from this offering will be added to the Company's
working capital to be available for general
corporate purposes, including possible
acquisitions. See "Use of Proceeds."

Listing and Trading of
Notes.................... The Notes will not be listed on any securities
exchange or on the Nasdaq National Market and will
only be traded in the over-the-counter market.

Common Stock............... The Common Stock issuable upon conversion of the
Notes is listed on the Nasdaq National Market under
the symbol "REPT."

3
<PAGE> 7

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
------- -------- -------- -------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net Sales:
Reptron Distribution................ $48,872 $ 71,346 $ 96,003 $140,146 $168,279 $42,349 $47,368
K-Byte Manufacturing................ 34,541 55,661 68,002 83,198 100,658 24,202 28,883
------- -------- -------- -------- -------- ------- -------
Total net sales.............. 83,413 127,007 164,005 223,344 268,937 66,551 76,251
======= ======== ======== ======== ======== ======= =======
Gross Profit:
Reptron Distribution................ 9,968 15,245 18,780 27,500 34,364 8,111 8,732
K-Byte Manufacturing................ 4,613 9,023 11,431 12,663 17,485 3,871 5,340
------- -------- -------- -------- -------- ------- -------
Total gross profit........... 14,581 24,268 30,211 40,163 51,849 11,982 14,072
Selling, general and administrative
expenses.......................... 11,217 16,455 19,051 26,586 35,023 8,348 9,250
------- -------- -------- -------- -------- ------- -------
Operating income.................... 3,364 7,813 11,160 13,577 16,826 3,634 4,822
Interest expense.................... 1,363 1,811 1,474 2,767 4,025 1,102 1,228
------- -------- -------- -------- -------- ------- -------
Earnings before income taxes........ 2,001 6,002 9,686 10,810 12,801 2,532 3,594
Income tax provision................ 807 2,400 3,823 4,324 5,148 1,013 1,438
------- -------- -------- -------- -------- ------- -------
Net earnings........................ $ 1,194 $ 3,602 $ 5,863 $ 6,486 $ 7,653 $ 1,519 $ 2,156
======= ======== ======== ======== ======== ======= =======
Net earnings per share.............. $ .27 $ .81 $ 1.03 $ 1.05 $ 1.24 $ .25 $ .35
======= ======== ======== ======== ======== ======= =======
Weighted average Common Stock and
Common Stock equivalent shares
outstanding....................... 4,442 4,442 5,714 6,170 6,179 6,168 6,207
======= ======== ======== ======== ======== ======= =======
EBITDA(1)........................... $ 4,115 $ 8,927 $ 12,549 $ 16,039 $ 20,464 $ 4,319 $ 5,853
======= ======== ======== ======== ======== ======= =======
Ratio of earnings to fixed
charges(2)........................ 2.47 4.31 7.57 4.66 3.56 2.89 3.46
======= ======== ======== ======== ======== ======= =======
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------
AS
ACTUAL ADJUSTED(3)
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $ 88,194 $121,338
Total assets................................................ 157,470 194,614
Revolving Credit Facility................................... 62,856 --
Long-term obligations(4).................................... 17,769 17,769
% Convertible Subordinated Notes due 2004................ -- 100,000
Shareholders' equity........................................ 50,873 50,873
</TABLE>

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

(1) EBITDA represents earnings before interest, income taxes, depreciation and
amortization. EBITDA is not presented as an alternative measure of net
income or cash flow from operations (both as determined in accordance with
generally accepted accounting principles), but because it is an accepted
financial indicator of a company's ability to service debt.
(2) The ratio of earnings to fixed charges is computed by dividing earnings by
fixed charges. For this purpose, "earnings" include pretax income from
continuing operations plus fixed charges. "Fixed charges" include interest,
whether expensed or capitalized, amortization of debt expense and the
portion of rental expense that is representative of the interest factor in
these rentals.
(3) Adjusted to give effect to the issuance and sale of the Notes and the
application of the estimated net proceeds therefrom. See "Use of Proceeds."
(4) Includes $6.1 million of capitalized lease obligations.
4
<PAGE> 8

RISK FACTORS

An investment in the Notes hereby involves a high degree of risk.
Prospective investors should consider carefully the following risk factors, in
addition to the other information included and incorporated by reference in this
Prospectus, in connection with an investment in the Notes offered hereby.

CUSTOMER CONCENTRATION AND OTHER FACTORS AFFECTING OPERATING RESULTS

The Company's divisions have certain customers that account for a
significant part of their net sales. The largest customer of the Company is a
customer of both Reptron Distribution and K-Byte Manufacturing. In 1996 and the
first quarter of 1997, this customer accounted for approximately 15.7% and
15.4%, respectively, of Reptron Distribution's net sales, 6.9% and 3.3%,
respectively, of K-Byte Manufacturing's net sales and 12.4% and 10.8%,
respectively, of the Company's total net sales. K-Byte Manufacturing had 36
principal customers in 1996 with the largest three customers accounting for
15.9%, 9.9% and 8.9% of its net sales in 1996, respectively (6.0%, 3.7% and 3.3%
of the Company's total net sales in 1996, respectively). During the first
quarter of 1997, K-Byte Manufacturing's three largest customers accounted for
14.7%, 9.4% and 8.7% of its net sales, respectively (5.6%, 3.6% and 3.3% of the
Company's total net sales during the first quarter of 1997). The loss of one or
more of these major customers, or a reduction in their level of purchasing,
could have a material adverse effect on the Company's business, results of
operations and financial condition. K-Byte Manufacturing's operating results are
affected by a number of factors, including fixed plant utilization, price
competition, the Company's ability to keep pace with technological developments,
the degree of automation that can be used in an assembly process, efficiencies
that can be achieved by the Company in managing inventories and fixed assets,
the timing of orders from major customers, the timing of capital expenditures in
anticipation of increased sales, customer product delivery requirements and
increased costs and shortages of components and labor. In addition, because of
the limited number of K-Byte Manufacturing's customers and the corresponding
concentration of its accounts receivable, the insolvency or other inability or
unwillingness of its customers to pay for its services could have a material
adverse effect on the Company.

DEPENDENCE UPON KEY VENDORS

Many kinds of components distributed by Reptron Distribution are currently
manufactured by a relatively small number of independent vendors. Four vendors
collectively accounted for approximately 37.5% and 41.5% of Reptron
Distribution's net sales in 1996 and the first quarter of 1997, respectively
(23.4% and 25.8% of the Company's total net sales in 1996 and the first quarter
of 1997, respectively). The Company does not have long-term distribution
contracts with its vendors. The Company's contracts are non-exclusive and
typically are cancelable upon 30 days' written notice. The Company's future
success will depend, in large part, on maintaining such relationships and
developing new relationships in connection with its existing and future product
lines. The Company believes that vendors are consolidating their distribution
relationships. In the first quarter of 1997, the Company and one of its primary
vendors discontinued their relationship. This vendor accounted for 9.3% of
Reptron Distribution's 1996 net sales (5.8% of the Company's total net sales in
1996). Although the Company does not believe that the loss of this vendor will
have a material adverse effect on the Company, the loss of, or significant
disruptions in the relationship with, one or more of Reptron Distribution's
other principal vendors could have a material adverse effect on the Company.

ACQUISITION RISKS

The Company's growth strategy includes expansion through acquisitions. A
part of the net proceeds from this offering may be used for potential
acquisitions. See "Use of Proceeds." There can be no assurance that the Company
will be able to successfully negotiate with potential acquisition candidates (in
which case the Company might pursue unsolicited acquisitions), secure
acquisition financing on acceptable terms (which financing may involve incurring
substantial indebtedness), complete acquisitions, integrate acquired operations
into existing operations or expand into new markets. There can also be no
assurance that future acquisitions will not have an adverse effect on the
Company's operating results, particularly in the periods following the
completion of such acquisitions while the operations of the acquired business
are being

5
<PAGE> 9

integrated into the Company's operations. Once integrated, acquired operations
may not achieve levels of sales, profitability or productivity comparable with
those achieved by the Company's existing operations, or otherwise perform as
expected. In addition, the Company competes for acquisition and expansion
opportunities with companies that have substantially greater resources than
those of the Company. The Company currently has no agreements, arrangements or
understandings with respect to any acquisition and there can be no assurance
that any such acquisition will be consummated.

ABSENCE OF LONG-TERM SALES CONTRACTS

The level and timing of purchase orders placed by K-Byte Manufacturing's
customers are affected by a number of factors, including variation in demand for
customers' products, customer attempts to manage inventory and changes in the
customers' manufacturing strategies. The Company typically does not obtain
long-term purchase orders or commitments but instead works with its customers to
develop nonbinding forecasts of the future volume of orders. Based on such
nonbinding forecasts, the Company makes commitments regarding the level of
business that it will seek and accept, the timing of production schedules and
the levels and utilization of personnel and other resources. A variety of
conditions, both specific to each individual customer and generally affecting
each customer's industry, may cause customers to cancel, reduce or delay orders
that were either previously made or anticipated. Generally, customers may
cancel, reduce or delay purchase orders and commitments without penalty, except
for payment for services rendered, materials purchased and, in certain
circumstances, charges associated with such cancellation, reduction or delay.
Significant or numerous cancellations, reductions or delays in orders by
customers, or any inability by customers to pay for services provided by the
Company or to pay for components and materials purchased by the Company on such
customers' behalf, could have a material adverse effect on the Company.

SUBSTANTIAL START-UP COSTS FOR MANUFACTURING CUSTOMERS

K-Byte Manufacturing targets customers requiring the production of a wide
variety of technologically complex printed circuit board assemblies. The
integration of new customers or new products of existing customers into K-Byte
Manufacturing's facilities and processes involves a substantial amount of
start-up costs which are incurred prior to any sales being generated from these
customers. These start-up costs could have a material adverse effect on K-Byte
Manufacturing.

COMPETITION; EFFECTS ON GROSS MARGIN

Both Reptron Distribution and K-Byte Manufacturing face substantial
competition. Many of the Company's competitors have significantly greater
resources and broader name recognition than the Company. Reptron Distribution
faces competition from hundreds of electronic component distributors of various
sizes, locations and market focuses (e.g., military, commercial, consumer) and
competes principally on the basis of product selection, reputation and
value-added customer services. Vendor representation and product diversity
create a segmentation among distributors. Reptron Distribution has several
primary competitors that carry similar significant Japanese semiconductor
vendors. K-Byte Manufacturing competes in a highly fragmented market composed of
a diverse group of U.S. based contract manufacturers. The Company believes that
the key competitive factors in its markets are manufacturing flexibility, price,
manufacturing quality, advanced manufacturing technology and reliable delivery.
Additionally, K-Byte Manufacturing also faces competition from current and
prospective customers that evaluate the Company's capabilities against the
merits of manufacturing products internally. There can be no assurance that the
Company will be able to continue to compete effectively with existing or
potential competitors. In addition, gross margins in the businesses in which the
Company competes have declined in recent years due to competitive pressures. The
Company believes this trend will continue.

AVAILABILITY OF COMPONENTS

The Company relies on third-party suppliers for components used in its
manufacturing process. Component shortages experienced by the Company and its
suppliers may have a material adverse effect on customer orders for the services
of both Reptron Distribution and K-Byte Manufacturing. At various times,

6
<PAGE> 10

there have been shortages of components in the electronics industry and
currently the supply of certain electronic components is subject to limited
allocations. If shortages of these or other components should intensify or occur
in the future, the Company may be forced to delay manufacturing and shipment or
to purchase components at higher prices (which it may not be able to pass on to
its customers), which may have a material adverse effect on customer demand for
the Company's services, on the Company's gross margins or both. Any of these
events could have a material adverse effect on the Company.

DEPENDENCE UPON KEY PERSONNEL

The success of the Company to date has been largely dependent upon the
efforts and abilities of the senior management. The loss of their services for
any reason could have a material adverse effect on the Company.

MANAGEMENT OF GROWTH

The Company has grown rapidly in recent years, with net sales increasing
from approximately $83.4 million in 1992 to approximately $268.9 million in
1996. The ability to continue this growth rate will depend upon several factors,
including the Company's ability to recruit, train and retain a skilled workforce
to support its expanding operations. There can be no assurance that the Company
will be able to sustain its historic rate of net sales growth, continue its
profitable operations, develop the required workforce or manage any future
growth successfully. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

VOLATILITY OF COMPONENT PRICING

The Company sells a significant amount of commodity-type components that
have historically experienced volatile pricing. These components include dynamic
random access memory and static random access memory products. If market pricing
for these components decreases significantly, the Company may experience periods
when its investment in component inventory exceeds the market price of such
components. Such market conditions could have a negative impact on sales and
gross profit margins unless and until the Company's vendors reduce the cost of
such components (through price protection rights, if any, outlined in the vendor
agreements).

CONTROL BY PRINCIPAL SHAREHOLDER

Michael L. Musto, the Company's President and Chief Executive Officer,
beneficially owned approximately 38.6% of the Common Stock at June 30, 1997
( % assuming conversion of the Notes and % assuming exercise of the
Underwriters' over-allotment option in full and conversion of the Notes). As a
result, Mr. Musto effectively will be able to continue to control the Company
after the consummation of this offering. See "Principal Shareholders."

ANTI-TAKEOVER PROVISIONS

The Company's articles of incorporation and bylaws and Florida law contain
certain provisions that may discourage or make more difficult any attempt by a
person or group to obtain control of the Company. In addition, the board of
directors of the Company is empowered to issue from time to time one or more
series of Preferred Stock without shareholder approval, the terms of which could
have the effect of delaying or preventing a change in control of the Company.
See "Description of Capital Stock."

DISCRETION IN USE OF PROCEEDS

The Company intends to use approximately $58.9 million of the net proceeds
from this offering to repay certain of its outstanding indebtedness. The
remaining $37.1 million of the net proceeds from this offering will be added to
the Company's working capital and will be available for general corporate
purposes, including possible acquisitions. As of the date of this Prospectus,
the Company cannot specify with certainty the particular uses for the net
proceeds to be added to its working capital. Accordingly, management will have

7
<PAGE> 11

broad discretion in the application of such net proceeds. See "Use of Proceeds"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

SUBORDINATION OF THE NOTES

The Notes will be unsecured and subordinated in right of payment in full to
all existing and future Senior Indebtedness of the Company. As a result of such
subordination, in the event of the Company's liquidation or insolvency, payment
default with respect to Senior Indebtedness, a covenant default with respect to
Senior Indebtedness, or upon acceleration of the Notes due to an Event of
Default (as defined herein), the assets of the Company will be available to pay
obligations on the Notes only after all Senior Indebtedness has been paid in
full, and there may not be sufficient assets remaining to pay amounts due on any
or all of the Notes then outstanding. The Company may from time to time incur
indebtedness constituting Senior Indebtedness. The Notes are also effectively
subordinated in right of payment to all indebtedness and other liabilities,
including trade payables, of the Company's subsidiaries. The Indenture does not
prohibit or limit the incurrence of Senior Indebtedness or other indebtedness
and other liabilities by the Company or its subsidiaries. The incurrence of
additional indebtedness and other liabilities by the Company or its subsidiaries
could adversely affect the Company's ability to pay its obligations on the
Notes. In addition, the cash flow and ability of the Company to service debt,
including the Notes, may in the future become dependent in part upon the
earnings from the business conducted by the Company through subsidiaries and
distribution of those earnings, or upon loans or other payments of funds by
those subsidiaries to the Company. As of June 30, 1997, after giving effect to
the issuance and sale of the Notes and the application of the net proceeds
therefrom, the Company would have had $18.5 million of Senior Indebtedness
outstanding, and the Company's subsidiaries would have had no indebtedness or
other liabilities outstanding. See "Description of Notes -- Subordination."

LIMITATIONS ON REPURCHASE OF NOTES

Upon a Change of Control, each holder of Notes will have the right, at the
holder's option, to require the Company to repurchase all or a portion of such
holder's Notes. If a Change of Control were to occur, there can be no assurance
that the Company would have sufficient funds to pay the repurchase price for all
Notes tendered by the holders thereof. In addition, the Company's repurchase of
Notes as a result of the occurrence of a Change of Control may be prohibited or
limited by, or create an Event of Default under, the terms of agreements related
to borrowings which the Company may enter into from time to time, including
agreements relating to Senior Indebtedness. The agreement relating to the
Company's current Senior Indebtedness would limit the Company's ability to
repurchase the Notes. See "Description of Notes -- Repurchase at Option of
Holders Upon a Change of Control."

ABSENCE OF PUBLIC MARKET FOR THE NOTES

The Notes will be a new issue of securities with no established trading
market. The Underwriters have advised the Company that they intend to make a
market in the Notes. The Underwriters are not obligated, however, to make a
market in the Notes, and any such market making may be discontinued at any time
at the sole discretion of the Underwriters without notice. There can be no
assurance that an active market for the Notes will develop and continue upon
completion of this offering or that the market price of the Notes will not
decline. Various factors such as changes in prevailing interest rates or changes
in perceptions of the Company's creditworthiness could cause the market price of
the Notes to fluctuate significantly. The trading price of the Notes could also
be significantly affected by the market price of the Common Stock, which could
be subject to wide fluctuations in response to a variety of factors, including
quarterly variations in operating results, announcements of technological
innovations or new products by the Company or its competitors, general
conditions in the industry and general economic and market conditions. The Notes
will not be listed on any securities exchange or the Nasdaq Stock Market and
will only be traded in the over-the-counter market.

8
<PAGE> 12

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Notes offered hereby,
after deducting the underwriting discount and the estimated expenses of this
offering, will be $96.0 million ($110.5 million if the Underwriters'
over-allotment option is exercised in full). The Company intends to use a part
of the net proceeds to repay all outstanding indebtedness under the Company's
Amended and Restated Revolving Credit and Reimbursement Agreement, dated July
29, 1995, as amended (the "Revolving Credit Facility"). At June 30, 1997,
approximately $58.9 million of borrowings were outstanding under the Revolving
Credit Facility and such borrowings bore interest at a weighted average interest
rate of 7.6% per year at that date. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

The remainder of the net proceeds will be added to the Company's working
capital and will be available for general corporate purposes, including
acquisitions. An important component of the Company's growth strategy is the
ability to pursue acquisitions. The purpose of this offering is to provide the
Company with increased financial flexibility to pursue acquisitions of other
businesses that are consistent with the Company's growth strategy. The Company
currently has no agreement, arrangement or understanding with respect to any
acquisition. See "Risk Factors -- Acquisition Risks", "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" and "Business -- Strategy."

Pending use of the net proceeds from this offering as discussed above, the
Company intends to make temporary investments in interest-bearing savings
accounts, certificates of deposit, United States government obligations, money
market accounts, interest bearing securities or other insured short-term,
interest-bearing investments.

9
<PAGE> 13

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
March 31, 1997 on an actual basis and as adjusted to give effect to the issuance
and sale of the Notes and the application of the net proceeds therefrom. See
"Use of Proceeds." This table should be read in conjunction with the
Consolidated Financial Statements and Notes included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1997
-------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
Revolving Credit Facility................................... $ 62,856 $ --
Long-term obligations(2).................................... 17,769 17,769
% Convertible Subordinated Notes due 2004.............. -- 100,000
Shareholders' equity:
Preferred Stock, $.10 par value; 15,000,000 shares
authorized, no shares issued........................... -- --
Common Stock, $.01 par value; 50,000,000 shares
authorized(3), 6,071,019 shares issued and outstanding
and issued and outstanding as adjusted(4).............. 61 61
Additional paid-in capital................................ 21,260 21,260
Retained earnings......................................... 29,552 29,552
-------- --------
Total shareholders' equity........................ 50,873 50,873
-------- --------
Total capitalization.............................. $131,498 $168,642
======== ========
</TABLE>

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

(1) Adjusted to give effect to the issuance and sale of the Notes and the
application of the estimated net proceeds therefrom. See "Use of Proceeds."
(2) Includes $6.1 million of capitalized lease obligations.
(3) Since March 31, 1997, the Company has increased the authorized Common Stock
to 50,000,000 shares.
(4) Excludes (i) 261,550 shares of Common Stock issuable upon the exercise of
options outstanding, which had a weighted average exercise price of $9.82
per share and (ii) 198,200 shares of Common Stock reserved for future
issuance under the Company's Incentive Stock Option Plan (the "Plan"). Since
March 31, 1997, the number of shares available for the issuance of options
under the Plan has been increased to 1,500,000 and the Company has granted
options to purchase an additional 479,500 shares of its Common Stock under
the Plan. See "Description of Capital Stock."

10
<PAGE> 14

SELECTED CONSOLIDATED FINANCIAL DATA

The balance sheet data as of December 31, 1995 and 1996 and the statement
of earnings data for each of the three years in the period ending December 31,
1996 have been derived from the Company's Consolidated Financial Statements for
such years, which have been audited by Grant Thornton LLP, independent certified
public accountants, and are included elsewhere in this Prospectus. The balance
sheet data as of December 31, 1992, 1993 and 1994 and the statement of earnings
data for each of the two years in the period ended December 31, 1993 have been
derived from the Company's Consolidated Financial Statements, which were audited
by Grant Thornton LLP and which are not included herein. The selected
consolidated financial information set forth below for the three months ended
March 31, 1996 and 1997 have been derived from the unaudited financial
statements of the Company and includes all adjustments the Company considers
necessary for a fair presentation of results of operations for the periods
presented. Operating results for the three months ending March 31, 1997 are not
necessarily indicative of the results which may be expected for the full year
ended December 31, 1997. The selected consolidated financial data set forth
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Consolidated Financial
Statements and Notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------- ---------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- -------- -------- ------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net Sales:
Reptron Distribution............... $48,872 $71,346 $96,003 $140,146 $168,279 $42,349 $47,368
K-Byte Manufacturing............... 34,541 55,661 68,002 83,198 100,658 24,202 28,883
------- ------- ------- -------- -------- ------- -------
Total net sales............. 83,413 127,007 164,005 223,344 268,937 66,551 76,251
======= ======= ======= ======== ======== ======= =======
Gross Profit:
Reptron Distribution............... 9,968 15,245 18,780 27,500 34,364 8,111 8,732
K-Byte Manufacturing............... 4,613 9,023 11,431 12,663 17,485 3,871 5,340
------- ------- ------- -------- -------- ------- -------
Total gross profit.......... 14,581 24,268 30,211 40,163 51,849 11,982 14,072
Selling, general and administrative
expenses........................... 11,217 16,455 19,051 26,586 35,023 8,348 9,250
------- ------- ------- -------- -------- ------- -------
Operating income..................... 3,364 7,813 11,160 13,577 16,826 3,634 4,822
Interest expense..................... 1,363 1,811 1,474 2,767 4,025 1,102 1,228
------- ------- ------- -------- -------- ------- -------
Earnings before income taxes......... 2,001 6,002 9,686 10,810 12,801 2,532 3,594
Income tax provision................. 807 2,400 3,823 4,324 5,148 1,013 1,438
------- ------- ------- -------- -------- ------- -------
Net earnings......................... 1,194 3,602 5,863 6,486 7,653 1,519 2,156
======= ======= ======= ======== ======== ======= =======
Net earnings per share............... .27 .81 1.03 1.05 1.24 .25 .35
======= ======= ======= ======== ======== ======= =======
Weighted average Common Stock
equivalent shares outstanding...... 4,442 4,442 5,714 6,170 6,179 6,168 6,207
======= ======= ======= ======== ======== ======= =======
EBITDA(1)............................ $ 4,115 $ 8,927 $12,549 $ 16,039 $ 20,464 $ 4,319 $ 5,853
======= ======= ======= ======== ======== ======= =======
Ratio of earnings to fixed
charges(2)......................... 2.47 4.31 7.57 4.66 3.56 2.89 3.46
======= ======= ======= ======== ======== ======= =======
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1997
----------------------------------------------- ---------------------
1992 1993 1994 1995 1996 ACTUAL ADJUSTED(3)
------- ------- ------- ------- ------- ------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................ $15,660 $28,328 $40,490 $75,629 $77,231 $88,194 $121,338
Total assets........................... 30,710 51,917 70,073 133,738 138,632 157,470 194,614
Revolving Credit Facility.............. 13,575 24,042 16,491 52,133 48,550 62,856 --
Long-term obligations.................. 2,188 4,755 4,307 12,977 18,795 17,769 17,769
% Convertible Subordinated Notes due
2004................................. -- -- -- -- -- -- 100,000
Shareholders' equity................... 3,834 7,436 34,415 40,948 48,690 50,873 50,873
</TABLE>

11
<PAGE> 15

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

12
<PAGE> 16

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

The following should be read in conjunction with the Consolidated Financial
Statements, including the notes thereto, included elsewhere in this Prospectus.

GENERAL

The Company has grown rapidly through the implementation of its strategy of
integrating value-added distribution services with contract manufacturing. Since
the acquisition of K-Byte Manufacturing in 1986, the Company's net sales have
increased from approximately $25 million to approximately $269 million in 1996.
The Company has also focused on improving its operating margin through such
measures as: (i) shifting Reptron Distribution's business mix from standard
component sales to higher margin value-added services, which now represent 35%
of its net sales; (ii) continuing to increase the number of customers using both
of the Company's distribution and contract manufacturing services, thereby
lowering overall selling expenses; (iii) investing in facilities technology in
order to improve efficiencies; and (iv) creating a telemarketing operation to
more efficiently access smaller volume customers.

K-Byte Manufacturing offers contract manufacturing services to its
customers on a turnkey basis pursuant to customer designs. In turnkey contracts,
K-Byte Manufacturing purchases the electronic components and other material used
in assembly and charges for these items in addition to its labor and
manufacturing costs. For strategic reasons, K-Byte Manufacturing does not pursue
consignment business in which the customer supplies the product material and
pays only for labor and manufacturing costs. The Company believes that by
retaining total responsibility for material procurement it can achieve greater
control of the manufacturing process and can leverage the strengths of Reptron
Distribution. The marketing cycle for K-Byte Manufacturing engagements tends to
span six to twelve months and the start-up phase typically spans another six
months. During start-up, significant investments are made by K-Byte
Manufacturing and its customers to prepare for the successful launch of the
contract manufacturing engagement. K-Byte Manufacturing's contracts with
customers address the customers' obligations relative to cancellation, component
price increases, engineering change notices, inventory (stores, work-in-process
and vendor stock) and payment terms.

In 1995, in order to expand Reptron's geographic presence, the Company
acquired substantially all of the assets and certain liabilities of Cronin
Electronics, Inc. and the electronic components distribution business of Western
Micro Technology, Inc. (collectively, the "1995 Acquisitions"). The 1995
Acquisitions, which were accounted for using the purchase method, involved a
total consideration of $19.5 million, consisting of $12.6 million in cash and
the balance in assumed liabilities. These acquisitions accounted for
approximately $30.4 million of 1996 total net sales. The 1995 Acquisitions and
the opening of an additional sales office enable Reptron Distribution to market
to 83% of the total available U.S. market for electronic components (based upon
1996 industry sales) compared to approximately 30% prior to these acquisitions.

In December 1995, the Company also created a division devoted solely to
selling memory modules. This division sells memory modules primarily to computer
integrators and value-added resellers, a customer base not historically served
by Reptron Distribution. Sales in this market segment are generally
characterized by lower gross margins and lower selling, general and
administrative expenses than other sales generated by Reptron Distribution.
Sales from this division have increased rapidly and accounted for 10.2% and 8.6%
of Reptron Distribution's net sales in 1996 and the first quarter of 1997,
respectively (6.4% and 5.3% of the Company's total net sales in 1996 and the
first quarter of 1997, respectively).

Sales for Reptron Distribution and K-Byte Manufacturing are recognized upon
shipment, except for sales from in-plant stores. Sales from in-plant stores are
recognized when a customer removes a product from the Company's in-plant
inventory. Sales from in-plant stores represented 19.8% and 18.6% of Reptron
Distribution's and 11.2% and 4.4% of K-Byte Manufacturing's 1996 and first
quarter of 1997 net sales, respectively (16.6% and 13.2% of the Company's total
net sales in 1996 and first quarter of 1997, respectively). In-plant inventories
are tracked using bar-code labeling technology or frequent inventory counts.
Cost of sales for

13
<PAGE> 17

Reptron Distribution includes only the cost of materials (electronic
components). Cost of sales for K-Byte Manufacturing includes the cost of
materials, labor and manufacturing overhead.

The Company has centralized many of its operations, including finance,
accounting, credit and collections, MIS, human resources and senior management.
These functions are performed by personnel in the corporate headquarters in
Tampa, who serve both divisions of the Company. Certain economic and integration
benefits are realized by centralizing these functions, allowing each division to
concentrate on its core business and focus on serving customers without being
distracted by administrative issues. The Company believes that through this
centralization, it can better control overhead expenses and spread the costs of
centralized functions over a larger sales base and thereby increase
profitability.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
of the Company's total net sales represented by each line item presented, except
for Reptron Distribution and K-Byte Manufacturing gross profit, which is
presented as a percentage of net sales of the respective segments.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
--------------------- -------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net Sales:
Reptron Distribution..................................... 58.5% 62.7% 62.6% 63.6% 62.1%
K-Byte Manufacturing..................................... 41.5 37.3 37.4 36.4 37.9
----- ----- ----- ----- -----
Total net sales.................................. 100.0 100.0 100.0 100.0 100.0
===== ===== ===== ===== =====
Gross Profit:
Reptron Distribution..................................... 19.6 19.6 20.4 19.2 18.4
===== ===== ===== ===== =====
K-Byte Manufacturing..................................... 16.8 15.2 17.4 16.0 18.5
===== ===== ===== ===== =====
Total gross profit............................... 18.4 18.0 19.3 18.0 18.5
Selling, general and administrative expenses............... 11.6 11.9 13.0 12.5 12.1
----- ----- ----- ----- -----
Operating income........................................... 6.8 6.1 6.3 5.5 6.4
Interest expense........................................... 0.9 1.2 1.5 1.7 1.6
----- ----- ----- ----- -----
Earnings before income taxes............................... 5.9 4.9 4.8 3.8 4.8
Income tax provision....................................... 2.3 2.0 2.0 1.5 1.9
----- ----- ----- ----- -----
Net earnings..................................... 3.6% 2.9% 2.8% 2.3% 2.9%
===== ===== ===== ===== =====
</TABLE>

THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31,
1996

Net Sales. Total first quarter net sales increased $9.7 million, or 14.6%,
from $66.6 million in the first quarter of 1996 to $76.3 million in the first
quarter of 1997.

Reptron Distribution first quarter net sales increased $5.0 million, or
11.9%, from $42.4 million in the first quarter of 1996 to $47.4 million in the
first quarter of 1997. Sales to the largest customer of the Company, Tellabs,
Inc., accounted for approximately $2.7 million of the increase in first quarter
1997 net sales. Tellabs, Inc. is a customer of both Reptron Distribution and
K-Byte Manufacturing and represented approximately 15.4% of Reptron Distribution
first quarter 1997 net sales (10.8% of total Company net sales). Sales from the
memory module division accounted for approximately $760,000 of the increase in
first quarter 1997 net sales. The balance of the increase in first quarter 1997
net sales was generated by the remainder of the Reptron Distribution sales
offices. The highest volume sales office accounted for approximately 21.5% of
Reptron Distribution net sales. Sales of semiconductors accounted for 75.1% of
first quarter Reptron Distribution net sales, with the remaining sales generated
from passive components (19.4%) and electromechanical products (5.5%).

14
<PAGE> 18

K-Byte Manufacturing net sales increased $4.7 million, or 19.3%, from $24.2
million in the first quarter of 1996 to $28.9 million in the first quarter of
1997. Sales to new customers accounted for a $6.6 million increase in net sales
over the first quarter of 1996. This increase was partially offset by an
intentional $1.4 million decrease in sales volume to a financially troubled
customer. Net sales from the remaining active K-Byte Manufacturing customers
varied based on differing customer requirements during these time periods. The
largest K-Byte Manufacturing customer accounted for approximately 14.7% of
division net sales (5.6% of total net sales). No other customer represented more
than 9.5% of division net sales. Sales from the Tampa, Florida manufacturing
facility accounted for approximately 58.0% of K-Byte Manufacturing net sales.
The Gaylord, Michigan manufacturing facility generated approximately 38.2% of
K-Byte Manufacturing net sales with the remaining net sales originating from the
Saline, Michigan location.

Gross Profit. Total first quarter gross profit increased $2.1 million, or
17.4%, from $12.0 million in the first quarter of 1996 to $14.1 million in the
first quarter of 1997. The gross margin of the Company increased from 18.0% in
the first quarter of 1996 to 18.5% in the first quarter of 1997.

Reptron Distribution first quarter gross profit increased $621,000, or
7.7%, from $8.1 million in the first quarter of 1996 to $8.7 million in the
first quarter of 1997. The gross margin decreased from 19.2% in the first
quarter of 1996 to 18.4% in the first quarter of 1997. Sales of a specific ASIC
component to the Company's largest customer, Tellabs, Inc., resulted in lowering
the first quarter 1997 gross margin. Additionally, the increase in lower margin
sales from the memory module division as a percentage of total Reptron
Distribution net sales, from 7.8% in the first quarter of 1996 to 8.6% in the
first quarter of 1997, contributed to the decrease in first quarter 1997 gross
margin.

K-Byte Manufacturing gross profit increased $1.4 million, or 38.0%, from
$3.9 million in the first quarter of 1996 to $5.3 million in the first quarter
of 1997 and its gross margin increased from 16.0% in the first quarter of 1996
to 18.5% in the first quarter of 1997. This increase is primarily attributable
to the efficiencies of fixed overhead costs being spread over a larger revenue
base and a favorable mix of business in the first quarter of 1997.

Selling, General and Administrative Expense. Selling, general and
administrative expenses increased $900,000, or 10.8%, from $8.3 million in the
first quarter of 1996 to $9.2 million in the first quarter of 1997. These
expenses, as a percentage of net sales, decreased from 12.5% in the first
quarter of 1996 to 12.1% in the first quarter of 1997.

Interest Expense. Interest expense increased $126,000, or 11.4%, from $1.1
million in the first quarter of 1996 to $1.2 million in the first quarter of
1997 as a result of higher levels of average outstanding debt. The Company's
current assets have increased to support the 14.6% increase in net sales. The
increases in current assets were financed through the bank credit line.

1996 COMPARED TO 1995

Net Sales. Total net sales increased $45.6 million, or 20.4%, from $223.3
million in 1995 to $268.9 million in 1996.

Reptron Distribution net sales increased $28.2 million, or 20.1%, from
$140.1 million in 1995 to $168.3 million in 1996. The memory module division,
established in December 1995, accounted for approximately $17.2 million of the
increase in net sales in 1996. Approximately $7.0 million of the increase in net
sales in 1996 was attributable to the 1995 Acquisitions. In addition,
approximately $3.2 million of the increase in 1996 net sales was attributable to
net sales from sales offices with greater than twelve months of sales history.
The remainder of the net sales increase, approximately $800,000, was generated
by a new sales office.

Sales of semiconductors, passive components and electromechanical
components accounted for 74.8%, 20.2% and 5.0%, respectively, of Reptron
Distribution's 1996 net sales. The percentage of net sales derived from
semiconductor sales increased from 73.8% in 1995, primarily as a result of sales
generated by the memory module division, established in December 1995. Sales
generated from the top four vendors accounted for approximately $63.0 million,
or 37.5% of Reptron Distribution's 1996 net sales.

15
<PAGE> 19

K-Byte Manufacturing net sales increased $17.5 million, or 21.0%, from
$83.2 million in 1995 to $100.7 million in 1996. Approximately $13.0 million of
the increase in net sales was generated by the previously existing K-Byte
Manufacturing customer base. The remainder of the increase in net sales,
approximately $4.5 million, was generated by sales to new customers.

Gross Profit. Total gross profit increased $11.6 million, or 29.1%, from
$40.2 million in 1995 to $51.8 million in 1996. Gross margin increased from
18.0% in 1995 to 19.3% in 1996.

Reptron Distribution's gross profit increased $6.9 million, or 25.0%, from
$27.5 million in 1995 to $34.4 million in 1996 and the gross margin increased
from 19.6% in 1995 to 20.4% in 1996. The increase in gross margin in 1996 was
primarily the result of an increase in the percentage of sales that were
generated from Reptron Distribution's value-added services. Value-added sales
generally have higher gross margins than traditional electronic component sales.
The increase in gross margin was generated despite the negative impact of lower
margin sales generated by the memory module division.

K-Byte Manufacturing's gross profit increased $4.8 million, or 38.1%, from
$12.7 million in 1995 to $17.5 million in 1996. Gross margin increased from
15.2% in 1995 to 17.4% in 1996. Price reductions for many types of electronic
components used by K-Byte Manufacturing helped improve the gross margin. In
addition, the increase in net sales has resulted in spreading overhead cost over
a larger sales base, allowing for higher gross margins.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $8.4 million, or 31.7%, from $26.6 million in
1995 to $35.0 million in 1996. These expenses, as a percentage of net sales,
increased from 11.9% in 1995 to 13.0% in 1996. Increases in K-Byte Manufacturing
support staff required to manage the increased sales activity accounted for
approximately $3.1 million of the increase in selling, general and
administrative expenses in 1996. The 1995 Acquisitions accounted for
approximately $2.6 million of the increase and the remainder of the increase
resulted from higher variable costs associated with the increase in Reptron
Distribution's net sales.

Interest Expense. Interest expense increased $1.2 million, or 45.5%, from
$2.8 million in 1995 to $4.0 million in 1996. This increase resulted from a
46.7% increase in the average borrowings outstanding under the Revolving Credit
Facility, from $34.3 million in 1995 to $50.3 million in 1996. The increased
borrowings were used to fund higher working capital needs.

1995 COMPARED TO 1994

Net Sales. Total net sales increased $59.3 million, or 36.2%, from $164.0
million in 1994 to $223.3 million in 1995.

Reptron Distribution's net sales increased $44.1 million, or 46.0%, from
$96.0 million in 1994 to $140.1 million in 1995. Net sales generated from the
1995 Acquisitions, which were consummated in March and July 1995, accounted for
approximately $20.1 million of the increase in net sales. The remainder of the
net sales increase (approximately $24.0 million, or 25.0%, over 1994 net sales)
was generated by the previously established offices of Reptron Distribution.

Sales of semiconductors, passive components and electromechnical components
accounted for 73.8%, 21.0% and 5.2%, respectively, of Reptron Distribution's
1995 net sales. The percentage of 1995 net sales generated by semiconductor
sales increased in the second half of 1995 primarily as a result of the
acquisition of the electronic component distribution division of Western Micro
Technology, Inc., which generated all of its net sales from semiconductor sales
prior to its acquisition by the Company. Sales generated from the top five
vendors increased $39.3 million in 1995. Sales from new vendor lines accounted
for $9.0 million of Reptron Distribution's 1995 net sales.

K-Byte Manufacturing's net sales increased $15.2 million, or 22.3%, from
$68.0 million in 1994 to $83.2 million in 1995. Sales to four major new
customers accounted for approximately $21.1 million of increased sales in 1995.
These increases were partially offset by the intentional reduction in sales of
approximately $3.0

16
<PAGE> 20

million to a financially troubled customer. The remainder of the change in net
sales resulted from differing customer requirements in 1995.

Gross Profit. Total gross profit increased $10.0 million, or 32.9%, from
$30.2 million in 1994 to $40.2 million in 1995. Gross margin decreased from
18.4% in 1994 to 18.0% in 1995.

Reptron Distribution's gross profit increased $8.7 million, or 46.4%, from
$18.8 million in 1994 to $27.5 million in 1995 and gross margin remained
unchanged at 19.6% in both 1994 and 1995.

K-Byte Manufacturing's gross profit increased $1.2 million, or 10.8%, from
$11.4 million in 1994 to $12.7 million in 1995. Gross margin decreased from
16.8% in 1994 to 15.2% in 1995. The decrease in K-Byte Manufacturing's gross
margin resulted primarily from a change in the mix of business and reflected
competitive market conditions.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $7.5 million, or 39.6%, from $19.1 million in
1994 to $26.6 million in 1995. These expenses, as a percentage of net sales,
increased from 11.6% in 1994 to 11.9% in 1995. The 1995 Acquisitions accounted
for approximately $3.5 million of the increase in selling, general and
administrative expenses. The remainder of the increase resulted from higher
variable costs associated with the increase in net sales.

Interest Expense. Interest expense increased $1.3 million, or 87.7%, from
$1.5 million in 1994 to $2.8 million in 1995. This increase primarily resulted
from a 69.3% increase in the average borrowings outstanding under the Revolving
Credit Facility from $20.3 million in 1994 to $34.3 million in 1995. The
increased borrowings were used primarily to finance the 1995 Acquisitions.

QUARTERLY RESULTS OF OPERATIONS AND SEASONALITY

The following table presents unaudited quarterly operating results for the
Company for each of the four quarters in both 1995 and 1996 and the first
quarter of 1997. In the opinion of management, this information has been
prepared on the same basis as the audited Consolidated Financial Statements
included in this Prospectus and includes all adjustments (consisting of only
normal recurring accruals) that management considers necessary for a fair
presentation of the results for such periods. Such quarterly results are not
necessarily indicative of the results of operations for any future period. In
1996, the industry experienced significant reductions in the pricing of many
types of semiconductors, including most memory products (DRAM and SRAM).
Although the Company's unit volume sales of such memory products increased
throughout 1996, the effect of such price reductions caused reduced revenue
growth in the first three quarters of 1996.

