10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended: June 30, 2004

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-12936

TITAN INTERNATIONAL, INC.

(Exact name of Registrant as specified in its Charter)

Illinois
(State of Incorporation) 36-3228472
(I.R.S. Employer Identification No.)

2701 Spruce Street, Quincy, IL 62301
(Address of principal executive offices, including Zip Code)

(217) 228-6011
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [  ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Shares Outstanding at
Class	July 29, 2004
Common stock, no par value per share		16,326,426

TITAN INTERNATIONAL, INC.

TABLE OF CONTENTS

		Page Number
Part I.	Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Condensed Statements of Operations for the Three and Six Months Ended June 30, 2004 and 2003		1
	Consolidated Condensed Balance Sheets as of June 30, 2004, and December 31, 2003		2
	Consolidated Condensed Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003		3
	Notes to Consolidated Condensed Financial Statements		4-16
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17-31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		32
Item 4.	Controls and Procedures		32
Part II.	Other Information
Item 2.	Changes in Securities and Use of Proceeds		33
Item 4.	Submission of Matters to a Vote of Security Holders		34
Item 6.	Exhibits and Reports on Form 8-K		34-35
	Signatures		35
Credit Agreement dated July 23, 2004
Indenture between Company and U.S. Bank National Association
Certification of the Principal Executive Officer pursuant to Section 302
Certification of the Principal Financial Officer pursuant to Section 302
Certification pursuant to Section 906

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TITAN INTERNATIONAL, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

(Amounts in thousands, except earnings per share data)

	Three months ended						Six months ended
	June 30,						June 30,
	2004			2003			2004			2003
Net sales	$	121,188		$	131,001		$	288,164		$	259,985
Cost of sales		99,872			124,930			239,555			243,519
Gross profit		21,316			6,071			48,609			16,466
Selling, general and administrative expenses		8,260			10,940			19,972			22,357
Research and development expenses		385			716			1,207			1,384
Goodwill impairment on Titan Europe		0			0			2,988			0
Income (loss) from operations		12,671			(5,585	)		24,442			(7,275	)
Interest expense		(4,615	)		(5,038	)		(9,765	)		(10,013	)
Equity investment income		788			0			788			0
Other income		88			2,005			134			2,483
Income (loss) before income taxes		8,932			(8,618	)		15,599			(14,805	)
Provision (benefit) for income taxes		3,289			(431	)		4,680			(740	)
Net income (loss)	$	5,643		$	(8,187	)	$	10,919		$	(14,065	)
Earnings (loss) per common share:
	$	.32		$	(.39	)	$	.57		$	(.67	)
Basic	$	.32		$	(.39	)	$	.57		$	(.67	)
Diluted Average shares outstanding:
Basic		17,379			20,913			19,288			20,852
Diluted		17,436			20,913			19,317			20,852

The accompanying notes are an integral part of the
consolidated condensed financial statements.

1

TITAN INTERNATIONAL, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands, except share data)

	June 30,			December 31,
	2004			2003
Assets
Current assets
Cash and cash equivalents	$	21,007		$	6,556
Accounts receivable (net allowance of $5,076 and $5,331, respectively)		66,529			83,975
Inventories		68,601			112,496
Assets held for sale		37,354			37,775
Deferred income taxes		20,343			20,343
Restricted cash deposits		15,000			0
Prepaid and other current assets		17,775			25,801
Total current assets		246,609			286,946
Property, plant and equipment, net		79,664			138,482
Restricted cash deposits		36,039			51,039
Investment in affiliate		27,967			0
Other assets		18,281			27,794
Goodwill, net		11,702			18,823
Total assets	$	420,262		$	523,084
Liabilities and Stockholders’ Equity
Current liabilities
Short-term debt (including current portion of long-term debt)	$	60,231		$	21,161
Accounts payable		28,900			51,931
Other current liabilities		28,178			29,883
Total current liabilities		117,309			102,975
Deferred income taxes		22,796			22,796
Other long-term liabilities		32,754			36,960
Long-term debt		147,138			248,397
Total liabilities		319,997			411,128
Stockholders’ equity
Common stock (no par, 60,000,000 shares authorized; 27,555,081 issued)		27			27
Additional paid-in capital		203,050			203,050
Retained earnings		21,361			10,629
Treasury stock (at cost: 11,252,225 and 6,357,761 shares, respectively)		(101,204	)		(81,204	)
Accumulated other comprehensive loss		(22,969	)		(20,546	)
Total stockholders’ equity		100,265			111,956
Total liabilities and stockholders’ equity	$	420,262		$	523,084

The accompanying notes are an integral part of the
consolidated condensed financial statements.