<TABLE>
<CAPTION>
QUARTERS ENDED
---------------------------------------------------------------------------------------------
1995 1996 1997
---------------------------------------- ---------------------------------------- -------
MARCH JUNE SEPTEMBER DECEMBER MARCH JUNE SEPTEMBER DECEMBER MARCH
31, 30, 30, 31, 31, 30, 30, 31, 31,
------- ------- --------- -------- ------- ------- --------- -------- -------
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales........................ $43,076 $52,873 $59,492 $67,903 $66,551 $66,092 $65,953 $70,341 $76,251
Gross profit..................... 8,171 9,515 10,729 11,748 11,982 13,199 12,594 14,074 14,072
Operating income................. 2,949 3,523 3,692 3,413 3,936 4,183 4,200 4,507 4,822
Net earnings..................... 1,511 1,778 1,713 1,484 1,519 1,905 2,017 2,212 2,156
Net earnings per share........... 0.25 0.29 0.28 0.24 0.25 0.31 0.33 0.36 0.35
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has primarily financed its operations
through bank credit lines, capital equipment leases and short-term financing
through supplier credit lines. Additionally, on April 5, 1994, the Company
received net proceeds totaling $21.1 million from its initial public offering,
which were used to repay borrowings outstanding under the Revolving Credit
Facility.

Pursuant to the Company's Revolving Credit Facility, four lenders have made
available to the Company a $63.8 million revolving credit facility through June
30, 1999. The lenders may advance funds to the Company pursuant to two types of
loans, each of which bears a separate rate of interest. As long as the Company
is not in default under the Revolving Credit Facility, and upon notice to the
lender, the Company may convert

17
<PAGE> 21

advances from one type of loan to the other. Interest rates on borrowings
outstanding under the Revolving Credit Facility ranged from 7.56% to 8.50% as of
June 30, 1997. Borrowings under the Revolving Credit Facility are collateralized
by all of the Company's inventory and accounts receivable. The Revolving Credit
Facility contains certain financial covenants, including requiring the Company
to maintain a minimum tangible net worth, maintain various financial ratios and
limit the amount of capital expenditures. In addition, the Revolving Credit
Facility requires the financial institutions' approval of annual dividends in
excess of the lesser of $1,000,000 or 25% of net earnings, thereby restricting
the distribution of the retained earnings of the Company. The Company was in
compliance with all financial covenants as of June 30, 1997.

The Company has entered into various capital lease transactions with
several leasing companies to finance capital expenditures, primarily for K-Byte
Manufacturing. These leases had an aggregate balance outstanding of $6.5 million
as of December 31, 1996. The leases bear interest at rates ranging from 7.4% to
11.1% and expire on various dates through December 2001.

The Company's operating activities used cash of approximately $10.6 million
in the first quarter of 1997. This decrease in liquidity resulted primarily from
an increase in accounts receivable of $7.6 million and an increase in
inventories of $6.8 million. These items were offset by a $4.0 million increase
in accounts payable. The Company's accounts receivable collections averaged 52.5
days as of March 31, 1997. Reptron Distribution averaged 5.2 inventory turns in
the first quarter of 1997 while K-Byte Manufacturing averaged 3.9 inventory
turns during this period. K-Byte Manufacturing's inventory turns have been
negatively impacted by the complex process associated with integrating ten new
customers, representing over 290 different circuit board assemblies into the
Tampa manufacturing plant.

The Company's capital expenditures, including capital leases, were
approximately $8.0 million in 1994, $10.2 million in 1995, $12.8 million in 1996
and $3.2 million in the first quarter of 1997. In 1994, the Company purchased
its corporate headquarters building in Tampa, Florida and a 336-acre parcel
adjacent to its headquarters for construction of its manufacturing and warehouse
facility. These items accounted for approximately $4.0 million of the 1994
capital expenditures total. In 1995, the Company added 22,000 square feet to its
K-Byte Manufacturing facility in Gaylord, Michigan and initiated construction on
a 150,000 square-foot building adjacent to the corporate headquarters in Tampa,
Florida. This building is used as the main warehouse for Reptron Distribution
and the Tampa K-Byte Manufacturing facility. These items accounted for
approximately $3.0 million of the 1995 capital expenditures total. The
continuing construction of the 150,000 square-foot building accounted for
approximately $5.9 million of the 1996 capital expenditures. Reptron
Distribution warehouse equipment represented approximately $750,000 of the 1996
total capital expenditures. The remainder of the capital expenditures in years
1994 through 1996 were primarily for the acquisition of manufacturing equipment
for use in K-Byte Manufacturing. Capital expenditures during the years 1994
through 1996 were funded through cash flow from operations, capital leases and
borrowings under the Revolving Credit Facility. In the first quarter of 1997,
the Company's capital expenditures were primarily for the acquisition of
manufacturing equipment and were funded with borrowings under the Revolving
Credit Facility. The Company expects that capital expenditures for the balance
of 1997 will approximate $6.0 million primarily for machinery and equipment for
K-Byte Manufacturing and renovation of corporate headquarters.

The 1995 Acquisitions were financed through a combination of cash and the
assumption of specified liabilities. Of the approximately $19.5 million total
consideration, approximately $12.6 million was paid in cash with the remainder
in the form of assumption of specified liabilities. The cash payments were
funded with borrowings under the Revolving Credit Facility.

The Company pays for its purchases from foreign sources, including Japanese
manufacturers, in U.S. dollars, which reduces the adverse effects of currency
fluctuations. The Company has not experienced a substantial adverse effect from
currency fluctuations.

18
<PAGE> 22

After the application of the net proceeds of this offering as described in
"Use of Proceeds," the Company believes that cash generated from operations and
amounts available under the Revolving Credit Facility will be sufficient for the
Company to meet its capital expenditures and working capital needs for its
operations as presently conducted for the foreseeable future. The Company's
growth strategy includes growth through acquisitions. The net proceeds of this
offering, together with cash generated from operations, may not be adequate to
finance such acquisitions and the Company may be required to seek additional
financing. See "Acquisition Risks." Although the Company intends to seek an
increase in its Revolving Credit Facility, there can be no assurance that it
will be able to obtain such an increase. See "Use of Proceeds." Further, there
can be no assurance that other financing would be available in amounts and on
terms acceptable to the Company.

19
<PAGE> 23

BUSINESS

GENERAL

The Company is a leading integrated electronics company providing both
value-added distribution of electronic components and targeted contract
manufacturing services through its two divisions, Reptron Distribution and
K-Byte Manufacturing. The two divisions are complementary, enabling the Company
to provide customers with a wide range of products and value-added services, as
well as a single source for their product, material, assembly and test
requirements. Approximately 44% of the Company's 1996 net sales were generated
by customers utilizing the services of both divisions. The Company believes that
its integrated approach to manufacturing and distribution distinguishes it in
the electronics industry, provides a high level of value to its customer base
and enables it to obtain sole source relationships with an increasing number of
its customers. As a result of the successful implementation of the Company's
business strategy, it has increased net sales from approximately $83.4 million
in 1992 to $268.9 million in 1996 and net earnings from $1.2 million in 1992 to
$7.7 million in 1996.

INDUSTRY OVERVIEW

Distribution. Most manufacturers of electronics components rely on
independent distributors, such as the Company, to extend their marketing
operations. As a stocking, marketing and financial intermediary, a distributor
relieves the manufacturer of part of the costs associated with the stocking and
selling of their products, including otherwise potentially sizeable investments
in inventories, accounts receivable and personnel. At the same time, the
distributor offers to a broad range of customers the convenience of diverse
inventory, flexible deliveries and a wide range of value-added services to help
manage material requirements. The growth of the electronics component
distribution industry has been fueled by the growing number of electronic
component manufacturers that view their distributors as essential extensions of
their marketing organizations and by customers who recognize the value that
distributors add to the total material procurement process. According to NEDA,
the total North American electronics distribution market grew from $10.2 billion
in revenue in 1992 to $21.0 billion in 1996 and is projected to grow to $23.6
billion in 1997.

Two important trends have developed recently in the U.S. electronic
components distribution industry. First, manufacturers of electronic components
are reducing the number of distributors who are authorized to sell their
products. This trend is the result of the need for electronic component
manufacturers to reduce their operating costs. Engaging a smaller number of
distributors allows the manufacturer to reduce support staff. Accordingly, the
reduced number of authorized distributors must be able to service the majority
of the total available U.S. market in order to allow the manufacturer to reduce
its distributor base without losing significant market share.

A second trend in the industry is for an increasing percentage of
distribution sales being associated with value-added services. This trend is the
result of the need for OEMs to reduce their operating costs. By interacting with
distributors through the use of in-plant stores, automated inventory
replenishment systems utilizing EDI and outsourcing of product assembly, among
other actions, OEMs may reduce their total materials acquisition cost. The
distributor assumes a larger role in the management of the supply chain in these
types of engagements.

Contract Manufacturing. The basis for the development of the contract
manufacturing industry in recent years has been the increasing reliance of OEMs
on contract manufacturing specialists such as the Company for the manufacture of
printed circuit board assemblies. As a result of outsourcing manufacturing
services, the contract manufacturing industry in the U.S. grew from $6.3 billion
in 1992 to $14.5 billion in 1996, a compound annual rate of 23.2%. Based on IPC
estimates, the U.S. contract manufacturing industry has expanded and will expand
at a 21% compound annual growth rate from 1995 through 2000. Some of the
advantages OEMs receive as a result of outsourcing are:

- Reduced Time to Market. Because of the intense competitive pressures
and rapidly progressing technology in the electronics industry, OEMs
are faced with increasingly short product life-cycles and therefore
have a growing need to reduce the time required to bring a product to
market.

20
<PAGE> 24

OEMs can reduce their time to market by using a contract manufacturer's
established manufacturing expertise and infrastructure.

- Minimized Capital Investment. As electronic products have become more
technologically advanced, the manufacturing process has become
increasingly automated and highly intricate, and manufacturers have had
to invest in new capital equipment at an accelerated rate. Contract
manufacturing specialists enable OEMs to gain access to advanced
manufacturing facilities and equipment, thereby reducing their overall
capital equipment requirements.

- Focused Resources. Because the electronics industry is experiencing
greater levels of competition and more rapid technological change, many
OEMs increasingly seek to focus their resources on activities and
technologies that add greater value. By offering turnkey manufacturing
services and comprehensive electronic assembly, contract manufacturing
specialists permit OEMs to focus on their core business activities,
such as product development, marketing and distribution.

- Access to Leading Edge Manufacturing Technology. Electronic products
and electronics manufacturing technology have become increasingly
sophisticated and complex. OEMs desire to work with contract
manufacturing specialists in order to gain access to their
technological expertise in process development and control.

- Improved Inventory Management and Purchasing Power. Electronics
industry OEMs are faced with increasing difficulties in planning,
procuring and managing their inventories efficiently due to frequent
design changes, short product life-cycles, large investments in
electronic components, component price fluctuations and the need to
achieve economies of scale in materials procurement. OEMs can reduce
production costs by using a contract manufacturing specialist's volume
procurement capabilities and expertise in inventory management. By
utilizing a contract manufacturing specialist, OEMs frequently can
better manage inventory costs and increase their return on assets.

The increasing cost of automated equipment used in the industry, the
working capital requirements relating to inventory and the additional services
that contract manufacturers are providing make it more difficult for smaller
contract manufacturers and start-up companies to compete with the services
provided by larger, well-capitalized companies. Additionally, the purchasing
power generated by the volumes of material purchased by larger contract
manufacturers makes it difficult for smaller manufacturers to be price
competitive. The Company believes that these factors are driving consolidation
in the industry and may provide opportunities for growth through acquisitions.

STRATEGY

- Continue to Capitalize on the Benefits of Integration. The Company
operates as an integrated electronics company that provides value-added
distribution of electronic components and targeted contract
manufacturing services. Reptron Distribution emphasizes its value-added
services as a method to lower the customer's total material acquisition
costs. The Company believes that K-Byte Manufacturing provides Reptron
Distribution with a significant advantage over its major competitors
that lack in-house contract manufacturing operations by broadening the
selection of products and services that can be offered to Reptron
Distribution's customers. Similarly, Reptron Distribution provides
K-Byte Manufacturing with advantages over other contract manufacturers
because of its access to Reptron Distribution's field sales force,
large customer base and expertise in component purchasing. Of K-Byte
Manufacturing's 36 customers in 1996, 32 are also Reptron Distribution
customers.

- Increase Sales from Value-Added Services. The Company seeks to
enhance sales by providing value-added services. Reptron Distribution
has developed a comprehensive value-added service

21
<PAGE> 25

offering which includes inventory control programs (e.g., bonded,
consigned, just-in-time), in-plant stores, automated inventory
replenishment systems utilizing EDI technology, component programming,
custom display integration and contract manufacturing (through K-Byte
Manufacturing). These value-added programs allow the OEMs to reduce
their total acquisition costs for materials. An increasing percentage
of industry sales are being generated from value-added engagements and
management believes the Company is well positioned to capitalize on
this trend. In 1996, and in the first quarter of 1997, approximately
35% of Reptron Distribution sales were generated through value-added
services.

- Target Manufacturing Customers in Specific Market Segments. The
Company follows a well-defined strategy in its contract manufacturing
business. K-Byte Manufacturing focuses on complex assemblies in
low-to-medium volumes for commercial and industrial customers.
Additionally, the Company seeks customers that will utilize K-Byte
Manufacturing's ability to assemble customers' products by integrating
printed circuit board assemblies into other elements of the customers'
products (sometimes referred to as total "box build"). The Company also
seeks customer relationships in which K-Byte Manufacturing is the
primary source and avoids engagements requiring an overflow supplier.
K-Byte Manufacturing targets customers in a variety of industries to
establish a diversity among customers and industries served.

- Leverage Investments Made in its Manufacturing Facilities. The
Company has invested in facilities that will allow it to expand its
business. The Company believes its combined manufacturing facilities
can accommodate the equipment and infrastructure capable of generating
approximately $225 million in annual contract manufacturing net sales
based on the types of business currently transacted by K-Byte
Manufacturing. K-Byte Manufacturing's sales totaled approximately $101
million in 1996 and, consequently, there is substantial capacity to
support K-Byte Manufacturing's future sales growth. Management believes
that significant opportunities exist for additional business from
present and new customers which will utilize the fixed investment
already made in these facilities.

- Expand Through Acquisitions and Internal Growth. The Company seeks to
expand its operations into geographic areas that it currently does not
serve and to increase its presence in existing markets. Reptron
Distribution currently serves approximately 83% of the total available
U.S. market (based upon 1996 industry sales). However, the Company
believes that significant opportunities exist to expand its business in
existing regions and into new regions either by acquiring distributors
in these markets or by opening new sales offices. The Company is
actively pursuing acquisition opportunities for Reptron Distribution
for the purpose of increasing its geographic coverage and increasing
its penetration in existing markets served. Additionally, the Company
intends to expand K-Byte Manufacturing within the Company's western
region to better capture contract manufacturing opportunities in that
area.

REPTRON DISTRIBUTION

The Company was founded in 1973 in Detroit as a distributor of electronic
components. From 1973 through 1989, the Company expanded by opening nine sales
offices in the midwestern and southeastern U.S. Additional expansion has been
generated through a series of acquisitions:

- In 1993, the Company acquired a distributor with offices in
Philadelphia, Pennsylvania and Baltimore, Maryland.

- In 1995, the Company acquired a distributor (Cronin Electronics) with
offices in Boston, Massachusetts and Hartford, Connecticut.

- In 1995, the Company acquired the electronic component distribution
business of Western Micro Technology, Inc. with offices in Boston,
Massachusetts; Irvine, Los Angeles, San Diego and San Jose, California;
Portland, Oregon; and Seattle, Washington.

22
<PAGE> 26

Reptron Distribution now operates from 20 sales offices that allow the
Company to market to approximately 83% of the total available electronic
components market in the U.S.

Products. Reptron Distribution represents over 60 vendor lines and
distributes more than 35,000 separate items. The products that the Company
distributes can be broadly divided into three main groups: semiconductors,
passive products and electromechanical components.

Semiconductors accounted for approximately 75% of Reptron Distribution's
net sales in both 1996 and the first quarter of 1997, respectively. Reptron
Distribution's product offering includes application specific integrated
circuits ("ASICs"), a variety of memory devices (e.g., dynamic, static,
programmable) and microprocessors and controllers produced by 25 vendors. The
Company represents a number of leading semiconductor manufacturers, including
Chips & Technologies, Hitachi, NEC, OKI, Orbit Semiconductor and Sharp. Passive
products and electromechanical components accounted for the remaining 25% of net
sales of Reptron Distribution in 1996 and in the first quarter of 1997. Among
these components are capacitors, resistors, relays, power supplies and
connectors manufactured by over 35 vendors, such as Astec, Dale, Potter &
Brumfield and Sprague. Reptron Distribution's largest four vendor lines
represented 37.5% and 41.5% of Reptron Distribution's net sales in 1996 and in
the first quarter of 1997, respectively (23.4% and 25.8% of the Company's total
net sales in 1996 and in the first quarter of 1997, respectively). See "Risk
Factors -- Customer Concentration and Other Factors Affecting Operating
Results."

In December 1995, Reptron Distribution created its K-Byte Memory Module
division, which is devoted solely to selling memory modules. This memory modules
division employs a separate sales and support staff that focuses on a different
market niche and customer base than was previously serviced by Reptron
Distribution. This division sells primarily to computer integrators and
value-added resellers. Sales in this niche are generally characterized by higher
volumes, lower gross profit margins and lower selling, general and
administrative expenses than other electronic component sales generated by
Reptron Distribution. Sales from the memory module division have increased
rapidly and accounted for 10.2% and 8.6% of Reptron Distribution's net sales in
1996 and the first quarter of 1997, respectively (6.4% and 5.3% of the Company's
total net sales in 1996 and in the first quarter of 1997, respectively).

Services. Reptron Distribution sells to over 9,000 customers representing
diverse industries including robotics, telecommunications, computers and
computer peripherals, consumer electronics, healthcare, industrial controls and
contract manufacturing. Services provided to these customers include component
sales, inventory replenishment programs, in-plant stores, component programming
and EDI. During 1996 and the first quarter of 1997, approximately 35% of Reptron
Distribution net sales were generated through value-added services. The Company
believes that an increasing percentage of Reptron Distribution's net sales will
be generated through its value-added services as customers continue to search
for ways to reduce costs. The Company has invested significantly in capital
equipment and support staff to help increase net sales from value-added
services. For its vendors, Reptron Distribution has developed product promotion
and customer identification programs that help vendors build recognition of
individual products and target and market to specific types of customers.

Vendors. In selecting vendors to represent, Reptron Distribution considers
numerous factors, including product demand, availability and compatibility with
existing product lines. Reptron Distribution has non-exclusive, geographically
limited agreements with its vendors for the sale of their products, which is
customary in the industry. Reptron Distribution's agreements with vendors do not
restrict the Company from selling similar products manufactured by competitors
of its vendors, and typically allow termination by either party upon 30 to 90
days' notice.

Reptron Distribution's vendors protect the Company against potential
write-downs of inventories based upon vendors' price reductions or technological
change. Under the terms of most of Reptron Distribution's distributor
agreements, if the Company complies with certain conditions, the vendor is
required, pursuant to price protection privileges, to credit the Company for
decreases in inventory value resulting from reductions in the vendor's list
prices of the items. In addition, under the stock rotation terms of Reptron
Distribution's distributor agreements, the Company has the right to return to
the vendor for credit against current obligations or future orders a specified
portion of those inventory items purchased within a designated period. A vendor

23
<PAGE> 27

that elects to terminate a distributor agreement is generally required to
purchase from the Company the total amount of its products carried in inventory.
The Company believes that its distributor agreements are on terms and conditions
consistent with industry standards. Most of the components sold through the
memory module division formed in December 1995 are not supplied under
distribution agreements with the Company's vendors, and consequently, this
inventory is not subject to the price protection and stock rotation privileges.
However, the majority of these components are not purchased until the Company
has received a customer purchase order for their sale.

Sales and Marketing. Reptron Distribution has developed a focused sales
strategy. Large key accounts are identified in each market and field sales
personnel are assigned to serve these accounts directly. All other customers in
each market are served by telemarketers from the local market or from the
corporate headquarters. The telemarketers also service customers in regions of
the country where the Company does not have a sales office.

Reptron Distribution's marketing plan also includes catalog sales, direct
mail, print advertising, field sales events, customer identification programs,
seminars and public relations efforts. The Company periodically publishes
product catalogs. These catalogs complement the efforts of the sales force by
extending the reach of the sales force beyond the immediate areas of the
established offices and by building customer awareness of Reptron Distribution's
name and product line.

Customers. Reptron Distribution has over 9,000 customers located
throughout the United States. The largest customer of the Company, Tellabs,
Inc., is a customer of both Reptron Distribution and K-Byte Manufacturing. In
the first quarter of 1997, this customer accounted for approximately 15.4% of
Reptron Distribution's net sales, 3.3% of K-Byte Manufacturing's net sales and
10.8% of the Company's total net sales. In 1996, Tellabs, Inc. accounted for
approximately 15.7% of Reptron Distribution net sales, 6.9% of K-Byte
Manufacturing net sales and 12.4% of the Company's total net sales. In 1995,
Tellabs, Inc. accounted for approximately 6.4% of Reptron Distribution net
sales, 9.4% of K-Byte Manufacturing net sales and 7.5% of the Company's total
net sales. Reptron Distribution's customers are in diverse industries, including
robotics, telecommunications, computers and computer peripherals, consumer
electronics, healthcare, industrial controls and contract manufacturing.

Training. A key element of the Company's operating philosophy is the
training of its employees in order to establish technical competency and to
assist in uniform application of the Company's procedures throughout its office
network. Reptron Distribution maintains a formal "Reptron University" training
program and all of Reptron Distribution's employees are required to participate
in these training classes. Additionally, field training takes place on a weekly
basis in the sales offices. The Company has also created a 16-18 month program
for developing product marketing managers.

Property and Offices. The Company owns a 77,500-square foot facility in
Tampa, Florida, which houses centralized corporate support personnel, management
staff and executive offices for Reptron Distribution and K-Byte Manufacturing.
Reptron Distribution's main warehouse is located in a portion of a
newly-constructed 150,000-square foot facility located adjacent to the Company's
Tampa headquarters. Substantially all Reptron Distribution shipments originate
from this warehouse.

24
<PAGE> 28

The Company also leases 20 sales offices for Reptron Distribution. Lease
terms on these facilities range from three to five years and expire at various
dates through June 2001. The table below shows the location of each office and
the date it was established.

<TABLE>
<CAPTION>
OFFICE DATE ESTABLISHED
- ------ -----------------
<S> <C>
Detroit, Michigan........................................... 1973
Chicago, Illinois........................................... 1979
Tampa, Florida.............................................. 1982
Atlanta, Georgia............................................ 1985
Ft. Lauderdale, Florida..................................... 1985
Minneapolis, Minnesota...................................... 1986
Cleveland, Ohio............................................. 1988
Huntsville, Alabama......................................... 1988
Raleigh, North Carolina..................................... 1989
Philadelphia, Pennsylvania.................................. 1993
Baltimore, Maryland......................................... 1993
San Jose, California........................................ 1994
Boston, Massachusetts....................................... 1995
Hartford, Connecticut....................................... 1995
Hauppauge (Long Island), New York........................... 1995
Irvine, California.......................................... 1995
Portland, Oregon............................................ 1995
San Diego, California....................................... 1995
Seattle, Washington......................................... 1995
Salem, New Hampshire........................................ 1996
</TABLE>

As part of its expansion strategy, Reptron Distribution has leased office
space and plans to open a sales office in Dallas, Texas in September 1997.

K-BYTE MANUFACTURING

The Company entered into the contract manufacturing business through its
acquisition of K-Byte Manufacturing in 1986. K-Byte Manufacturing's net sales
have grown from approximately $2 million in 1986 to approximately $101 million
in 1996.

Manufacturing Operations. K-Byte Manufacturing provides turnkey
manufacturing services, including the purchase of customer-specified components
from its extensive network of component suppliers (including Reptron
Distribution), assembly of components onto printed circuit boards and
performance of post-production testing. In addition, approximately 21% of K-Byte
Manufacturing's 1995 and 1996 net sales was generated by total box build
assembly. K-Byte Manufacturing attempts to perform as much of a given
manufacturing process as is feasible and generally does not perform labor-only,
consignment assembly functions unless they may provide a direct route to turnkey
contracts.

K-Byte Manufacturing provides design-for-manufacturability engineering
services as well as SMT conversion and printed circuit board layout services for
existing products. The Company also provides test process design capabilities
that include the design and development of test fixtures and procedures and
software for both in-circuit tests and functional tests of circuit boards,
components and products.

In its manufacturing services, the Company offers both SMT and PTH
interconnection technologies. SMT is a computer-automated process that allows
the placement of a higher density of components directly on both sides of a
printed circuit board. The SMT process is a more recent advancement over the
mature PTH technology which normally permits electronic components to be
attached to only one side of a printed circuit board by inserting components
into holes drilled through the board. The SMT process allows OEMs to use
advanced circuitry, while at the same time permitting the placement of a greater
number of components on a printed circuit board without having to increase the
size of the board. By allowing increasingly complex

25
<PAGE> 29

circuits to be packaged with the components placed in closer proximity to each
other, SMT greatly enhances circuit processing speed and thus board and system
performance. The SMT process allows a reduction in the number of printed circuit
boards required per system and allows the use of more fully automated production
processes.

K-Byte Manufacturing performs PTH assembly both manually and with
computer-automated component insertion and soldering equipment. Although SMT is
the leading interconnection technology, the Company intends to continue
providing PTH assembly services for its customers. PTH is of continuing
viability because most printed circuit boards assembled using SMT require some
PTH assembly. In addition, certain current and prospective customers have not
shifted or do not wish to change their manufacturing process to utilize SMT.

K-Byte Manufacturing is able to manage its materials procurement and
inventory management functions efficiently through its relationship with Reptron
Distribution. The inherent scheduling and procurement challenges in
low-to-medium volume production of a large number of different circuit board
assemblies requires a high level of expertise in material procurement. K-Byte
Manufacturing currently manages a supply chain that provides approximately
56,000 different part types that are required to produce approximately 2,000
different kinds of circuit board assemblies. K-Byte Manufacturing obtains its
electronic components from a wide variety of manufacturers, some of which are
procured through Reptron Distribution. The Company developed this materials
procurement competency through its experience as a component distributor.

Marketing and Customers. K-Byte Manufacturing follows a well-defined
marketing strategy, which includes the following key elements:

Target Customers Requiring Low-to-Medium Volume Production of Multiple
Products. K-Byte Manufacturing focuses on complex assemblies in low-to-medium
volumes for commercial and industrial customers. The Company has not been a
manufacturer of high volume printed circuit board assemblies for personal
computers, consumer products or the automotive industries, which typically have
relatively low gross profit margins. K-Byte Manufacturing targets customers
requiring a high number of different circuit board assemblies, thereby
minimizing the exposure to any one product made for a specific customer. This
market niche typically generates higher gross margins than the high volume
sector. K-Byte Manufacturing focuses on the low-to-medium volume batch business
because of its reduced volatility. K-Byte Manufacturing has access to a
significant number of these kinds of customers through its relationship with
Reptron Distribution.

Target Customer Relationships where K-Byte Manufacturing is the Primary
Source. K-Byte Manufacturing seeks engagements with customers that have decided
to strategically outsource substantially all circuit board assembly.
Consequently, K-Byte Manufacturing markets its services as a "partnership" with
the customer and encourages the customer to view K-Byte Manufacturing as an
extension of its own manufacturing capabilities. The Company attempts to avoid
relationships where K-Byte Manufacturing is used as an overflow supplier to
level peak volume periods for its customers.

Maintain a Diverse Customer and Industry Base. The Company targets
customers in the telecommunications, healthcare devices, banking and industrial
controls industries and seeks to maintain a diversity of customers among these
industries and within each industry. In addition, the Company believes that the
industries that it targets make products that generally have longer life cycles,
more stable demand and less price pressure compared to consumer oriented
products.

The marketing cycle for customers meeting these criteria tends to span
six-to-twelve months. Additionally, the start-up phase for these kinds of
engagements spans another six months. During this phase, significant investments
are made by K-Byte Manufacturing and the customer to successfully launch a high
number of different, complex circuit board assemblies. K-Byte Manufacturing
works closely with its customers in all phases of design, start-up and
production and develops a close working relationship with the customer. These
relationships and the investments made both in time and financial resources by
the customer and K-Byte Manufacturing promote long-term customer loyalty.

Reptron Distribution provides a comprehensive marketing effort for K-Byte
Manufacturing. Reptron Distribution has approximately 85 field sales personnel
who transact business with over 9,000 customers and

26
<PAGE> 30

are trained to identify potential customers for K-Byte Manufacturing. The
Reptron Distribution sales personnel are motivated through sales commissions to
promote K-Byte Manufacturing.

Using the Reptron Distribution sales force to market K-Byte Manufacturing
has proven to be successful as 32 of 36 customers serviced by K-Byte
Manufacturing in 1996 have come from the Reptron Distribution channel.
Additionally, the use of the Reptron Distribution sales force reduces the
overall selling costs for K-Byte Manufacturing. Other contract manufacturers
often use commissioned manufacturers' sales representatives, which is generally
a more costly method of selling.

K-Byte Manufacturing seeks to maintain diversity within its customer base
and industries served. During the first quarter of 1997, K-Byte Manufacturing
had 36 principal customers, with the largest three customers representing 14.7%,
9.4% and 8.7% of K-Byte Manufacturing's first quarter 1997 net sales (5.6%, 3.6%
and 3.3% of total Company net sales). During 1996, K-Byte Manufacturing had
approximately 36 customers, with the largest three customers representing 15.9%,
9.9% and 8.9% of K-Byte Manufacturing's 1996 net sales (6.0%, 3.7% and 3.3% of
total Company net sales in 1996). The following table sets forth the number of
principal customers and percentage of K-Byte Manufacturing sales derived from
various industries for 1995 and 1996.

<TABLE>
<CAPTION>
1995 1996
---------------------- ----------------------
INDUSTRY CUSTOMERS % OF SALES CUSTOMERS % OF SALES
- -------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Industrial/Instrumentation 7 21.9% 11 24.6%
Telecommunications 4 22.8 6 22.3
Banking 2 19.9 2 20.2
Healthcare 4 10.5 5 15.1
Mass Storage 2 8.9 2 8.5
Office Products 2 7.7 2 7.3
Other 4 8.3 8 2.0
</TABLE>

Training. The Company believes that its highly trained and productive work
force is an essential element in its ability to compete effectively, and the
Company is committed to investing in training its employees. K-Byte
Manufacturing has developed a formal training program taught by Company
employees at an in-house "K-Byte Academy," which includes classes in technical
training and employee personal skills in areas such as communication, team
building and leadership. Additionally, K-Byte Manufacturing cross-trains its
employees to perform multiple job functions.

Manufacturing Facilities. K-Byte Manufacturing operates three plants. The
Gaylord, Michigan facility is owned by the Company and was constructed in 1988.
The Company completed a 22,000 square foot addition to this plant in 1995 and
this facility now totals approximately 72,000 square feet. The Tampa, Florida
150,000 square foot manufacturing and warehouse facility was completed in the
first quarter of 1997. These manufacturing facilities are equipped with advanced
SMT assembly equipment and PTH insertion equipment. The Company has a variety of
automated and manual test equipment capable performing in-circuit and functional
testing, as well as a skilled staff of technicians who perform customer-specific
or product-specific testing requirements. The Saline, Michigan plant is located
in a 15,000 square foot, rented building. This facility is equipped for
prototype assembly and shorter production runs, services that cannot be
efficiently provided at the larger plants.

The Company believes the three facilities, depending on product mix, can
accommodate the equipment and infrastructure capable of generating approximately
$225 million in annual contract manufacturing net sales based on the kinds of
business currently transacted by K-Byte Manufacturing. The Tampa, Florida
manufacturing plant accounted for 60.4% and 58.0% of K-Byte Manufacturing's 1996
and first quarter 1997, net sales, respectively, with the Gaylord, Michigan
plant totaling 36.0% and 38.2% of 1996 and first quarter 1997 net sales,
respectively, and the Saline, Michigan, short production run plant accounting
for the remaining 3.6% and 3.8% of 1996 and first quarter 1997 net sales,
respectively.

27
<PAGE> 31

COMPETITION

Both Reptron Distribution and K-Byte Manufacturing face substantial
competition. Many of the Company's competitors in each division have
significantly greater financial resources and broader name recognition than the
Company. Reptron Distribution faces competition from hundreds of electronic
component distributors of various sizes, locations and market focuses (e.g.,
military, commercial, consumer) and competes principally on the basis of product
selection and value-added customer service. Vendor representation and product
diversity create a segmentation among distributors. Reptron Distribution has
several primary competitors that carry similar significant Japanese
semiconductor vendors. Reptron Distribution attempts to differentiate itself
from these competitors through its wide offering of value-added services,
including contract manufacturing (through K-Byte Manufacturing). To the
Company's knowledge, no significant competitor offers customers the combination
and versatility of a leading national distributor with substantial in-house
contract manufacturing capability.

K-Byte Manufacturing competes in a highly fragmented market composed of a
diverse group of U.S. based contract manufacturers. The Company believes that
the key competitive factors in its markets are manufacturing flexibility, price,
manufacturing quality, advanced manufacturing technology and reliable delivery.
Many contract manufacturers operate high-volume facilities and focus on target
markets, such as the computer industry, that K-Byte Manufacturing does not seek
to serve. K-Byte Manufacturing considers its key competitive advantages to
include its expertise in low-to-medium volume, flexible batch processing, its
provision of value-added services and its material management techniques (as a
result of its integration with Reptron Distribution). The Company believes that
K-Byte Manufacturing's expertise in flexible, batch processing differentiates it
from its high-volume competitors because of the relative complexity of
economically fulfilling a large number of batch contracts. The Company believes
that by focusing on low- to medium-volume production runs, by manufacturing
products using Reptron Distribution's product line and by leveraging Reptron
Distribution's sales force and customer base, K-Byte Manufacturing competes
effectively. See "Risk Factors -- Competition; Effects on Gross Margin."

MANAGEMENT INFORMATION SYSTEMS

The Company has made significant investments in computer hardware, software
and MIS personnel. The MIS department totals 20 individuals who are responsible
for hardware upgrades, maintenance of current software and related data bases
and augmenting software packages with custom programming.

The Company operates MIS for both Reptron Distribution and K-Byte
Manufacturing with UNIX-based software packages. Reptron Distribution operates
an integrated distribution software package that has been greatly enhanced with
custom programming. This system allows management to direct the entire Reptron
Distribution operation by connecting all 20 sales offices to the corporate
headquarters. In 1996, Reptron Distribution significantly upgraded the software
that operates its main warehouse in Tampa, Florida. This upgrade combines bar
code technology with sophisticated conveyor systems and storage of electronic
components. The entire warehouse system is controlled and organized by software
written and implemented by the Company's MIS staff. The Reptron Distribution
software package accommodated the integration of the 1995 Acquisitions and is
expected to be sufficient for the Company's growth for the foreseeable future.
K-Byte Manufacturing operates an integrated MRP II package that has also been
greatly enhanced by the Company's MIS staff through custom programming. This
system is used to operate and integrate all three manufacturing plants with
central administrative functions. The K-Byte Manufacturing software system is
also expected to accommodate the Company's growth for the foreseeable future.

The UNIX-based software used by the Company may be operated on a variety of
hardware platforms. Therefore, the Company is not restricted to the use of
computer hardware from any one supplier and does not have the constraints
associated with proprietary hardware or software. The Company is currently
upgrading and expanding to a client-server based system. This Windows-based
system is expected to improve productivity and facilitate the integration of
internet and intranet software applications. The Company currently maintains a
web home page that provides a wide variety of information as well as links to
vendors and customers.

28
<PAGE> 32

BACKLOG

Backlog of Reptron Distribution as of March 31, 1997 was approximately
$42.3 million, as compared to approximately $45.5 million at March 31, 1996.
Reptron Distribution includes in backlog only those product shipment orders for
which a confirmed customer order has been received as of the date on which the
backlog is computed. A growing percentage of Reptron Distribution's sales are
generated through its in-plant store value-added program. These orders are not
included in backlog as the booking and billing are both recorded when the
customer removes a product from the Company's in-plant inventory. In 1996, 19.8%
of Reptron Distribution's sales were generated by in-plant stores as compared to
8.9% in 1995. Backlog for K-Byte Manufacturing totaled $42.0 million as of March
31, 1997 and $31.4 million as of March 31, 1996. K-Byte Manufacturing includes
in backlog only specific purchase orders or product releases that it has
received under manufacturing agreements it has established with customers.
Typically, customers release orders to K-Byte Manufacturing in 120-day
increments. Because of the possibility of customer changes in delivery
schedules, cancellations of orders and potential delays in product shipment and
performance, the Company's backlog on any particular date may not be indicative
of revenues for any succeeding period.

EMPLOYEES

As of June 30, 1997, the Company employed 1,467 persons, of whom 351 were
dedicated to Reptron Distribution, 1,091 were dedicated to K-Byte Manufacturing
and 25 were corporate employees. The Company has no collective bargaining
agreements with any of its employees, has never experienced any material labor
disruption and is not aware of any current efforts or plans to organize its
employees.

LEGAL PROCEEDINGS

The Company is, from time to time, involved in litigation relating to
claims arising out of its operations in the ordinary course of business. The
Company believes that these matters, individually or in the aggregate, are not
likely to have a material adverse effect on the Company's business, results of
operations and financial condition.

29
<PAGE> 33

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The Company's executive officers and directors are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- --- -----------
<S> <C> <C>
Michael L. Musto(1).................................. 56 President, Chief Executive
Officer, and Director
Paul J. Plante....................................... 39 Chief Operating Officer, Treasurer
and Director
Michael Branca....................................... 37 Chief Financial Officer
Patrick J. Flynn..................................... 56 President -- K-Byte Manufacturing
Gary G. Bolohan...................................... 42 President -- Reptron Distribution
Robert M. Moore...................................... 62 Vice President -- Corporate
Operations
Michael R. Nichols................................... 40 Vice President -- Sales
Leigh A. Adams(1)(2)................................. 32 Corporate Credit Manager,
Secretary, and Director
William L. Elson(3).................................. 49 Director
Barry M. Alpert(3)................................... 56 Director
</TABLE>

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

(1) Mr. Musto and Ms. Adams serve on the Company's Stock Option Committee.
(2) Ms. Adams is the daughter of Mr. Musto.
(3) Messrs. Alpert and Elson serve on the Company's Audit and Compensation
Committees.

Michael L. Musto. Mr. Musto has been the President, Chief Executive
Officer and a director of the Company since its inception in 1973. Prior to
1973, Mr. Musto worked for nine years in electronic components distribution for
Northland Electronics and Diplomat Electronics.

Paul J. Plante. Mr. Plante was appointed Chief Operating Officer of the
Company in January 1997 and has been a director since 1994. Mr. Plante has
served as Treasurer since 1986. Mr. Plante has been employed by the Company
since 1986, and previously served as its Vice President of Finance and Chief
Financial Officer (1986-1997). He was Controller of K-Byte Manufacturing, which
is now a division of the Company, during the period 1983-1986. Prior to 1983,
Mr. Plante worked for a regional accounting firm (1980-83). Mr. Plante is a
Certified Public Accountant and is a graduate of Michigan State University, with
a Bachelor of Arts degree in accounting. He also has an MBA degree from the
University of South Florida.

Michael Branca. Mr. Branca was appointed Chief Financial Officer in July
1997. Prior to joining the Company, Mr. Branca served as Vice President of
Business Development and Financial Operations at Utility Partners, LC from 1996
to 1997 and Chief Financial Officer of IVANS, Inc.'s wholly owned subsidiary,
Pivotal, Inc., from 1995 to 1996. From 1982 to 1995, Mr. Branca held various
positions with IBM Corporation ("IBM"), including Division Controller for IBM's
Multimedia Systems Division and Controller for IBM's Enterprise Systems
Division. Mr. Branca has a Bachelor of Science degree in Business Management
from Cornell University and a MBA in Finance from the University of Scranton.

Patrick J. Flynn. Mr. Flynn has been employed by the Company since 1986 as
President of K-Byte Manufacturing. He has over 30 years of experience in the
electronics business. He was employed by the KTB Group (an engineering firm) in
Detroit from 1966 to 1983. During his employment with the KTB Group, Mr. Flynn
served in a number of capacities, including as Executive Vice President and
Chief Operating Officer. He purchased K-Byte Manufacturing from the KTB Group in
1983 and was the sole owner of K-Byte Manufacturing prior to its acquisition by
the Company in 1986. Mr. Flynn is a graduate of the University of Detroit with a
Bachelor of Science degree in electrical engineering.

Gary G. Bolohan. Mr. Bolohan has served as President of Reptron
Distribution since May 1997. In this role, Mr. Bolohan is responsible for all
aspects of the operations of Reptron Distribution. Prior to his current
position, Mr. Bolohan held several positions, including Executive Vice President
of Reptron Distribution

30
<PAGE> 34

(1990-1997), Vice President of Product Marketing (1989-1990), midwest regional
sales manager (1985-1989), general manager of the Detroit sales office
(1983-1985), and field salesperson. Mr. Bolohan has been employed by the Company
since 1978.

Robert M. Moore. Mr. Moore joined the Company in 1990 as Corporate
Director of Operations and became Vice President of Corporate Operations in
1992. His previous experience includes: President of Moore Investment Corp., a
consulting firm (1988-1990); President of Bufkor, Inc., a manufacturer of
jewelry packaging and displays (1986-1988); Senior Vice President and Chief
Financial Officer of Duro Bag Manufacturing Company (1982-1986); and Vice
President of Finance of Tresler Oil Company Division, Ashland Oil, Inc.
(1977-1982). Mr. Moore is a graduate of the University of Cincinnati with a
Bachelor of Science degree in management.

Michael R. Nichols. Mr. Nichols was promoted to Vice President of Sales in
1990. He is responsible for all sales activity for Reptron Distribution and is
instrumental in generating sales opportunities for K-Byte Manufacturing. Prior
to his current role, Mr. Nichols held several positions with the Company,
including southeast regional sales manager (1985-1990), sales manager for the
Tampa sales office (1982-1985), and field salesperson. Mr. Nichols has been
employed by the Company since 1978. He is a graduate of the University of
Florida with a Bachelor of Arts degree in management and marketing.

Leigh A. Adams. Ms. Adams serves as the Company's Secretary and has been a
director since 1994. Ms. Adams joined the Company in 1982 and has served in a
number of administrative posts, including Operations Manager (1989-1991) and
Corporate Credit Manager (1991-present).

William L. Elson. Mr. Elson has served as the Company's outside general
counsel since 1979 and has been a director since 1994. He has practiced as a
sole practitioner since 1975 and worked for Coopers & Lybrand from 1973 to 1975.
Mr. Elson is a Certified Public Accountant and is a graduate of Wayne State
University, with a J.D. degree and a Bachelor of Science degree in accounting.

Barry M. Alpert. Mr. Alpert currently is a Managing Director at Raymond
James & Associates, Inc. Mr. Alpert has served as Vice President and then as
Senior Vice President of Investment Banking for Robert W. Baird & Co.
Incorporated from 1991-1997. Since 1989, Mr. Alpert has served as President and
Chief Executive Officer of Alpert Financial Group, Inc. (a family investment
holding company). From 1989-1993, Mr. Alpert served as Vice Chairman of Colony
Bank. Mr. Alpert holds a graduate degree in banking from the University of
Wisconsin and a BS/BA degree from Roosevelt University. He has been a director
since 1995.

31
<PAGE> 35

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of July 1, 1997 by (i) each person who is known
to the Company to be the beneficial owner of more than 5% of the outstanding
Common Stock, (ii) the Chief Executive Officer and the other four most highly
compensated executive officers, (iii) each of the directors of the Company, and
(iv) all directors and executive officers of the Company as a group. Except as
set forth below, the shareholders named below have sole voting and investment
power with respect to all shares of Common Stock shown as being beneficially
owned by them.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) NUMBER PERCENT
- --------------------------------------- ----------- ---------
<S> <C> <C>
Michael L. Musto............................................ 2,344,790(2) 38.6%
MLM Investment Company Limited Partnership.................. 1,996,154 32.8
Paul J. Plante(3)........................................... 701,456 11.5
Patrick J. Flynn(4)......................................... 41,250 *
Gary G. Bolohan(5).......................................... 22,651 *
Michael R. Nichols(6)....................................... 20,518 *
Leigh A. Adams(7)........................................... -- *
William L. Elson(8)......................................... 12,500 *
3000 Town Center, Suite 2690
Southfield, Michigan 48075
Barry M. Alpert(9).......................................... 5,000 *
880 Carillon Parkway
St. Petersburg, Florida 33716
All directors and executive officers as a group (10
persons).................................................. 2,811,529 46.2%
</TABLE>

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

* Less than 1% of the outstanding Common Stock.
(1) The business address for Ms. Adams and Messrs. Musto, Plante, Flynn, Bolohan
and Nichols is 14401 McCormick Drive, Tampa, Florida 33626.
(2) Includes 1,996,154 shares held by: (i) MLM Investment Company Limited
Partnership ("MLM") of which certain trusts for the benefit of Mr. Musto and
Mr. Musto's children are the limited partners and a corporation, in which
Mr. Musto is the sole shareholder and director, and Mr. Musto's revocable
trust are the general partners (Mr. Musto has sole voting and dispositive
power over the shares held by MLM); and (ii) 348,636 shares held by Paul J.
Plante as Trustee of the Reptron Electronics, Inc. Employee Profit Sharing
Trust (the "Profit Sharing Trust"), which are attributable to Mr. Musto in
accordance with Rule 13d-3 under the Exchange Act. Excludes: (i) up to
116,212 shares which are expected to be allocated to Mr. Musto by the Profit
Sharing Trust, (ii) 1,000 shares owned by Mr. Musto's mother and (iii) 3,000
shares subject to options that are currently exercisable by Mr. Musto's
mother. Mr. Musto disclaims beneficial ownership of his mother's shares.
(3) Includes: (i) 37,500 shares subject to options that are currently
exercisable and (ii) 661,956 shares held by Mr. Plante as trustee of the
Profit Sharing Trust. The Profit Sharing Trust has been terminated and it is
expected that all such shares will be distributed among Profit Sharing Trust
participants. Except for Mr. Musto, no director or executive officer of the
Company will beneficially own more than 5% of the outstanding shares of
common stock immediately after, and as a result of, the Profit Sharing Trust
distribution.
(4) Represents shares subject to options that are currently exercisable.
(5) Excludes up to 22,650 shares expected to be distributed to Mr. Bolohan from
the Profit Sharing Trust.
(6) Excludes up to 20,517 shares that are expected to be distributed to Mr.
Nichols from the Profit Sharing Trust.
(7) Excludes up to 1,299 shares expected to be distributed to Ms. Adams from the
Profit Sharing Trust.
(8) Includes 5,000 shares subject to options that are currently exercisable.
(9) Represents shares subject to options that are currently exercisable.

32
<PAGE> 36

DESCRIPTION OF NOTES

The Notes are to be issued under an Indenture, to be dated as of August ,
1997 (the "Indenture"), between the Company and Reliance Trust Company, as
Trustee (the "Trustee"), a copy of which is filed as an exhibit to the
Registration Statement (as defined). Wherever particular defined terms of the
Indenture (including the Notes) are referred to, such defined terms are
incorporated herein by reference (the Notes and various terms relating to the
Notes being referred to in the Indenture as "Securities"). References in this
section to the "Company" are solely to Reptron Electronics, Inc. and not to its
subsidiaries. The following summaries of certain provisions of the Indenture do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, the detailed provisions of the Notes and the
Indenture, including the definitions therein of certain terms. Section
references below are references to Sections of the Indenture.

GENERAL

The Notes will be unsecured subordinated obligations of the Company, will
be limited to $115,000,000 aggregate principal amount and will mature on August
1, 2004. The Notes will bear interest at the rate per annum shown on the front
cover of this Prospectus from August , 1997, payable semiannually on February
1 and August 1 of each year, commencing on February 1, 1998. Interest payable
per $1,000 principal amount of Notes for the period from August , 1997 to
February 1, 1998 will be $ . (sec.sec. 301 and 307)

The Notes will be convertible into Common Stock initially at the conversion
rate stated on the cover page of the Prospectus, subject to adjustment upon the
occurrence of certain events described under "-- Conversion Rights," at any time
prior to the close of business on the maturity date, unless previously redeemed
or repurchased. (sec. 1301)

The Notes are redeemable under the circumstances and at the redemption
prices set forth below under "-- Optional Redemption," plus accrued interest to
the redemption date. (sec. 203)

The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple thereof. (sec. 302). No
service charge will be made for any registration of transfer or exchange of
Notes, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith. (sec. 305)

CONVERSION RIGHTS

The Holder of any Note will have the right to convert any portion of the
principal amount of a Note that is an integral multiple of $1,000 into shares of
Common Stock at any time prior to the close of business on the maturity date,
unless previously redeemed or repurchased, at a conversion rate of shares of
Common Stock per $1,000 principal amount of Notes (the "Conversion Rate")
(equivalent to a conversion price of approximately $ per share of
Common Stock) (subject to adjustment as described below). The right to convert a
Note called for redemption will terminate at the close of business on the
Business Day prior to the Redemption Date for such Note, and the right to
convert a Note tendered for repurchase will terminate at the close of business
on the Repurchase Date for such Note. (sec. 1301)

The right of conversion attaching to any Note may be exercised by the
Holder by delivering the Note at the specified office of the Conversion Agent,
accompanied by a duly signed and completed notice of conversion, a copy of which
may be obtained from the Trustee. The conversion date will be the date on which
the Note and the duly signed and completed notice of conversion are so
delivered. As promptly as practicable on or after the conversion date, the
Company will issue and deliver to the Trustee a certificate or certificates for
the number of full shares of Common Stock issuable upon conversion, together
with payment in lieu of any fraction of a share; such certificate will be sent
by the Trustee to the Conversion Agent (if other than the Trustee) for delivery
to the Holder. Such shares of Common Stock issuable upon conversion of the
Notes, in accordance with the provisions of the Indenture, will be fully paid
and nonassessable and will rank pari passu with the other shares of Common Stock
of the Company outstanding from time to time.

As described below, except in certain limited circumstances with respect to
any conversion of Notes prior to August 1, 2000 as described below, Holders that
surrender Notes for conversion on a date that is not an

33
<PAGE> 37

Interest Payment Date will not receive any interest for the period from the
Interest Payment Date next preceding the date of conversion to the date of
conversion or for any later period, even if the Notes are surrendered after a
notice of redemption (except for the payment of interest on Notes called for
redemption on a Redemption Date or to be repurchased on a Repurchase Date
between a Regular Record Date and the Interest Payment Date to which it relates
(including any Notes (or portion thereof) called for redemption on a Redemption
Date that is a Record Date or Interest Payment Date, as the case may be), as
provided above).

Accordingly, except as provided below, any Note surrendered for conversion
during the period from the close of business on any Regular Record Date next
preceding any Interest Payment Date to the opening of business on such Interest
Payment Date (except Notes (or portions thereof) called for redemption on a
Redemption Date or which are repurchaseable on a Repurchase Date occurring, in
either case, within such period (including any Notes (or portions thereof)
called for redemption on a Redemption Date that is a Record Date or Interest
Payment Date, as the case may be)) must be accompanied by payment of an amount
equal to the interest payable on such Interest Payment Date on the principal
amount of Notes being surrendered for conversion. The interest so payable on
such Interest Payment Date with respect to any Note (or portion thereof, if
applicable) which has been called for redemption on a Redemption Date, or which
may be repurchased on a Repurchase Date, occurring, in either case, during the
period from the close of business on any Record Date next preceding any Interest
Payment Date to the opening of business on such Interest Payment Date (including
any Notes (or portions thereof) called for redemption on a Redemption Date that
is a Record Date or Interest Payment Date, as the case may be), which Note (or
portion thereof, if applicable) is surrendered for conversion during such period
(or on the last Business Day prior to the Record Date or Interest Payment Date
in the case of a Note (or portions thereof) called for redemption on a Record
Date or Interest Payment Date, as the case may be), shall be paid to the Holder
of such Note being converted in an amount equal to the interest that would have
been payable on such Note if such Note had been converted as of the close of
business on such Interest Payment Date. The interest so payable on such Interest
Payment Date in respect of any Note (or portion thereof, as the case may be)
which has not been called for redemption on a Redemption Date, or is not
eligible for repurchase on a Repurchase Date, occurring, in either case, during
the period from the close of business on any Record Date next preceding any
Interest Payment Date to the opening of business on such Interest Payment Date,
which Note (or portion thereof, as the case may be) is surrendered for
conversion during such period, shall be paid to the Holder of such Note as of
such Regular Record Date. Interest payable in respect of any Note surrendered
for conversion or repurchase on or after an Interest Payment Date shall be paid
to the Holder of such Note as of the next preceding Regular Record Date,
notwithstanding the exercise of the right of conversion or repurchase.

Notwithstanding the foregoing, any Notes surrendered for conversion prior
to August 1, 2000 during the period from the close of business on any Regular
Record Date next preceding any Interest Payment Date to the opening of business
on such Interest Payment Date (other than Notes which are repurchaseable on a
Purchase Date occurring within such period) shall not be accompanied by an
amount equal to the interest payable on such Interest Payment Date on the
principal amount of Notes being surrendered for conversion, and the Company
shall pay to the Holder of such Notes as of such Regular Record Date in cash or
in shares of Common Stock having a fair market value equal to the amount of such
interest (such fair market value being determined based on the Closing Price Per
Share of the Common Stock on the Business Day immediately preceding such
Interest Payment Date).

No other payment or adjustment for interest, or for any dividends in
respect of Common Stock, will be made upon conversion. Holders of Common Stock
issued upon conversion will not be entitled to receive any dividends payable to
holders of Common Stock as of any record time or date before the close of
business on the conversion date. No fractional shares will be issued upon
conversion but, in lieu thereof, the Company will pay an appropriate amount in
cash based on the market price of Common Stock at the close of business on the
date of conversion. (sec.sec. 101, 203, 307, 1302 and 1303)

A Holder delivering a Note for conversion will not be required to pay any
taxes or duties in respect of the issue or delivery of Common Stock on
conversion but will be required to pay any tax or duty which may be payable in
respect of any transfer involved in the issue or delivery of the Common Stock in
a name other than

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<PAGE> 38

that of the Holder of the Note. Certificates representing shares of Common Stock
will not be issued or delivered unless all taxes and duties, if any, payable by
the Holder have been paid. (sec.sec. 1302 and 1308)

The Conversion Rate is subject to adjustment in certain events, including,
without duplication: (a) dividends (and other distributions) payable in Common
Stock on shares of capital stock (other than on shares of preferred stock issued
by the Company for cash to the extent that the right to pay dividends on such
preferred stock in shares of Common Stock was included in the terms of such
preferred stock as of the date of original issuance), (b) the issuance to all
holders of Common Stock of Rights, options or warrants entitling them to
subscribe for or purchase Common Stock at less than the then current market
price of such Common Stock (determined as provided in the Indenture) as of the
record date for shareholders entitled to receive such rights, options or
warrants, (c) subdivisions, combinations and reclassifications of Common Stock,
(d) distributions to all holders of Common Stock of evidences of indebtedness of
the Company, shares of capital stock, cash or assets (including securities, but
excluding those dividends, rights, options, warrants and distributions referred
to above, dividends and distributions paid exclusively in cash and in mergers
and consolidations to which the next succeeding paragraph applies), (e)
distributions consisting exclusively of cash (excluding any cash portion of
distributions referred to in (d) above) to all holders of Common Stock in an
aggregate amount that, combined together with (i) other such all-cash
distributions made within the preceding 12 months in respect of which no
adjustment has been made and (ii) any cash and the fair market value of other
consideration payable in respect of any tender offer by the Company or any of
its subsidiaries for Common Stock concluded within the preceding 12 months in
respect of which no adjustment has been made, exceeds 10% of the Company's
market capitalization (being the product of the then current market price per
share of the Common Stock (determined as provided in the Indenture) and the
number of shares of Common Stock then outstanding) on the record date for such
distribution, and (f) the successful completion of a tender offer made by the
Company or any of its subsidiaries for Common Stock which involves an aggregate
consideration that, together with (i) any cash and other consideration payable
in a tender offer by the Company or any of its subsidiaries for Common Stock
expiring within the 12 months preceding the expiration of such tender offer in
respect of which no adjustment has been made and (ii) the aggregate amount of
any such all-cash distributions referred to in (e) above to all holders of
Common Stock within the 12 months preceding the expiration of such tender offer
in respect of which no adjustments have been made, exceeds 10% of the Company's
market capitalization on the expiration of such tender offer. The Company
reserves the right to make such increases in the Conversion Rate in addition to
those required in the foregoing provisions as it considers to be advisable in
order that any event treated for federal income tax purposes as a dividend or
distribution of stock or issuance of rights or warrants to purchase or subscribe
for stock will not be taxable to the recipients. No adjustment of the Conversion
Rate will be required to be made until the cumulative adjustments amount to 1.0%
or more of the Conversion Rate. (sec. 1304) The Company shall compute any
adjustments to the Conversion Rate pursuant to this paragraph and will give
notice to the Holders of the Notes of any adjustments. (sec. 1305)

In case of any consolidation or merger of the Company with or into another
Person or any merger of another Person into the Company (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock), or in case of any sale or transfer of all or
substantially all of the assets of the Company, each Note then outstanding will,
without the consent of the Holder of any Note, become convertible only into the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock into which such Note was convertible immediately prior thereto
(assuming such holder of Common Stock failed to exercise any rights of election
and that such Note was then convertible). (sec. 1311)

The Company from time to time may increase the Conversion Rate by any
amount for any period of at least 20 days, in which case the Company shall give
at least 15 days' notice of such increase, if the Board of Directors has made a
determination that such increase would be in the best interests of the Company,
which determination shall be conclusive. No such increase shall be taken into
account for purposes of determining whether the closing price of the Common
Stock exceeds the Conversion Price by 105% in connection with an event which
otherwise would be a Change of Control. (sec. 1304)

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<PAGE> 39

If at any time the Company makes a distribution of property to its
shareholders which would be taxable to such shareholders as a dividend for
United States federal income tax purposes (e.g., distributions of evidence of
indebtedness or assets of the Company, but generally not stock dividends on
Common Stock or rights to subscribe for Common Stock) and, pursuant to the
anti-dilution provisions of the Indenture, the number of shares into which Notes
are convertible is increased, such increase may be deemed for federal income tax
purposes to be the payment of a taxable dividend to Holders of Notes. See
"Certain Federal Income Tax Considerations."

SUBORDINATION

The payment of the principal of, premium, if any, and interest on
(including any amounts payable upon the redemption or repurchase of the Notes
permitted by the Indenture), the Notes will be subordinated in right of payment,
to the extent set forth in the Indenture, to the prior payment in full of the
principal of, premium, if any, interest and other amounts in respect of all
Senior Indebtedness of the Company. The Notes also are effectively subordinated
in right of payment to all indebtedness and other liabilities of the Company's
subsidiaries. As of June 30, 1997, after giving effect to the issuance and sale
of the Notes and the application of the net proceeds therefrom, the Company
would have had $18.5 million of Senior Indebtedness outstanding, and the
Company's subsidiaries would have had no indebtedness or other liabilities
outstanding.

Senior Indebtedness is defined in the Indenture to mean the principal of
(and premium, if any) and interest (including all interest accruing subsequent
to the commencement of any bankruptcy or similar proceeding, whether or not a
claim for post-petition interest is allowable as a claim in any such proceeding)
on, and all fees and other amounts payable in connection with, the following,
whether absolute or contingent, secured or unsecured, due or to become due,
outstanding on the date of the Indenture or thereafter created, incurred or
assumed: (a) indebtedness of the Company to banks, insurance companies and other
financial institutions evidenced by credit or loan agreements, notes or other
written obligations, (b) all other indebtedness of the Company (including
obligations of the Company arising from its guarantee of the indebtedness of
others) other than the Notes, whether outstanding on the date of the Indenture
or thereafter created, incurred or assumed, which is (i) for money borrowed or
(ii) evidenced by a note, security, debenture, bond or similar instrument or
guarantee thereof, (c) obligations of the Company as lessee under leases
required to be capitalized on the balance sheet of the lessee under generally
accepted accounting principles, and (d) renewals, extensions, modifications,
restatements and refundings of and any amendments, modifications or supplements
to, or any indebtedness or obligation issued in exchange for, any such
indebtedness or obligation described in clauses (a) through (c) of this
paragraph; provided, however, that Senior Indebtedness shall not include any
such indebtedness or obligation if the terms of such indebtedness or obligation
(or the terms of the instrument under which, or pursuant to which, it is issued)
expressly provide that such indebtedness or obligation shall not be senior in
right of payment to the Notes, or expressly provide that such indebtedness or
obligation is pari passu with or junior to the Notes. Notwithstanding the
foregoing, unsecured indebtedness of the Company shall only be included in
Senior Indebtedness if the incurrence of such unsecured indebtedness should not,
in the opinion of counsel or a nationally recognized accounting firm experienced
in tax matters, cause the Notes to be considered "corporate acquisition
indebtedness" within the meaning of sec. 279 of the Internal Revenue Code of
1986, as amended. "Designated Senior Indebtedness" means any particular Senior
Indebtedness in which the instrument creating or evidencing the same or the
assumption or guarantee thereof (or related agreements or documents to which the
Company is a party) expressly provides that such Senior Indebtedness shall be
"Designated Senior Indebtedness" for purposes of the Indenture (provided that
such instrument, agreement or other document may place limitations and
conditions on the right of such Senior Indebtedness to exercise the Rights of
Designated Senior Indebtedness). (sec.sec. 101, 1201 and 1202)

Upon any acceleration of the principal due on the Notes or payment or
distribution of assets of the Company to creditors upon any dissolution, winding
up, liquidation or reorganization, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other similar proceedings of the
Company, all principal, premium, if any, and interest or other amounts due on
all Senior Indebtedness must be paid in full before the Holders of the Notes are
entitled to receive any payment. (sec. 1202) The Indenture will further

36
<PAGE> 40

require that the Company promptly notify holders of Senior Indebtedness if
payment of the Notes is accelerated because of an Event of Default. The Company
also may not make any payment upon or in respect of the Notes if (i) a default
in the payment of the principal of, premium, if any, interest or other amounts
due on any Senior Indebtedness occurs and is continuing beyond any applicable
period of grace or (ii) any other default occurs and is continuing with respect
to Designated Senior Indebtedness that permits holders of the Designated Senior
Indebtedness as to which such default relates to accelerate the maturity thereof
and the Trustee receives a notice of such default (a "Payment Blockage Notice")
from the Company, any lender of Designated Senior Indebtedness (or agent bank on
behalf of such lender) or other person permitted to give such notice under the
Indenture. Payments on the Notes may and shall be resumed (a) in the case of a
payment default, upon the date on which such default is cured or waived in
accordance with the agreements evidencing such Senior Indebtedness and (b) in
case of a nonpayment default, the earlier of the date on which such nonpayment
default is cured or waived in accordance with the agreements evidencing such
Senior Indebtedness or 179 days after the date on which the applicable Payment
Blockage Notice is received. No new period of payment blockage may be commenced
unless and until (i) 365 days have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice and (ii) all scheduled payments of
principal, premium, if any, and interest on the Notes that have come due have
been paid in full in cash. No nonpayment default that existed or was continuing
on the date of delivery of any Payment Blockage Notice to the Trustee shalt be,
or be made, the basis for a subsequent Payment Blockage Notice.

By reason of the foregoing subordination, in the event of insolvency,
creditors of the Company who are holders of Senior Indebtedness are likely to
recover more, ratably, than the Holders of the Notes, and such subordination may
result in a reduction or elimination of payments to the Holders of the Notes.

The Indenture does not limit the Company's ability to incur Senior
Indebtedness or any other indebtedness or the ability of any subsidiary of the
Company to incur any indebtedness or other liabilities.

OPTIONAL REDEMPTION

The Notes may not be redeemed prior to August 1, 2000. Thereafter, the
Notes may be redeemed, in whole or in part, at the option of the Company, upon
not less than 30 nor more than 60 days' prior notice as provided under
"-- Notices" below, at the redemption prices set forth below.

The redemption prices (expressed as a percentage of principal amount) are
as follows for the 12-month period beginning on August 1, of the following
years:

<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---- ----------------
<S> <C>
2000...................................................... %
2001......................................................
2002......................................................
</TABLE>

and thereafter at a redemption price equal to 100% of the principal amount, in
each case together with accrued interest to the date of redemption. (sec. 203,
Article Eleven)

No sinking fund is provided for the Notes.

REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE OF CONTROL

If a Change of Control (as defined) occurs, each Holder of Notes shall have
the right, at the Holder's option, to require the Company to repurchase all of
such Holder's Notes, or any portion of the principal amount thereof specified by
the Holder that is equal to $1,000 or an integral multiple of $1,000 in excess
thereof, on the date (the "Repurchase Date") that is 45 days after the date of
the Company Notice (as defined), at a price equal to 100% of the principal
amount of the Notes to be repurchased, together with interest accrued to the
Repurchase Date (the "Repurchase Price"). (sec. 1401)

Within 30 days after the occurrence of a Change of Control, the Company is
obligated to give to all Holders of the Notes notice, as provided in the
Indenture (the "Company Notice"), of the occurrence of such Change of Control
and of the repurchase right arising as a result thereof, or, at the request of
the Company on or before the 15th day after such occurrence, the Trustee shall
give the Company Notice. The Company must

37
<PAGE> 41

also deliver a copy of the Company Notice to the Trustee and to the office of
each Paying Agent. To exercise the repurchase right, a Holder of Notes must
deliver on or before the 30th day after the date of the Company Notice
irrevocable written notice to the Trustee or Paying Agent of the Holder's
exercise of such right, together with the Notes with respect to which the right
is being exercised. (sec. 1403)

A Change of Control shall be deemed to have occurred at such time after the
original issuance of the Notes as there shall occur:

(i) the acquisition by any Person (including any syndicate or group
deemed to be a "person" under Section 13(d)(3) of the Exchange Act) of (a)
beneficial ownership, directly or indirectly, through a purchase, merger or
other acquisition transaction or series of transactions, of shares of
capital stock of the Company entitling such Person to exercise 50% or more
of the total voting power of all shares of capital stock of the Company
entitled to vote generally in elections of directors, other than any such
acquisition by the Company, any subsidiary of the Company, any employee
benefit plan of the Company or by Michael L. Musto, the President and Chief
Executive Officer of the Company, or (b) the right or ability by voting
power, contract or otherwise to elect or designate for election a majority
of the entire Board of Directors; or

(ii) any consolidation of the Company with, or merger of the Company
into, any other Person, any merger of another Person into the Company, or
any conveyance, sale, transfer or lease, in one transaction or a series of
related transactions, of all or substantially all of the assets (other than
to a wholly owned Subsidiary of the Company) of the Company to any other
Person (other than (a) any such transaction pursuant to which the holders
of 50% or more of the total voting power of all shares of capital stock of
the Company entitled to vote generally in elections of directors
immediately prior to such transaction have, directly or indirectly, at
least 50% or more of the total voting power of all shares of capital stock
of the continuing or surviving corporation entitled to vote generally in
elections of directors of the continuing or surviving corporation
immediately after such transaction and (b) a merger (x) which does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of capital stock of the Company or (y) which is effected
solely to change the jurisdiction of incorporation of the Company and
results in a reclassification, conversion or exchange of outstanding shares
of Common Stock into solely shares of common stock); or

(iii) at any time Continuing Directors (as defined) cease to
constitute a majority of the Board of Directors of the Company then in
office. "Continuing Director" means at any date a member of the Company's
Board of Directors (i) who was a member of such Board on the date of the
Indenture or (ii) who was nominated or elected by at least two-thirds of
the directors who were Continuing Directors at the time of such nomination
or election or whose election to the Company's Board of Directors was
recommended or endorsed by at least two-thirds of the directors who were
Continuing Directors at the time of such election. Under this definition,
if the present Board of Directors of the Company were to approve a new
director or directors and then resign, no Change of Control would occur
even though the present Board of Directors would thereafter cease to be in
office.

The Company's ability to repurchase Notes upon the occurrence of a Change
of Control is subject to limitations. There can be no assurance that the Company
would have the financial resources or be able to arrange financing on acceptable
terms to pay the Repurchase Price for all the Notes as to which the purchase
right is exercised. Further, any repurchase in connection with a Change in
Control could, depending on the circumstances and absent a waiver from the
holders of Senior Indebtedness, be blocked by the subordination provisions of
the Notes. See "-- Subordination." The agreement relating to the Company's
current Senior Indebtedness would limit the Company's ability to repurchase the
Notes. See "Use of Proceeds." Failure by the Company to repurchase the Notes
when required may result in an Event of Default with respect to the Notes (and
with respect to Senior Indebtedness) whether or not such repurchase is permitted
by the subordination provisions. See "-- Events of Default" and "Risk
Factors -- Limitations on Repurchase of Notes."

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<PAGE> 42

Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to Holders of
the Notes. The Company will comply with this rule to the extent applicable at
that time.

The foregoing provisions would not necessarily afford Holders of the Notes
protection in the event of highly leveraged or other transactions involving the
Company that may adversely affect Holders.

MERGERS AND SALES OF ASSETS BY THE COMPANY

The Company may not consolidate with or merge into any other Person or,
directly or indirectly, convey, transfer, sell, lease or otherwise dispose of
its properties and assets substantially as an entirety to any Person (other than
a conveyance, sale, transfer or lease to a wholly owned subsidiary), and the
Company may not permit any Person (other than a wholly owned subsidiary) to
merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless (a) the Person formed by
such consolidation or into which the Company is merged or the Person to which
the properties and assets of the Company are so transferred or leased is a
corporation, limited liability company, partnership or trust organized and
existing under the laws of the United States, any State thereof or the District
of Columbia and has expressly assumed the due and punctual payment of the
principal of, premium, if any, and interest on the Notes and the performance of
the other covenants of the Company under the Indenture, (b) immediately after
giving effect to such transaction, no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default, shall
have occurred and be continuing, and (c) the Company has provided to the Trustee
an Officer's Certificate and Opinion of Counsel if required by the Indenture.
(sec. 801)

EVENTS OF DEFAULT

The following will be Events of Default under the Indenture: (a) failure to
pay principal or Redemption Price of any Note when due, whether or not such
payment is prohibited by the subordination provisions of the Indenture; (b)
failure to pay any interest on any Note when due, continuing for 30 days,
whether or not such payment is prohibited by the subordination provisions of the
Indenture; (c) default in the Company's obligation to provide a Company Notice
of Change in Control; (d) failure to perform any other covenant of the Company
in the Indenture, continuing for 60 days after written notice as provided in the
Indenture; (e) any indebtedness for money borrowed by the Company in an
aggregate principal amount in excess of $5,000,000 is not paid at final maturity
or upon acceleration thereof and such default in payment or acceleration is not
cured or rescinded within 30 days after written notice as provided in the
Indenture; and (f) certain events of bankruptcy, insolvency or reorganization.
(sec. 501) Subject to the provisions of the Indenture relating to the duties of
the Trustee in case an Event of Default shall occur and be continuing, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable indemnity. (sec. 603)
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in aggregate principal amount of the Outstanding Notes will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
on the Trustee. (sec. 512)

If an Event of Default (other than an Event of Default specified in
subsection (f) above) occurs and is continuing, either the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Notes, by notice in writing to the Company, may declare the principal of all the
Notes to be due and payable immediately, and upon any such declaration such
principal and any accrued interest thereon will become immediately due and
payable. If an Event of Default specified in subsection (f) occurs and is
continuing, the principal and any accrued interest on all of the then
Outstanding Notes shall ipso facto become due and payable immediately without
any declaration or other Act on the part of the Trustee or any Holder.
(sec. 502)

At any time after a declaration of acceleration has been made but before a
judgment or decree based on acceleration, the Holders of a majority in aggregate
principal amount of Outstanding Notes may, under certain

39
<PAGE> 43

circumstances, rescind and annul such acceleration if all Events of Default,
other than the nonpayment of accelerated principal and interest have cured or
waived as provided in the Indenture. (sec. 502)

No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless also the Holders of at least 25% in aggregate principal
amount of the Outstanding Notes shall have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as trustee,
and the Trustee shall not have received from the Holders of a majority in
aggregate principal amount of the Outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. (sec. 507) However, such limitations do not apply to a suit instituted by
a Holder of a Note for the enforcement of payment of the principal of, premium,
if any, or interest on such Note on or after the respective due dates expressed
in such Note or of the right to convert such Note in accordance with the
Indenture. (sec. 508)

The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (sec. 1004)

MODIFICATION AND WAIVER

Modifications and amendments of the Indenture may be made, and certain past
defaults by the Company may be waived, with the written consent of the Holders
of not less than a majority in aggregate principal amount of the Notes at the
time Outstanding. However, no such modification or amendment may, without the
consent of the Holder of each outstanding Note affected thereby, (a) change the
Stated Maturity of the principal of, or any installment of interest on, any
Note, (b) reduce the principal amount of, or the premium, if any, or rate of
interest on, any Note, (c) reduce the amount payable upon redemption or
repurchase, (d) modify the provisions with respect to the repurchase right of
the Holders in a manner adverse to the Holders, (e) change the place or currency
of payment of principal of, premium, if any, or interest on, any Note, (f)
impair the right to institute suit for the enforcement of any payment on or with
respect to any Note (including any payment of the Repurchase Price in respect of
such Note), (g) modify the obligation of the Company to maintain an office or
agency in New York City, (h) except as otherwise permitted by the Indenture or
contemplated by provisions concerning consolidation, merger, conveyance,
transfer, sale or lease of all or substantially all of the property and assets
of the Company, adversely affect the right of Holders to convert any of the
Notes or to require the Company to repurchase any Note other than as provided in
the Indenture, (i) modify the subordination provisions in a manner adverse to
the Holders of the Notes, (j) reduce the above-stated percentage of Outstanding
Notes necessary to modify or amend the Indenture, or (k) reduce the percentage
of aggregate principal amount of Outstanding Notes necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults. (sec.sec. 902 and 513)

The Holders of a majority in aggregate principal amount of the Outstanding
Notes may waive compliance by the Company with certain restrictive provisions of
the Indenture. (sec. 1009) The Holders of a majority in aggregate principal
amount of the Outstanding Notes also may waive any past default under the
Indenture, except a default in the payment of principal, premium, if any, or
interest. (sec. 513)

TRANSFER AND EXCHANGE

The Company has initially appointed the Trustee as security registrar and
transfer agent, acting through its Corporate Trust Office. The Company reserves
the right to vary or terminate the appointment of the security registrar or of
any transfer agent or to appoint additional or other transfer agents or to
approve any change in the office through which any security registrar or any
transfer agent acts. (sec.sec. 305 and 1002)

PURCHASE AND CANCELLATION

The Company or any subsidiary may at any time and from time to time
purchase Notes at any price in the open market or otherwise.

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<PAGE> 44

All Notes surrendered for payment, redemption, repurchase, registration of
transfer or exchange or conversion shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee. All Notes so delivered to the
Trustee shall be canceled promptly by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
the Indenture.

TITLE

The Company and the Trustee may treat the registered owner (as reflected in
the Security Register) of any Note as the absolute owner thereof (whether or not
such Note shall be overdue) for the purpose of making payment and for all other
purposes. (sec. 308)

NOTICES

Notice to Holders of the Notes will be given by first class mail to the
addresses of such Holders as they appear in the Security Register. Such notices
will be deemed to have been given on the date of the first such publication or
on the date of such mailing, as the case may be. (sec. 106)

Notice of a redemption of Notes will be given at least once not less than
30 nor more than 60 days prior to the redemption date (which notice shall be
irrevocable) and will specify the redemption date. (sec. 1105)

REPLACEMENT OF NOTES

Notes that become mutilated, destroyed, stolen or lost will be replaced by
the Company at the expense of the Holder upon delivery to the Trustee of the
mutilated Notes or evidence of the loss, theft or destruction thereof
satisfactory to the Company and the Trustee. In the case of a lost, stolen or
destroyed Note indemnity satisfactory to the Trustee and the Company may be
required at the expense of the Holder of such Note before a replacement Note
will be issued. (sec. 306)

SATISFACTION AND DISCHARGE

The Company may discharge its payment obligations under the Indenture while
Notes remain outstanding if (a) all outstanding Notes have become due and
payable or will become due and payable at their scheduled maturity within one
year, (b) all outstanding Notes are scheduled for redemption within one year or
(c) all outstanding Notes are delivered to the Trustee for conversion in
accordance with the Indenture and in the case of (a) or (b) above, the Company
has deposited with the Trustee an amount sufficient to pay and discharge the
entire indebtedness on all outstanding Notes on the date of their scheduled
maturity or the scheduled date of redemption. (sec. 401)

GOVERNING LAW

The Indenture and the Notes will be governed by and construed in accordance
with the laws of the State of New York. (sec. 112)

THE TRUSTEE

In case an Event of Default shall occur (and shall not be cured), the
Trustee will be required to use the degree of care of a prudent person in the
conduct of his own affairs in the exercise of its powers. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the Holders of
Notes, unless they shall have offered to the Trustee reasonable security or
indemnity. (sec.sec. 601 and 603)

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<PAGE> 45

BOOK-ENTRY

The Notes will be issued in the form of a global note (the "Global Note")
deposited with, or on behalf of, The Depository Trust Company ("DTC") and
registered in the name of Cede & Co. as DTC's nominee. Owners of beneficial
interests in the Notes represented by the Global Note will hold such interests
pursuant to the procedures and practices of DTC and must exercise any rights in
respect of their interests (including any right to convert or require repurchase
of their interests) in accordance with those procedures and practices. Such
beneficial owners will not be Holders, and will not be entitled to any rights
under the Global Note or the Indenture, with respect to the Global Note, and the
Company and the Trustee, and any of their respective agents, may treat DTC as
the sole Holder and owner of the Global Note.

DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. DTC holds securities that its participants
deposit with DTC. DTC also facilitates the settlement among participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct participants include securities brokers and dealers, banks, trust
companies, clearing corporation, and certain other organizations. DTC is owned
by a number of its direct participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a direct participant, either directly or
indirectly. The rules applicable to DTC and its participants are on file with
the Securities and Exchange Commission.

Unless and until they are exchanged in whole or in part for certificated
Notes in definitive form as set forth below, the Global Note may not be
transferred except as a whole by DTC to a nominee of DTC, or by a nominee of DTC
to DTC or another nominee of DTC.

The Notes represented by the Global Note will not be exchangeable for
certificated Notes, provided that if (a) DTC is at any time unwilling, unable or
ineligible to continue as depositary and a successor depositary is not appointed
by the Company within 90 days or (b) there shall have occurred and be continuing
an Event of Default with respect to the Notes, the Company will issue individual
Notes in definitive form in exchange for the Global Note. In addition, the
Company may at any time and in its sole discretion determine not to have a
Global Note, and, in such event, will issue individual Notes in definitive form
in exchange for the Global Note previously representing all such Notes. In
either instance, an owner of a beneficial interest in a Global Note will be
entitled to physical delivery of Notes in definitive form equal in principal
amount to such beneficial interest and to have such Notes registered in its
name. Individual Notes so issued in definitive form will be issued in
denominations of $1,000 and any larger amount that is an integral multiple of
$1,000 and will be issued in registered form only, without coupons.

Payments of principal of and interest on the Notes will be made by the
Company through the Trustee to DTC or its nominee, as the case may be, as the
registered owner of the Global Note. Neither the Company nor the Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests of the Global Note
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests. The Company expects that DTC, upon receipt of
any payment of principal or interest in respect of the Global Note, will credit
the accounts of the related participants with payment in amounts proportionate
to their respective holdings in principal amount of beneficial interest in the
Global Note as shown on the records of DTC. The Company also expects that
payments by participants to owners of beneficial interests in the Global Note
will be governed by standing customer instructions and customary practices, as
is now the case with securities held for the accounts of customers in bearer
form or registered in "street name," and will be the responsibility of such
participants.

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<PAGE> 46

So long as the Notes are represented by a Global Note, DTC or its nominee
will be the only entity that can exercise a right to repayment pursuant to the
Holder's option to elect repayment of its Notes or the right of conversion of
the Notes. Notice by participants or by owners of beneficial interests in a
Global Note held through such participants of the exercise of the option to
elect repayment, or the right of conversion, of beneficial interests in Notes
represented by the Global Note must be transmitted to DTC in accordance with its
procedures on a form required by DTC and provided to participants. In order to
ensure that DTC's nominee will timely exercise a right to repayment, or the
right of conversion, with respect to a particular Note, the beneficial owner of
such Notes must instruct the broker or other participant through which it holds
an interest in such Notes to notify DTC of its desire to exercise a right to
repayment, or the right of conversion. Different firms have different cut-off
times for accepting instructions from their customers and, accordingly, each
beneficial owner should consult the broker or other participant through which it
holds an interest in a Note in order to ascertain the cut-off time by which such
an instruction must be given in order for timely notice to be delivered to DTC.
The Company will not be liable for any delay in delivery of such notice to DTC.

43
<PAGE> 47

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of certain United States federal income tax
considerations relating to the purchase, ownership and disposition of the Notes
and of Common Stock into which Notes may be converted, but does not purport to
be a complete analysis of all the potential tax considerations relating thereto.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), and existing, temporary and proposed Treasury Regulations, laws,
rulings and decisions now in effect, all of which are subject to change. This
summary deals only with Holders that will hold Notes and Common Stock into which
Notes may be converted as "capital assets" (within the meaning of Section 1221
of the Code) and that are (i) citizens or residents of the United States, (ii)
domestic corporations, or (iii) otherwise subject to United States federal
income taxation on a net income basis in respect of a Note or Common Stock. This
summary does not address tax considerations applicable to investors that may be
subject to special tax rules, such as banks, tax-exempt organizations, insurance
companies, dealers in securities or currencies, or persons that will hold Notes
as a position in a hedging transaction, "straddle" or "conversion transaction"
for tax purposes. This summary discusses the tax considerations applicable to
the initial purchasers of the Notes who purchase the Notes at their "issue
price" as defined in Section 1273 of the Code and does not discuss the tax
considerations applicable to subsequent purchasers of the Notes. The Company has
not sought any ruling from the Internal Revenue Service with respect to the
statements made and the conclusions reached in the following summary, and there
can be no assurance that the Internal Revenue Service will agree with such
statements and conclusions.

INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME AND
ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR
UNDER ANY APPLICABLE TAX TREATY.