2

TITAN INTERNATIONAL, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Amounts in thousands)

	Six months ended June 30,
	2004			2003
Cash flows from operating activities:
Net income (loss)	$	10,919		$	(14,065	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		11,349			15,780
Goodwill impairment		2,988			0
(Increase) decrease in current assets:
Accounts receivable		(24,570	)		(12,639	)
Inventories		7,253			3,735
Income tax refund		0			7,687
Prepaid and other current assets		(1,533	)		(56	)
Increase (decrease) in current liabilities:
Accounts payable		6,856			(2,964	)
Other current liabilities		10,439			2,941
Other, net		(3,014	)		(236	)
Net cash provided by operating activities		20,687			183
Cash flows from investing activities:
Capital expenditures, net		(3,441	)		(3,636	)
Proceeds from Titan Europe sale		49,984			0
Loan to Titan Europe Plc		(9,227	)		0
Other		239			63
Net cash provided by (used for) investing activities		37,555			(3,573	)
Cash flows from financing activities:
Proceeds from borrowings		348			20,427
Payment of debt		(28,661	)		(14,956	)
Repurchase of common stock		(15,000	)		(244	)
Dividends paid		(212	)		(208	)
Other, net		(50	)		373
Net cash (used for) provided by financing activities		(43,575	)		5,392
Effect of exchange rate changes on cash		(216	)		331
Net increase in cash and cash equivalents		14,451			2,333
Cash and cash equivalents at beginning of period		6,556			22,049
Cash and cash equivalents at end of period	$	21,007		$	24,382

The accompanying notes are an integral part of the
consolidated condensed financial statements.

3

TITAN INTERNATIONAL, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

A.	Accounting Policies
	In the opinion of Titan International, Inc. (“Titan” or the “Company”), the accompanying unaudited consolidated condensed financial statements contain all adjustments, which are normal and recurring in nature, necessary to present fairly its financial position as of June 30, 2004, the results of operations for the three and six months ended June 30, 2004 and 2003, and cash flows for the six months ended June 30, 2004 and 2003.
	Accounting policies have continued without change and are described in the Summary of Significant Accounting Policies contained in the Company’s 2003 Annual Report on Form 10-K. These interim financial statements have been prepared pursuant to the Securities and Exchange Commission’s rules for Form 10-Q’s and, therefore, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2003 Annual Report on Form 10-K. Details in those notes have not changed significantly, except as a result of normal interim transactions and certain matters discussed hereafter.
	Stock-based Compensation
	At June 30, 2004, the Company has two stock-based compensation plans, which are described in Note 21 to the Company’s financial statements on Form 10-K for the fiscal year ended December 31, 2003. The Company applies the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations in accounting for those plans. The Company granted no stock options during the first six months of 2004 or 2003 and no stock-based compensation expense was required to be recorded. For the first six months of 2004 and 2003, the total stock-based compensation expense as determined under the fair value method for all awards, net of related tax effects, was computed to be zero and four thousand dollars, respectively. All prior grants became fully vested in 2002.

4

TITAN INTERNATIONAL, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

B.	Inventories
	Inventories consisted of the following (in thousands):

	June 30,		December 31,
	2004		2003
Raw materials	$	24,606	$	38,054
Work-in-process		4,374		17,457
Finished goods		35,928		53,177
		64,908		108,688
LIFO reserve		3,693		3,808
	$	68,601	$	112,496