PAYMENT OF INTEREST

Interest on a Note generally will be includable in the income of a Holder
as ordinary income at the time such interest is received or accrued, in
accordance with such Holder's method of accounting for United States federal
income tax purposes.

SALE, EXCHANGE OR REDEMPTION OF THE NOTES

Upon the sale, exchange or redemption of a Note, a Holder generally will
recognize capital gain or loss equal to the difference between (i) the amount of
cash proceeds and the fair market value of any property received on the sale,
exchange or redemption (except to the extent such amount is attributable to
accrued interest income not previously included in income which is taxable as
ordinary income) and (ii) such Holder's adjusted tax basis in the Note. A
Holder's adjusted tax basis in a Note generally will equal the cost of the Note
to such Holder. Such capital gain or loss will be long-term capital gain or loss
if the Holder's holding period in the Note is more than one year at the time of
sale, exchange or redemption.

CONSTRUCTIVE DISTRIBUTION

If at any time (i) the Company makes a distribution of cash or property to
its shareholders or purchases Common Stock and such distribution or purchase
would be a taxable distribution to such shareholders for United States federal
income tax purposes (e.g., distributions of evidences of indebtedness or assets
of the Company, but generally not stock dividends or rights to subscribe for
Common Stock) and, pursuant to the anti-dilution provision of the Indenture, the
conversion rate of the Notes is increased, or (ii) the conversion rate of the
Notes is increased at the discretion of the Company, such increase in conversion
rate may be deemed to be a taxable distribution to Holders of Notes (pursuant to
Section 305 of the Code). Such a deemed distribution will be taxable as a
dividend, return of capital or capital gain in accordance with the earnings and
profits rules discussed under "-- Dividends." Holders of Notes could therefore
have taxable income as a result of an event pursuant to which they receive no
cash or property.

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<PAGE> 48

CONVERSION OF THE NOTES

A Holder of a Note generally will not recognize any income, gain or loss
upon conversion of a Note into shares of Common Stock except with respect to
cash received either in lieu of a fractional share of Common Stock or
attributable to accrued interest on the converted Notes. A Holder's tax basis in
the Common Stock received on conversion of a Note will be the same as such
Holder's adjusted tax basis in the Note at the time of conversion (reduced by
any basis allocable to a fractional share interest). The holding period for the
shares of Common Stock received on conversion will generally include the holding
period of the Note converted.

Cash received in lieu of a fractional share of Common Stock upon conversion
will be treated as a payment in exchange for the fractional share of Common
Stock. Accordingly, the receipt of cash in lieu of a fractional share of Common
Stock generally will result in capital gain or loss (measured by the difference
between the cash received for the fractional share and the Holder's adjusted tax
basis in the fractional share).

DIVIDENDS

Distributions paid on shares of Common Stock will constitute dividends for
United States federal income tax purposes to the extent of the Company's current
or accumulated earnings and profits and will be includable in the income of a
Holder as ordinary income. Dividends paid to Holders that are United States
corporations may qualify for a dividends-received deduction.

To the extent that a distribution to a Holder on shares of Common Stock
that would otherwise constitute a dividend for United States federal income tax
purposes exceeds current and accumulated earnings and profits of the Company,
such distribution will be treated first as a non-taxable return of capital,
reducing the Holder's basis in the shares of Common Stock. Any such distribution
in excess of the Holder's basis in the shares of Common Stock will be treated as
capital gain.

SALE OF COMMON STOCK

Upon the sale or exchange of Common Stock, a Holder generally will
recognize capital gain or loss equal to the difference between (i) the amount of
cash and the fair market value of any property received upon the sale or
exchange and (ii) such Holder's adjusted tax basis in the Common Stock. Such
capital gain or loss will be long-term if the Holder's holding period in such
Common Stock is more than one year at the time of the sale or exchange. A
Holder's basis and holding period in Common Stock received upon conversion of a
Note are determined as discussed above under "Conversion of the Notes."

CONSTRUCTIVE SALE OF THE NOTES OR COMMON STOCK

Under section 1001 of the H.R. 2014 (the "Bill"), which is currently
pending before Congress, a taxpayer generally would be required to recognize
gain with respect to an "appreciated financial position" upon entering into
certain transactions, including, but not limited to, a short sale, certain
offsetting notional principal contracts, or certain future or forward contracts,
with respect to the "appreciated financial position." Both the Notes and the
underlying Common Stock will constitute "appreciated financial positions" if
gain would be recognized were such instruments sold for their fair market value.
Accordingly, if the Bill is enacted into law, then upon entering into one of the
enumerated transactions with respect to any Note or underlying Common Stock, the
holder of such Note or Common Stock must recognize gain, if any, on such Note or
Common Stock as if it sold either instrument for the instrument's fair market
value. Proper adjustment will be made to the amount of gain or loss subsequently
realized with respect to any Note or underlying Common Stock for any gain taken
into account by virtue of the constructive sale, and the holding period of such
Note or Common Stock will be determined as if such instrument were acquired on
the date of the constructive sale. If enacted, section 1001 of the Bill
generally will apply to any constructive sale occurring after June 8, 1997.

INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on a Note, payments of dividends on
Common Stock, payments of the proceeds of the sale of a Note

45
<PAGE> 49

and payments of the proceeds of the sale of Common Stock to certain noncorporate
Holders, and a 31% backup withholding tax may apply to such payments if the
Holder (i) fails to furnish or certify his correct taxpayer identification
number to the payor in the manner required, (ii) is notified by the Internal
Revenue Service (the "IRS") that he has failed to report payments of interest
and dividends properly, or (iii) under certain circumstances, fails to certify
that he has not been notified by the IRS that he is subject to backup
withholding for failure to report interest and dividend payments. Any amounts
withheld under the backup withholding rules from a payment to a Holder will be
allowed as a credit against such Holder's United States federal income tax and
may entitle the Holder to a refund, provided that the required minimum
information is furnished to the IRS.

46
<PAGE> 50

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company is authorized to issue 50,000,000 shares of Common Stock, par
value $.01 per share, and 15,000,000 shares of preferred stock, par value $.10
per share (the "Preferred Stock"). As of July 1, 1997, 6,079,519 shares of
Common Stock were outstanding and such shares were held by approximately 119
holders of record. None of the Preferred Stock is outstanding.

The following descriptions of the Common Stock and the Preferred Stock are
based on the Company's Articles of Incorporation (the "Articles") and Bylaws and
applicable Florida law.

COMMON STOCK

Each holder of Common Stock is entitled to one vote for each share owned of
record on all matters presented to the shareholders. In the event of a
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share equally and ratably in the assets of the Company, if
any, remaining after the payment of all debts and liabilities of the Company and
the liquidation preference of any outstanding Preferred Stock. The Common Stock
has no preemptive rights, no cumulative voting rights and no redemption, sinking
fund or conversion provisions. Currently, 1,500,000 shares of Common Stock are
reserved for issuance under the Company's Incentive Stock Option Plan (the "ISO
Plan").

Holders of Common Stock are entitled to receive dividends if, as and when
declared by the Board of Directors out of funds legally available therefor,
subject to the dividend and liquidation rights of any Preferred Stock that may
be issued and outstanding and subject to any dividend restrictions in the
Revolving Credit Facility. No dividends or other distributions (including
redemptions or repurchases of shares of capital stock) may be made if after
giving effect to any such dividends or distributions, the Company would not be
able to pay its debts as they become due in the usual course of business or the
Company's total assets would be less than the sum of its total liabilities plus
the amount that would be needed at the time of a liquidation to satisfy the
preferential rights of any holders of Preferred Stock. See "Dividend Policy."

All of the shares of Common Stock offered hereby, when issued and sold,
will be validly issued, fully paid and nonassessable.

The transfer agent and registrar for the Common Stock is First Union
National Bank of North Carolina, Charlotte, North Carolina.

PREFERRED STOCK

The Board of Directors of the Company is authorized, without further
shareholder action, to designate and issue from time to time one or more series
of Preferred Stock. The Board of Directors may fix and determine the
designations, preferences and relative rights and qualifications, limitations or
restrictions of any series of Preferred Stock so established, including voting
powers, dividend rights, liquidation preferences, redemption rights and
conversion privileges. Because the Board of Directors has the power to establish
the preferences and rights of each series of Preferred Stock, it may afford the
holders of any series of Preferred Stock preferences and rights, voting or
otherwise, senior to the rights of holders of Common Stock. As of the date of
this Prospectus, the Board of Directors has not authorized any series of
Preferred Stock and has no plans to issue any shares of Preferred Stock.

CERTAIN PROVISIONS OF THE COMPANY'S ARTICLES OF INCORPORATION

The Articles provide that special meetings of shareholders may be called
only by: (i) holders of not less than 25% of all votes entitled to be cast at
the meeting; (ii) the President; (iii) the Board of Directors; or

47
<PAGE> 51

(iv) the Chairman of the Board of Directors. Shareholders may take action only
at a duly called and held meeting and may not take action by written consent.

The Articles provide for a classified Board of Directors and permit removal
of directors only for cause by the shareholders of the Company at a meeting by
the affirmative vote of at least 66 2/3% of the outstanding shares of Common
Stock. See "Management -- Executive Officers and Directors." The Articles
establish an advance notice procedure for the nomination of candidates for
election as directors, as well as for other shareholder proposals to be
considered at shareholders' meetings. Nominations may be made at shareholders'
meetings by or at the direction of the Board of Directors, by any nominating
committee or person appointed by the Board or by any shareholder entitled to
vote for the election of directors. Notice of shareholder proposals and
nominations of directors by shareholders must be given timely in writing to the
Secretary of the Company before the meeting at which such matters are to be
acted upon or directors are to be elected. Such notice, to be timely, must be
received at the principal executive offices of the Company with respect to
shareholder proposals and elections to be held at the annual meeting, not less
than 60 days before the date of the meeting at which the director(s) are to be
elected; however, if less than 70 days' notice or prior public disclosure of the
date of the scheduled meeting is given or made, notice by the shareholder, to be
timely, must be so delivered or received not later than the close of business on
the tenth day following the earlier of the day on which notice of the date of
such meeting is mailed to shareholders or public disclosure of the date of such
meeting is made.

Notice to the Company from a shareholder who intends to present a proposal
or to nominate a person for election as a director at a meeting must contain
certain information about the shareholder giving such notice and, in the case of
director nominations, all information that would be required to be included in a
proxy statement soliciting proxies for the election of the proposed nominee
(including such person's written consent to serve as a director if so elected).
If the presiding officer of the meeting determines that a shareholder's proposal
or nomination is not made in accordance with the procedures set forth in the
Articles, such proposal or nomination, at the direction of such presiding
officer, may be disregarded. The notice requirement for shareholder proposals
contained in the Articles does not restrict a shareholder's right to include
proposals in the Company's annual proxy materials pursuant to rules promulgated
under the Exchange Act.

The preceding provisions of the Articles may be changed only upon the
affirmative vote of holders of 66 2/3% of the outstanding Common Stock.

The provisions of the Articles summarized in the preceding four paragraphs
and the provisions of Florida's Business Corporation Act described under
"Certain Provisions of Florida Law" may have certain anti-takeover effects. Such
provisions, individually or in combination, may discourage other persons, or
make it more difficult, without the approval of the Board of Directors, for
other persons to make a tender offer or acquisitions of substantial amounts of
the Common Stock or from launching other takeover attempts that a shareholder
might consider in such shareholder's best interest, including attempts that
might result in the payment of a premium over the market price for the Common
Stock held by such shareholder.

CERTAIN PROVISIONS OF FLORIDA LAW

The Company is subject to several anti-takeover provisions under Florida
law that apply to a public corporation organized under Florida law, unless the
corporation has elected to opt out of those provisions in its articles of
incorporation or bylaws. The Company has not elected to opt out of those
provisions. The Florida Business Corporation Act, as amended (the "FBCA"),
prohibits the voting of shares in a publicly-held Florida corporation that are
acquired in a "control share acquisition" unless the holders of a majority of
the corporation's voting shares (exclusive of shares held by officers of the
corporation, inside directors or the acquiring party) approve the granting of
voting rights as to the shares acquired in the control share acquisition. A
"control share acquisition" is defined as an acquisition that immediately
thereafter entitles the acquiring party to vote in the election of directors
within each of the following ranges of voting power: (i) one-fifth or more but
less than one-third of such voting power; (ii) one-third or more but less than a
majority of such voting power; and (iii) more than a majority of such voting
power.

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<PAGE> 52

The FBCA also contains an "affiliated transaction" provision that prohibits
a publicly-held Florida corporation from engaging in a broad range of business
combinations or other extraordinary corporate transactions with an "interested
shareholder" unless: (i) the transaction is approved by a majority of
disinterested directors before the person becomes an interested shareholder;
(ii) the interested shareholder has owned at least 80% of the corporation's
outstanding voting shares for at least five years; or (iii) the transaction is
approved by the holders of two-thirds of the corporation's voting shares other
than those owned by the interested shareholder. An interested shareholder is
defined as a person who together with affiliates and associates beneficially
owns more than 10% of the corporation's outstanding voting shares.

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<PAGE> 53

UNDERWRITING

Subject to the terms and conditions of an underwriting agreement (the
"Underwriting Agreement") among the Company and the Underwriters named below
(the "Underwriters"), the Company has agreed to sell to each of the Underwriters
named below, and each of such Underwriters have severally agreed to purchase
from the Company, the principal amount of Notes set forth opposite its name
below.

<TABLE>
<CAPTION>
UNDERWRITER AMOUNT OF NOTES
- ----------- ----------------
<S> <C>
Raymond James & Associates, Inc. ......................... $
Forum Capital Markets L.P. ...............................
Stephens Inc. ............................................
------------
Total........................................... $100,000,000
============
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters to purchase the Notes are subject to certain conditions. The
Underwriters are committed to purchase all the Notes if any of the Notes are
purchased.

The Company has been advised by the Underwriters that the Underwriters
propose to offer the Notes to the public initially at the public offering price
set forth on the cover page of this Prospectus, and to certain dealers at such
price less a concession not in excess of % of the principal amount of the
Notes. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of % of the principal amount of the Notes to other dealers.
After the commencement of this offering, the public offering price, the
concessions to selected dealers and the reallowance to other dealers may be
changed by the Underwriters.

The Company has granted to the Underwriters an option, expiring 30 days
after the date of this Prospectus, to purchase from the Company up to an
aggregate of $15,000,000 additional principal amount of Notes at the public
offering price less the underwriting discount set forth on the cover page of
this Prospectus solely to cover over-allotments, if any. If the Underwriters
exercise such option, the Underwriters have severally agreed, subject to certain
conditions, to purchase approximately the same percentage thereof that the
principal amount of the Notes to be purchased by each of them shown in the above
table bears to the aggregate principal amount of the Notes offered hereby.

The Notes will not be listed on any securities exchange or the Nasdaq
National Market. The Underwriters have advised the Company that they intend to
make a market in the Notes. The Underwriters are not obligated, however, to make
a market in the Notes, and any such market making may be discontinued at any
time at the sole discretion of the Underwriters without notice.

Forum Capital Markets L.P., on behalf of the Underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Exchange Act.
Over-allotment involves syndicate sales in excess of the offering size, which
creates a syndicate short position. Stabilizing transactions permit bids to
purchase shares of Common Stock so long as the stabilizing bids do not exceed a
specified maximum. Syndicate covering transactions involve purchases of Common
Stock in the open market after the distribution has been completed in order to
cover syndicate short positions. Penalty bids permit Forum Capital Markets L.P.,
on behalf of the Underwriters, to reclaim a selling concession from a syndicate
member when the Notes originally sold by such syndicate member are purchased in
a syndicate covering transaction to cover syndicate short positions. Such
over-allotment, stabilizing transactions, syndicate covering transaction and
penalty bids may cause the price of the Notes to be higher than it would
otherwise be in the absence of such transaction. These transactions may be
effected in the over-the-counter market or otherwise and, if commenced, may be
discontinued at any time.

The Company has agreed to indemnify the Underwriters against certain
liabilities under the Securities Act, or to contribute to certain payments that
the Underwriters may be required to make in respect thereof.

Barry M. Alpert, a director of the Company, is a Managing Director of
Raymond James & Associates, Inc., one of the Underwriters.

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<PAGE> 54

LEGAL MATTERS

Certain legal matters in connection with the offering and sale of the Notes
will be passed upon for the Company by Holland & Knight LLP, Tampa, Florida. The
validity of the Notes will be passed upon for the Underwriters by King &
Spalding, New York, New York.

EXPERTS

The Consolidated Financial Statements and schedule of the Company at
December 31, 1995, 1996 and for each of the three years in the period ended
December 31, 1996, included and incorporated by reference in this Prospectus
have been audited by Grant Thornton LLP, independent certified public
accountants, as set forth in their reports with respect thereto, and are
included and incorporated herein in reliance upon the authority of such firm as
experts in accounting and auditing.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files periodic reports and other information
with the Securities and Exchange Commission (the "Commission"). Reports, proxy
and information statements and other information filed by the Company may be
inspected and copies may be obtained (at prescribed rates) at the Commission's
Public Reference Section, 450 5th Street, N.W., Washington, D.C. 20549, as well
as the following Regional Offices of the Commission: Seven World Trade Center,
13th Floor, New York, New York 10048 and at Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can also be obtained by mail from the Public Reference Section,
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington D.C.
20549, upon payment of prescribed rates. In addition, electronically filed
documents, including reports, proxy and information statements and other
information regarding the Company, can be obtained from the Commission's Web
site at: http://www.sec.gov. The Company's Common Stock is traded on the Nasdaq
National Market, and reports, proxy statements and other information concerning
the Company can also be inspected at the offices of the National Association of
Securities Dealers, Inc. at 1735 K Street, Washington, D.C. 20006.

The Company has filed a Registration Statement on Form S-3 under the
Securities Act with respect to the Notes offered hereby (the "Registration
Statement"). This Prospectus does not contain all the information set forth in
the Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and such Common Stock offered hereby,
reference is made to the Registration Statement and the exhibits, schedules and
reports filed as part thereof. Statements contained in the Prospectus with
respect to the contents of any contract or other document filed as an exhibit to
the Registration Statement are not necessarily complete, and in each such
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement. Each such statement is qualified in
all respects by such reference to such exhibit. Copies of all or any part of the
Registration Statement, including the documents incorporated by reference
therein or exhibits thereto, may be obtained upon payment of the prescribed
rates at the offices of the Commission set forth above.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission pursuant
to the Exchange Act are hereby incorporated by reference in this Prospectus:

(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996; and

(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.

All documents filed by the Company pursuant to sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Notes shall be deemed to be incorporated
by reference in this Prospectus. Any statement contained herein or in a document

51
<PAGE> 55

incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person to whom a Prospectus
is delivered, upon written or oral request of such person, a copy of any and all
of the information that has been incorporated by reference in this Prospectus
(excluding exhibits unless such exhibits are specifically incorporated by
reference into such documents). Please direct such requests to the Secretary,
Reptron Electronics, Inc., 14401 McCormick Drive, Tampa, Florida, 33626,
telephone number (813) 854-2351.

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<PAGE> 56

REPTRON ELECTRONICS, INC.

INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.......... F-2

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets as of December 31, 1995 and
1996 and March 31, 1997 (unaudited).................... F-3

Consolidated Statements of Earnings for the years ended
December 31, 1994, 1995 and 1996, and the three months
ended March 31, 1996 and 1997 (unaudited).............. F-4

Consolidated Statement of Shareholders' Equity for the
years ended December 31, 1994, 1995 and 1996, and the
three months ended March 31, 1997 (unaudited).......... F-5

Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996, and the three months
ended March 31, 1996 and 1997 (unaudited).............. F-6

Notes to Consolidated Financial Statements................ F-7

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON
SCHEDULE.................................................. F-18

Schedule II -- Valuation and Qualifying Accounts for the
years ended December 31, 1994, 1995 and 1996........... F-19
</TABLE>

F-1
<PAGE> 57

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Reptron Electronics, Inc.

We have audited the accompanying consolidated balance sheets of Reptron
Electronics, Inc. as of December 31, 1996 and 1995, and the related consolidated
statements of earnings, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1996. 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 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 consolidated financial position of Reptron
Electronics, Inc. as of December 31, 1996 and 1995, and the consolidated results
of operations and cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.

GRANT THORNTON LLP

Tampa, Florida
February 5, 1997

F-2
<PAGE> 58

REPTRON ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- MARCH 31,
1995 1996 1997
--------- --------- ----------
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 224 $ 479 $ 50
Accounts receivable -- trade, less allowances for doubtful
accounts of $180, $350 and $350, respectively.......... 41,234 39,807 47,360
Inventories............................................... 63,461 58,694 65,498
Prepaid expenses and other................................ 1,842 2,764 4,714
Deferred tax benefit...................................... 124 138 167
-------- -------- --------
Total current assets.............................. 106,885 101,882 117,789
PROPERTY, PLANT AND EQUIPMENT -- AT COST, NET............... 20,953 30,869 33,189
EXCESS OF COST OVER NET ASSETS ACQUIRED, NET................ 4,385 4,504 4,444
OTHER ASSETS................................................ 1,515 1,377 2,048
-------- -------- --------
$133,738 $138,632 $157,470
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable -- trade................................. $ 24,948 $ 18,339 $ 22,359
Notes payable to banks.................................... 1,933 -- 2,856
Current portion of long-term obligations.................. 2,547 3,560 2,352
Accrued expenses.......................................... 1,828 2,506 2,028
Income taxes payable...................................... -- 246 --
-------- -------- --------
Total current liabilities......................... 31,256 24,651 29,595
NOTES PAYABLE TO BANKS...................................... 50,200 48,550 60,000
LONG-TERM OBLIGATIONS, less current portion................. 10,430 15,235 15,417
DEFERRED INCOME TAXES....................................... 904 1,506 1,585
COMMITMENTS AND CONTINGENCIES............................... -- -- --
SHAREHOLDERS' EQUITY
Preferred Stock -- authorized 15,000,000 shares of $.10
par value; no shares issued............................ -- -- --
Common Stock -- authorized, 15,000,000 shares of $.01 par
value; issued and outstanding, 6,048,519, 6,065,519 and
6,071,019 shares, respectively......................... 60 61 61
Additional paid-in capital................................ 21,145 21,233 21,260
Retained earnings......................................... 19,743 27,396 29,552
-------- -------- --------
40,948 48,690 50,873
-------- -------- --------
$133,738 $138,632 $157,470
======== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE> 59

REPTRON ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------ -----------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales............................ $ 164,005 $ 223,344 $ 268,937 $ 66,551 $ 76,251
Cost of goods sold................... 133,794 183,181 217,088 54,569 62,179
---------- ---------- ---------- ---------- ----------
Gross profit......................... 30,211 40,163 51,849 11,982 14,072
Selling, general and administrative
expenses........................... 19,051 26,586 35,023 8,348 9,250
---------- ---------- ---------- ---------- ----------
Operating income..................... 11,160 13,577 16,826 3,634 4,822
Interest expense..................... 1,474 2,767 4,025 1,102 1,228
---------- ---------- ---------- ---------- ----------
Earnings before income taxes......... 9,686 10,810 12,801 2,532 3,594
Income tax provision................. 3,823 4,324 5,148 1,013 1,438
---------- ---------- ---------- ---------- ----------
NET EARNINGS............... 5,863 6,486 7,653 1,519 2,156
========== ========== ========== ========== ==========
Net earnings per common
share.................... $ 1.03 $ 1.05 $ 1.24 $ 0.25 $ 0.35
========== ========== ========== ========== ==========
Weighted average Common Stock and
Common Stock equivalent shares
outstanding........................ 5,713,808 6,170,265 6,179,231 6,168,288 6,206,952
========== ========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE> 60

REPTRON ELECTRONICS, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
TOTAL ADDITIONAL
SHARES PAR PAID-IN RETAINED SHAREHOLDERS'
OUTSTANDING VALUE CAPITAL EARNINGS EQUITY
----------- ----- ---------- -------- -------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1994.................... 4,230,769 $42 $ -- $ 7,394 $ 7,436
Initial public offering, net of offering costs
of $708..................................... 1,800,000 18 21,036 -- 21,054
Exercise of stock options..................... 12,500 -- 62 -- 62
Net Earnings.................................. -- -- -- 5,863 5,863
--------- --- ------- ------- -------
Balance at December 31, 1994.................. 6,043,269 60 21,098 13,257 34,415
Exercise of stock options..................... 5,250 -- 47 -- 47
Net Earnings.................................. -- -- -- 6,486 6,486
--------- --- ------- ------- -------
Balance at December 31, 1995.................. 6,048,519 60 21,145 19,743 40,948
Exercise of stock options..................... 17,000 1 88 -- 89
Net Earnings.................................. -- -- -- 7,653 7,653
--------- --- ------- ------- -------
Balance at December 31, 1996.................. 6,065,519 61 21,233 27,396 48,690
Exercise of stock options (Unaudited)......... 5,500 -- 27 -- 27
Net Earnings (Unaudited)...................... -- -- -- 2,156 2,156
--------- --- ------- ------- -------
Balance at March 31, 1997 (Unaudited)......... 6,071,019 $61 $21,260 $29,552 $50,873
========= === ======= ======= =======
</TABLE>

The accompanying notes are an integral part of this statement.

F-5
<PAGE> 61

REPTRON ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------- -----------------
1994 1995 1996 1996 1997
------- -------- ------- ------- -------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities:
Net earnings.................................. $ 5,863 $ 6,486 $ 7,653 $ 1,519 $ 2,156
------- -------- ------- ------- -------
Adjustments to reconcile net earnings to net
cash provided by (used in) operating
activities.................................
Depreciation and amortization.............. 1,389 2,462 3,638 685 1,031
Gain on sale of assets..................... (24) -- (47) -- (2)
Deferred income taxes...................... 369 350 588 -- 50
Change in assets and liabilities:
Accounts receivable -- trade............. (2,531) (11,425) 1,427 2,932 (7,553)
Inventories.............................. (7,990) (23,329) 4,344 6,022 (6,804)
Prepaid expenses and other............... (744) (669) (920) (34) (1,951)
Other assets............................. (507) (963) (396) 397 (788)
Related party receivable................. 479 -- -- -- --
Accounts payable -- trade................ (678) 5,842 (6,607) (9,985) 4,020
Accrued expenses......................... (454) 457 678 (449) (478)
Income taxes payable..................... (156) (72) 246 617 (246)
------- -------- ------- ------- -------
Net cash provided by (used in)
operating activities................ (4,984) (20,861) 10,604 1,704 (10,565)
------- -------- ------- ------- -------
Cash flows from investing activities:
Net cash paid for acquisitions................ -- (12,629) -- (91) --
Purchases of property, plant and equipment.... (5,900) (7,642) (7,586) (3,062) (3,173)
Proceeds from sale of property, plant and
equipment.................................. -- -- 72 -- 2
------- -------- ------- ------- -------
Net cash used in investing
activities.......................... (5,900) (20,271) (7,514) (3,153) (3,171)
------- -------- ------- ------- -------
Cash flows from financing activities:
Net proceeds from (payments on) note payable
to bank.................................... (7,551) 35,642 (3,582) (33) 14,306
Proceeds from long-term obligation............ 77 7,389 3,409 2,100 --
Payments on long-term obligations............. (2,586) (1,988) (2,751) (684) (1,026)
Net proceeds from initial public offering..... 21,054 -- -- -- --
Proceeds from exercise of stock options....... 62 47 89 26 27
------- -------- ------- ------- -------
Net cash provided by (used in)
financing activities................ 11,056 41,090 (2,835) 1,409 13,307
------- -------- ------- ------- -------
Net increase (decrease) in cash and
cash equivalents.................... 172 (42) 255 (40) (429)
Cash and cash equivalents at beginning of
period........................................ 94 266 224 224 479
------- -------- ------- ------- -------
Cash and cash equivalents at end of period...... $ 266 $ 224 $ 479 $ 184 $ 50
======= ======== ======= ======= =======
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE> 62

REPTRON ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reptron Electronics, Inc. (the "Company") is a leading integrated
electronics company providing through two divisions both value-added
distribution of electronic components ("Reptron Distribution") and targeted
contract manufacturing services ("K-Byte Manufacturing"). Reptron Distribution
sells to over 60 vendor lines of semiconductors, passive products and
electromechanical components, including more than 35,000 different items. K-Byte
Manufacturing focuses on establishing primary or sole source relationships with
OEMs in a wide variety of industries that require complex circuit board assembly
with low-to-medium volume production requirements.

A summary of the significant accounting policies consistently applied in
the preparation of the accompanying consolidated financial statements follows:

1. Principles of Consolidation. The financial statements include the
accounts of Reptron Electronics, Inc. and its wholly-owned subsidiary. All
significant inter-company balances and transactions have been eliminated.

2. Cash Equivalents. For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.

3. Inventories. Inventories are stated at the lower of cost or
market. For K-Byte Manufacturing, cost is determined using the first-in,
first-out method (FIFO). To better reflect the movement of Reptron
Distribution inventory, the Company changed its inventory method from FIFO
to the average cost method. Since the average cost method and FIFO
generally yield similar results, the change had and will have an immaterial
effect on the financial statements of the Company.

4. Property, Plant and Equipment. Depreciation is provided for, using
the straight-line method, in amounts sufficient to relate the cost of
depreciable assets to operations over their estimated service lives
(building 39 1/2 years, all other asset categories 5 years). Leasehold
improvements are amortized using the straight-line method over the lives of
the respective leases or the service lives of the improvements, whichever
is shorter.

Leased equipment under capital leases is amortized using the
straight-line method over the lives of the respective leases or over the
service lives of the assets for those leases which substantially transfer
ownership.

5. Production Set-up Costs. Under certain contractual arrangements
with customers, the Company incurs set-up costs. These costs are
capitalized, included in prepaid expenses and other assets, and amortized
over the contract period, or two years, whichever is less, using the
straight-line method. Amortization begins after the development stage of
the contract is complete and the production stage begins.

6. Excess of Cost Over Net Assets Acquired. The excess of cost over
net assets acquired is amortized over twenty years using the straight-line
method. Accumulated amortization totaled approximately $134,000, $362,000
and $422,000 at December 31, 1995, 1996, and March 31, 1997, respectively.

7. Accounting for Impairment of Long-Lived Assets. The Company's
evaluates long-lived assets and intangibles held and used for impairment
whenever events or changes in circumstances indicate that carrying amounts
may not be recoverable. Impairment is recognized when the carrying amounts
of such assets cannot be recovered by the net cash flows they will
generate.

8. Income Taxes. The Company accounts for income taxes on the
liability method, as provided by Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting For Income Taxes." Under the
liability method specified by SFAS 109, deferred tax assets and liabilities
are determined based on the difference between the financial statement and
tax bases of assets and liabilities as measured

F-7
<PAGE> 63

REPTRON ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

by the enacted tax rates which will be in effect when these differences
reverse. Deferred tax expense is the result of changes in deferred tax
assets and liabilities.

9. Earnings Per Common Share. Earnings per share are computed using
the weighted average number of Common Shares plus Common Stock equivalents,
consisting of the incentive stock options, using the treasury stock method.
Primary and fully diluted calculations result in the same earnings per
share. If the sale by the Company of 1,800,000 shares of Common Stock had
occurred on January 1, 1994 and the net proceeds of the sale had been
applied to the reduction of the Company's Revolving Credit Facility,
earnings per share would have been $0.99 in 1994.

10. Use of Estimates. In preparing financial statements in conformity
with generally accepted accounting principles, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the
financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.

11. New Accounting Pronouncement. In October, 1995 the Financial
Accounting Standards Board issued SFAS No. 123 "Accounting for Stock Based
Compensation". For employee stock awards, as allowed by SFAS No. 123, the
Company has elected to continue using the accounting method promulgated by
Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to
Employees". The pro-forma disclosures required by SFAS No. 123, as a result
of this election, would have resulted in a decrease in net earnings in 1995
and 1996 of approximately $45,000 and $90,000 respectively are not included
as the pro-forma effect on these financial statements is insignificant.
These pro-forma amounts may not be representative of future disclosures
because they reflect options granted for only three years, while the effect
of issuing the options is recognized over a five year period.

12. Reclassifications. Certain reclassifications have been made to
conform the 1994 and 1995 presentations to the 1996 presentation.

13. Unaudited Financial Statements. The unaudited financial
statements and the related notes thereto for March 31, 1996 and 1997
include all normal and recurring adjustments which in the opinion of
management are necessary for a fair presentation and are prepared on the
same basis as audited annual statements. The interim results are not
necessarily indicative of the results that may be expected for the full
year.

NOTE B -- STATEMENTS OF CASH FLOWS

Supplemental disclosures of cash flow information (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------- ------------------
1994 1995 1996 1996 1997
------ ------ ------ ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash paid during the period indicated
for:
Interest............................ $1,436 $2,781 $4,879 $1,102 $1,125
Income taxes........................ $3,437 $4,085 $4,269 $ 396 $2,425
</TABLE>

The Company incurred approximately $2,061,000, $2,645,000, $5,209,000 and
$372,000 of obligations under capital leases for the acquisition of equipment
during 1994, 1995, 1996 and the three months ended March 31, 1996, respectively.
No capital leases were entered into during the period ended March 31, 1997.

F-8
<PAGE> 64

REPTRON ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company purchased substantially all the assets of Cronin Electronics,
Inc. and the electronic component division of Western Micro Technology, Inc.
during 1995. In conjunction with the acquisitions, specified liabilities were
assumed as follows (in thousands):

<TABLE>
<S> <C>
Fair value of assets acquired............................... $ 19,467
Cash paid................................................... (12,629)
--------
Liabilities assumed......................................... $ 6,838
========
</TABLE>

NOTE C -- INVENTORIES

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------ ---------
1995 1996 1997
------- ------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Reptron Distribution:
Inventories......................................... $43,647 $31,085 $36,362
K-Byte Manufacturing:
Work in process..................................... 7,421 8,833 11,089
Raw materials....................................... 12,393 18,776 18,047
------- ------- -------
$63,461 $58,694 $65,498
======= ======= =======
</TABLE>

NOTE D -- PROPERTY, PLANT, AND EQUIPMENT

Property, plant and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------ ---------
1995 1996 1997
------- ------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Land and buildings.................................... $ 6,765 $ 6,837 $15,375
Furniture, fixtures and equipment..................... 18,375 24,908 27,427
Leasehold improvements................................ 1,182 1,275 1,240
Construction in progress.............................. 2,564 8,380 476
------- ------- -------
28,886 41,400 44,518
Less accumulated depreciation and amortization........ 7,933 10,531 11,329
------- ------- -------
$20,953 $30,869 $33,189
======= ======= =======
</TABLE>

The Company completed construction of a 150,000 square foot manufacturing
and warehouse facility in 1997. The total cost of the construction project was
approximately $8,000,000, exclusive of land costs. During the years ended
December 31, 1995 and 1996 and the three months ended March 31, 1996 and 1997,
capitalized interest totaled approximately $170,000, $820,000, $200,000 and
$197,000, respectively.

NOTE E -- NOTES PAYABLE TO BANKS

The Company is a party to an Amended and Restated Revolving Credit and
Reimbursement Agreement dated June 29, 1995, as amended (the "Revolving Credit
Facility"). Pursuant to the Revolving Credit Facility, four lenders have made
available to the Company a $55 million revolving credit facility ($60 million at
March 31, 1997). The lenders may advance funds to the Company pursuant to two
types of loans, each of which bears a separate rate of interest. As long as the
Company is not in default under the Revolving Credit Facility, and upon notice
to the lender, the Company may convert advances from one type of loan to the
other. Interest rates on advances made under the Revolving Credit Facility
ranged from 7.25% to 8.25% as of

F-9
<PAGE> 65

REPTRON ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

December 31, 1996 (7.06% to 8.50% as of March 31, 1997). Borrowings under the
Revolving Credit Facility are collateralized by all of the Company's inventory
and accounts receivable. The Revolving Credit Facility contains certain
financial covenants, including the requirement that the Company maintain a
minimum tangible net worth, maintain various financial ratios and limit the
amount of capital expenditures. In addition, the Revolving Credit Facility
requires the financial institutions' approval of dividends in excess of the
lesser of $1,000,000 or 25% of net earnings, thereby restricting the
distribution of the retained earnings of the Company. The Company was in
compliance with all financial covenants as of December 31, 1996. The Revolving
Credit Facility is scheduled to terminate on June 30, 1999 but may be extended
by agreement.

The weighted average interest rate on short-term borrowings on December 31,
1995 was 8.01% and there were no short term borrowings on December 31, 1996.

NOTE F -- LONG-TERM OBLIGATIONS

Long-term obligations consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31 MARCH 31,
----------------- -----------
1995 1996 1997
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Variable rate demand notes issued in conjunction with
the notes payable to banks, collateralized by certain
land and buildings due in semi-annual payments of $500
beginning July 1, 1996 through 2003, interest rates
range from 5.4% to 6.2% at December 31, 1996.......... $ 6,300 $ 9,300 $ 8,800
Capitalized lease obligations (net of interest of
approximately $1,894) for equipment, due in monthly
principal and interest payments of approximately $189,
through 2001.......................................... 4,575 6,467 6,057
Notes payable collateralized by real property, due in
monthly principal and interest installments of $13,
two requiring a final balloon payment due March 1998,
interest rates of prime plus .5% (8.75% at December
31, 1996) and 10%..................................... 568 983 969
Notes payable collateralized by certain equipment, due
in monthly principal and interest installments of $47,
through November 2001 at an interest rates of 7.5% and
7.9%.................................................. 998 2,045 1,943
Other................................................... 536 -- --
------- ------- -------
12,977 18,795 17,769
Less current maturities................................. 2,547 3,560 2,352
------- ------- -------
$10,430 $15,235 $15,417
======= ======= =======
</TABLE>

At December 31, 1996, aggregate maturities of long-term obligations are as
follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1997...................................................... $ 3,560
1998...................................................... 3,755
1999...................................................... 2,871
2000...................................................... 2,622
2001...................................................... 2,018
Thereafter................................................ 3,969
-------
$18,795
=======
</TABLE>

F-10
<PAGE> 66

REPTRON ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company has entered into various capital leases for equipment, totaling
approximately $2,061,000 in 1994, $2,645,000 in 1995, $5,209,000 in 1996 and
$372,000 for the three months ended March 31, 1996. No capital leases were
entered into during the period ended March 31, 1997. At December 31, 1995 and
1996 and March 31, 1997, the net book value of equipment under capital leases is
approximately $6,034,000, $7,215,000 and $6,988,000, respectively. The related
capital lease obligations are included with long-term obligations.

NOTE G -- INCOME TAXES

The provision for income taxes for the years ended December 31, 1994, 1995,
1996 and the three months ended March 31, 1996 and 1997, respectively, is as
follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
-------------------------- ----------------
1994 1995 1996 1996 1997
------ ------ ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current............................. $3,454 $3,974 $4,560 $1,013 $1,388
Deferred............................ 369 350 588 -- 50
------ ------ ------ ------ ------
$3,823 $4,324 $5,148 $1,013 $1,438
====== ====== ====== ====== ======
</TABLE>

The Company's effective tax rate differs from the statutory U. S. federal
income tax rate as a result of the following:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------- ------------
1994 1995 1996 1996 1997
----- ----- ----- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Statutory federal tax rate...................... 34.0% 34.0% 35.0% 34.0% 35.0%
Effect of marginal federal tax rate............. -- -- (0.8) -- (0.8)
State income taxes of approximately 6.6%, 6.4%,
6.9%, 6.4% and 6.9%, respectively, net of
Federal tax benefit........................... 4.3 4.3 4.6 4.3 4.6
Other........................................... 1.2 1.7 1.4 1.7 1.2
---- ---- ---- ---- ----
Effective tax rate.............................. 39.5% 40.0% 40.2% 40.0% 40.0%
==== ==== ==== ==== ====
</TABLE>

The Company's income in excess of $10.0 million is subject to federal
income tax at a marginal rate of 35%. As a result of the Company's current and
expected earnings, management has chosen 35% as the Company's statutory federal
tax rate.

F-11
<PAGE> 67

REPTRON ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income tax assets and liabilities resulting from differences
between accounting for financial statement purposes and tax purposes pursuant to
SFAS No. 109, are summarized as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
----------------- -----------
1995 1996 1997
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Deferred tax assets
Accrued vacation...................................... $ 51 $ 51 $ 50
Allowance for bad debts............................... 71 138 138
Other................................................. 2 23 22
------- ------- -------
124 212 210
Deferred tax liabilities
Depreciation.......................................... 846 1,399 1,478
Other................................................. 58 181 150
------- ------- -------
904 1,580 1,628
Net deferred tax liability.................... $ (780) $(1,368) $(1,418)
======= ======= =======
</TABLE>

A valuation allowance has not been recorded against the deferred tax assets
for 1995, 1996 and 1997.

NOTE H -- COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company has operating leases for facilities and certain machinery and
equipment which expire at various dates through 2001. Certain leases provide for
payment by the Company of any increases in property taxes and insurance over a
base amount and others provide for payment of all property taxes and insurance
by the Company.

One of the leases, which expires in November 1998, is for a building owned
by the Chief Executive Officer of the Company and provides for annual rentals of
$68,000. Rent paid on this facility totaled $69,000 in 1994, and $68,000 in both
1995 and 1996 and $17,000 for the three months ended March 31, 1997. The Company
pays for property taxes and insurance in accordance with the provisions of the
lease.