	The large inventory decrease resulted from the April 2004 sale of a majority interest in Titan Europe. See Note N for additional information. The Titan Europe inventory balance at December 31, 2003 was $37.2 million. Included in the above inventory balances at June 30, 2004, and December 31, 2003, are reserves for slow-moving and obsolete inventory of $4.1 million and $6.8 million respectively.
C.	Assets Held for Sale
	In December 2003, the Company’s management and Board of Directors approved the sale of certain operating assets with a carrying value of $37.8 million at December 31, 2003. At June 30, 2004, $37.4 million of these assets remain. Land and buildings at the Company’s idle facilities in Walcott, Iowa, and Greenwood, South Carolina, totaling $4.9 million are included in this amount. Machinery and equipment located at the Company’s idle facilities in Brownsville, Texas, and Natchez, Mississippi, with an aggregate carrying value of $32.5 million are also included in assets held for sale. Management has identified no impairment on the carrying value of these assets as of June 30, 2004. Depreciation is not being recorded on assets held for sale in accordance with Statement of Financial Accounting Standards (SFAS) No. 144. Depreciation on these assets held for sale was $1.3 million and $2.6 million for the quarter and six months ended June 30, 2003. Had these assets not been classified as held for sale, depreciation would have been $1.4 million and $2.8 million for the quarter and six months ended June 30, 2004. Appraisals from third-party valuation firms support the fair market value of the machinery and equipment at these facilities to be in excess of the carrying value. The Company has had inquiries regarding these assets and is continuing the sales process with the intention of completion by the end of 2004. If the Company is unable to sell or obtain a firm commitment to sell these assets by the end of 2004, the assets will be reclassified to held and used. If the assets are reclassified back to held and used, they would be valued at the lower of fair value or carrying amount adjusted for untaken depreciation.

5

TITAN INTERNATIONAL, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

D.	Property, Plant and Equipment
	Property, plant and equipment, net reflects accumulated depreciation of $168.3 million and $230.2 million at June 30, 2004, and December 31, 2003, respectively. The large decrease in net property, plant and equipment resulted from the April 2004 sale of a majority interest in Titan Europe. See Note N for additional information. The Titan Europe net property, plant and equipment balance at December 31, 2003, was $53.3 million. The Company has reviewed the fixed assets to assess recoverability from future operations. No impairment has been identified as of June 30, 2004.
E.	Goodwill
	Goodwill, net reflects accumulated amortization of $2.9 million at June 30, 2004, as compared to $5.8 million at December 31, 2003. Goodwill amortization was ceased in January 2002, pursuant to the adoption of Statement of Financial Accounting Standards (SFAS) No. 142.
	The carrying amount of goodwill by segment at June 30, 2004, was (i) agricultural of $6.9 million, (ii) earthmoving/construction of $3.6 million, and (iii) consumer of $1.2 million. The decrease in net goodwill to $11.7 million at June 30, 2004, from $18.8 million at December 31, 2003, is the result of (i) impairment of Titan Europe goodwill of $3.0 million in the first quarter of 2004 and (ii) the sale of a majority interest in Titan Europe along with a currency translation adjustment of $4.1 million. See Note N for additional information.
	The Company reviews goodwill to assess recoverability from future operations during the fourth quarter of each annual reporting period, and whenever events and circumstances indicate that the carrying values may not be recoverable, as was the case given the pending disposition of a majority interest in Titan Europe at March 31, 2004. There can be no assurance that future goodwill tests will not result in a charge to earnings for additional impairment.

6

TITAN INTERNATIONAL, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

F.	Long-term Debt
	Long-term debt consisted of the following (in thousands):

	June 30,		December 31,
	2004		2003
Senior subordinated notes	$	136,750	$	136,750
Term loan		60,000		86,425
Revolving loan agreement		0		0
Foreign subsidiary debt		0		35,653
Industrial revenue bonds and other		10,619		10,730
		207,369		269,558
Less: Amounts due within one year		60,231		21,161
	$	147,138	$	248,397

Aggregate maturities of long-term debt at June 30, 2004, were as follows (in thousands):

July 1 – December 31, 2004	$	5,065
2005		55,266
2006		124
2007		136,848
2008		566
Thereafter		9,500
	$	207,369

On April 19, 2004, the Company amended its term loan with General Electric Capital Corporation. Major revisions contained in the amendment included a voluntary prepayment of $26.4 million on April 19, 2004, with no prepayment penalty and the right of the Company to purchase the Titan International stock owned by Citicorp Venture Capital, Ltd. For further information, see the Company’s Form 8-K filed on April 22, 2004.

In the third quarter of 2004, on July 23, 2004, the Company secured a new $100 million revolving credit agreement. This new facility replaces the Company’s $20 million revolving loan agreement and term loan, which were terminated on July 23, 2004.

Also in the third quarter, on July 26, 2004, the Company sold $115 million of 5.25% senior unsecured convertible notes due 2009. The net proceeds of the sale of $111.3 million will be applied to the outstanding principal of the Company’s 8.75% senior subordinated notes due 2007.