The Company also leases an aircraft from a corporation controlled by the
Chief Executive Officer of the Company. The Company is responsible for all costs
associated with the operation of the aircraft, including fuel, maintenance,
storage and crew salary and expenses. Rent expense for the use of aircraft
totaled approximately $156,000 in 1994, $74,000 in 1995 and $240,000 in 1996 and
$60,000 for the three months ended March 31, 1997.

Future minimum payments, by year and in the aggregate, under noncancellable
operating leases consist of the following at December 31, 1996 (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- ------------
<S> <C>
1997...................................................... $1,167
1998...................................................... 870
1999...................................................... 544
2000...................................................... 221
2001...................................................... 73
</TABLE>

Total rent expense for the years ended December 31, 1994, 1995, 1996 and
the three months ended March 31, 1996 and 1997 was approximately $1,519,000,
$1,725,000, $1,555,000, $347,000 and $301,000, respectively, which includes
$225,000, $142,000, $308,000, $77,000 and $77,000 to the Chief Executive Officer
of the Company.

F-12
<PAGE> 68

REPTRON ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Litigation

The Company is, from time to time, involved in litigation relating to
claims arising out of its operations in the ordinary course of business. The
Company believes that none of these claims which should have a material adverse
impact on its financial condition or results of operations.

NOTE I -- SHAREHOLDERS' EQUITY

The Board of Directors is authorized, without further shareholder action,
to divide any or all shares of the authorized Preferred Stock into series and to
fix and determine the designations, preferences, relative rights,
qualifications, limitations or restrictions thereon, of any series so
established, including voting powers, dividend rights, liquidation preferences,
redemption rights and conversion privileges. The Board of Directors has not
authorized any issuance of Preferred Stock and there are no plans, agreements,
or understandings for the authorization or issuance of any shares of Preferred
Stock.

In April 1997, the Company increased the number of authorized Common Stock
shares to 50,000,000.

NOTE J -- EMPLOYEE BENEFITS

Incentive Stock Option Plan

The Company's Incentive Stock Option Plan (the "ISO Plan") was adopted in
November, 1993 to provide for the grant to employees of incentive stock options
within the meaning of Section 422 of the Internal Revenue Code. The ISO Plan is
intended to provide incentives to directors, officers, and other key employees
and to enhance the Company's ability to attract and retain qualified employees.
A total of 500,000 shares of Common Stock has been reserved for issuance under
the ISO Plan. Stock options are granted for the purchase of Common Stock at a
price not less than the fair market on the date of grant.

The following table summarizes the activity in Common Stock subject to
options:

<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
RANGE OF AVERAGE AVERAGE
EXERCISE EXERCISE REMAINING
SHARES PRICE PRICE CONTRACTUAL LIFE
------- -------------- -------- ----------------
(IN YEARS)
<S> <C> <C> <C> <C>
Outstanding at January 1, 1994................ 211,300 $5.00 $ 5.00 9.9
Granted..................................... 16,000 9.13 9.13
Exercised................................... (12,500) 5.00 5.00
Forfeited................................... (3,500) 5.00 5.00
-------
Outstanding at December 31, 1994.............. 211,300 $ 5.00 -- 9.13 $ 5.31 9.0
Granted..................................... 10,000 14.25 -- 15.07 14.66
Exercised................................... (5,250) $ 5.00 -- 9.13 8.93
Forfeited................................... (24,250) 5.00 5.00
-------
Outstanding at December 31, 1995.............. 191,800 5.00 -- 15.07 $ 5.74 8.0
Granted..................................... 22,000 12.75 -- 14.75 14.30
Exercised................................... (17,000) 5.00 -- 9.13 5.18
Forfeited................................... (2,750) 5.00 -- 9.13 8.38
-------
Outstanding at December 31, 1996.............. 194,050 $5.00 -- 15.07 $ 6.72 7.3
Granted (unaudited)......................... 73,500 14.75 -- 18.00 17.61
Exercised (unaudited)....................... (5,500) 5.00 5.00
Forfeited (unaudited)....................... (500) 5.00 5.00
-------
Outstanding at March 31, 1997 (unaudited)..... 261,500 $5.00 -- 18.00 9.82 7.8
=======
</TABLE>

F-13
<PAGE> 69

REPTRON ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes information about Common Stock options
outstanding at December 31, 1996:

<TABLE>
<CAPTION>
OPTIONS EXERCISABLE
OPTIONS OUTSTANDING WEIGHTED
----------------------------------------- ----------------------
WEIGHTED WEIGHTED NUMBER WEIGHTED
NUMBER AVERAGE AVERAGE EXERCISABLE AVERAGE
RANGE OF OUTSTANDING REMAINING EXERCISE AT EXERCISE
EXERCISE PRICES AT 12/31/96 CONTRACTUAL LIFE PRICE 12/31/96 PRICE
- --------------- ----------- ---------------- -------- ----------- --------
(IN YEARS)
<C> <C> <C> <C> <C> <C>
$5.00 154,050 6.9 $ 5.00 115,538 $ 5.00
$ 9.13 -- 12.75 13,000 8.3 10.52 4,000 9.13
$14.25 -- 15.07 27,000 9.1 14.72 2,500 14.66
------- -------
$ 5.00 -- 15.07 194,050 7.3 $ 6.72 122,038 $ 5.33
======= =======
</TABLE>

The duration of options granted under the ISO Plan is ten years from the
date of grant, or such other date as determined by the Board of Directors. In
general, the options must be exercised while a person is employed by the Company
or 90 days thereafter. The options may be exercised in four equal annual
increments, cumulatively, beginning one year after the date of grant, and all
such options may be exercised in full four years after the date of grant. The
options are non-transferable other than by will or by the laws of descent and
distribution.

Profit Sharing Plan

The Company previously maintained a discretionary Profit Sharing Plan (the
"Profit Sharing Plan"), for the benefit of its employees. The amount of the
Company's previous contribution to the Profit Sharing Plan for any year was
determined by the Board of Directors in its sole discretion, subject to certain
limitations imposed by the Internal Revenue Code. In 1992, the Administrator of
the Profit Sharing Plan approved termination of the Profit Sharing Plan and a
favorable determination has been issued by the Internal Revenue Service. The
Profit Sharing Plan began distributions to its participants during 1996 and is
expected to distribute the participants' remaining shares by December 31, 1997.
The Profit Sharing Plan currently holds 661,955 shares of the Company's Common
Stock.

401(k) Plan

In 1993, the Company established a deferred compensation plan (the "Plan")
under section 401(a) of the Code. Substantially all of the officers and
employees of the Company are eligible to participate in the Plan. Employees are
eligible to participate in the Plan after six months of service and after
attaining age 21. At its discretion, the Company may make matching contributions
to the Plan. Employees are always vested in their contributions and are fully
vested in the employer contributions after five years of service. The Company
contributed approximately $54,000, $82,000, $18,000 and $26,000 to the Plan for
the years ended December 31, 1995 and 1996 and the three months ended March 31,
1996 and 1997, respectively.

NOTE K -- ACQUISITIONS

On March 22, 1995, the Company purchased substantially all of the assets
and assumed certain liabilities of Cronin Electronics, Inc. Cronin Electronics
was a distributor of electronic components serving the New England market with
locations in suburban Boston, Massachusetts and Hartford, Connecticut. The
acquisition was accounted for using the purchase method and, accordingly, the
acquired business operations have been included herein since the date of the
acquisition. Of the approximately $6.2 million total costs involved in the
acquisition, approximately $2.9 million was in cash, with the remainder in
assumption of specified liabilities.

F-14
<PAGE> 70

REPTRON ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company allocated approximately $3.3 million of the purchase price to
tangible assets. Pro forma information is not presented as the effect of the
acquisition was not significant to the financial statements.

On July 26, 1995, the Company purchased substantially all of the assets and
assumed certain liabilities of the electronic component distribution business of
Western Micro Technology, Inc. The electronic component distribution business of
Western Micro Technology, Inc. had offices in Seattle, Washington; Portland,
Oregon; Saratoga, California; Irvine, California; Los Angeles, California; San
Diego, California; Philadelphia, Pennsylvania; and Boston Massachusetts. The
acquisition was accounted for using the purchase method and, accordingly, the
acquired business operations have been included herein since the date of the
acquisition. Of the approximately $13.3 million in total costs involved in the
acquisition, approximately $9.7 million was in cash, with the remainder in
assumption of specified liabilities. The Company allocated approximately $11.6
million of the purchase price to tangible assets.

The following unaudited pro forma summary combines the results of
operations of the Company with the operations of the electronic component
distribution business of Western Micro Technology, Inc., as if the acquisition
had occurred at the beginning of the respective periods. This pro forma summary
does not necessarily reflect the results of operations as they would have been
if the Company and the operations of the electronic component distribution
business of Western Micro Technology, Inc., operated as a single entity during
such periods.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------
1994 1995
-------- --------
(IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
Net Sales................................................... $223,356 $254,398
Gross Profit................................................ 41,281 44,525
Operating Income............................................ 12,264 12,896
Net Earnings................................................ 6,107 5,790
Net Earnings per Common Share............................... 1.07 .94
</TABLE>

NOTE L -- RELATED PARTY TRANSACTIONS

The Company has a non-interest bearing loan receivable from the profit
sharing plan totaling approximately $99,000, $194,000, $279,000 and $194,000 as
of December 31, 1994, 1995 and 1996 and March 31, 1997, respectively.

A director of the Company serves as its general counsel and received
approximately $178,000, $235,000, $185,000 and $39,000 for services rendered
during 1994, 1995, 1996 and the three months ended March 31, 1997, respectively.

See Note H for related party leases.

NOTE M -- FAIR VALUE OF FINANCIAL INSTRUMENTS

At December 31, 1996, the carrying amount of cash, accounts receivable,
accounts payable and accrued expenses approximate fair value because of the
short-term maturities of these items.

The carrying amounts of current and long-term portions of notes payable,
and long-term obligations approximate fair market value since the interest rates
on most of these instruments change with market interest rates.

F-15
<PAGE> 71

REPTRON ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE N -- FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

The Company has two industry segments: Distribution and Contract
Manufacturing. Distribution purchases a wide variety of electronic components,
including semiconductors, passive products and electromechanical components, for
distribution to manufacturers and wholesalers throughout the United States.
Contract Manufacturing manufactures electronic products according to customer
design for customers in various industries, including telecommunications,
banking and medical services.

The following table shows net sales, operating income, identifiable assets,
depreciation and amortization expense and capital expenditures as of and for the
years 1994, 1995 and 1996.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Net Sales
Unaffiliated customers
Distribution........................................... $ 96,003 $140,146 $168,279
Contract Manufacturing................................. 68,002 83,198 100,658
-------- -------- --------
164,005 223,344 268,937
Intersegment sales..................................... 5,437 14,494 10,235
-------- -------- --------
169,442 237,838 279,172
======== ======== ========
Operating Income
Distribution........................................... 5,174 8,804 7,036
Contract Manufacturing................................. 5,986 4,773 9,790
-------- -------- --------
11,160 13,577 16,826
======== ======== ========
Identifiable Assets
Distribution........................................... 32,257 71,839 64,993
Contract Manufacturing................................. 32,158 49,600 59,948
-------- -------- --------
64,415 121,439 124,941
Corporate................................................. 5,658 12,299 13,691
-------- -------- --------
70,073 133,738 138,632
======== ======== ========
Depreciation and Amortization
Distribution........................................... 81 580 674
Contract Manufacturing................................. 1,064 1,736 2,444
-------- -------- --------
1,145 2,316 3,118
Corporate.............................................. 244 146 520
-------- -------- --------
1,389 2,462 3,638
======== ======== ========
Capital Expenditures (includes equipment under capitalized
leases)
Distribution........................................... 727 1,142 1,516
Contract Manufacturing................................. 2,761 6,957 5,033
-------- -------- --------
3,488 8,099 6,549
Corporate.............................................. 4,473 2,188 6,149
-------- -------- --------
$ 7,961 $ 10,287 $ 12,698
======== ======== ========
</TABLE>

F-16
<PAGE> 72

REPTRON ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE O -- SUPPLEMENTAL SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of the quarterly results of operations for the
quarterly periods of 1995 and 1996 (in thousands except per share data):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
1995
- --------------------------------------------
Net sales................................... $43,076 $52,873 $59,492 $67,903
Gross profit................................ 8,171 9,515 10,729 11,748
Operating income............................ 2,949 3,523 3,692 3,413
Net earnings................................ 1,511 1,778 1,713 1,484
Net earnings per common share............... .25 .29 .28 .24
1996
- --------------------------------------------
Net sales................................... 66,551 66,092 65,953 70,341
Gross profit................................ 11,982 13,199 12,594 14,074
Operating income............................ 3,936 4,183 4,200 4,507
Net earnings................................ 1,519 1,905 2,017 2,212
Net earnings per common share............... $ .25 $ .31 $ .33 $ .36
1997
- --------------------------------------------
Net sales................................... $76,251
Gross profit................................ 14,072
Operating income............................ 4,822
Net earnings................................ 2,156
Net earnings per common share............... $ .35
</TABLE>

NOTE P -- CONCENTRATION OF CREDIT RISK

One customer represented 12.4% of total Company net sales in 1996 (10.8%
for the three months ended March 31, 1997). The loss of this customer or a
reduction in its level of purchasing could have a material impact on the
Company's business and results of operations.

F-17
<PAGE> 73

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SCHEDULE

Board of Directors
Reptron Electronics, Inc.

In connection with our audit of the consolidated financial statements of
Reptron Electronics, Inc., referred to in our report dated February 5, 1997,
which is included in this Registration Statement we have also audited Schedule
II for each of the three years in the period then ended. In our opinion, this
schedule presents fairly, in all material respects, the information required to
be set forth therein.

GRANT THORNTON LLP

Tampa, Florida
February 5, 1997

F-18
<PAGE> 74

SCHEDULE II

REPTRON ELECTRONICS, INC.

VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1994, DECEMBER 31, 1995 AND DECEMBER 31, 1996

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ---------- ---------- ------------ --------
BALANCE AT CHARGED TO ACCOUNTS BALANCE
BEGINNING COSTS AND WRITTEN OFF, AT END
DESCRIPTION OF YEAR EXPENSES NET OF YEAR
- ----------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Year Ended December 31, 1994......................... $179,500 $218,600 $(217,700) $180,400
Year Ended December 31, 1995......................... 180,400 149,775 (150,466) $179,709
Year Ended December 31, 1996......................... 179,709 193,000 (23,000) $349,709
</TABLE>

F-19
<PAGE> 75

(This Page Intentionally Left Blank)
<PAGE> 76

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

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED OR
IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 5
Use of Proceeds....................... 9
Capitalization........................ 10
Selected Consolidated Financial
Data................................ 11
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 13
Business.............................. 20
Management............................ 30
Principal Shareholders................ 32
Description of Notes.................. 33
Certain Federal Income Tax
Considerations...................... 44
Description of Capital Stock.......... 46
Underwriting.......................... 49
Legal Matters......................... 50
Experts............................... 50
Available Information................. 50
Incorporation of Certain Documents by
Reference........................... 50
Index to Financial Statements and
Schedule............................ F-1
</TABLE>

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

$100,000,000

[REPTRON ELECTRONICS, INC. LOGO]

% CONVERTIBLE SUBORDINATED

NOTES DUE 2004
------------------------
PROSPECTUS
------------------------
RAYMOND JAMES & ASSOCIATES, INC.

FORUM CAPITAL MARKETS L.P.

STEPHENS INC.

, 1997

======================================================
<PAGE> 77

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the fees and expenses in connection with the
issuance and distribution of the securities being registered hereunder.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 34,849
NASD filing fee............................................. 12,000
Printing and engraving expenses............................. 150,000*
Accounting fees and expenses................................ 100,000*
Legal fees and expenses..................................... 100,000*
Blue Sky fees and expenses.................................. 10,000*
Miscellaneous............................................... 92,151*
--------
Total............................................. 500,000*
========
</TABLE>

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

* Estimated.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company is a Florida corporation. The FBCA provides that, in general, a
business corporation may indemnify any person who is or was a party to any
proceeding (other than an action by, or in the right of, the corporation) by
reason of the fact that he is or was a director or officer of the corporation,
against liability incurred in connection with such proceeding, including any
appeal thereof, provided certain standards are met, including that such officer
or director acted in good faith and in a manner he reasonably believed to be in,
or not opposed to, the best interests of the corporation, and provided further
that, with respect to any criminal action or proceeding, the officer or director
had no reasonable cause to believe his conduct was unlawful. In the case of
proceedings by or in the right of the corporation, the FBCA provides that, in
general, a corporation may indemnify any person who was or is a party to any
such proceeding by reason of the fact that he is or was a director or officer of
the corporation against expenses and amounts paid in settlement actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof, provided that such person acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the corporation, except that no indemnification shall be
made in respect of any claim as to which such person is adjudged liable unless a
court of competent jurisdiction determines upon application that such person is
fairly and reasonably entitled to indemnity. To the extent that any officers or
directors are successful on the merits or otherwise in the defense of any of the
proceedings described above, the FBCA provides that the corporation is required
to indemnify such officers or directors against expenses actually and reasonably
incurred in connection therewith. However, the FBCA further provides that, in
general, indemnification or advancement of expenses shall not be made to or on
behalf of any officer or director if a judgment or other final adjudication
establishes that his actions, or omissions to act, were material to the cause of
action so adjudicated and constitute: (i) a violation of the criminal law,
unless the director or officer had reasonable cause to believe his conduct was
lawful or had no reasonable cause to believe it was unlawful; (ii) a transaction
from which the director or officer derived an improper personal benefit; (iii)
in the case of a director, a circumstance under which the director has voted for
or assented to a distribution made in violation of the FBCA or the corporation's
articles of incorporation; or (iv) willful misconduct or a conscious disregard
for the best interests of the corporation in a proceeding by or in the right of
the corporation to procure a judgment in its favor or in a proceeding by or in
the right of a shareholder. Article V of the Company's Bylaws provides that the
Company shall indemnify any director, officer, employee or agent or any former
director, officer, employee or agent to the full extent permitted by Florida
law.

The underwriters also will agree to indemnify the directors and officers of
the Company against certain liabilities as set forth in Section of the
Underwriting Agreement (see Exhibit 1).

II-1
<PAGE> 78

The Company has purchased insurance with respect to, among other things,
any liabilities that may arise under the statutory provisions referred to above.

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S> <C>
1.1 -- Form of Underwriting Agreement
4.1 -- Form of Indenture
4.2 -- Form of Convertible Subordinated Note (included in Exhibit
4.1)
4.3 -- Articles of Amendment to Articles of Incorporation
5.1 -- Opinion of Holland & Knight LLP
12.1 -- Statement re Computation of Ratio of Earnings to Fixed
Charges+
21.1 -- Subsidiaries of the Company
23.1 -- Consent of Holland & Knight LLP (contained in Exhibit 5.1)
23.2 -- Consent of Grant Thornton, LLP
24 -- Powers of Attorney+
25.1 -- Statement on Form T-1 as to Eligibility of Trustee
</TABLE>

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

+ Previously filed.

ITEM 17. UNDERTAKINGS

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 indemnification provisions described herein, 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 Securities Act of 1933 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

The undersigned registrant hereby undertakes that:

(1) 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 of 1933 shall be deemed to be part
of this registration statement as of the time it was declared effective.

(2) 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.

The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.

II-2
<PAGE> 79

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereto duly authorized, in the City of Tampa,
State of Florida, on August 1, 1997.

REPTRON ELECTRONICS, INC.

By: /s/ MICHAEL L. MUSTO*

-----------------------------------
Michael L. Musto
President, Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MICHAEL L. MUSTO* President, Chief Executive August 1, 1997
- --------------------------------------------------- Officer, and Director
Michael L. Musto (Principal Executive Officer)

/s/ PAUL J. PLANTE* Chief Operating Officer and August 1, 1997
- --------------------------------------------------- Director
Paul J. Plante

/s/ LEIGH A. ADAMS* Secretary and Director August 1, 1997
- ---------------------------------------------------
Leigh A. Adams

/s/ MICHAEL BRANCA* Chief Financial Officer August 1, 1997
- --------------------------------------------------- (Principal Financial and
Michael Branca Accounting Officer)

/s/ WILLIAM L. ELSON* Director August 1, 1997
- ---------------------------------------------------
William L. Elson

/s/ BARRY M. ALPERT* Director August 1, 1997
- ---------------------------------------------------
Barry M. Alpert

*By: /s/ PAUL J. PLANTE
---------------------------------------------
Paul J. Plante
Attorney-in-fact
</TABLE>

II-3
<PAGE> 80

INDEX TO EXHIBITS

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

+ Previously filed.

<PAGE> 1
EXHIBIT 1.1

REPTRON ELECTRONICS, INC.

__% CONVERTIBLE SUBORDINATED NOTES DUE 2004

UNDERWRITING AGREEMENT

August __, 1997

Raymond James & Associates, Inc.
Forum Capital Markets L.P.
Stephens Inc.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Raymond James & Associates, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716

Ladies and Gentlemen:

Reptron Electronics, Inc., a Florida corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of $100,000,000 principal amount of the __% Convertible Subordinated Notes,
convertible into Common Stock, par value $.01 per share ("Stock"), of the
Company (the "Firm Securities") and, at the election of the Underwriters, up to
an aggregate of $15,000,000 additional aggregate principal amount (the "Optional
Securities"). The Firm Securities and the Optional Securities which the
Underwriters elect to purchase pursuant to Section 2 hereof are herein
collectively called the "Securities".

1. The Company represents and warrants to, and agrees with, each
of the Underwriters that:

(a) A registration statement on Form S-3 (File No. 333-31605)
in respect of the Securities has been filed with the Securities and
Exchange Commission (the "Commission"); such registration statement and
any post-effective amendment thereto, each in the form heretofore
delivered to you, and, excluding exhibits thereto but including all
documents incorporated by reference in the prospectus contained
therein, to you for each of the other Underwriters, have been declared
effective by the Commission in such form; no other document with
respect to such registration statement or document incorporated by
reference therein has heretofore been filed with the Commission; and no
stop order suspending the effectiveness of such registration statement
has been issued and no proceeding for that purpose has been initiated
or, to the best knowledge of the
<PAGE> 2

Company, threatened by the Commission (any preliminary prospectus
included in such registration statement or filed with the Commission
pursuant to Rule 424(a) of the rules and regulations of the Commission
under the Securities Act of 1933, as amended (the "Act"), is
hereinafter called a "Preliminary Prospectus"; the various parts of
such registration statement, including all exhibits thereto but
excluding Form T-1 and including (i) the information contained in the
form of final prospectus filed with the Commission pursuant to Rule
424(b) under the Act in accordance with Section 5(a) hereof and deemed
by virtue of Rule 430A under the Act to be part of the registration
statement at the time it was declared effective and (ii) the documents
incorporated by reference in the prospectus contained in the
registration statement at the time such part of the registration
statement became effective, each as amended at the time such part of
the registration statement became effective, are hereinafter
collectively called the "Registration Statement"; such final
prospectus, in the form first filed pursuant to Rule 424(b) under the
Act, is hereinafter called the "Prospectus"; any reference herein to
any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Act, as of the date of such
Preliminary Prospectus or Prospectus, as the case may be; any reference
to any amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the
case may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; and any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section
13(a) or 15(d) of the Exchange Act after the effective date of the
Registration Statement that is incorporated by reference in the
Registration Statement;

(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
rules and regulations of the Commission thereunder, and did not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter through Raymond James & Associates,
Inc. expressly for use therein;

(c) The documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a

-2-

<PAGE> 3

material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed
and incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents are filed with the
Commission, will conform in all material respects to the requirements
of the Exchange Act and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through Raymond James & Associates, Inc. expressly for use therein;

(d) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or
the Prospectus will conform, in all material respects to the
requirements of the Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder and do not and will not, as of
the applicable effective date as to the Registration Statement and any
amendment thereto and as of the applicable filing date as to the
Prospectus and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter through Raymond James & Associates, Inc. expressly
for use therein;

(e) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, that is
material to the Company and its subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus; and,
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
change in the capital stock or long-term debt of the Company or any of
its subsidiaries, considered on a consolidated basis, or any material
adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries taken as a whole, otherwise than as
set forth or contemplated in the Prospectus;

(f) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all material personal property owned by them, in each case free and
clear of all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not materially affect the
value of

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<PAGE> 4

such property and do not interfere with the use made and proposed to be
made of such property by the Company and its subsidiaries; and any real
property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries;

(g) The Company has been duly incorporated and is validly
existing as a corporation with active status under the laws of the
State of Florida, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectus
and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction; and each subsidiary of the Company
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction;

(h) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable; the shares of Stock initially issuable upon
conversion of the Securities have been duly and validly authorized and
reserved for issuance and, when issued and delivered in accordance with
the provisions of the Securities and the Indenture referred to below,
will be validly issued, fully paid and non-assessable and will conform
to the description of the Stock contained in the Prospectus; and with
respect to each subsidiary of the Company, all of the issued shares of
capital stock of each such subsidiary have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;

(i) The Securities have been duly authorized and, when issued
and delivered pursuant to the provisions of the Indenture and this
Agreement, will have been duly executed, authenticated, issued and
delivered and will constitute valid and legally binding obligations of
the Company entitled to the benefits provided by the Indenture to be
dated as of August __, 1997 (the "Indenture") between the Company and
Reliance Trust Company, as Trustee (the "Trustee"), under which they
are to be issued, which will be substantially in the form filed as an
exhibit to the Registration Statement; the Indenture has been duly
authorized by the Company and duly qualified under the Trust Indenture
Act and, when executed and delivered by the Company and the Trustee,
will constitute a

-4-
<PAGE> 5

valid and legally binding instrument, enforceable in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Securities and the Indenture will conform to the descriptions thereof
in the Prospectus;

(j) The issue and sale of the Securities and the compliance by
the Company with all of the provisions of the Securities, the Indenture
and this Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
material 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 is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Articles of
Incorporation or Bylaws of the Company or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Securities or
the consummation by the Company of the transactions contemplated by
this Agreement or the Indenture, except the registration under the Act
of the Securities and the shares of Stock issuable upon conversion
thereof and such consents, approvals, authorizations, registrations or
qualifications as have been obtained under the Trust Indenture Act, and
such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Securities
by the Underwriters;

(k) Neither the Company nor any of its subsidiaries is in
violation of its Articles of Incorporation or Bylaws or in default in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, material lease or other agreement or instrument
to which it is a party or by which it or any of its properties may be
bound;

(l) The execution and delivery of this Agreement, and the
performance by the Company of its obligations under this Agreement,
have been duly and validly authorized by the Company, and this
Agreement has been duly executed and delivered by the Company and
constitutes the valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms subject, as to
enforcement to bankruptcy, insolvency, reorganization and other laws of
generally applicability relating to or affecting creditors' rights and
to general equity principles;

(m) The statements set forth in the Prospectus under the
captions "Description of Notes" and "Description of Capital Stock",
insofar as they purport to constitute a

-5-
<PAGE> 6

summary of the terms of the Securities and the Stock, and under the
captions "Certain Federal Income Tax Considerations" and
"Underwriting", insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate, complete and
fair;

(n) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually
or in the aggregate have a material adverse effect on the current or
future consolidated financial position, stockholders' equity or results
of operations of the Company and its subsidiaries taken as a whole;
and, to the knowledge of the Company, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others;

(o) The Company is not and, after giving effect to the offering
and sale of the Securities, will not be an "investment company" or an
entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");

(p) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075, Florida Statutes;

(q) Grant Thornton LLP, who have audited certain financial
statements of the Company and its subsidiaries and delivered their
report with respect to the audited consolidated financial statements
and schedules included in the Registration Statement, are, to the best
knowledge of the Company, independent public accountants as required by
the Act and the rules and regulations of the Commission thereunder;

(r) The Company and its subsidiaries have all permits,
licenses, franchises, approvals, consents and authorizations of
governmental or regulatory authorities or private persons or entities
(hereinafter "permit" or "permits") as are necessary to own their
respective properties and to conduct their respective businesses in the
manner described in the Prospectus, subject to such qualifications as
may be set forth therein, except where the failure to have obtained any
such permit has not had and would not have a material adverse effect on
the current or future consolidated financial position, shareholders'
equity or results of operations of the Company and its subsidiaries
taken as a whole; the Company and its subsidiaries have fulfilled and
performed all of their material obligations with respect to each such
permit and no event has occurred which allows, or after notice or lapse
of time would allow, revocation or termination of any such permit or
result in any other material impairment of the rights of the holder of
any such permit, subject in each case to such qualification as may be
set forth in the Prospectus;

-6-
<PAGE> 7

and, except as described in the Prospectus, such permits contain no
restrictions that are materially burdensome to the Company and its
subsidiaries taken as a whole;

(s) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which
they are engaged; and the Company has no reason to believe that the
Company and its subsidiaries will not be able to renew their existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
their respective businesses as a comparable cost;

(t) The Company and its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific
authorizations; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences;

(u) Neither the Company nor any of its subsidiaries has,
directly or indirectly, at any time during the past five years (i) made
any unlawful contribution to any candidate for political office, or
failed to disclose fully any contribution in violation of law, or (ii)
made any payment to any federal, state or foreign governmental
official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the
United States or any jurisdiction thereof or applicable foreign
jurisdictions;

(v) The Company and its subsidiaries have filed all foreign,
federal, state and local tax returns that are required to be filed or
have requested extensions thereof (except in any case in which the
failure so to file would not have a material adverse effect on the
Company and its subsidiaries) and have paid all taxes required to be
paid by them and any other assessment, fine or penalty levied against
them, to the extent that any of the foregoing is due and payable,
except for any such assessment, fine or penalty that is currently being
contested in good faith or as described in or contemplated by the
Prospectus.

(w) Neither the Company nor any of its subsidiaries is in
violation of any federal or state law or regulation relating to (i) the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants or to the storage, handling or transportation of hazardous
or toxic material ("Environmental Laws") or (ii) occupational safety
and health and the Company and its subsidiaries have received all

-7-
<PAGE> 8

permits, licenses or other approvals required of them under applicable
federal and state occupational safety and health and Environmental Laws
and regulations to conduct their respective businesses, and the Company
and its subsidiaries are in compliance with all terms and conditions of
any such permit, license or approval, except any such violation of law
or regulation, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals which would not, individually or in the
aggregate, result in a material adverse effect on the current or future
consolidated financial position, stockholders' equity or results
operations of the Company and its subsidiaries taken as a whole, except
as described in or contemplated by the Prospectus. Neither the Company
nor any of its subsidiaries have any pending or threatened
Environmental Law or occupational safety and health claims against them
nor are there circumstances with respect to any property or operations
of the Company or its subsidiaries that could reasonably be anticipated
to form the basis of an Environmental Law or occupational safety and
health claim against the Company or its subsidiaries which,
individually or in the aggregate, would result in a result in a
material adverse effect on the current or future consolidated financial
position, shareholders' equity or results operations of the Company and
its subsidiaries taken as a whole, except as described in or
contemplated by the Prospectus.

(x) The Company and its subsidiaries own or have the right to
use all patents, patent applications, trademarks, trademark
applications, tradenames, service marks, copyrights, franchises, trade
secrets, software, proprietary or other confidential information and
intangible properties and assets (collectively, "Intangibles")
necessary to their respective businesses as presently conducted or as
the Prospectus indicate the Company and its subsidiaries propose to
conduct, except where the failure to own or have the right to use would
not have a material adverse effect on the current or future
consolidated financial position, shareholders' equity or results of
operations of the Company and its subsidiaries; to the best knowledge
of the Company, none of the Company or its subsidiaries has infringed
or is infringing, and none of the Company or its subsidiaries has
received notice of infringement with respect to, asserted Intangibles
of others; and, to the best knowledge of the Company, there is no
infringement by others of Intangibles of the Company and its
subsidiaries; and

2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price of 100% of the principal amount thereof, plus accrued interest
from August __, 1997, if any, to the Time of Delivery hereunder, the principal
amount of Securities set forth opposite the name of such Underwriter in Schedule
I hereto, and (b) in the event and to the extent that the Underwriters shall
exercise the election to purchase Optional Securities as provided below, the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
the purchase price set forth in clause (a) of this Section 2, that portion of
the aggregate principal amount of Optional Securities as to which such election
shall have been

-8-
<PAGE> 9

exercised (to be adjusted by you so as to eliminate fractions of $1,000)
determined by multiplying such aggregate principal amount of Optional Securities
by a fraction, the numerator of which is the maximum aggregate principal amount
of Optional Securities which such Underwriter is entitled to purchase as set
forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the maximum aggregate principal amount of Optional
Securities which all of the Underwriters are entitled to purchase hereunder.

The Company hereby grants to the Underwriters the right to purchase
at their election up to $15,000,000 aggregate principal amount of Optional
Securities, at the purchase price set forth in clause (a) of the first paragraph
of this Section 2, for the sole purpose of covering overallotments in the sale
of the Firm Securities. Any such election to purchase Optional Securities may be
exercised by written notice from you to the Company, given within a period of 30
calendar days after the date of this Agreement, setting forth the aggregate
principal amount of Optional Securities to be purchased and the date on which
such Optional Securities are to be delivered, as determined by you but in no
event earlier than the First Time of Delivery (as defined in Section 4 hereof)
or, unless you and the Company otherwise agree in writing, earlier than two or
later than five business days after the date of such notice.

3. Upon the authorization by you of the release of the Firm Securities,
the several Underwriters propose to offer the Firm Securities for sale upon the
terms and conditions set forth in the Prospectus.

4. (a) The Securities to be purchased by each Underwriter hereunder
will be represented by one or more global Securities in book-entry form which
will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or its designated custodian. The Company will deliver the
Securities to Raymond James & Associates, Inc., for the account of each
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor by wire transfer, payable to the order of the Company in Federal
(same day) funds, by causing DTC to credit the Securities to the account of
Raymond James & Associates, Inc. at DTC. The Company will cause the certificate
or certificates representing the Securities to be made available to Raymond
James & Associates, Inc. for checking at least twenty-four hours prior to the
Time of Delivery (as defined below) at the office of DTC or its designated
custodian (the "Designated Office"). The time and date of such delivery and
payment shall be, with respect to the Firm Securities, 9:30 a.m., New York time,
on August __, 1997 or such other time and date as Raymond James & Associates,
Inc. and the Company may agree upon in writing, and, with respect to the
Optional Securities, 9:30 a.m., New York time, on the date specified by Raymond
James & Associates, Inc. in the written notice given by Raymond James &
Associates, Inc. of the Underwriters' election to purchase such Optional
Securities, or such other time and date as Raymond James & Associates, Inc. and
the Company may agree upon in writing. Such time and date for delivery of the
Firm Securities is herein called the "First Time of Delivery", such time and
date for delivery of the Optional Securities, if not the First Time of Delivery,
is herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".

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<PAGE> 10

(b) The documents to be delivered at each Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross receipt for the Securities and any additional documents requested by the
Underwriters pursuant to Section 7(j) hereof, will be delivered at the offices
of King & Spalding, 120 West 45th Street, New York, New York 10036 (the "Closing
Location"), and the Securities will be delivered at the Designated Office, all
at such Time of Delivery. A meeting will be held at the Closing Location at 1:00
p.m., New York City time, on the New York Business Day next preceding such Time
of Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.

5. The Company agrees with each of the Underwriters:

(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus prior to the last Time of Delivery
which shall be disapproved by you promptly after reasonable notice
thereof; to advise you, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish you with copies
thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long
as the delivery of a prospectus is required in connection with the
offering or sale of the Securities; to advise you, promptly after it
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus, of the suspension of the
qualification of the Securities or the shares of Stock issuable upon
conversion of the Securities for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;

(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities and the shares of Stock
issuable upon conversion of the Securities for offering and sale (with
the assistance of counsel for the Underwriters) under

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<PAGE> 11

the securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Securities, provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction;

(c) To furnish the Underwriters with copies of the Prospectus
in such quantities as you may from time to time reasonably request,
and, if the delivery of a prospectus is required at any time prior to
the expiration of nine months after the time of issue of the Prospectus
in connection with the offering or sale of the Securities and the
shares of Stock issuable upon conversion of the Securities, and if at
such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference
in the Prospectus in order to comply with the Act, the Exchange Act or
the Trust Indenture Act, to notify you and upon your request to file
such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as you may
from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or
omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the
Securities and the shares of Stock issuable upon conversion of the
Securities at any time nine months or more after the time of issue of
the Prospectus, upon your request but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as many copies
as you may request of an amended or supplemented Prospectus complying
with Section 10(a)(3) of the Act;

(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule
158(c) under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);

(e) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the
Prospectus, not to offer, sell, contract to sell, pledge or otherwise
dispose of, or file a Registration Statement under the Act with respect
to, except as provided hereunder, any securities of the Company that
are substantially similar to the Securities or the Stock, including but
not limited to any securities that are convertible into or exchangeable
for, or that represent the right to receive, Stock or any such
substantially similar securities (other than (i) pursuant to stock

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<PAGE> 12

options, restricted stock, retirement and stock purchase plans existing
on, or upon the conversion or exchange of convertible or exchangeable
securities outstanding as of, the date of this Agreement or (ii) in
payment in whole or in part of the purchase price in connection with
the acquisition of all or a portion of the outstanding capital stock or
assets of another person or entity provided the Company shall have
obtained and delivered to the Underwriters an executed written
agreement of such transferee of any such securities in form and
substance satisfactory to you to be bound by the transfer restrictions
set forth in this Section 5(e)), without the prior written consent of
Raymond James & Associates, Inc.

(f) To furnish to the holders of the Securities as soon as
practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, stockholders'
equity and cash flows of the Company and its consolidated subsidiaries
certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the
effective date of the Registration Statement), consolidated summary
financial information of the Company and its subsidiaries for such
quarter in reasonable detail;

(g) During a period of two years from the effective date of the
Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to stockholders,
and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which the Securities
or any class of securities of the Company is listed; and (ii) such
additional information concerning the business and financial condition
of the Company as you may from time to time reasonably request,
provided that to the extent any such information is non-public, you
agree to keep such information confidential until such time as such
information is in the public domain (such financial statements to be on
a consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders
generally or to the Commission);

(h) To use the net proceeds received by it from the sale
of the Securities pursuant to this Agreement in the manner specified in
the Prospectus under the caption "Use of Proceeds";

(i) To reserve and keep available at all times, free of
preemptive rights, shares of Stock for the purpose of enabling the
Company to satisfy any obligations to issue shares of its Stock upon
conversion of the Securities; and

(j) To use its best efforts to list, subject to notice of
issuance, the shares of Stock issuable upon the conversion of the
Securities on the Nasdaq National Market.

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<PAGE> 13

6. The Company covenants and agrees with the several Underwriters
that the Company will pay or cause to be paid the following: (a) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities and the shares of Stock
issuable upon conversion of the Securities under the Act and all other expenses
in connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus and the Prospectus and amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (b) the cost of printing or producing any Agreement
among Underwriters, this Agreement, the Indenture, the Blue Sky and Legal
Investment Memoranda, closing documents (including any compilations thereof) and
any other documents in connection with the offering, purchase, sale and delivery
of the Securities; (c) all expenses in connection with the qualification of the
Securities and the shares of Stock issuable upon the conversion of the
Securities for offering and sale under state securities laws as provided in
Section 5(b) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky and Legal Investment surveys; (d) all fees and expenses in connection
with listing the Securities and the shares of Stock issuable upon conversion of
the Securities on the Nasdaq National Market; (e) any fees charged by securities
rating services for rating the Securities; (f) the filing fees incident to, and
the fees and disbursements of counsel to the Underwriters in connection with,
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Securities; (g) the cost of preparing the
Securities; (h) the fees and expenses of the Trustee and any agent of the
Trustee and the fees and disbursements of counsel for the Trustee in connection
with the Indenture and the Securities; and (i) all other costs and expenses
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. It is understood, however, that
except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, transfer taxes on resale of any of the Securities by them, and
any advertising expenses connected with any offers they may make.