7

TITAN INTERNATIONAL, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

	Additionally, in the third quarter, on July 26, 2004, the Company notified the trustee to redeem all of Titan’s outstanding 8.75% senior subordinated notes. The redemption date will be August 26, 2004, for the total $136.8 million of notes outstanding at a redemption price of 101.458% per note (expressed as a percentage of the principal amount).
G.	Warranty Costs
	The Company provides limited warranties on workmanship on its products in all market segments. The Company’s products have a limited warranty that ranges from zero to ten years, with certain products being prorated after the first year. The Company calculates a provision for warranty expense based on past warranty experience. Warranty accruals are included as a component of other current liabilities on the Consolidated Condensed Balance Sheets. Changes in the warranty liability consisted of the following (in thousands):

	2004			2003
Warranty liability, January 1	$	1,508		$	1,617
Provision for warranty liabilities		1,290			928
Warranty payments made		(1,071	)		(922	)
Warranty liability, June 30	$	1,727		$	1,623

H.

Income Taxes

The Company recorded income tax expense of $4.7 million and an income tax benefit of $0.7 million for the six months ended June 30, 2004 and 2003, respectively. The Company’s income tax expense differs from the amount of income tax determined by applying the statutory U.S. federal income tax rate to pre-tax income (loss) primarily as a result of income tax expense to be paid in foreign jurisdictions and the application of a valuation allowance on the domestic net deferred tax asset balance. As a result of several years of previous losses, the Company had reserved its net deferred tax asset position, consistent with the Company’s accounting policies. As a result of the sale of Titan Europe, the Company will reverse a $15.0 million valuation allowance and use the deferred tax asset to offset the taxable proceeds received from the sale. At June 30, 2004, the Company had no remaining valuation allowance.

8

TITAN INTERNATIONAL, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

I.	Employee Benefit Plans
	The Company has two frozen defined benefit pension plans. The components of net periodic pension cost consisted of the following (in thousands):

	Three months						Six months
	ended June 30,						ended June 30,
	2004			2003			2004			2003
Interest cost	$	1,116		$	1,154		$	2,232		$	2,308
Expected return on assets		(1,098	)		(870	)		(2,196	)		(1,740	)
Amortization of unrecognized prior service cost		34			36			68			72
Amortization of unrecognized deferred taxes		(14	)		(15	)		(28	)		(30	)
Amortization of net unrecognized loss		402			398			804			796
Net periodic pension cost	$	440		$	703		$	880		$	1,406

	During the six months ended June 30, 2004, the Company contributed $2.9 million to the frozen defined benefit pension plans. The Company presently anticipates contributing approximately $5.5 million to the pension plans in the remainder of 2004.
J.	Goodwill Impairment on Titan Europe
	On April 7, 2004, Titan Luxembourg, a wholly-owned European subsidiary, sold 70% of the common stock of Titan Europe, to the public on the AIM market in London. In the first quarter of 2004, Titan recognized a $3.0 million goodwill impairment on the pending sale of Titan Europe based on the valuation of Titan Europe inherent in the April 2004 public offering in accordance with the Company’s goodwill impairment policy. The April 2004 consideration for the entire Titan Europe offering was $89.5 million as compared to a book value of $92.5 million resulting in a goodwill impairment of $3.0 million. See Note N for additional information.
K.	Comprehensive Income (Loss)
	Comprehensive income, which included net income of $5.6 million and the effect of foreign currency translation adjustments of $(2.2) million, totaled $3.4 million for the second quarter of 2004, compared to comprehensive loss of $(4.9) million in the second quarter of 2003. Comprehensive income for the six months ended June 30, 2004 was $8.5 million, including net income of $10.9 million and the effect of foreign currency translations of $(2.4) million, compared to comprehensive loss of $(10.8) million in 2003.

9

TITAN INTERNATIONAL, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

L.	Segment Information
	The following tables present information about certain revenues and income from operations for the three and six months ended June 30, 2004 and 2003 used by the chief operating decision maker of the Company (in thousands):

	Revenues				Income (loss)
Three months ended	from external		Intersegment		from
June 30, 2004	customers		revenues		operations
Agricultural	$	79,826	$	11,911	$	12,950
Earthmoving/construction		33,662		5,137		4,856
Consumer		7,700		516		636
Reconciling items (a)		0		0		(5,771	)
Consolidated totals	$	121,188	$	17,564	$	12,671
Three months ended June 30, 2003
Agricultural	$	75,847	$	15,473	$	191
Earthmoving/construction		45,138		8,620		1,103
Consumer		10,016		1,527		(279	)
Reconciling items (a)		0		0		(6,600	)
Consolidated totals	$	131,001	$	25,620	$	(5,585	)

(a) Represents corporate expenses and depreciation and amortization expense related to property, plant and equipment carried at the corporate level.