7. The obligations of the Underwriters hereunder shall be
subject, in their discretion, to the condition that all representations and
warranties and other statements of the Company herein are, at and as of such
Time of Delivery, true and correct, the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed, and to
the following additional conditions:

(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall
have been issued and no proceeding for that purpose shall have been
initiated or, to the best knowledge of the Company, threatened by the
Commission; and all requests for additional information on the part of
the Commission shall have been complied with to your reasonable
satisfaction;

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<PAGE> 14

(b) King & Spalding, counsel for the Underwriters, shall
have furnished to you such opinion or opinions, dated such Time
of Delivery, with respect to certain matters covered in paragraphs
(i), (ii), (vii), (viii), (ix) and (xvi) of subsection (c) below as
well as such other related matters as you may reasonably request, and
such counsel shall have received such papers and information as they
may reasonably request to enable them to pass upon such matters; in
rendering such opinion, such counsel may rely as to all matters of
Florida law upon the opinion of Holland & Knight LLP;

(c) Holland & Knight LLP, counsel for the Company, shall
have furnished to you their written opinion, dated such Time of
Delivery, in form and substance satisfactory to you, to the effect
that:

(i) The Company has been duly incorporated and is
validly existing as a corporation with active status under the
laws of the State of Florida, with power and authority
(corporate and other) to own its properties and conduct its
business as described in the Prospectus;

(ii) The Company has an authorized capitalization as
set forth in the Prospectus and all of the issued shares of
capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable;
and the shares of Stock initially issuable upon conversion of
the Securities have been duly and validly authorized and
reserved for issuance and, when issued and delivered in
accordance with the provisions of the Securities and the
Indenture, will be duly and validly issued and fully paid and
non-assessable; and will conform in all material respects to
the description of the Stock contained in the Prospectus;

(iii) Each of the Company and its subsidiaries has
been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, or is subject to no material liability or
disability by reason of failure to be so qualified in any such
jurisdiction (such counsel being entitled to rely in respect of
the opinion in this clause upon opinions of local counsel and
in respect of matters of fact upon certificates of officers of
the Company, provided that such counsel shall state that they
believe that both you and they are justified in relying upon
such opinions and certificates);

(iv) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation;
and all of the issued shares of capital stock of each such
subsidiary have been duly and validly authorized and issued,
are fully paid and non-assessable, and, to the knowledge of
such counsel after investigation, are

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<PAGE> 15

owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims other than those
arising pursuant to loan agreements disclosed in the
Prospectus; and, except for the shares of stock of any of the
Company's subsidiaries owned by the Company, to the knowledge
of such counsel after investigation, neither the Company nor
any of its subsidiaries own any shares of stock or any other
equity securities of any corporation or has any equity
interest in any firm, partnership, association or other
entity, except as described by the Prospectus (such counsel
being entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company
or its subsidiaries, provided that such counsel shall state
that they believe that both you and they are justified in
relying upon such opinions and certificates);

(v) Neither the Company nor any of its
subsidiaries is in violation of its Articles of Incorporation
or Bylaws or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, or
lease or agreement or other instrument to which it is a party
or by which it or any of its properties may be bound except
for any such violation or default that would not have a
material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of
operations of the Company and its subsidiaries;

(vi) To such counsel's knowledge after investigation
and other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company
or any of its subsidiaries is a party or of which any property
of the Company or any of its subsidiaries is the subject which,
if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a
material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; and, to the
best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others;

(vii) This Agreement has been duly authorized,
executed and delivered by the Company;

(viii) The Securities have been duly authorized,
executed, authenticated, issued and delivered and constitute
valid and legally binding obligations of the Company entitled
to the benefits provided by the Indenture; and the Securities
and the Indenture conform to the descriptions thereof in the
Prospectus;

(ix) The Indenture has been duly authorized,
executed and delivered by the parties thereto and constitutes
a valid and legally binding instrument,

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<PAGE> 16

enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the
Indenture has been duly qualified under the Trust Indenture Act
(it being understood that Holland & Knight LLP may rely as to
all matters of New York law on the opinion of King & Spalding);

(x) The issue and sale of the Securities being
issued at such Time of Delivery and the compliance by the
Company with all of the provisions of the Securities, the
Indenture and this Agreement and the consummation of the
transactions herein and therein contemplated will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument filed as an exhibit to the Registration Statement or
any document incorporated by reference therein or any other
material agreement or instrument known to such counsel to which
the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any
of the property or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any
violation of the provisions of the Articles of Incorporation or
Bylaws of the Company or any statute or any order, rule or
regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties;

(xi) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale
of the Securities being issued at such Time of Delivery or the
consummation by the Company of the transactions contemplated by
this Agreement or the Indenture, except such as have been
obtained under the Act and the Trust Indenture Act, such as may
be required under the Act in connection with the shares of
Stock issuable upon conversion of the Securities, and such
consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution
of the Securities by the Underwriters;

(xii) The statements set forth in the Prospectus under
the captions "Description of Notes" and "Description of Capital
Stock", insofar as they purport to constitute a summary of the
terms of the Securities, and under the captions "Certain
Federal Income Tax Considerations" and "Underwriting," insofar
as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair;

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<PAGE> 17

(xiii) The Company is not an "investment company" or
an entity "controlled" by an "investment company", as such
terms are defined in the Investment Company Act;

(xiv) The Registration Statement has become effective
under the Act and, to such counsel's knowledge after
investigation, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose are pending before or threatened by the
Commission;

(xv) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made
by the Company prior to such Time of Delivery (other than the
financial statements and related schedules included or
incorporated therein, as to which such counsel need express no
opinion), when they were filed with the Commission complied as
to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission
thereunder; and they have no reason to believe that any of such
documents, when such documents were so filed, contained an
untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made when such documents were so filed, not misleading;
and

(xvi) The Registration Statement and the Prospectus
and any further amendments and supplements thereto made by the
Company prior to such Time of Delivery (other than the
financial statements and related schedules included or
incorporated therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Act and the Trust Indenture Act and the
rules and regulations thereunder; although they do not assume
any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement or
the Prospectus, except for those referred to in the opinion in
subsection (ix) of this Section 7(c), they have no reason to
believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company
prior to such Time of Delivery (other than the financial
statements and related schedules included or incorporated
therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading or
that, as of its date, the Prospectus or any further amendment
or supplement thereto made by the Company prior to such Time of
Delivery (other than the financial statements and related
schedules included or incorporated therein, as to which such
counsel need express no opinion) contained an untrue statement
of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or
that, as of such Time of Delivery, either the Registration
Statement or the Prospectus or any

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<PAGE> 18

further amendment or supplement thereto made by the Company
prior to such Time of Delivery (other than the financial
statements and related schedules included or incorporated
therein, as to which such counsel need express no opinion)
contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made,
not misleading; and they do not know of any amendment to the
Registration Statement required to be filed or of any contracts
or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus or required to be
described in the Registration Statement or the Prospectus which
are not filed or incorporated by reference or described as
required.

In rendering such opinions, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and public
officials. The phrases "to such counsel's knowledge after
investigation" and "known to such counsel after investigation" are
limited to the actual current knowledge of the Holland & Knight LLP
lawyers, currently with the firm, who have given substantive attention
to matters relating to the Company's affairs. The phrases also indicate
that such counsel has made reasonable inquiry of the representatives of
the Company who, in the judgment of such counsel, are likely to know
the facts upon which the opinion will be based. The opinion shall also
state that as to matters of Florida law, King & Spalding, counsel to
the Underwriters, shall be entitled to rely upon such opinion.

(d) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at
each Time of Delivery, Grant Thornton LLP shall have furnished to you a
letter or letters, dated the respective dates of delivery thereof, in
form and substance satisfactory to you, to the effect set forth in
Annex I hereto;

(e) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus
there shall not have been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in Clause (i) or (ii), is in the
judgment of the Representatives so

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<PAGE> 19

material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Securities
being issued at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;

(f) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization," as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Act, and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities;

(g) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the Nasdaq National Market; (ii) a
suspension or material limitation in trading in the Company's
securities on the Nasdaq National Market; (iii) a general moratorium on
commercial banking activities declared by either Federal or New York or
Florida State authorities; or (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the
United States of a national emergency or war, if the effect of any such
event specified in this Clause (iv) in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Securities being issued at
such Time of Delivery on the terms and in the manner contemplated in
the Prospectus;

(h) The shares of Stock issuable upon conversion of the
Securities shall have been duly listed, subject to notice of issuance,
on the Nasdaq National Market;

(i) The Company shall have furnished or caused to be furnished
to you at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as
to the performance by the Company of all of its obligations hereunder
to be performed at or prior to such Time of Delivery, and as to such
other matters as you may reasonably request, and the Company shall have
furnished or caused to be furnished certificates as to the matters set
forth in subsections (a) and (e) of this Section.

8. (a) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or any audio or visual materials supplied or reviewed and approved by
the Company and used in connection with marketing the Securities (including,
without limitation, slides, videos, films and tape recordings) or arise out of

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<PAGE> 20

or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Raymond James & Associates, Inc. expressly for use therein; provided,
further that the Company will not be liable to any Underwriter with respect to
any such untrue statement or omission made in any Preliminary Prospectus that is
corrected in the Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased Securities
from such Underwriter but was not sent or given a copy of the Prospectus (as
amended or supplemented) at or prior to the written confirmation of the sale of
such Securities to such person in any case where such delivery of the Prospectus
(as amended or supplemented) is required by the Act, unless such failure to
deliver the Prospectus (as amended or supplemented) was a result of a
noncompliance by the Company with Sections 5(a) or (c) of this Agreement.

(b) Each Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the Company
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or any audio or visual
materials supplied or reviewed and approved by the Company and used in
connection with marketing the Securities (including, without limitation, slides,
videos, films and tape recordings) or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Raymond James &
Associates, Inc. expressly for use therein; and will reimburse the Company for
any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending any such action or claim as such expenses are
incurred.

(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified

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<PAGE> 21

party otherwise than under such subsection. In case any such action shall be
brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim 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
any indemnified party.

(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Securities. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro

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<PAGE> 22

rata allocation (even if the Underwriters 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 above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this subsection (d),
no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter 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 Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.

(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.

9. (a) If any Underwriter shall default in its obligation to purchase
the Securities which it has agreed to purchase hereunder, you may in your
discretion arrange for you or another party or other parties to purchase such
Securities on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such
Securities, then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to you
to purchase such Securities on such terms. In the event that, within the
respective prescribed periods, you notify the Company that you have so arranged
for the purchase of such Securities, or the Company notifies you that it has so
arranged for the purchase of such Securities, you or the Company shall have the
right to postpone such Time of Delivery for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Securities.

(b) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Underwriter or Underwriters by you and the
Company as provided in

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<PAGE> 23

subsection (a) above, the aggregate principal amount of such Securities which
remains unpurchased does not exceed one-eleventh of the aggregate principal
amount of all the Securities to be purchased at such Time of Delivery, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the principal amount of Securities which such Underwriter agreed to
purchase hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the
principal amount of Securities which such Underwriter agreed to purchase
hereunder) of the Securities of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.

(c) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters by you
and the Company as provided in subsection (a) above, the aggregate principal
amount of Securities which remains unpurchased exceeds one-eleventh of the
aggregate principal amount of all the Securities to be purchased at such Time of
Delivery, or if the Company shall not exercise the right described in subsection
(b) above to require non-defaulting Underwriters to purchase Securities of a
defaulting Underwriter or Underwriters, then this Agreement (or, with respect to
the Second Time of Delivery, the obligation of the Underwriters to purchase and
of the Company to sell the Optional Securities) shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter or the Company,
except for the expenses to be borne by the Company and the Underwriters as
provided in Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.

10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.

11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason any Securities
are not delivered by or on behalf of the Company as provided herein, the Company
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Securities not so delivered, but the Company shall then
be under no further liability to any Underwriter in respect of the Securities
not so delivered except as provided in Sections 6 and 8 hereof.

12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or

-23-
<PAGE> 24

agreement on behalf of any Underwriter made or given by you jointly or by
Raymond James & Associates, Inc. on behalf of you as the representatives.

All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the Representatives in care of Raymond James &
Associates, Inc., 880 Carillon Parkway, St. Petersburg, Florida 33716,
[ATTENTION: REGISTRATION DEPARTMENT]; and if to the Company shall be delivered
or sent by mail, telex or facsimile transmission to the address of the Company
set forth in the Registration Statement, Attention: Chief Operating Officer;
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire or
telex constituting such Questionnaire, which address will be supplied to the
Company by you on request. Any such statements, requests, notices or agreements
shall take effect upon receipt thereof.

13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters and the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Securities from any Underwriter shall be deemed a successor or assign
by reason merely of such purchase.

14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.

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

16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.

-24-
<PAGE> 25

If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and each of the Representatives plus one
for each counsel counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement among each of the Underwriters and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination, upon request, but without warranty on your part as to the authority
of the signers thereof.

Very truly yours,

Reptron Electronics, Inc.

By:
-------------------------------------
Name: Paul J. Plante
Title: Chief Operating Officer

Accepted as of the date hereof:

Raymond James & Associates, Inc.
Forum Capital Markets L.P.
Stephens Inc.

By:
----------------------------------
(Raymond James & Associates, Inc.)
On behalf of each of the
Underwriters

-25-
<PAGE> 26

SCHEDULE I

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
PRINCIPAL AMOUNT OPTIONAL SECURITIES TO BE
OF FIRM SECURITIES PURCHASED IF MAXIMUM
UNDERWRITER TO BE PURCHASED OPTION EXERCISED
----------- ------------------ --------------------------

<S> <C> <C>
Raymond James &
Associates, Inc. . . . . . . . . . . $
Forum Capital Markets L.P. . . . . . . $
Stephens Inc. . . . . . . . . . . . . .
------------ -----------

Total . . . . . . . . . . . . . . . . . $100,000,000 $15,000,000
============ ===========
</TABLE>
<PAGE> 27

ANNEX I

Pursuant to Section 7(e) of the Underwriting Agreement, Grant Thornton
LLP shall furnish letters to the Underwriters with respect to the Company and
its subsidiaries to the effect that:

(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;

(ii) In their opinion, the consolidated financial statements
and any supplementary financial information and schedules examined by
them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and regulations
thereunder;

(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997 incorporated by reference into the Prospectus and,
on the basis of specified procedures including inquiries of officials
of the Company who have responsibility for financial and accounting
matters regarding whether the unaudited condensed consolidated
financial statements referred to in paragraph (vi)(A)(i) below comply
as to form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published
rules and regulations, nothing came to their attention that caused them
to believe that the unaudited condensed consolidated financial
statements do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Exchange Act and
the related published rules and regulations;

(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for such
five fiscal years which were included or incorporated by reference in
the Company's Annual Reports on Form 10-K for such fiscal years;

(v) They have compared the information in the Prospectus
under selected captions with the disclosure requirements of Regulation
S-K and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing procedures
that caused them to believe that this information does not conform
<PAGE> 28

in all material respects with the disclosure requirements of Items
301, 302, 402 and 503(d), respectively, of Regulation S-K;

(vi) On the basis of limited procedures, not constituting
an examination in accordance with generally accepted auditing
standards, consisting of a reading of the unaudited financial
statements and other information referred to below, a reading of the
latest available interim financial statements of the Company and its
subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, inquiries of
officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may
be specified in such letter, nothing came to their attention that
caused them to believe that:

(A) (i) the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Company's
Quarterly Report on Form 10- Q for the quarter ended March 31,
1997 incorporated by reference in the Prospectus do not comply
as to form in all material respects with the applicable
accounting requirements of the Exchange Act as it applies to
Form 10-Q and the related published rules and regulations, or
(ii) any material modifications should be made to the unaudited
condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows
included in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 incorporated by reference in the
Prospectus, for them to be conformity with generally accepted
accounting principles;

(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in
the Company's Annual Report on Form 10-K for the most recent
fiscal year;

(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
unaudited condensed financial statements referred to in Clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with
the basis for the audited financial statements included or
incorporated by reference in the Company's Annual Report on
Form 10-K for the most recent fiscal year;

-2-
<PAGE> 29

(D) as of a specified date not more than five
days prior to the date of such letter, there have been any
changes in the consolidated capital stock (other than
issuances of capital stock upon exercise of options and stock
appreciation rights, upon earn-outs of performance shares and
upon conversions of convertible securities, in each case which
were outstanding on the date of the latest balance sheet
included or incorporated by reference in the Prospectus) or
any increase in the consolidated long-term debt of the Company
and its subsidiaries, or any decreases in consolidated net
current assets or stockholders equity or other items specified
by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared
with amounts shown in the latest balance sheet included or
incorporated by reference in the Prospectus, except in each
case for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and

(E) for the period from the date of the latest
financial statements included or incorporated by reference in
the Prospectus to the specified date referred to in Clause (D)
there were any decreases in consolidated net revenues or
operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Representatives, except
in each case for increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and

(vii) In addition to the examination referred to in their
report incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an examination in
accordance with generally accepted auditing standards, with respect to
certain amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records
of the Company and its subsidiaries, which appear in the Prospectus
(excluding documents incorporated by reference) or in Part II of, or in
exhibits and schedules to, the Registration Statement specified by the
Representatives or in documents incorporated by reference in the
Prospectus specified by the Representatives, and have compared certain
of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found
them to be in agreement.

-3-

<PAGE> 1
EXHIBIT 4.1

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

REPTRON ELECTRONICS, INC.

AND

RELIANCE TRUST COMPANY,

as TRUSTEE

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

INDENTURE

Dated as of August __, 1997

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

$100,000,000

___% CONVERTIBLE SUBORDINATED NOTES
DUE AUGUST 1, 2004

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

<PAGE> 2

Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:

<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- ---------------- ---------
<S> <C> <C>
Section 310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608
610
Section 311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
Section 312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701
702(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702(c)
Section 313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(b)
Section 314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 603(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Section 316 (a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1003
Section 318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
</TABLE>

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

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

<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----

ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION

<S> <C>
SECTION 101. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Agent Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Applicable Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Closing Price Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Constituent Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Continuing Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conversion Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Conversion Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
</TABLE>

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

Note: This table of contents shall not, for any purpose, be deemed to be
a part of the indenture.

-i-

<PAGE> 4

<TABLE>
<CAPTION>
Page
----
<S> <C>
Designated Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Expiration Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Non-electing Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Payment Blockage Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Record Date Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Reference Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Repurchase Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Repurchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Security Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Security Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trading Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 104. Acts of Holders; Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 105. Notices, Etc., to Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 107. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 110. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 111. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 112. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE TWO

SECURITY FORMS

SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 203. Form of Reverse of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 204. Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 205. Form of Conversion Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 206. Form of Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

ARTICLE THREE

THE SECURITIES

SECTION 301. Title and Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 305. Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

ARTICLE FOUR

SATISFACTION AND DISCHARGE

SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

ARTICLE FIVE

REMEDIES

SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 502. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . . . . . . 39
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 505. Trustee May Enforce Claims Without Possession of Securities . . . . . . . . . . . . . . . . . . . . 41
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 507. Limitation or Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 514. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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ARTICLE SIX

THE TRUSTEE
<S> <C> <C>
SECTION 601. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 603. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 605. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 606. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 608. Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 609. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 610. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 612. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . . . . 50
SECTION 613. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 614. Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

ARTICLE SEVEN

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. Company to Furnish Trustee Names and Addresses of Holders . . . . . . . . . . . . . . . . . . . . . 52
SECTION 702. Preservation of Information; Communications to Holders . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

ARTICLE EIGHT

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801. Company May Consolidate, Etc., Only on Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 802. Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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ARTICLE NINE

SUPPLEMENTAL INDENTURES

<S> <C> <C>
SECTION 901. Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 902. Supplemental Indentures with Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 905. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 906. Reference in Securities to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 907. Notice of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

ARTICLE TEN

COVENANTS

SECTION 1001. Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1003. Money for Security Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 1004. Statement by Officers as to Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 1005. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 1006. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1007. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1008. Book-Entry System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1009. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1010. Further Instruments and Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

SECTION 1101. Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1102. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1103. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1104. Selection by Trustee of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1105. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1106. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1107. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
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SECTION 1108. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1109. Conversion Arrangement on Call for Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

ARTICLE TWELVE

SUBORDINATION OF SECURITIES

SECTION 1201. Securities Subordinate to Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 1202. No Payments in Certain Circumstances; Payment Over of Proceeds Upon Dissolution, Etc . . . . . . . . 66
SECTION 1203. Prior Payment to Senior Indebtedness Upon
Acceleration of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 1204. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 1205. Payment Permitted if No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 1206. Subrogation to Rights of Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 1207. Provisions Solely to Define Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 1208. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 1209. No Waiver of Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 1210. Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 1211. Reliance on Judicial Order or Certificate of Liquidating Agent . . . . . . . . . . . . . . . . . . . 72
SECTION 1212. Trustee Not Fiduciary for Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 1213. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights . . . . . . . . 71
SECTION 1214. Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 1215. Certain Conversions Deemed Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

ARTICLE THIRTEEN

CONVERSION OF SECURITIES

SECTION 1301. Conversion Privilege and Conversion Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 1302. Exercise of Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 1303. Fractions of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 1304. Adjustment of Conversion Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 1305. Notice of Adjustments of Conversion Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 1306. Notice of Certain Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 1307. Company to Reserve Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
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SECTION 1308. Taxes on Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 1309. Covenant as to Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 1310. Cancellation of Converted Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 1311. Provision in Case of Consolidation, Merger or Sale of Assets . . . . . . . . . . . . . . . . . . . . 83
SECTION 1312. Responsibility of Trustee for Conversion Provisions . . . . . . . . . . . . . . . . . . . . . . . . 84

ARTICLE FOURTEEN

REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE OF CONTROL

SECTION 1401. Right to Require Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 1402. [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 1403. Notices, Method of Exercising Repurchase Right, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 1404. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 1405. Consolidation, Merger, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

ARTICLE FIFTEEN

IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS

SECTION 1501. Indenture and Securities Solely Corporate Obligations . . . . . . . . . . . . . . . . . . . . . . . 90
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INDENTURE, dated as of August __, 1997, between Reptron Electronics,
Inc., a corporation duly organized and existing under the laws of the State of
Florida (herein called the "Company"), having its principal office at 14401
McCormick Drive, Tampa, Florida 33626, and Reliance Trust Company, a state
banking corporation duly organized and existing under the laws of the State of
Georgia, as Trustee (herein called the "Trustee").

RECITALS OF THE COMPANY

The Company has duly authorized the creation of an issue of its ___%
Convertible Subordinated Notes Due August 1, 2004 (herein called the
"Securities") of substantially the tenor and amount hereinafter set forth, and
to provide therefor the Company has duly authorized the execution and delivery
of this Indenture.

All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done. Further, all things necessary to duly authorize the issuance of the
Common Stock of the Company issuable upon the conversion of the Securities, and
to duly reserve for issuance the number of shares of Common Stock issuable upon
such conversion, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION

SECTION 101. Definitions.

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

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

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

<PAGE> 12

(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted at the date of
such computation; and

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

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

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

"Agent Member" means any member of, or participant in, the Depositary.

"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Global Security to the extent
applicable to such transaction and as in effect from time to time.

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

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

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

"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New
York, Atlanta, Georgia or Tampa, Florida, are authorized or obligated by law or
executive order to close.

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<PAGE> 13
"Change of Control" has the meaning specified in Section 1404(b).

"Closing Price Per Share" means, with respect to the Common Stock of
the Company, on any day, the reported last sales price regular way per share
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case (i) on the
Nasdaq National Market, or if the Common Stock is not quoted thereon, the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, or (ii) if not or quoted on the Nasdaq National Market
listed or admitted to trading on any national securities exchange, the average
of the closing bid and asked prices in the over-the-counter market as furnished
by any New York Stock Exchange member firm selected from time to time by the
Company for that purpose.

"Code" has the meaning specified in Section 201.

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

"Common Stock" means the Common Stock, par value $.01 per share, of
the Company authorized at the date of this instrument as originally executed.
Subject to the provisions of Section 1311, shares issuable on conversion or
repurchase of Securities shall include only shares of Common Stock or shares of
any class or classes of common stock resulting from any reclassification or
reclassifications thereof; provided, however, that if at any time there shall
be more than one such resulting class, the shares so issuable on conversion of
Securities shall include shares of all such classes, and the shares of each
such class then so issuable shall be substantially in the proportion which the
total number of shares of such class resulting from all such reclassifications
bears to the total number of shares of all such classes resulting from all such
reclassifications.

"common stock" includes any stock of any class of capital stock which
has no preference in respect of dividends or of amount payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
issuer thereof and which is not subject to redemption by the issuer thereof.

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

"Company Notice" has the meaning specified in Section 1403.

"Company Order" or "Company Request" means a written order or request
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its

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<PAGE> 14
President or a Vice President, and by its Treasurer, an Assistant Treasurer,
its Secretary or an Assistant Secretary, and delivered to the Trustee.

"Constituent Person" has the meaning specified in Section 1311.

"Continuing Director" means at any date a member of the Company's
Board of Directors (i) who was a member of such Board on the date of the
Indenture or (ii) who was nominated or elected by at least two-thirds of the
directors who were Continuing Directors at the time of such nomination or
election or whose election to the Company's Board of Directors was recommended
or endorsed by at least two-thirds of the directors who were Continuing
Directors at the time of such election.

"Conversion Agent" means any Person authorized by the Company to
convert Securities in accordance with Article Thirteen. The Company has
initially appointed the Trustee as its Conversion Agent.

"Conversion Price" has the meaning specified in Section 1404.

"Conversion Rate" has the meaning specified in Section 1301.

"Corporate Trust Office" means the principal corporate trust office of
the Trustee at which, at any particular time, its corporate trust business
shall be administered, which office at the date hereof is located at 3384
Peachtree Road, Suite 900, Atlanta, Georgia 30326-1106, except that for
purposes of Section 1002, such term shall mean the office or agency of the
Trustee in the Borough of Manhattan, the City of New York, which office at the
date hereof is located at c/o Chase Melon, Shareholder Services, 15th Floor,
450 West 33rd Street, New York, New York 10001.

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

"Custodian" means Reliance Trust Company, as custodian with respect to
any Global Security, or any successor entity thereto.

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

"Depositary" means, with respect to any Global Securities, a clearing
agency that is registered as such under the Exchange Act and is designated by
the Company to act as Depositary for such Global Securities (or any successor
securities clearing agency so registered).

"Designated Senior Indebtedness" means any particular Senior
Indebtedness in which the instrument creating or evidencing the same or the
assumption or guarantee thereof (or

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<PAGE> 15
related agreements or documents to which the Company is a party) expressly
provides that such indebtedness shall be "Designated Senior Indebtedness" for
purposes of the Indenture (provided that such instrument, agreement or other
document may place limitations and conditions on the right of such Senior
Indebtedness to exercise the rights of Designated Senior Indebtedness).

"DTC" means The Depositary Trust Company, a New York corporation.

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

"Exchange Act" means the United States Securities Exchange Act of 1934
(or any successor statute), as amended from time to time.

"Expiration Date" has the meaning specified in Section 104.

"Expiration Time" has the meaning specified in Section 1304.

"Global Security" means a Security that is registered in the Security
Registrar in the name of a Depositary or a nominee thereof.

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

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

"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.

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

"Non-electing Share" has the meaning specified in Section 1311.

"Notice of Default" means a written notice of the kind specified in
Section 501(4) or 501(5).

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<PAGE> 16

"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President or a Vice President, and
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 1004 shall be the
principal executive, financial or accounting officer of the Company.

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

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

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

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

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

(iv) Securities converted into Common Stock pursuant to Article
Thirteen;

provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities are present at a meeting of Holders
for quorum purposes or have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such determination as to the presence of a quorum or upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the

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<PAGE> 17

Trustee the pledgee's right to act with respect to such Securities and that the
pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.

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

"Payment Blockage Notice" has the meaning specified in Section 1202.

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

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

"Record Date Period" means the period from the close of business on
any Regular Record Date next preceding any Interest Payment Date to the opening
of business on such Interest Payment Date.

"Record Date" means any Regular Record Date or Special Record Date.

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

"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.

"Reference Date" has the meaning specified in Section 1304.

"Regular Record Date" for the interest payable on any Interest Payment
Date means the January 15 or July 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.

"Repurchase Date" has the meaning specified in Section 1401.

"Repurchase Price" has the meaning specified in Section 1401.

"Responsible Officer", when used with respect to the Trustee, means
any officer within the Corporate Trust Office of the Trustee (including without
limitation any vice president,

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<PAGE> 18

assistant treasurer, assistant secretary, corporate trust officer, assistant
corporate trust officer or other employee of the Trustee customarily performing
functions similar to those performed by any of the above designated officers)
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge and
familiarity with the particular subject.

"Securities" has the meaning specified in the first paragraph under
the caption "Recitals of the Company".

"Securities Act" means the United States Securities Act of 1933 (or
any successor statute), as amended from time to time.

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

"Senior Indebtedness" means the principal of (and premium, if any) and
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post- petition
interest is allowable as a claim in any such proceeding) on, and all fees and
other amounts payable in connection with, the following, whether absolute or
contingent, secured or unsecured, due or to become due, outstanding on the date
of the Indenture or thereafter created, incurred or assumed: (a) indebtedness
of the Company to banks, insurance companies and other financial institutions
evidenced by credit or loan agreements, notes or other written obligations, (b)
all other indebtedness of the Company (including obligations of the Company
arising from its guarantee of the indebtedness of others) other than the
Securities, whether outstanding on the date of this Indenture or thereafter
created, incurred or assumed, which is (i) for money borrowed or (ii) evidenced
by a note, security, debenture, bond or similar instrument or guarantee
thereof, (c) obligations of the Company as lessee under leases required to be
capitalized on the balance sheet of the lessee under generally accepted
accounting principles, and (d) renewals, extensions, modifications,
restatements and refundings of, and any amendments, modifications or
supplements to, or any indebtedness or obligation issued in exchange for, any
such indebtedness or obligation described in clauses (a) through (c) of this
paragraph; provided that Senior Indebtedness shall not include (i) indebtedness
to a Subsidiary or other Affiliate of the Company, (ii) any such indebtedness
or obligation if the terms of such indebtedness or obligation (or the terms of
the instrument under which, or pursuant to which, it is issued) expressly
provided that such indebtedness or obligation shall not be senior in right of
payment to the Securities, or expressly provide that such indebtedness or
obligation is pari passu with or junior to the Securities and (iii) accounts
payable of the Company to trade creditors. Notwithstanding the foregoing,
unsecured indebtedness of the Company shall only be included in Senior
Indebtedness if the incurrence of such unsecured indebtedness should not, in
the opinion of counsel or a nationally recognized accounting firm experienced
in tax matters, cause the Securities to be considered "corporate acquisition
indebtedness" within the meaning of Section 279 of the Internal Revenue Code
of 1986, as amended.

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<PAGE> 19

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

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

"Subsidiary" means a corporation or limited liability company more
than 50% of the outstanding voting stock, membership interests or units of
which is owned, directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries. For the
purposes of this definition, "voting stock" means stock, membership interests
or units which ordinarily has voting power for the election of directors or
managers (in the case of a limited liability company), whether at all times or
only so long as no senior class of stock has such voting power by reason of any
contingency.

"Trading Days" means (i) if the Common Stock is quoted on the Nasdaq
National Market or any other system of automated dissemination of quotations of
securities prices, days on which trades may be effected through such system;
(ii) if the Common Stock is listed or admitted for trading on any national
securities exchange, days on which such national securities exchange is open
for business; or (iii) if the Common Stock is not listed or admitted for
trading on any national securities exchange or quoted on the Nasdaq National
Market or any other system of automated dissemination of quotation of
securities prices, days on which the Common Stock is traded regular way in the
over-the-counter market and for which a closing bid and a closing asked price
for the Common Stock are available.

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

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

"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".

SECTION 102. Compliance Certificates and Opinions.

Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating

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<PAGE> 20

to the proposed action have been complied with and an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with, except that in the case of any such application
or request as to which the furnishing of documents is specifically required by
any provision of this Indenture relating to such particular application or
request, no additional certificate or opinion need be furnished.

Every certificate (other than certificates provided pursuant to
Section 1004) or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include, without limitation:

(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions in
this Indenture relating to 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 each such individual,
each such individual has made such examination or investigation as is
necessary to enable each such individual to express an informed
opinion as to whether or not such covenant or condition has been
complied with; and

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

SECTION 103. Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

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

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<PAGE> 21

exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.

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

SECTION 104. Acts of Holders; Record Dates.

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

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

(d) The Company may set any day as a record date for the purpose of
determining the Holders entitled to give, make or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Indenture to be given, made or taken by Holders; provided
that the Company may not set a record date for, and the provisions of this
Section 104(d) shall not apply with respect to, the giving or making of any
notice, declaration, request or direction referred to in Section 104(e). If
any record date is set pursuant to this Section 104(d), the Holders on such
record date, and only such Persons, shall be entitled to take the relevant
action, whether or not such Holders remain Holders after such record date;
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Expiration Date by Holders of the requisite principal
amount of Securities on

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<PAGE> 22

such record date. Nothing in this Section 104(d) shall be construed to prevent
the Company from setting a new record date for any action for which a record
date has previously been set pursuant to this paragraph (whereupon the record
date previously set shall automatically and with no action by any Person be
cancelled and of no effect), and nothing in this Section 104(d) shall be
construed to render ineffective any action taken by Holders of the requisite
principal amount of Securities on the date such action is taken. Promptly after
any record date is set pursuant to this Section 104(d), the Company, at its own
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Trustee in writing and to
each Holder in the manner set forth in Section 106.

(e) The Trustee may set any day as a record date for the purpose of
determining the Holders entitled to join in the giving or making of (i) any
Notice of Default, (ii) any declaration of acceleration referred to in Section
502, (iii) any request to institute proceedings referred to in Section 507(2),
or (iv) any direction referred to in Section 512. If any record date is set
pursuant to this Section 104(e), the Holders on such record date, and only such
Persons, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record date;
provided that no such action be effective hereunder unless taken on or prior to
the applicable Expiration Date by Holders of the requisite principal amount of
Securities on such record date. Nothing in this Section 104(e) shall be
construed to prevent the Trustee from setting a new record date for any action
for which a record date has previously been set pursuant to this Section 104(e)
(whereupon the record date previously set shall automatically and with no
action by any Person be cancelled and of no effect), and nothing in this
Section 104(e) shall be construed to render ineffective any action taken by
Holders of the requisite principal amount of Securities on the date such action
is taken. Promptly after any record date is set pursuant to this Section
104(e), the Trustee, at the Company's expense, shall cause notice of such
record date, the proposed action by Holders and the applicable Expiration Date
to be given to the Company in writing and to each Holder of Securities in the
manner set forth in Section 106.

(f) With respect to any record date set pursuant to Sections 104(d)
or 104(e), the party which sets such record date may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party in
writing, and to each Holder in the manner set forth in Section 106, on or prior
to the existing Expiration Date. If an Expiration Date is not designated with
respect to any record date set pursuant to Sections 104(d) or 104(e), the party
which set such record date shall be deemed to have initially designated the
180th day after such record date as the Expiration Date with respect thereto,
subject to its right to change the Expiration Date as provided in this
paragraph. Notwithstanding the foregoing, no Expiration Date shall be later
than the 180th day after the applicable record date.

(g) Without limiting the foregoing, a Holder entitled to take any
action hereunder with regard to any particular Security may do so with regard
to all or any part of the principal

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<PAGE> 23

amount of such Security or by one or more duly appointed agents each of which
may do so pursuant to such appointment with regard to all or any part of such
principal amount.

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

SECTION 105. Notices, Etc., to Trustee and Company.

Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:

(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Department (Reptron Electronics, Inc. ___%
Convertible Subordinated Notes Due 2004), or

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

SECTION 106. Notice to Holders; Waiver.

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

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<PAGE> 24

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

SECTION 107. Conflict with Trust Indenture Act.

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

SECTION 108. Effect of Headings and Table of Contents.

The Article and Section headings and the Table of Contents contained
in this Indenture are for convenience only and shall not affect the
construction hereof.

SECTION 109. Successors and Assigns.

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

SECTION 110. Separability Clause.

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

SECTION 111. Benefits of Indenture.

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

SECTION 112. Governing Law.

THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES AS APPLIED IN SUCH STATE.

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<PAGE> 25

SECTION 113. Legal Holidays.

In any case where any Interest Payment Date, Redemption Date,
Repurchase Date or Stated Maturity of any Security or the last date on which a
Holder has the right to convert such Holder's Securities shall not be a
Business Day, then (notwithstanding any other provision of this Indenture or of
the Securities) payment of interest or principal (and premium, if any) or
conversion of the Securities need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the Interest Payment Date, Redemption Date or Repurchase Date, or at the Stated
Maturity, or on such last day for conversion; provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption
Date, Stated Maturity or last day for conversion, as the case may be.

ARTICLE TWO

SECURITY FORMS

SECTION 201. Forms Generally.

The Securities and the Trustee's certificates of authentication shall
be in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange, the Internal
Revenue Code of 1986, as amended, and the regulations thereunder (the "Code"),
or as may, consistent herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities.

Any definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods or may be produced in any other
manner permitted by the rules of securities exchange or any automated quotation
system on which the Securities may be listed or quoted, as the case may be, all
as determined by the officers executing such Securities, as evidenced by their
execution of such Securities.

SECTION 202. Form of Face of Security.

[The following legend shall also appear on the face of each Global Security:

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
REFERRED TO BELOW AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE
OF THE DEPOSITARY, WHICH SHALL BE TREATED BY THE COMPANY, THE TRUSTEE AND ANY
AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES.]

-15-
<PAGE> 26

[The following legend shall also appear on the face of each Global Security for
which The Depository Trust Company is to be the Depositary:

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

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR REGISTERED
SECURITIES IN DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES
REFERENCED IN THE INDENTURE, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE 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.]

REPTRON ELECTRONICS, INC.

___% CONVERTIBLE SUBORDINATED NOTE DUE AUGUST 1, 2004

$______
No. ______

Reptron Electronics, Inc., a corporation duly organized and existing
under the laws of Florida herein called the "Company", which term includes any
successor Person under the Indenture referred to below), for value received,
hereby promises to pay to _______________, or registered assigns, the principal
sum of _________ Dollars ($_____) on August 1, 2004, and to pay interest
thereof from August __, 1997 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually in arrears on
February 1 and August 1 in each year (each, an "Interest Payment Date"),
commencing February __ 1998 at the rate of ___% per annum, until the principal
hereof is due, and at the rate of ____% per annum on any overdue principal and
premium, if any, and, to the extent permitted by law, on any overdue interest.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the January 15 or July 15 (whether or
not a Business Day), as the case

-16-
<PAGE> 27

may be, next preceding such Interest Payment Date. Except as otherwise provided
in the Indenture, any such interest not so punctually paid or duly provided for
will cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Company, notice of which shall be given to Holders of Securities not less than
10 days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
or automated quotation system on which the Securities may be listed or quoted,
and upon such notice as may be required by such exchange or quotation system,
as the case may be, all as more fully provided in the Indenture. Payments of
principal shall be made upon the surrender of this Security at the option of
the Holder at the Corporate Trust Office of the Trustee, or at such other
office or agency of the Company as may be designated by it for such purpose in
the Borough of Manhattan, The City of New York, in such coin or currency of the
United States of America as at the time of payment shall be legal tender for
the payment of public and private debts; provided, however, that at the option
of the Company payment of interest may be made by check, mailed to the address
of the Person entitled thereto as such address shall appear in the Security
Register, or, upon written application by the Holder to the Security Registrar.

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

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

-17-
<PAGE> 28

IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:

REPTRON ELECTRONICS, INC.

[Corporate Seal]

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

Attest:

- ---------------------------
Title:

-18-
<PAGE> 29

SECTION 203. Form of Reverse of Security.

This Security is one of a duly authorized issue of Securities of the
Company designated as its ___% Convertible Subordinated Notes Due August 1,
2004 (herein called the "Securities"), limited in aggregate principal amount to
$100,000,000 (subject to increase as provided in the Indenture up to
$15,000,000 aggregate principal amount), issued and to be issued under an
Indenture, dated as of August __, 1997 (the "Indenture"), between the Company
and Reliance Trust Company, as Trustee (the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is made for a statement of the respective
rights, limitations of rights, duties and immunities of the Company, the
Trustee, the holders of Senior Indebtedness and the Holders of the Securities
and of the terms upon which the Securities are, and are to be, authenticated
and delivered. The Securities are issuable in registered form only without
coupons in denominations of $1,000 and any integral multiple thereof.

Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled, at his option, at any time before the
close of business on August 1, 2004 (except that (a) if this Security or a
portion hereof is called for redemption, the right of conversion in respect of
this Security shall terminate at the close of business on the Business Day
immediately preceding the Redemption Date and (b) if the Holder hereof has
exercised his right to require the Company to repurchase this Security or a
portion hereof, the right of conversion in respect of this Security shall
terminate at the close of business on the Repurchase Date, unless in each case
the Company defaults in making the payment due upon redemption or repurchase,
as the case may be) to convert this Security (or any portion of the principal
amount hereof that is an integral multiple of $1,000 provided that the
unconverted portion of such principal amount is $1,000 or an integral multiple
of $1,000 in excess thereof) into fully paid and nonassessable shares of Common
Stock of the Company at an initial Conversion Rate of _______ for each share of
Common Stock (or at the then current adjusted Conversion Rate if an adjustment
has been made as provided in the Indenture) by surrender of this Security, duly
endorsed or assigned to the Company or in blank and, in case such surrender
shall be made during the period from the close of business on any Regular
Record Date next preceding any Interest Payment Date to the opening of business
on such Interest Payment Date (except if this Security has been called for
redemption on a Redemption Date or is repurchasable on a Repurchase Date
occurring, in either case, during such period and is surrendered for such
conversion during such period (including any Securities or portions thereof
called for redemption on a Redemption Date that is a Regular Record Date or an
Interest Payment Date, as the case may be)), subject to the second succeeding
sentence, also accompanied by payment in New York Clearing House or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of this Security then being
converted, and also the conversion notice hereon duly executed, to the Company
at the Corporate Trust Office of the Trustee, or at such other office or agency
of the Company, subject to any laws or regulations applicable thereto and
subject to the right of the Company to

-19-
<PAGE> 30

terminate the appointment of any Conversion Agent (as defined below) as may be
designated by it for such purpose in the Borough of Manhattan, The City of New
York, or at such other offices or agencies as the Company may designate (each a
"Conversion Agent"), provided, further, that if this Security or portion hereof
has been called for redemption on a Redemption Date or is repurchasable on a
Repurchase Date occurring, in either case, during the period from the close of
business on any Regular Record Date next preceding any Interest Payment Date to
the opening of business on such succeeding Interest Payment Date and is
surrendered for conversion during such period, then the Holder of this Security
who converts this Security or a portion hereof during such period (or on the
last Business Day prior to the Regular Record Date or Interest Payment Date in
case of any Security (or portion thereof) called for redemption on a Regular
Record Date or Interest Payment Date, as the case may be) will be entitled to
receive the interest accruing hereon from the Interest Payment Date next
preceding the date of such conversion to such succeeding Interest Payment Date
and shall not be required to pay such interest upon surrender of this Security
for conversion. Subject to the provisions of the preceding sentence and, in the
case of a conversion after the close of business on the Regular Record Date next
preceding any Interest Payment Date and or before the close of business on such
Interest Payment Date, to the right of the Holder of this Security (or any
Predecessor Security of record as of such Regular Record Date) to receive the
related installment of interest to the extent and under the circumstances
provided in the Indenture, no cash payment or adjustment is to be made or
conversion for interest accrued herein from the Interest Payment Date next
preceding the day of conversion, or for dividends on the Common Stock issued on
conversion hereof. Notwithstanding the foregoing, if this Security (or any
portion of the principal amount hereof that is an integral multiple of $1,000
provided that the unconverted portion of such principal amount is $1,000 or an
integral multiple of $1,000 in excess thereof) is surrendered for conversion
prior to August 1, 2000 during the period from the close of business on any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such interest Payment Date (unless this Security is repurchasable on
a Repurchase Date occurring within such period) shall not be accompanied by an
amount equal to the interest payable on such Interest Payment Date on the
principal amount of this Security then being converted, and the Company shall
pay to the Holder of this Security as of such Regular Record Date in cash or in
shares of Common Stock having a fair market value equal to the amount of such
interest (such fair market value being determined based on the Closing Price Per
Share of the Common Stock on the Business Day immediately preceding such
Interest Payment Date).

The Company shall thereafter deliver to the Holder the fixed number of
shares of Common Stock (together with any cash adjustment, as provided in the
Indenture) into which this Security is convertible and such delivery will be
deemed to satisfy the Company's obligation to pay the principal amount of this
Security. No fractions of shares or scrip representing fractions of shares
will be issued on conversion, but instead of any fractional interest
(calculated to the nearest 1/100th of a share) the Company shall pay a cash
adjustment as provided in the Indenture.

-20-
<PAGE> 31

The Conversion Rate is subject to adjustment as provided in the
Indenture. In addition, the Indenture provides that in case of certain
consolidations or mergers to which the Company is a party or the conveyance,
transfer, sale or lease of all or substantially all of the property and assets
of the Company, the Indenture shall be amended, without the consent of any
Holders of Securities, so that this Security, if then Outstanding, will be
convertible thereafter, during the period this Security shall be convertible as
specified above, only into the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, transfer, sale
or lease by a holder of the number of shares of Common Stock of the Company into
which this Security could have been converted immediately prior to such
consolidation, merger, conveyance, transfer, sale or lease (assuming such holder
of Common Stock is not a Constituent Person, failed to exercise any rights of
election and received per share the kind and amount received per share by a
plurality of Non- electing Shares). No adjustment in the Conversion Rate will be
made until such adjustment would require an increase or decrease of at least one
percent of such Conversion Rate, provided that any adjustment that would
otherwise be made will be carried forward and taken into account in the
computation of any subsequent adjustment.

The Securities are subject to redemption upon not less than 30 nor
more than 60 days' notice by mail, at any time on or after August 1, 2000, as a
whole or in part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount): If redeemed during
the 12-month period beginning August 1 of the years indicated,

Redemption
Year Price
---- ----------
<S> <C>
2000................................. %
2001.................................
2002.................................
</TABLE>

and thereafter at a Redemption Price equal to 100% of the principal amount, in
each case together with accrued interest to the Redemption Date; provided that
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.

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

In any case where the due date for the payment of the principal of,
premium, if any, or interest on any Security or the last day on which a Holder
of a Security has a right to convert such Holder's Security shall be a day on
which banking institutions are authorized or obligated

-21-

<PAGE> 32
by law or executive order to close, then payment of principal, premium, if any,
or interest, or delivery for conversion of such Security need not be made on or
by such date at such place but may be made on or by the next succeeding day at
such place which is not a day on which banking institutions are authorized or
obligated by law or executive order to close, with the same force and effect as
made on the date for such payment or the date fixed for redemption or
repurchase, or by such last day for conversion, and no interest shall accrue
on the amount so payable for the period after such date so long as payment is
made on the next succeeding day at such place which is not a day on which
banking institutions are authorized or obligated by law or executive order to
close.

If a Change of Control occurs, the Holder of this Security, at the
Holder's option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security or any portion of
the principal amount hereof that is equal to $1,000 or any integral multiple of
$1,000 in excess thereof plus interest accrued to the Repurchase Date. The
Repurchase Price will be paid in cash. Whenever in this Security there is a
reference, in any context, to the principal of any Security as of the time,
such reference shall be deemed to include reference to the Repurchase Price
payable in respect of such security to the extent that such Repurchase Price
is, was or would be so payable at such time, and express mention of the
Repurchase Price in any provision of this Security shall not be construed as
excluding the Repurchase Price so payable in those provisions of this Security
when such express mention is not made.

The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.

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

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

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<PAGE> 33
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.

No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any)
and interest on this Security on the respective Stated Maturities expressed
herein (or in the case of redemption or repurchase, on the Redemption Date or
Repurchase Date, as the case may be,) or to convert this Security as provided in
the Indenture.

As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee
or for any other remedy thereunder, unless such Holder shall have previously
given the Trustee written notice of a continuing Event of Default, the Holders
of not less than 25% in principal amount of the Outstanding Securities shall
have made written request to the Trustee to institute proceedings in respect of
such Event of Default as Trustee and offered the Trustee reasonable indemnity
and the Trustee shall not have received from the Holders of a majority in
principal amount of the Securities Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to any suit instituted by the Holder of this Security
for the enforcement of any payment of principal hereof, premium, if any, or
interest hereon on or after the respective due dates expressed herein or for
the enforcement of the right to convert this Security as provided in the
Indenture.

As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for that purpose pursuant to Section
1002, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transfer or transferees.

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

Prior to due presentment of this Security for registration of
transfer, the Company, the trustee, any Authenticating Agent, any Conversion
Agent, any Paying Agent or any other agent of the Company or the Trustee shall
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue, and

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<PAGE> 34

neither the Company, the Trustee nor any Authenticating Agent, Conversion Agent,
Paying Agent or other agent of the Company or the Trustee shall be affected by
notice to the contrary.

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

The Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles as applied in such state.

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

-24-
<PAGE> 35

ABBREVIATIONS

The following abbreviations, when used in the description of the face
of this Security, shall be construed as through they were written out in full
according to applicable laws or regulations:

<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT TRANSFER ACT-______Custodian_______
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Transfer Act
of survivorship and not as ______________________________
tenants in common (State)

UNIF TRF MIN ACT ______ (Custodian until age __)
(Cust)
______________ under Uniform Transfers
(Minor)
to minors Act _______________
(State)
</TABLE>

Additional abbreviations may also be used
though not in the above list

-25-
<PAGE> 36

ELECTION OF HOLDER TO REQUIRE REPURCHASE

1. Pursuant to Section 1401 of the Indenture, the undersigned
hereby elects to have this security repurchased by the Company.

2. The undersigned hereby directs the Trustee or the Company to
pay it or ___________ an amount in cash or, at the Company's election, Common
Stock valued as set forth in the Indenture, equal to 100% of the principal
amount to be repurchased (as set forth below), plus interest accrued to the
Repurchase Date, as provided in the Indenture.

Dated:

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

----------------------------------------
Signature(s)

Signature(s) must be guaranteed by an
Eligible Guarantor Institution with
membership in an approved signature
guarantee program pursuant to Rule
17Ad-15 under the Securities Exchange
Act of 1934.

----------------------------------------
Signature Guaranteed

Principal amount to be repurchased
(equal to an integral multiple of $1,000):
---------------------------------

Remaining principal amount following such repurchase:
------------------------

NOTICE: The signature to the foregoing election must correspond to the Name as
written upon the fact of this Security in every particular, without alteration
or any change whatsoever.

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<PAGE> 37

SECTION 204. Form of Trustee's Certificate of Authentication.

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

----------------------------,
as Trustee

By
-----------------------------
Authorized Signatory

SECTION 205. Form of Conversion Notice.

The undersigned Holder of this Security hereby irrevocably exercises
the option to convert this Security, or any portion of the principal amount
hereof (which is an integral multiple of $1,000, provided that the unconverted
portion of such principal amount is $1,000 or an integral multiple of $1,000 in
excess thereof) below designated, into shares of Common Stock in accordance
with the terms of the Indenture referred to in this Security, and directs that
such shares, together with a check in payment for any fractional share and any
Securities representing any unconverted principal amount hereof, be delivered
to and be registered in the name of the undersigned unless a different name has
been indicated below. If shares of Common Stock or Securities are to be
registered in the name of a Person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto. Any amount required
to be paid by the undersigned on account of interest accompanies this Security.

Dated:
------------------------- -----------------------------------

Fill in for registration of shares of
Common Stock if to be issued, and
Securities if to be delivered, other than
to and in the name of the registered
holder.

- -------------------------------- ----------------------------------
(Name) Signature(s)

Signature(s) must be guaranteed by
an Eligible Guarantor Institution
with membership in an approved
signature guarantee program
pursuant to Rule 17Ad-15 under the
Securities Exchange Act of 1934.

-----------------------------------
Signature Guaranteed

-27-
<PAGE> 38

SECTION 206. Form of Assignment.

For value received ________________________ hereby sells(s), assign(s)
and transfer(s) unto ______________________ (Please insert social security or
other identifying number of assignee) the within Security, and hereby
irrevocably constitutes and appoints __________________________ as attorney to
transfer the said Security on the books of the Company, with full power of
substitution in the premises.

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

Signature(s) must be guaranteed by an
Eligible Guarantor Institution with
membership in an approved signature
guarantee program pursuant to Rule
17Ad-15 under the Securities Exchange
Act of 1934.

---------------------------------------
Signature Guaranteed

-28-
<PAGE> 39

ARTICLE THREE

THE SECURITIES

SECTION 301. Title and Terms.

The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to (a) $100,000,000
plus (b) such aggregate principal amount (which may not exceed $15,000,000
principal amount) of Securities as shall be purchased by the Underwriters
pursuant to the Underwriting Agreement, dated August __, 1997, among the
Company, Raymond James & Associates, Inc. and Forum Capital Markets, L.P., as
underwriters, except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities pursuant to Section 304, 305, 306, 906, 1108, 1302 or 1403(e).

The Securities shall be known and designated as the "___% Convertible
Subordinated Notes Due August 1, 2004" of the Company. Their Stated Maturity
shall be August 1, 2004, and they shall bear interest at the rate of ___% per
annum from August __, 1997 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, as the case may be, payable
semi-annually in arrears on February 1 and August 1 in each year, commencing
February 1, 1998, until the principal thereof is paid or made available for
payment, and, to the fullest extent permitted by law, at the rate of ___% per
annum on any overdue principal and on any overdue installment of interest.

The principal of (premium, if any) and interest on the Securities
shall be payable at the office or agency of the Company maintained for such
purpose pursuant to Section 1002; provided that at the option of the Company
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register.

The Securities shall be redeemable as provided in Article Eleven.

The Securities are not entitled to the benefit of any sinking fund.

The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Twelve.

The Securities shall be convertible as provided in Article Thirteen.

The Securities shall be subject to repurchase at the option of the
Holders upon a Change of Control as provided in Article Fourteen.

-29-
<PAGE> 40

SECTION 302. Denominations.

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

SECTION 303. Execution, Authentication, Delivery and Dating.

The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President, its
Executive or Senior Vice President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Chief Financial Officer,
Treasurer, Controller, secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or
facsimile.

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

At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise.

Each Security shall be dated the date of its authentication.

No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Indenture.

SECTION 304. Temporary Securities.

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

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

For purposes of this Section 304, each Global Security shall be
considered a definitive Security.

SECTION 305. Registration, Registration of Transfer and Exchange.

The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is
hereby appointed "Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.

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

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

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

Every Security presented or surrendered for registration of transfer
or for exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form

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<PAGE> 42
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.

No service charge shall be made to a Holder for any registration of
transfer or exchange of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 906, 1108, 1302, 1402
or 1403(e) not involving any transfer.

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

The provisions of Clauses (1), (2), (3), (4) and (5) below shall apply
only to Global Securities:

(1) Each Global Security authenticated under this Indenture
shall be registered in the name of the Depositary designated for such
Global Security or a nominee thereof and delivered to such Depositary
or a nominee thereof or Custodian therefor, and each such Global
Security shall constitute a single Security for all purposes of this
Indenture.

(2) Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities
registered, and no transfer of a Global Security in whole or in part
may be registered, in the name of any Person other than the Depositary
for such Global Security or a nominee thereof unless (A) such
Depositary (i) has notified the Company that it is unwilling or unable
to continue as Depositary for such Global Security or (ii) has ceased
to be a clearing agency registered under the Exchange Act, or (B)
there shall have occurred and be continuing an Event of Default with
respect to such Global Security.

(3) Subject to Clause (2) above, any exchange of a Global
Security for other Securities may be made in whole or in part, and all
Securities issued in exchange for a Global Security or any portion
thereof shall be registered in such names as the Depositary for such
Global Security shall direct.

(4) Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a
Global Security or any portion thereof, whether pursuant to this
Article Three or otherwise, shall be authenticated and delivered in
the form of, and shall be, a Global Security, unless such Security is
registered in the name

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of a Person other than the Depositary for such Global Security or a
nominee thereof under the conditions set forth in clause 2 above.

(5) The Depositary or its nominee, as registered owner of a
Global Security, shall be the Holder of such Global Security for all
purposes under the Indenture and the Securities, and owners of
beneficial interests in a Global Security shall hold such interests
pursuant to the Applicable Procedures. Accordingly, any such owner's
beneficial interest in a Global Security will be shown only on, and the
transfer of such interest shall be effected only through, records
maintained by the Depositary or its nominee or its Agent Members and
such owners of beneficial interests in a Global Security will not be
considered the owners or holders thereof. Neither the Company nor the
Trustee will have any responsibility or obligation to the Depositary or
any of its Agent Members with respect to (i) the accuracy of any
records maintained by the Depositary or Agent Members, (ii) the payment
by the Depositary or any Agent Members of any amount due to any owner
of beneficial interests in a Global Security in respect of any
Securities, (iii) the delivery of any notice by the Depositary or any
Agent Member, or (v) any other action taken by the Depositary or any
Agent Members.

SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.

If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.

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

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

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

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<PAGE> 44

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

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

SECTION 307. Payment of Interest; Interest Rights Preserved.

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

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

(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted
Interest as this clause provides. Thereupon, the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to
each Holder at his address as it appears in the Security Register, not
less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record
Date therefor

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<PAGE> 45

having been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following
clause (2).

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

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

Interest on any Security which is converted in accordance with Section
1302 during a Record Date Period shall be payable in accordance with the
provisions of Section 1302.

SECTION 308. Persons Deemed Owners.

Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee shall
treat the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of (and premium, if
any) and (subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

SECTION 309. Cancellation.

All Securities surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be
promptly cancelled by it. The Company may at any time deliver to the Trustee
for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Securities so delivered shall be promptly cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Securities held by the Trustee shall be disposed of
pursuant to the Trustee's standard procedures or as otherwise directed by a
Company Order and a certificate of destruction delivered to the Company.

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SECTION 310. Computation of Interest.

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

ARTICLE FOUR

SATISFACTION AND DISCHARGE

SECTION 401. Satisfaction and Discharge of Indenture.

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

(1) either

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

(B) all such Securities not thereto delivered to the
Trustee for cancellation

(i) have become due and payable, or

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

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

and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee funds in
trust for the purpose and in an amount sufficient to pay and
discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest to the date of
such deposit (in the case of

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<PAGE> 47

Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;

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

(3) the Trustee has not received any notice pursuant to the
terms of Section 1210; and

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

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company in Sections 305, 306, 1001, 1002 and 1003, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.

SECTION 402. Application of Trust Money.

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

ARTICLE FIVE

REMEDIES

SECTION 501. Events of Default.

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

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<PAGE> 48

(1) default in the payment of the principal, Redemption Price
or Repurchase Price of any Security at its Maturity, whether or not
such payment is prohibited by the subordination provisions contained
in Article Twelve; or

(2) default in the payment of any interest upon any Security
when it becomes due and payable, and continuance of such default for a
period of 30 days, whether or not such payment is prohibited by the
subordination provisions contained in Article Twelve; or

(3) failure by the Company to give the Company Notice in
accordance with Section 1403; or

(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere
in this Section specifically dealt with), and continuance of such
default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at lease 25% in
aggregate principal amount of the Outstanding Securities a written
notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or

(5) any indebtedness of the Company for money borrowed in an
aggregate outstanding principal amount in excess of $5,000,000,
whether such indebtedness now exists or shall hereafter be created, is
not paid at final maturity (either upon its stated maturity or
acceleration thereof) and such default in payment or acceleration has
not been cured or rescinded, within a period of 30 days after there
shall have been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in aggregate principal amount of the Outstanding Securities
a written notice specifying such default and requiring the Company to
cause such indebtedness to be discharged or cause such default to be
cured or waived or such acceleration to be rescinded or annulled and
stating that such notice is a "Notice of Default" hereunder; or

(6) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the
continuance of any such

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<PAGE> 49

decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or

(7) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by
it to the entry of a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable
Federal or State law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by the Company in
furtherance of any such action.

SECTION 502. Acceleration of Maturity; Rescission and Annulment.

If an Event of Default (other than an Event of Default specified in
Section 501(6) or 501(7)) occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal and
all accrued interest thereon shall become immediately due and payable. If an
Event of Default specified in Section 501(6) or 501(7) occurs and is
continuing, the principal and any accrued interest thereon, all Outstanding
Securities shall become immediately due and payable without any declaration or
other Act on the part of the Trustee or any Holder.

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

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

(A) all overdue interest on all Securities,

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

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<PAGE> 50

(C) to the extent that payment of such interest
is lawful, interest upon the overdue interest at a rate of
______% per annum, and

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

and

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

No such rescission or annulment referred to above shall affect any subsequent
default or Event of Default or impair any right consequent thereon.

SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.

The Company covenants that if:

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

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

the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at a rate
of ______% per annum, and, in addition thereto, 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.

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

If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate

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judicial proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.

SECTION 504. Trustee May File Proofs of Claim.

In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or the
creditors of either, the Trustee (irrespective of whether the principal of, and
any interest on, the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise:

(1) to file and prove a claim for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect
of the Securities and take such other actions, including participating
as a member, voting or otherwise, of any official committee of
creditors appointed in such matter, and to file such other papers or
documents, in each of the foregoing cases, as may be necessary or
advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and of the Holders of
Securities allowed in such judicial proceeding, and

(2) to collect and receive any moneys or other property
payable or deliverable on any such claim and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel and
any other amounts due the Trustee under Section 607.

Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a
Security any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to authorize
the Trustee to vote in respect of the claim of any Holder of a Security in any
such proceeding; provided, however, that the Trustee may, on behalf of such
Holders, vote for the election of a trustee in bankruptcy or similar official
and may serve on a creditors' committee.

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<PAGE> 52

SECTION 505. Trustee May Enforce Claims Without Possession of Securities.

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

SECTION 506. Application of Money Collected.

Subject to Article Twelve, any money collected by the Trustee pursuant
to this Article Five shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on
account of principal (or premium, if any) or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:

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

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

THIRD: Any remaining amounts shall be repaid to the Company.

SECTION 507. Limitation or Suits.

No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder,
unless:

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

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

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<PAGE> 53

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

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

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

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

SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest and to Convert.

Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption or repurchase, on the
Redemption Date or Repurchase Date, as the case may be) and to convert such
Security in accordance with Article Thirteen and to institute suit for the
enforcement of any such payment and right to convert, and such rights shall not
be impaired without the consent of such Holder.

SECTION 509. Restoration of Rights and Remedies.

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

SECTION 510. Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any

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other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.

SECTION 511. Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article Five or
by law to the Trustee or to the Holders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or by the Holders, as the
case may be.

SECTION 512. Control by Holders.

The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that:

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

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

SECTION 513. Waiver of Past Defaults.

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

(1) in the payment of the principal of (or premium, if any) or
interest on any Security, or

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

Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but

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no such waiver shall extend to any subsequent or other default or impair any
right consequent thereon.

SECTION 514. Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that the provisions of this Section 514 (to the extent
permitted by law) shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than ten (10) percent in principal amount of Outstanding Securities, or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of, premium, if any, or interest on any Security or to any suit or the
enforcement of the right to convert any Security in accordance with the
provisions of Article Thirteen or to require the Company to repurchase any
Security in accordance with the provisions of Article Fourteen.

SECTION 515. Waiver of Stay or Extension Laws.

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

ARTICLE SIX

THE TRUSTEE

SECTION 601. Certain Duties and Responsibilities.

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

(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and

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

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

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

(1) this paragraph (c) shall not be construed to limit the
effect of paragraph (a) of this Section;

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

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

(4) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.

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

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SECTION 602. Notice of Defaults.

Within 90 days after the occurrence of any default hereunder, the
Trustee shall give to all Holders of Securities, in the manner provided in
Section 106, notice of such default, unless such default shall have been cured
or waived; provided that, except in the case of a default in the payment of the
principal of, premium, if any, or interest on any Security, the Trustee shall
be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors or any
Responsible Officer of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders; and provided,
further, that in the case of any default of the type specified in Section
501(4), no such notice to Holders of Securities shall be given until at least
30 days after the occurrence of such default. For the purpose of this Section,
the term "default" means any event which is, or after notice or lapse of time
or both would become, an Event of Default.

SECTION 603. Certain Rights of Trustee.

Subject to the provisions of Section 601:

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

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

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

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

(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee

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reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction;

(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney; and

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

SECTION 604. Not Responsible for Recitals or Issuance of Securities.

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

SECTION 605. May Hold Securities.

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

SECTION 606. Money Held in Trust.

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

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SECTION 607. Compensation and Reimbursement.

The Company agrees:

(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);

(2) to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by
the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or
bad faith; and

(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.

When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in clauses (6) and (7) of Section 501, the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.

SECTION 608. Disqualification; Conflicting Interests.

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

SECTION 609. Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such,
having a combined capital and surplus of at least $50,000,000 subject to
supervision by Federal or State Authority and in good standing. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Person shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 609, it shall

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resign immediately in the manner and with the effect hereinafter specified in
this Article and a successor shall be appointed pursuant to Section 610.

SECTION 610. Resignation and Removal; Appointment of Successor.

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

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

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

(d) If at any time:

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

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

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

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

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

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

(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.

SECTION 611. Acceptance of Appointment by Successor.

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

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

SECTION 612. Merger, Conversion, Consolidation or Succession to Business.

Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee (including the trust created by this Indenture), shall
be the successor of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of nay of the parties
hereto. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion
or consolidation to such authenticating Trustee may adopt such authentication
and

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deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.

SECTION 613. Preferential Collection of Claims Against Company.

If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).

SECTION 614. Appointment of Authenticating Agent.

The Trustee may appoint an Authenticating Agent or Agents which shall
be authorized to act on behalf of the Trustee to authenticate Securities issued
upon original issue and upon exchange, registration of transfer, partial
conversion or partial redemption or pursuant to Section 306, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.

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

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An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders as their
names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder,
with like effect as if originally named as an Authenticating Agent. No
successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.

The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.

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

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

-------------------------------------,
As Trustee

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

By:
----------------------------------
Authorized Signatory

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ARTICLE SEVEN

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.

The Company will furnish or cause to be furnished to the Trustee:

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

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

provided that such list need not be furnished by the Company so long as the
Trustee is acecurity Registrar.

SECTION 702. Preservation of Information; Communications to Holders.

(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 701 and the
names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 701 upon receipt of a new list so furnished.

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

(c) Every Holder, by receiving and holding the Securities, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
agent of either of them shall be held accountable by reason of any disclosure
of information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.

SECTION 703. Reports by Trustee.

(a) The Trustee shall transmit to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant
thereto.
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(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Securities are listed on any stock
exchange.

SECTION 704. Reports by Company.

The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at
the times and in the manner provided pursuant to such Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be
filed with the Trustee within 15 days after the same is so required to be filed
with the Commission.

ARTICLE EIGHT

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.

The Company (a) shall not consolidate with or merge into any other
Person or convey, sell, transfer or lease its properties and assets
substantially as an entirety to any Person in one transaction or a series of
related transactions (other than a conveyance, sale, transfer or lease to a
wholly owned Subsidiary), and (b) shall not permit any Person (other than a
wholly owned Subsidiary) to merge into the Company or convey, transfer or lease
its properties and assets substantially as an entirety to the Company in one
transaction or a series of related transactions, unless:

(1) in case the Company shall consolidate with or merge into
another Person or convey, sell, transfer or lease its properties and
assets substantially as an entirety to any Person in one transaction
or a series of related transactions, the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance, sale or transfer, or which leases, the
properties and assets of the Company substantially as an entirety
shall be a corporation, limited liability company, partnership or
trust, shall be organized and validly existing under the laws of the
United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, the due and punctual payment of the principal of (and
premium, if any) and interest on all the Securities and the
performance or observance of every covenant of this Indenture on the
part of the Company to be performed or observed and shall have
provided for conversion rights in accordance with Article Thirteen;

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

(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer, sale or lease and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture is required in connection
with such transaction, such supplemental indenture comply with this
Article and the Trust Indenture Act and that all conditions precedent
herein provided for relating to such transaction have been complied
with.

SECTION 802. Successor Substituted.

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

ARTICLE NINE

SUPPLEMENTAL INDENTURES

SECTION 901. Supplemental Indentures Without Consent of Holders.

Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:

(1) to evidence, pursuant to Article Eight, the succession of
another Person to the Company and the assumption by any such successor
of the covenants and obligations of the Company herein and in the
Securities; or

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

(3) to secure the Securities; or

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(4) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Section 1311 or the repurchase
obligations of the Company pursuant to the requirements of Section
1405; or

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

SECTION 902. Supplemental Indentures with Consent of Holders.

With the written consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by the Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided that no such supplemental indenture shall, without the consent or
affirmative vote of the Holder of each Outstanding Security affected thereby:

(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or the amounts payable
upon the redemption or repurchase thereof, or change the place of
payment where, or the place or currency in which, any Security or any
premium or interest thereon or any other amount in respect thereof is
payable, or impair the right to institute suit for the enforcement of
any payment in respect of any Security on or after the Stated Maturity
thereof (or, in the case of redemption or any repurchase, on or after
the Redemption Date or Repurchase Date, as the case may be), or, except
as provided by Section 1311, adversely affect the right to convert any
Security as provided in Article Thirteen, or modify the provisions of
this Indenture with respect to the subordination of the Securities in a
manner adverse to the Holders, or

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

(3) modify the obligation of the Company to maintain an office
or agency in the Borough of Manhattan, The City of New York pursuant
to Section 1002, or

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(4) modify any of the provisions of this Section, Section 513
or Section 1009, except to increase any percentage contained herein or
therein or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the Holder or each
Outstanding Security affected thereby, or

(5) modify the provisions of Article Twelve, Article Thirteen
or Article Fourteen in a manner adverse to the Holders.

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

SECTION 903. Execution of Supplemental Indentures.

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

SECTION 904. Effect of Supplemental Indentures.

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

SECTION 905. Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to this Article Nine
shall conform to the requirements of the Trust Indenture Act, as then in
effect.

SECTION 906. Reference in Securities to Supplemental Indentures.

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

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SECTION 907. Notice of Supplemental Indentures.

Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the Company
shall give notice to all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture, in the manner
provided in Section 106. Any failure of the Company to give such notice, or
any defect therein, shall not in any way impair or affect the validity of any
such supplemental indenture.

ARTICLE TEN

COVENANTS

SECTION 1001. Payment of Principal, Premium and Interest.

The Company will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities in accordance with the terms of
the Securities and this Indenture.

SECTION 1002. Maintenance of Office or Agency.

The Company hereby appoints the Corporate Trust Office of the Trustee,
as its agent in The City of New York where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration of
transfer or exchange, where conversion notices, certificates and other items
required to be delivered to effect conversion may be delivered and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served.

The Company hereby also appoints the Corporate Trust Office of the
Trustee as Paying Agent for the payment of principal of and interest on the
Securities and as Conversion Agent for the Conversion of any of the Securities
in accordance with Article Thirteen, and appoints the Corporate Trust Office of
the Trustee as transfer agent where Securities may be surrendered for
registration of transfer or exchange.

The Company may at any time and from time to time vary or terminate
the appointment of any such agent or appoint any additional agents with or
without cause for any or all of such purposes; provided, however, that until
all of the Securities have been delivered to the Trustee for cancellation, or
moneys sufficient to pay the principal of and interest on the Securities have
been made available for payment and either paid or returned to the Company
pursuant to the provisions of Section 1003, the Company will maintain in the
Borough of Manhattan, The City of New York, an office or agency where
Securities may be presented or surrendered for payment, where Securities may be
surrendered for registration of transfer or exchange, where Securities may be
surrendered for conversion and where notices and demand to or upon the Company,
in respect of the Securities and this Indenture may be served. The

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Company will give prompt written notice to the Trustee, and will give notice to
Holders of Securities in the manner specified in Section 105, of the appointment
or termination of any such agents and of the location and any change in the
location of any such office or agency.

If at any time the Company shall fail to maintain any such required
office or agency, or shall fail to furnish the Trustee with the address
thereof, presentations and surrenders may be made and notices and demands may
be served on and Securities may be surrendered for conversion to the Corporate
Trust Office of the Trustee, and the Company hereby appoints the same as its
agent to receive such respective presentations, surrenders, notices and
demands.

SECTION 1003. Money for Security Payments to Be Held in Trust.

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

Whenever the Company shall have one or more Paying Agents, it will, on
or before each due date of the principal of, premium, if any, or interest on any
Securities, deposit with such Paying Agent(s) a sum sufficient to pay the
principal, premium, if any, or interest so becoming due, such sum to be held for
the benefit of the Persons entitled to such principal, premium, if any, or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of any failure so to act; provided that if such
deposit is made on such due date, such deposit shall be received by the Paying
Agent(s) by 10:00 a.m. New York City time on such date.

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

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

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

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

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

Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Security and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided that in the event that the Securities
are no longer Global Securities, the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Company.

SECTION 1004. Statement by Officers as to Default.

The Company shall deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company, an Officer's Certificate stating
whether or not to the knowledge of the signers thereof the Company is in
compliance with all conditions and covenants under the Indenture (without
regard to any period of grace or requirement of notice provided hereunder).

The Company will deliver to the Trustee, within three Business Days
after becoming aware of any default or Event of Default under this Indenture,
an Officers' Certificate specifying with particularity such default or Event of
Default and further stating what action the Company has taken, is taking or
proposes to take with respect thereto. For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default.

Any notice required to be given under this Section 1004 shall be
delivered to the Trustee at its Corporate Trust Office.

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SECTION 1005. Existence.

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

SECTION 1006. Maintenance of Properties.

The Company will cause all properties used or useful in the conduct of
its business to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business.

SECTION 1007. Payment of Taxes and Other Claims.

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

SECTION 1008. Book-Entry System.

If the Securities cease to trade in DTC's book-entry settlement
system, the Company covenants and agrees that it shall use reasonable efforts
to make such other book-entry arrangements that it determines are reasonable
for the Securities.

SECTION 1009. Waiver of Certain Covenants.

The Company may omit in any particular instance to comply with any
covenant or condition set forth in Sections 1006 and 1007, inclusive, if before
the time for such

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compliance the Holders of not less than a majority in principal amount of the
Outstanding Securities shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such covenant or condition shall remain in full force and
effect.

SECTION 1010. Further Instruments and Acts.

Upon reasonable request of the Trustee, the Company will execute and
deliver such further instruments and perform such further acts as may be
reasonably necessary, or proper to carry out more effectively the purposes of
this Indenture.

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

SECTION 1101. Right of Redemption.

The Securities may be redeemed at the election of the Company, as a
whole or from time to time in part, at any time on or after August 1, 2000, at
the Redemption Prices specified in the form of Security set forth herein,
together with accrued interest to the Redemption Date.

SECTION 1102. Applicability of Article.

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

SECTION 1103. Election to Redeem; Notice to Trustee.

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

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SECTION 1104. Selection by Trustee of Securities to Be Redeemed.

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

If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed
(so far as may be) to be the portion selected for redemption. Securities which
have been converted during a selection of Securities to be redeemed shall be
treated by the Trustee as Outstanding for the purpose of such selection.

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

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

SECTION 1105. Notice of Redemption.

Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at such Holder's address
appearing in the Security Register.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price and accrued interest, if any,

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

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

(5) the Conversion Rate, the date on which the right to
convert the Securities to be redeemed will terminate and the place or
places where such Securities may be surrendered for conversion, and

(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price and accrued interest,
if any.

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

SECTION 1106. Deposit of Redemption Price.

On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money (which shall be in immediately available funds on such Redemption Date)
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date other than any Securities called for
redemption on that date which have been converted prior to the date of such
deposit; provided that if such deposit is made on the Redemption Date, such
deposit shall be received by the Trustee or Paying Agent, as the case may be,
by 10:00 a.m. New York City time on such date.

If any Security called for redemption is converted, any money deposited
with the Trustee or with any Paying Agent or so segregated and held in trust for
the redemption of such Security shall (subject to any right of the Holder of
such Security or any Predecessor Security to receive interest as provided in the
last paragraph of Section 307) be paid to the Company upon Company Request or,
if then held by the Company, shall be discharged from such trust.

SECTION 1107. Securities Payable on Redemption Date.

Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price, including accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security
shall be paid by the Company at the Redemption Price, together with accrued
interest to the Redemption Date; provided that installments of interest whose
Stated Maturity is on

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or prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.

If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (premium, if any) shall, until
paid, bear interest from the Redemption Date at a rate of _____% per annum.

SECTION 1108. Securities Redeemed in Part.

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

SECTION 1109. Conversion Arrangement on Call for Redemption.

In connection with any redemption of Securities, the Company may
arrange for the purchase and conversion of any Securities by an agreement with
one or more investment bankers or other purchasers to purchase such Securities
by paying to the Trustee in trust for the Holders, on or before the Redemption
Date, an amount not less than the applicable Redemption Price, together with
interest accrued to the Redemption Date, of such Securities. Notwithstanding
anything to the contrary contained in this Article Eleven, the obligation of the
Company to pay the Redemption Price, together with interest accrued to the
Redemption Date, shall be deemed to be satisfied and discharged to the extent
such amount is so paid by such purchasers. If such an agreement is entered into
(a copy of which shall be filed with the Trustee prior to the Redemption Date),
any Securities not duly surrendered for conversion by the Holders thereof may,
at the option of the Company, be deemed, to the fullest extent permitted by law,
and consistent with any agreement or agreements with such purchasers, acquired
by such purchasers from such Holders and (notwithstanding anything to the
contrary contained in Article Thirteen) surrendered by such purchasers for
conversion, all as of immediately prior to the close of business on the
Redemption Date (and the right to convert any such Securities shall be extended
through such time), subject to payment of the above amount as aforesaid. At the
direction of the Company, the Trustee shall hold and dispose of any such amount
paid to it in the same manner as it would monies deposited with it by the
Company for the redemption of Securities. Without the Trustee's prior written
consent, no arrangement between the Company and such purchasers for the purchase
and conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or

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obligations of the Trustee as set forth in this Indenture, and the Company
agrees to indemnify the Trustee from, and hold it harmless against, any loss,
liability or expense arising out of or in connection with any such arrangement
for the purchase and conversion of any Securities between the Company and such
purchasers to which the Trustee has not consented in writing, including the
costs and expenses, including reasonable legal fees and expenses, incurred by
the Trustee in the defense of any claim or liability arising out of or in
connection with the exercise or performance of any of its powers, duties,
responsibilities or obligations under this Indenture.

ARTICLE TWELVE

SUBORDINATION OF SECURITIES

SECTION 1201. Securities Subordinate to Senior Indebtedness.

The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article Twelve (subject to the
provisions of Article Four), the indebtedness represented by the Securities and
the payment of the principal of (premium, if any) and interest on each and all
of the Securities are hereby expressly made subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness. Whenever in
this Article Twelve there is a reference, in any context, to the principal of
any Security as of any time, such reference shall be deemed to include
reference to the Repurchase Price or Redemption Price payable in cash in
respect of such Security to the extent that such Repurchase Price or Redemption
Price payable in cash is, was or would be so payable at such time, and express
mention of the Repurchase Price and the Redemption Price in any provision of
this Article Twelve shall not be construed as excluding the Repurchase Price or
Redemption Price payable in cash in those provisions of this Article Twelve
when such express mention is not made.

SECTION 1202. No Payments in Certain Circumstances; Payment Over of Proceeds
Upon Dissolution, Etc.

No payment on account of principal of, premium, if any, or interest
on, or redemption or repurchase of, the Securities shall be made if, at the
time of such payment or immediately after giving effect thereto: (i) a default
in the payment of principal, premium, if any, or interest or other amounts due
on any Senior Indebtedness occurs and is continuing (or, in the case of Senior
Indebtedness for which there is a period of grace, in the event of such a
default that continues beyond the period of grace specified in the instrument
or lease evidencing such Senior Indebtedness), unless and until such default
shall have been cured or waived in accordance with the agreements evidencing
such Senior Indebtedness or shall have ceased to exist; or (ii) a default,
other than a payment default, on any Designated Senior Indebtedness occurs and
is continuing that then permits holders of such Designated Senior Indebtedness
to

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accelerate the maturity thereof and the Trustee receives a notice of the default
(a "Payment Blockage Notice") from a Person who may give it pursuant to Section
1210 hereof. Notwithstanding the foregoing, the Company may make, and the
Trustee may receive and shall apply, any payment in respect of the Securities
(for principal, premium, if any, or interest or repurchase) if such payment was
made prior to the occurrence of any of the contingencies specified in clauses
(i) and (ii) above.

If the Trustee receives any Payment Blockage Notice pursuant to clause
(ii) above, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section unless and until (A) at least 365 days shall have
elapsed since the effectiveness of the immediately prior Payment Blockage
Notice, and (B) all scheduled payments of principal, premium, if any, and
interest on the Securities that have come due have been paid in full in cash.
No nonpayment default that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the Trustee shall be, or be made, the basis for
a subsequent Payment Blockage Notice.

The Company may and shall resume payments on and distributions in
respect of the Securities upon the earlier of: (i) in the case of a payment
default, the date upon which the default is cured or waived in accordance with
the agreements evidencing the Senior Indebtedness with respect to which such
payment default occurred, or (ii) in the case of a nonpayment default, the
earlier of the date on which such default is cured or waived in accordance with
the agreements evidencing the Senior Indebtedness with respect to which such
default occurred or 179 days after the applicable Payment Blockage Notice is
received.

In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets and liabilities of the Company, then and in any
such event the holders of Senior Indebtedness shall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
Senior Indebtedness in cash or other immediately available funds, or provision
shall be made for such payment in cash or other immediately available funds or
otherwise in a manner satisfactory to each holder of Senior Indebtedness with
respect to its indebtedness, before the Holders of the Securities are entitled
to receive any payment on account of principal of (or premium, if any) or
interest on the Securities, and to that end the holders of Senior Indebtedness
shall be entitled to receive, for any application to the payment thereof, any
payment or distribution of any kind or character, whether in cash, property or
securities, which may be payable or deliverable in respect of the Securities in
any such case, proceeding, dissolution, liquidation or other winding up or
similar event.

In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the

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Company of any kind or character, whether in cash, securities or other property,
before all Senior Indebtedness is paid in full or payment thereof provided for,
and if such fact shall, at or prior to the time of such payment or distribution,
have been made known to the Trustee or, as the case may be, such Holder, then
and in such event such payment or distribution shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Senior Indebtedness in
full, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Indebtedness.

For purposes of this Article only, the words, "cash, securities or
other property" shall not be deemed to include shares of stock of the Company
as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment which
shares of stock are subordinated in right of payment to all then outstanding
Senior Indebtedness to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article Twelve.
The consolidation of the Company with, or the merger of the Company into,
another Person or the liquidation or dissolution of the Company following the
conveyance or transfer of its properties and assets substantially as an
entirety to another Person upon the terms and conditions set forth in Article
Eight shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshaling of assets
and liabilities of the Company for the purposes of this Section if the Person
formed by such consolidation or into which the Company is merged or which
acquires by conveyance or transfer such properties and assets substantially as
an entirety, as the case may be, shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions set forth in Article
Eight.

SECTION 1203. Prior Payment to Senior Indebtedness Upon Acceleration of
Securities.

In the event that any Securities are declared due and payable before
their Stated Maturity, then and in such event the holders of the Senior
Indebtedness outstanding at the time such Securities so become due and payable
shall be entitled to receive payment in full of all amounts due or to become due
on or in respect of such Senior Indebtedness, or provisions shall be made for
such payment in money or money's worth, before the Holders of the Securities are
entitled to receive any payment by the Company on account of the principal of
(or premium, if any) or interest on the Securities or on account of the purchase
or other acquisition of Securities.

In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to
the time of such payment, have been made known to the Trustee or, as the case
may be, such Holder then and in such event such payment shall be paid over and
delivered forthwith to the holders of Senior Indebtedness, or as a court of
competent jurisdiction shall direct, for application to the payment of any due
and unpaid

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Senior Indebtedness, to the extent necessary to pay all such due and unpaid
Senior Indebtedness in cash or other immediately available funds, after giving
effect to any concurrent payment to or for the holders of Senior Indebtedness.

The provisions of this Section shall not apply to any payment with
respect to which Section 1202 would be applicable.

SECTION 1204. Reserved.

[Reserved]

SECTION 1205. Payment Permitted if No Default.

Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of any case, proceeding, dissolution, liquidation or other winding
up, assignment for the benefit of creditors or other marshaling of assets and
liabilities of the Company referred to in Section 1202 or under the conditions
described in Section 1203, from making payments at any time of principal of
(premium, if any) or interest on the Securities, or (b) the application by the
Trustee of any money deposited with it hereunder to the payment of or on
account of the principal of (and premium, if any) or interest on the Securities
or the retention of such payment by the Holders, if, at the time of such
application by the Trustee, it did not have knowledge that such payment would
have been prohibited by the provisions of this Article.

SECTION 1206. Subrogation to Rights of Holders of Senior Indebtedness.

Subject to the payment in full of all Senior Indebtedness, the Holders
of the Securities shall be subrogated to the extent of the payments or
distributions made to the holders of such Senior Indebtedness pursuant to the
provisions of this Article to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of (and
premium, if any) and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of the
Senior Indebtedness of any cash, property or securities to which the Holders of
the Securities or the Trustee would be entitled except for the provisions of
this Article, and no payments over pursuant to the provisions of this Article to
the holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.

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SECTION 1207. Provisions Solely to Define Relative Rights.

The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities
is intended to or shall (a) impair, as among the Company, its creditors other
than holders of Senior Indebtedness and the Holders of the Securities, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders of the Securities the principal of (premium, if any) and interest on
the Securities as and when the same shall become due and payable in accordance
with their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than the holders
of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior Indebtedness to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.

SECTION 1208. Trustee to Effectuate Subordination.

Each holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.

SECTION 1209. No Waiver of Subordination Provisions.

No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder of any
Senior Indebtedness, or by any non-compliance by the Company with the terms,
provisions and covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.

Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment, or the amount of interest, fees or other amounts
payable in respect of, or extend the time of payment of, or renew, increase, or
otherwise alter, Senior Indebtedness, or otherwise amend or supplement in any
manner Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise

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securing Senior Indebtedness; (iii) release any Person liable in any manner for
the payment or collection of Senior Indebtedness; (iv) exercise or refrain from
exercising any rights or remedies against the Company or any other Person; (v)
give or fail to give any notice, or take or fail to take any other action,
required by law, by agreement or otherwise to preserve the rights of any holder
of Senior Indebtedness against the Company or any other Person liable in respect
of Senior Indebtedness or with respect to any property pledged, mortgaged, or
otherwise subject to a security interest or lien securing Senior Indebtedness;
(vi) perform or fail to perform any obligation of such holders of Senior
Indebtedness under any instrument or agreement evidencing, guaranteeing,
securing or otherwise affecting or relating to Senior Indebtedness; or (vii)
take or fail to take any action that might otherwise constitute a defense
available to, or a discharge of, the Company or any other Person liable in
respect of Senior Indebtedness.

SECTION 1210. Notice to Trustee.

The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities. Notwithstanding the provisions of
this Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness (or a trustee therefor or an agent
bank) or from any trustee therefor; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of Section 801, shall be
entitled in all respects to assume that no such facts exist; provided that if
the Trustee shall not have received the notice provided for in this Section at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of (premium, if any) or interest on any Security),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purpose for which such money was received and shall not be affected by
any notice to the contrary which may be received by it within two Business Days
prior to such date.

Notwithstanding anything in this Article Twelve to the contrary,
nothing shall prevent any payment by the Trustee to the Holders of monies
deposited with it pursuant to Section 401, and any such payment shall not be
subject to the provisions of Section 1202 or 1203.

Subject to the provisions of Section 601, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor or an agent bank) to establish that such notice has been given
by a holder of Senior Indebtedness (or a trustee therefor or an agent bank).
In the event that the Trustee determines in good faith that further evidence is
required with respect to the

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right of any Person as a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this Article, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.

SECTION 1211. Reliance on Judicial Order or Certificate of Liquidating
Agent.

Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 601, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this
Article.

SECTION 1212. Trustee Not Fiduciary for Holders of Senior Indebtedness.

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

SECTION 1213. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.

The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.

Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607.

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SECTION 1214. Article Applicable to Paying Agents.

In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided that
Section 1213 shall not apply to the Company or any Affiliate of this Company if
it or such Affiliate acts as Paying Agent.

SECTION 1215. Certain Conversions Deemed Payment.

For the purposes of this Article only: (1) the issuance and delivery
of junior securities upon conversion of Securities in accordance with Article
Thirteen or upon the repurchase of Securities in accordance with Article
Fourteen shall not be deemed to constitute a payment or distribution on account
of the principal of or premium or interest on Securities or on account of the
purchase or other acquisition of Securities, and (2) the payment, issuance or
delivery of cash, property or securities (other than junior securities) upon
conversion of a Security shall be deemed to constitute payment on account of
the principal of such Security. For the purposes of this Section, the term
"junior securities" means (a) shares of any stock of any class of the Company
and any cash, securities or other property into which the Securities are
convertible pursuant to Article Thirteen and (b) securities of the Company
which are subordinated in right of payment to all Senior Indebtedness which may
be outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is intended to or
shall impair, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, the right, which is absolute
and unconditional, of the Holder of any Security to convert such Security in
accordance with Article Thirteen or to exchange such Security for Common Stock
in accordance with Article Fourteen if the Company elects to satisfy its
obligation under Article Fourteen by the delivery of Common Stock.

ARTICLE THIRTEEN

CONVERSION OF SECURITIES

SECTION 1301. Conversion Privilege and Conversion Rate.

Subject to and upon compliance with the provisions of this Article
Thirteen, at the option of the Holder thereof, any Security may be converted at
any time into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100th of a share) of Common Stock of the Company at
the Conversion Rate, determined as hereinafter provided, in effect at the time
of conversion. Such conversion right shall expire at the close of business on

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August 1, 2004, subject, in the case of conversion of any Global Security, to
any Applicable Procedures. In case a Security or portion thereof is called for
redemption at the election of the Company or the Holder thereof exercises his
right to require the Company to repurchase a Security or portion thereof, such
conversion right in respect of such Security, shall expire (a) at the close of
business on the Business Day immediately preceding the Redemption Date, in the
case of a Security called for redemption, and (b) at the close of business on
the Repurchase Date, in the case of a Security tendered for repurchase, in each
case unless the Company defaults in making the payment due upon redemption or
repurchase, as the case may be, and in each case subject as aforesaid to any
Applicable Procedures with respect to any Global Security.

The rate at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Rate") shall be initially ____ shares
of Common Stock for each $1,000 principal amount of Securities (equivalent to a
conversion price of approximately $____ per share of Common Stock). The
Conversion Rate shall be adjusted in certain instances as provided in this
Article Thirteen.

SECTION 1302. Exercise of Conversion Privilege.

In order to exercise the conversion privilege, the Holder of any
Security to be converted shall surrender such Security, duly endorsed or
assigned to the Company or in blank, at any office or agency of the Company
maintained for that purpose pursuant to Section 1002, accompanied by a duly
signed conversion notice substantially in the form set forth in Section 205
stating that the Holder elects to convert such Security or, if less than the
entire principal amount thereof is to be converted the portion thereof to be
converted. Except as set forth below, each Security surrendered for conversion
(in whole or in part) during the Record Date Period shall (except in the case
of any Security or portion thereof which has been called for redemption on a
Redemption Date, or which is repurchasable on a Repurchase Date, occurring, in
either case, within such Record Date Period (including any Securities or
portions thereof called for redemption on a Redemption Date that is a Regular
Record Date or an Interest Payment Date, as the case may be)) be accompanied by
payment in New York Clearing House funds or other funds acceptable to the
Company of an amount equal to the interest payable on such Interest Payment
Date on the principal amount of such Security (or part thereof, as the case may
be) being surrendered for conversion. The interest so payable on such Interest
Payment Date with respect to any Security (or portion thereof, if applicable)
which has been called for redemption on a Redemption Date, or is repurchasable
on a Repurchase Date, occurring, in either case, during the Record Date Period,
which Security (or portion thereof, if applicable) is surrendered for
conversion during such Record Date Period (or on the last Business Day prior to
the Regular Record Date or Interest Payment Date in the case of any Security
(or portion thereof, as the case may be) called for redemption on such Regular
Record Date or Interest Payment Date, as the case may be), shall be paid to the
Holder of such Security being converted in an amount equal to the interest that
would have been payable on such Security if such Security had been converted as
of the close of business

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on such Interest Payment Date. The interest so payable on such Interest Payment
Date in respect of any Security (or portion thereof, as the case may be) which
has not been called for redemption on a Redemption Date, or is not eligible for
repurchase on a Repurchase Date, occurring, in either case, during the Record
Date Period, which Security (or portion thereof, as the case may be) is
surrendered for conversion during such Record Date Period, shall be paid to the
Holder of such Security as of such Regular Record Date. Interest payable in
respect of any Security surrendered for conversion on or after a Regular Record
Date and prior to an Interest Payment Date shall be paid to the Holder of such
Security as of such Regular Record Date. Interest payable in respect of any
Security surrendered for conversion on or after a Regular Record Date and prior
to an Interest Payment Date shall be paid to the Holder of such Security as of
the next preceding Regular Record Date, notwithstanding the exercise of the
right of conversion. Notwithstanding the foregoing, any Security surrendered
for conversion (in whole or in part) prior to August 1, 2000 during the Record
Date Period (except in the case of any Security or portion thereof which is
repurchaseable on a Purchase Date occurring within such period) shall not be
accompanied by an amount equal to the interest payable on such Interest Payment
Date on the principal amount of such Security (or part thereof, as the case may
be) being surrendered for conversion, and the Company shall pay to the Holder
of such Security (or part thereof, as the case may be) as of such Regular
Record Date in cash or in shares of Common Stock having a fair market value
equal to the amount of such interest (such fair market value being determined
based on the Closing Price Per Share of the Common Stock on the Business Day
immediately preceding such Interest Payment Date).

Except as provided in the preceding paragraph and subject to the last
paragraph of Section 307, no cash payment or adjustment shall be made upon any
conversion. Except as provided in the preceding paragraph and subject to the
last paragraph of Section 307, no cash payment of adjustment shall be made upon
any conversion on account of any interest accrued from the Interest Payment
Date next preceding the conversion date, in respect of any Security (or part
thereof, as the case may be) surrendered for conversion, or on account of any
dividends on the Common Stock issued upon conversion. The Company's delivery to
the Holder of the number of shares of Common Stock (and cash in lieu of
fractions thereof, as provided in this Indenture) into which a Security is
convertible will be deemed to satisfy the Company's obligation to pay the
principal amount of the Security.

Securities shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Securities for conversion
in accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and deliver to the Trustee, for delivery to the Holder, a
certificate or certificates for the number of full shares of Common Stock
issuable upon conversion, together with payment in lieu of any fraction of a
share, as provided in Section 1303.

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In the case of any Security which is converted in part only, upon
such conversion the Company shall execute and the Trustee shall authenticate
and deliver to the Holder thereof, at the expense of the Company, a new
Security or Securities of authorized denominations in the aggregate principal
amount equal to the unconverted portion of the principal amount of such
Security. A Security may be converted in part, but only if the principal amount
of such Security to be converted is any integral multiple of $1,000 and the
principal amount of such security to remain Outstanding after such conversion
is equal to $1,000 or any integral multiple of $1,00 in excess thereof.

SECTION 1303. Fractions of Shares.

No fractional shares of Common Stock shall be issued upon conversion
of any Security or Securities. If more than one Security shall be surrendered
for conversion at one time by the same Holder, the number of full shares that
shall be issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any Security or Securities (or
specified portions thereof), the Company shall calculate and pay a cash
adjustment in respect of such fraction (calculated to the nearest 1/100th of a
share) in an amount equal to the same fraction of the Closing Price Per Share
at the close of business on the day of conversion.

SECTION 1304. Adjustment of Conversion Rate.

The Conversion Rate shall be subject to adjustments from time to time
as follows:

(1) In case the Company shall pay or make a dividend or
other distribution on any class of capital stock of the Company
payable in shares of Common Stock (other than on shares of preferred
stock issued by the Company for cash to the extent that the right to
pay dividends on such preferred stock in shares of Common Stock was
included in the terms of such preferred stock as of the date of
original issuance), the Conversion Rate in effect at the opening of
business on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution
shall be increased by dividing such Conversion Rate by a fraction of
which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or
other distribution, such increase to become effective immediately
after the opening of business on the day following the date fixed for
such determination. For the purposes of this paragraph (1), the
number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Company but shall include
shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company will not pay any
dividend or make any distribution on shares of Common Stock held in
the treasury of the Company.

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(2) In case the Company shall issue rights, options or
warrants to all holders of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share
less than the current market price per share (determined as provided
in paragraph (8) of this Section 1304) of the Common Stock on the
date fixed for the determination of stockholders entitled to receive
such rights, options or warrants, the Conversion Rate in effect at
the opening of business on the day following the date fixed for such
determination shall be increased by dividing such Conversion Rate by
a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or purchase would
purchase at such current market price and the denominator shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription or business on the
day following the date fixed for such determination. For the purposes
of this paragraph (2), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock.
The Company will not issue any rights, options or warrants in respect
of shares of Common Stock held in the treasury of the Company.

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

(4) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its
indebtedness, shares of any class of capital stock, or other property
(including securities, but excluding (i) any rights, options or
warrants referred to in paragraph (2) of this Section, (ii) any
dividend or distribution paid exclusively in cash, (iii) any dividend
or distribution referred to in paragraph (1) of this Section and (iv)
any merger or consolidation to which Section 1311 applies), the
Conversion Rate shall be adjusted so that the same shall equal the
rate determined by dividing the Conversion Rate in effect immediately
prior to the close of business on the date fixed for the determination
of stockholders entitled to receive such distribution by a fraction of
which the numerator shall be the current market price per share
(determined as provided in paragraph (8) of this Section 1304)

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of the Common Stock on the date fixed for such determination (the
"Reference Date") less the then fair market value (as determined by
the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution filed with the Trustee) on the
Reference Date of the portion of the assets, shares or evidences of
indebtedness so distributed applicable to one share of Common Stock
and the denominator shall be the current market price per share of
the Common Stock on the Reference Date, such adjustment to become
effective immediately prior to the opening of business on the day
following the Reference Date. In any case in which this paragraph (4)
is applicable, paragraph (2) of this Section shall not be applicable.

(5) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any
cash that is distributed as a part of a distribution referred to in
paragraph (4) of this Section) in an aggregate amount that, combined
together with (I) the aggregate amount of any other cash
distributions to all holders of its Common Stock made exclusively in
cash within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to this
paragraph (5) has been made and (II) the aggregate of any cash plus
the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board
Resolution) of consideration payable in respect of any tender offer
by the Company or any of its subsidiaries for all or any portion of
the Common Stock concluded within the 12 months preceding the date of
payment of such distribution and in respect of which no adjustment
pursuant to paragraph (6) of this Section 1304 has been made (the
"combined cash and tender amount") exceeds 10% of the product of the
current market price per share (determined as provided in paragraph
(8) of this Section 1304) of the Common Stock on the date for the
determination of holders of shares of Common Stock entitled to
receive such distribution times the number of shares of Common Stock
outstanding on such date (the "aggregate current market price"),
then, and in each such case, immediately after the close of business
on such date for determination, the Conversion Rate shall be adjusted
so that the same shall equal the rate determined by dividing the
Conversion Rate in effect immediately prior to the close of business
on the date fixed for determination of the stockholders entitled to
receive such distribution by a fraction (i) the numerator of which
shall be equal to the current market price per share (determined as
provided in paragraph (8) of this Section) of the Common Stock on the
date fixed for such determination less an amount equal to the
quotient of (x) the excess of such combined cash and tender amount
over such aggregate current market price divided by (y) the number of
shares of Common Stock outstanding on such date for determination and
(ii) the denominator of which shall be equal to the current market
price per share (determined as provided in paragraph (8) of this
Section 1304) of the Common Stock on such date for determination.

(6) In case a tender offer made by the Company or any
Subsidiary for all or any portion of the Common Stock shall expire
and such tender offer or exchange (as

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amended upon the expiration thereof) shall require the payment to
stockholders (based on the acceptance (up to any maximum specified in
the terms of the tender offer) of Purchased Shares (as defined
below)) of an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) that combined
together with (I) the aggregate of the cash plus the fair market
value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution), as of the
expiration of such tender or exchange offer, of consideration payable
in respect of any other tender or exchange offer by the Company or
any Subsidiary for all or any portion of the Common Stock expiring
within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to this
paragraph (6) has been made and (II) the aggregate amount of any cash
distributions to all holders of the Company's Common Stock within 12
months preceding the expiration of such tender or exchange offer and
in respect of which no adjustment pursuant to paragraph (5) of this
Section has been made (the "combined tender and cash amount") exceeds
10% of the product of the current market price per share of the
Common Stock (determined as provided in paragraph (8) of this Section
1304) as of the last time (the "Expiration Time") tenders or
exchanges could have been made pursuant to such tender or exchange
offer (as it may be amended) times the number of shares of Common
Stock outstanding (including any tendered or exchanged shares) as of
the Expiration Time, then, and in each such case, immediately prior
to the opening of business on the day after the date of the
Expiration Time, the Conversion Rate shall be adjusted so that the
same shall equal the rate determined by dividing the Conversion Rate
immediately prior to close of business on the date of the Expiration
Time by a fraction (i) the numerator of which shall be equal to (A)
the product of (I) the current market price per share of the Common
Stock (determined as provided in paragraph (8) of this Section 1304)
on the date of the Expiration Time multiplied by (II) the number of
shares of Common Stock outstanding (including any tendered or
exchanged shares) on the Expiration Time less (B) the combined tender
and cash amount, and (ii) the denominator of which shall be equal to
the product of (A) the current market price per share of the Common
Stock (determined as provided in paragraph (8) of this Section 1304)
as of the Expiration Time multiplied by (B) the number of shares of
Common Stock outstanding (including any tendered or exchanged shares)
as of the Expiration Time less the number of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time
(the shares deemed so accepted up to any such maximum, being referred
to as the "Purchased Shares").

(7) The reclassification of Common Stock into securities
other than Common Stock (other than any reclassification upon a
consolidation or merger to which Section 1311 applies) shall be
deemed to involve (a) a distribution of such securities other than
Common Stock to all holders of Common Stock (and the effective date
of such reclassification shall be deemed to be "the date fixed for
the determination of stockholders entitled to receive such
distribution" and "the date fixed for such

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determination" within the meaning of paragraph (4) of this Section),
and (b) a subdivision or combination, as the case may be, of the
number of shares of Common Stock outstanding immediately prior to
such reclassification into the number of shares of Common Stock
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such
combination becomes effective", as the case may be, and "the day upon
which such subdivision or combination becomes effective" within the
meaning of paragraph (3) of this Section 1304).

(8) For the purpose of any computation under paragraphs
(2), (4), (5) or (6) of this Section 1304, the current market price
per share of Common Stock on any date shall be calculated by the
Company and be deemed to be the average of the daily Closing Prices
Per Share for the five consecutive Trading Days selected by the
Company commencing not more than 10 Trading Days before, and ending
not later than, the earlier of the day in question and the day before
the "ex date" with respect to the issuance or distribution requiring
such computation. For purposes of this paragraph, the term "'ex
date", when used with respect to any issuance or distribution, means
the first date on which the Common Stock trades regular way in the
applicable securities market or on the applicable securities exchange
without the right to receive such issuance or distribution.

(9) No adjustment in the Conversion Rate shall be required
unless such adjustment (plus any adjustments not previously made by
reason of this paragraph (9)) would require an increase or decrease
of at least one percent in such rate; provided, however, that any
adjustments which by reason of this paragraph (9) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Article shall be
made to the nearest cent or to the nearest one-hundredth of a share,
as the case may be.

(10) The Company may make such increases in the Conversion
Rate, for the remaining term of the Securities or any shorter term,
in addition to those required by paragraphs (1), (2), (3), (4), (5)
and (6) of this Section 1304, as it considers to be advisable in
order to avoid or diminish any income tax to any holders of shares of
Common Stock resulting from any dividend or distribution of stock or
issuance of rights or warrants to purchase or subscribe for stock or
from any event treated as such for income tax purposes. The Company
shall have the power to resolve any ambiguity or correct any error in
this paragraph (10) and its actions in so doing shall, absent
manifest error, be final and conclusive.

(11) To the extent permitted by applicable law, the Company
from time to time may increase the Conversion Rate by any amount for
any period of time if the period is at least 20 days, the increase is
irrevocable during such period, and the Board of Directors shall have
made a determination that such reduction would be in the best

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interests of the Company, which determination shall be conclusive.
Whenever the Conversion Rate is increased pursuant to the preceding
sentence, the Company shall give notice of the increase to the
Holders in the manner provided in Section 106 at least fifteen (15)
days prior to the date the increased Conversion Rate takes effect,
and such notice shall state the increased Conversion Rate and the
period during which it will be in effect.

SECTION 1305. Notice of Adjustments of Conversion Rate.

Whenever the Conversion Rate is adjusted as herein provided:

(1) the Company shall compute the adjusted Conversion Rate in
accordance with Section 1304 and shall prepare a certificate signed by
the principal accounting or financial officer of the Company setting
forth the adjusted Conversion Rate and showing in reasonable detail
the facts upon which such adjustment is based, and such certificate
shall promptly be filed with the Trustee and with each Conversion
Agent; and

(2) a notice stating that the Conversion Rate has been
adjusted and setting forth the adjusted Conversion Rate shall
forthwith be prepared, and as soon as practicable after it is
prepared, such notice shall be provided by the Company to all Holders
in accordance with Section 106.

Neither the Trustee nor any Conversion Agent shall be under any duty or
responsibility with respect to any such certificate or the information and
calculations contained therein, except to exhibit the same to any Holder of
Securities desiring inspection thereof at its office during normal business
hours.

SECTION 1306. Notice of Certain Corporate Action.

In case:

(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable (i) otherwise than
exclusively in cash or (ii) exclusively in cash in an amount that
would require any adjustment pursuant to Section 1304; or

(b) the Company shall authorize the granting to the holders
of its Common Stock of rights, options or warrants to subscribe for or
purchase any shares of capital stock of any class or of any other
rights; or

(c) of any reclassification of the Common Stock of the
Company, or of any consolidation, merger, or share exchange to which
the Company is a party and for

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which approval of any stockholders of the Company is required, or of
the conveyance, sale, transfer or lease of all or substantially all
of the assets of the Company; or

(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or

(e) the Company or any Subsidiary shall commence a tender
offer for all or a portion of the Company's outstanding shares of
Common Stock (or shall amend any such tender offer);

then the Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of Securities pursuant to Section 1002, and shall
cause to be provided to all Holders in accordance with Section 106, at least 20
days (or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record, expiration or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, rights, options or warrants, or, if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, rights, options or warrants are to be
determined, (y) the date on which the right to make tenders under such tender
offer expires or (z) the date on which such reclassification, consolidation,
merger, conveyance, transfer, sale, lease, dissolution, liquidation or winding
up is expected to become effective, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities, cash or other property deliverable upon
such reclassification, consolidation, merger, conveyance, transfer, sale,
lease, dissolution, liquidation or winding up. Neither the failure to give such
notice or the notice referred to in the following paragraph nor any defect in
such notice shall affect the legality or validity of the proceedings clauses
(a) through (e) of this Section 1306. If at the time the Trustee shall not be a
Conversion Agent, a copy of such notice shall also be filed by the Company with
the Trustee.

The preceding paragraph to the contrary notwithstanding, the Company
shall cause to be filed at each office or agency maintained for the purpose of
conversion of Securities pursuant to Section 1002, and shall cause to be
provided to all Holders in accordance with Section 106 notice of any tender
offer by the Company or any Subsidiary for all or any portion of the Common
Stock at or about the time that such notice of tender offer is provided to the
public generally.

SECTION 1307. Company to Reserve Common Stock.

The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Securities, the full number of shares of
Common Stock then issuable upon the conversion of all Outstanding Securities.

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<PAGE> 94

SECTION 1308. Taxes on Conversions.

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

SECTION 1309. Covenant as to Common Stock.

The Company agrees that all shares of Common Stock which may be
delivered upon conversion of Securities, upon such delivery, will have been
duly authorized and validly issued and will be fully paid and nonassessable
and, except as provided in Section 1308, the Company will pay all taxes, liens
and charges with respect to the issue thereof.

SECTION 1310. Cancellation of Converted Securities.

All Securities delivered for conversion shall be delivered to the
Trustee to be cancelled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 309.

SECTION 1311. Provision in Case of Consolidation, Merger or Sale of Assets.

In case of any consolidation or merger of the Company with or into
any other Person, any merger of another Person with or into the Company (other
than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the Company)
or any conveyance, sale, transfer or lease of all or substantially all of the
assets of the Company in one transaction or a series of related transactions,
the Person formed by such consolidation or resulting from such merger or which
acquires such assets, as the case may be, shall execute and deliver to the
Trustee a supplemental indenture providing that the Holder of each Security
then Outstanding shall have the right thereafter, during the period such
Security shall be convertible as specified in Section 1301, to convert such
Security only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance, sale, transfer or lease
by a holder of the number of shares of Common Stock of the Company into which
such Security might have been converted immediately prior to such
consolidation, merger, conveyance, sale, transfer or lease, assuming such
holder of Common Stock of the Company (i) is not a Person with which the
Company consolidated or merged with or into or which merged into or with the
Company or to which such conveyance, sale, transfer or lease was

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<PAGE> 95

made, as the case may be ("Constituent Person"), or an Affiliate of a
Constituent Person and (ii) failed to exercise his rights of election, if any,
as to the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, conveyance, sale, transfer, or lease (provided that
if the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, conveyance, sale, transfer or lease (provided that
if the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, conveyance, sale, transfer, or lease is not the
same for each share of Common Stock of the Company held immediately prior to
such consolidation, merger, conveyance, sale, transfer or lease by others than
a Constituent Persons or an Affiliate thereof and in respect of which such
rights of election shall not have been exercised ("Non-electing Share"), then
for the purpose of this Section 1311 the kind and amount of securities, cash
and other property receivable upon such consolidation, merger, conveyance,
sale, transfer or lease by the holders of each Non- electing Share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
Non-electing Shares). Such supplemental indenture shall provide for adjustments
which, for events subsequent to the effective date of such supplemental
indenture, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article. The above provisions of this Section
1311 shall similarly apply to successive consolidations, mergers, conveyances,
sales, transfers or leases. Notice of the execution of such a supplemental
indenture shall be given by the Company to the Holder of each Security as
provided in Section 106 promptly upon such execution.

Neither the Trustee, any Paying Agent, nor any Conversion Agent shall
be under any responsibility to determine the correctness of any provisions
contained in any such supplemental indenture relating either to the kind or
amount of shares of stock or other securities or property or cash receivable by
Holders of Securities upon the conversion of their Securities after any such
consolidation, merger, conveyance, transfer, sale or lease or to any such
adjustment, but may accept as conclusive evidence of the correctness of any
such provisions, and shall be protected in relying upon, an Opinion of Counsel
with respect thereto, which the Company shall cause to be furnished to the
Trustee upon request.

For purposes of preventing duplicative adjustments, if and to the
extent Section 1311 applies to any event or occurrence, Section 1304 shall not
apply.

SECTION 1312. Responsibility of Trustee for Conversion Provisions.

The Trustee, subject to the provisions of Section 601, and any
Conversion Agent shall not at any time be under any duty or responsibility to
any Holder of Securities to determine whether any facts exist which may require
any adjustment of the Conversion Rate, or with respect to the nature or extent
of any such adjustment when made, or with respect to the method employed, or
herein or in any supplemental indenture provided to be employed, in making the
same, or whether a supplemental indenture need to be entered into. Neither the
Trustee, subject to the provisions of Section 601, nor any Conversion Agent
shall be accountable with respect to the validity or value (or the kind or
amount) of any Common

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<PAGE> 96

Stock, or of any other securities or property or cash, which may at any time be
issued or delivered upon the conversion of any Security; and it or they do not
make any representation with respect thereto. Neither the Trustee, subject to
the provisions of Section 601, nor any Conversion Agent shall be responsible
for any failure of the Company to make or calculate any cash payment or to
issue, transfer, or deliver any shares of Common Stock or share certificates or
other securities or property or cash upon the surrender of any Security for the
purpose of conversion; and the Trustee, subject to the provisions of Section
601, and any Conversion Agent shall not be responsible for any failure of the
Company to comply with any of the covenants of the Company contained in this
Article.

ARTICLE FOURTEEN

REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE OF CONTROL

SECTION 1401. Right to Require Repurchase.

In the event that a Change of Control (as hereinafter defined) shall
occur, then each Holder shall have the right, at the Holder's option to require
the Company to repurchase, and upon the exercise of such right the Company
shall repurchase, all of such Holder's Securities, or any portion of the
principal amount thereof that is equal to $1,000 or an integral multiple of
$1,000 in excess thereof, on the date (the "Repurchase Date") that is 45 days
after the date of the Company Notice (as defined in Section 1403) at a price
equal to 100% of the principal amount of the Securities to be repurchased plus
interest accrued to the Repurchase Date (the "Repurchase Price"); provided,
however, that installments of interest on Securities whose Stated Maturity is
on or prior to the Repurchase Date shall be payable in cash to the Holders of
such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Regular Record Date according to their
terms and the provisions of Section 307. Such right to require the repurchase
of the Securities shall not continue after a discharge of the Company from its
obligations with respect to the Securities in accordance with Article Four,
unless a Change of Control shall have occurred prior to such discharge. The
Repurchase Price shall be paid in cash. Whenever in this Indenture (including
Sections 202, 301, 501(2) and 508) there is a reference, in an context, to the
principal of any Security as of any time, such reference shall be deemed to
include reference to the Repurchase Price payable in respect of such Security
to the extent that such Repurchase Price is, was or would be so payable at such
time, and express mention of the Repurchase Price in any provision of this
Indenture shall not be construed as excluding the Repurchase Price in those
provisions of this Indenture when such express mention is not made; provided
that for the purposes of Article Twelve such reference shall be deemed to
include reference to the Repurchase Price only to the extent the Repurchase
Price is payable in cash.

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SECTION 1402. [Reserved].

SECTION 1403. Notices, Method of Exercising Repurchase Right, Etc.

(a) Unless the Company shall have previously called for redemption
all of the Outstanding Securities or unless all of the Outstanding Securities
shall have theretofore been converted in accordance with Article Thirteen, on
or before the 30th day after the occurrence of a Change of Control, the Company
or, at the request and expense of the Company on or before the 15th day after
such occurrence, the Trustee, shall give to all Holders, in the manner provided
in Section 106, notice (the "Company Notice") of the occurrence of the Change
of Control and of the repurchase right set forth herein arising as a result
thereof. The Company shall also deliver a copy of such notice of a repurchase
right to the Trustee.

Each notice of a repurchase right shall state:

(1) the Repurchase Date,

(2) the date by which the repurchase right must be exercised,

(3) the Repurchase Price,

(4) a description of the procedure which a Holder must follow
to exercise a repurchase right, and the place or places where such
Securities are to be surrendered for payment of the Repurchase Price
and accrued interest, if any,

(5) that on the Repurchase Date the Repurchase Price, and
accrued interest, if any, will become due and payable upon each such
Security designated by the Holder to be repurchased, and that interest
thereon shall cease to accrue on and after said date, and

(6) the Conversion Rate then in effect, the date on which the
right to convert the principal amount of the Securities to be
repurchased will terminate and the place or places where such
Securities may be surrendered for conversion.

No failure of the Company to give the foregoing notices or defect
therein shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Securities.

If any of the foregoing provisions or other provisions of this Article
Fourteen are inconsistent with applicable law, such law shall govern.

(b) To exercise a repurchase right, a Holder shall deliver to the
Trustee or any Paying Agent on or before the 30th day after the date of the
Company Notice (i) written notice

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of the Holder's exercise of such right, which notice shall set forth the name
of the Holder, the principal amount of the Securities to be repurchased (and,
if any Security is to repurchased in part, the portion of the principal amount
thereof to be repurchased and the name of the Person in which the portion
thereof to remain Outstanding after such repurchase is to be registered), and a
statement that an election to exercise the repurchase right is being made
thereby, and (ii) the Securities with respect to which the repurchase right is
being exercised. Such written notice shall be irrevocable, except that the
right of the Holder to convert the Securities with respect to which the
repurchase right is being exercised shall continue until the close of business
on the Repurchase Date.

(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the Trustee
or the Paying Agent the Repurchase Price in cash for paying to the Holder on
the Repurchase Date, together with accrued and unpaid interest to the
Repurchase Date payable with respect to the Securities as to which the purchase
right has been exercised; provided, however, that installments of interest on
Securities whose Stated Maturity is on or prior to the Repurchase Date shall be
payable in cash to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Regular
Date according to the terms and provisions of Section 307.

(d) If any Security (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the principal amount of such
Security (or portion thereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the Repurchase Date at
the rate of ____% per annum, and each Security shall remain convertible into
Common Stock until the principal of such Security (or portion thereof, as the
case may be) shall have been paid or duly provided for.

(e) Any Security which is to be repurchased only in part shall be
surrendered to the Trustee (with due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and make available for
delivery to the Holder of such Security without service charge, a new Security
or Securities, containing identical terms and conditions, each in an authorized
denomination in aggregate principal amount equal to and in exchange for the
unrepurchased portion of the principal of the Security so surrendered.

(f) No payment or adjustment shall be made for dividends or
distributions on any Common Stock issued upon repurchase of any Security
declared prior to the Repurchase Date.

(g) All Securities delivered for repurchase shall be delivered to the
Trustee, the Paying Agent or any other agents (as shall be set forth in the
Company Notice) to be cancelled by or at the direction of the Trustee, which
shall dispose of the same as provided in Section 309.

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SECTION 1404. Certain Definitions.

For purposes of this Article Fourteen,

(a) the term "beneficial owner" shall be determined in accordance with
Rule 13d-3, as in effect on the date of the original execution of this
Indenture, promulgated by the Commission pursuant to the Exchange Act;

(b) a "Change of Control" shall be deemed to have occurred at the
time, after the original issuance of the Securities, of:

(i) the acquisition by any Person of (a) beneficial
ownership, directly or indirectly, through a
purchase, merger or other acquisition transaction
or series of transactions, of shares of capital
stock of the Company entitling such Person to
exercise 50% or more of the total voting power of
all shares of capital stock of the Company
entitled to vote generally in elections of
directors (any shares of voting stock of which
such person or group is the beneficial owner that
are not then outstanding being deemed outstanding
for purposes of calculating such percentage),
other than any such acquisition by the Company,
any Subsidiary of the Company, any employee
benefit plan of the Company existing on the date
of this Indenture or by Michael L. Musto or (b)
the right or ability by voting power, contract or
otherwise to elect or designate for election a
majority of the entire Board of Directors; or

(ii) any consolidation of the Company with, or merger
of the Company into, any other Person, any merger
of another Person into the Company, or any
conveyance, sale, transfer or lease, in one
transaction or a series of related transactions,
of all or substantially all of the assets (other
than to a wholly owned Subsidiary of the Company)
of the Company to any other Person (other than
(a) any such transaction pursuant to which the
holders of 50% or more of the total voting power
of all shares of capital stock of the Company
entitled to vote generally in elections of
directors immediately prior to such transaction
have, directly or indirectly, at least 50% or
more of the total voting power of all shares of
capital stock of the continuing or surviving
corporation entitled to vote generally in
elections of directors of the continuing or
surviving corporation immediately after such
transaction and (b) a merger (x) which does not
result in any reclassification, conversion,
exchange or cancellation of outstanding shares of
capital stock of the Company or (y) which is
effected solely to change the jurisdiction of
incorporation of the Company and results in a
reclassification, conversion or exchange of
outstanding shares of Common Stock into solely
shares of common stock); or

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(iii) at any time Continuing Directors cease to
constitute a majority of the Board of Directors
of the Company then in office.

Conversion Rate; and

(d) for the purposes of Section 1404(b)(i), the term "Person" shall
include any syndicate or group which would be deemed to be a "person" under
Section 12(d)(3) of the Exchange Act, as in effect on the date of the original
execution of this Indenture.

SECTION 1405. Consolidation, Merger, Etc.

In the case of any reclassification, change, consolidation, merger,
combination, sale or conveyance to which Section 1311 applies, in which the
Common Stock of the Company is changed or exchanged as a result into the right
to receive shares of stock and other securities or property or assets
(including cash) which includes shares of Common Stock of the Company or common
stock of another person that are, or upon issuance will be, traded on a United
States national securities exchange or approved for trading on an established
automated over-the-counter trading market in the United States and such shares
constitute at the time such change or exchange becomes effective in excess of
50% of the aggregate fair market value of such shares of stock and other
securities, property and assets (including cash) (as determined by the Company,
which determination shall be conclusive and binding), then the person formed by
such consolidation or resulting from such merger or combination or which
acquires the properties or assets (including cash) of the Company, as the case
may be, shall execute and deliver to the Trustee a supplemental indenture
(which shall comply with the Trust Indenture Act as in force at the date of
execution of such supplemental indenture) modifying the provisions of this
Indenture relating to the right of Holders to cause the Company to repurchase
the Securities following a Change of Control, including without limitation the
applicable provisions of this Article Fourteen and the definitions of the
Common Stock and Change of Control, as appropriate, and such other related
definitions set forth herein as determined in good faith by the Company (which
determination shall be conclusive and binding), to make such provisions apply
to the common stock and the issue thereof if different from the Company and
Common Stock of the Company (in lieu of the Company and the Common Stock of the
Company).

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ARTICLE FIFTEEN

IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS

SECTION 1501. Indenture and Securities Solely Corporate Obligations.

No recourse for the payment of the principal of or premium, if any,
or interest on any Security, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture or in any supplemental indenture or
in any Security, or because of the creation of any Indebtedness represented
thereby, shall be had against any incorporator, stockholder, employee, agent,
officer, or director or subsidiary, as such, past, present or future, of the
Company or of any successor corporation, either directly or through the Company
or any successor corporation, whether by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty or otherwise;
it being expressly understood that all such liability is hereby waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Securities.

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

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

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

REPTRON ELECTRONICS, INC.

By:

---------------------------
Attest:

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

RELIANCE TRUST COMPANY
as Trustee

By:

---------------------------
Name:
Title:
Attest:

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

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<PAGE> 103

STATE OF ) ss.:
COUNTY OF )

On the ____ day of __________, 1997, before me personally came
________________________, to me known, who, being by me duly sworn, did depose
and say that he/she is ____________________________ of REPTRON ELECTRONICS,
INC. one of the corporations described in and which said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so affixed
by authority of the Board of Directors of said corporation, and that he/she
signed his/her name thereto by like authority.

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

STATE OF GEORGIA ) ss.:
COUNTY OF FULTON )

On the ____ day of __________, 1997, before me personally came
________________________, to me known, who, being by me duly sworn, did depose
and say that he/she is ____________________________ of RELIANCE TRUST COMPANY,
one of the corporations described in and which executed the foregoing
instrument; that he/she knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation, and that he/she signed
his/her name thereto by like authority.

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

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Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:

Trust Indenture Indenture
Act Section Section
- --------------- ---------
<S> <C>
Section 310(a)(1) ............................................................. 609
(a)(2) ............................................................. 609
(a)(3) ............................................................. Not Applicable
(a)(4) ............................................................. Not Applicable
(b) ............................................................. 608
610

Section 311(a) ............................................................. 613
(b) ............................................................. 613
Section 312(a) ............................................................. 701 702(a)
(b) ............................................................. 702(b)
(c) ............................................................. 702(c)
Section 313(a) ............................................................. 703(a)
(b) ............................................................. 703(a)
(c) ............................................................. 703(a)
(d) ............................................................. 703(b)
Section 314(a) ............................................................. 704
(b) ............................................................. Not Applicable
(c)(1) ............................................................. 102
(c)(2) ............................................................. 102
(c)(3) ............................................................. Not Applicable
(d) ............................................................. Not Applicable
(e) ............................................................. 102
Section 315(a) ............................................................. 601
............................................................. 603(a)
(b) ............................................................. 602
(c) ............................................................. 601
(d) ............................................................. 601
(e) ............................................................. 514
Section 316(a)(1)(A) ............................................................. 512
(a)(1)(B) ............................................................. 513
(a)(2) ............................................................. Not Applicable
(b) ............................................................. 508
(c) ............................................................. 104
Section 317(a)(1) ............................................................. 503
(a)(2) ............................................................. 504
(b) ............................................................. 1003
Section 318(a) ............................................................. 107
</TABLE>

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

<PAGE> 105

RECITALS OF THE COMPANY

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION

SECTION 101. Definitions.

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

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

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

<PAGE> 106

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

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

"Agent Member" means any member of, or participant in, the Depositary.

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

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

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<PAGE> 107

"Change of Control" has the meaning specified in Section 1404(b).

"Code" has the meaning specified in Section 201.

"Company Notice" has the meaning specified in Section 1403.

"Company Order" or "Company Request" means a written order or request
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its

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<PAGE> 108

President or a Vice President, and by its Treasurer, an Assistant Treasurer,
its Secretary or an Assistant Secretary, and delivered to the Trustee.