10

TITAN INTERNATIONAL, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

	Revenues				Income (loss)
Six months ended	from external		Intersegment		from
June 30, 2004	customers		revenues		operations
Agricultural	$	183,132	$	29,279	$	25,663	(b)
Earthmoving/construction		87,051		13,853		8,825	(b)
Consumer		17,981		1,755		1,522	(b)
Reconciling items (a)		0		0		(11,568	)
Consolidated totals	$	288,164	$	44,887	$	24,442	(b)
Six months ended June 30, 2003
Agricultural	$	153,949	$	40,419	$	3,578
Earthmoving/construction		86,182		19,815		2,650
Consumer		19,854		4,281		(71	)
Reconciling items (a)		0		0		(13,432	)
Consolidated totals	$	259,985	$	64,515	$	(7,275	)

(a)	Represents corporate expenses and depreciation and amortization expense related to property, plant and equipment carried at the corporate level.
(b)	Amount includes the pro rata portion of the goodwill impairment recorded on Titan Europe during the first quarter of 2004.

11

TITAN INTERNATIONAL, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

Assets by segment were as follows (in thousands):

	June 30,		December 31,
Total assets	2004		2003
Agricultural	$	184,169	$	246,138
Earthmoving/construction		82,641		144,580
Consumer		20,087		27,130
Reconciling items (a)		133,365		105,236
Consolidated totals	$	420,262	$	523,084

(a) Represents property, plant and equipment and goodwill related to certain acquisitions and other corporate assets.

M.	Earnings per Share
	Earnings per share are as follows (amounts in thousands, except per share data):

	Three months ended,
	June 30, 2004						June 30, 2003
			Weighted							Weighted
	Net		-average		Per share		Net			-average		Per share
	Income		shares		amount		Loss			shares		amount
Basic EPS	$	5,643		17,379	$	.32	$	(8,187	)		20,913	$	(.39	)
Effect of stock options		0		57				0			0
Diluted EPS	$	5,643		17,436	$	.32	$	(8,187	)		20,913	$	(.39	)

	Six months ended,
	June 30, 2004						June 30, 2003
			Weighted							Weighted
	Net		-average		Per share		Net			-average		Per share
	Income		shares		amount		Loss			shares		amount
Basic EPS	$	10,919		19,288	$	.57	$	(14,065	)		20,852	$	(.67	)
Effect of stock options		0		29				0			0
Diluted EPS	$	10,919		19,317	$	.57	$	(14,065	)		20,852	$	(.67	)

The effect of stock options with exercise prices that were greater than the average market price of the Company’s common shares have been excluded, as the effect would have been antidilutive.

12

TITAN INTERNATIONAL, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

N. Titan Europe Sale

On April 7, 2004, Titan Luxembourg, a wholly-owned European subsidiary, sold 70% of the common stock of Titan Europe, to the public on the AIM market in London. Titan Luxembourg is the largest single stockholder in Titan Europe Plc, retaining a 30% interest. Titan Luxembourg’s proceeds from the sale of Titan Europe shares were approximately $62.0 million before fees and expenses of approximately $2.8 million. The Company recorded cash receipts of $50.0 million and a note receivable from the newly created public company, Titan Europe Plc, of $9.2 million.

In the first quarter of 2004, Titan recognized a $3.0 million goodwill impairment on the pending sale of Titan Europe in accordance with the Company’s goodwill impairment policy. Approximately $26.4 million of the cash receipts from the sale of Titan Europe were used to reduce the Company’s debt balances in April 2004. An additional $15.0 million of the cash receipts were used to purchase the shares of Titan International stock (approximately 4.9 million shares) held by Citicorp Venture Capital, Ltd.

The Company is accounting for its 30% interest in Titan Europe as an equity investment. Titan recognized equity income on its investment in Titan Europe of $0.8 million in the second quarter of 2004. The carrying value of the Company’s equity investment in Titan Europe was $28.0 million at June 30, 2004, classified as investment in affiliate on the consolidated condensed balance sheet.

Had the transaction occurred on January 1, 2003, net sales for the three and six months ended June 30, 2004, would have been $121.2 and $238.7 million respectively, compared to $94.0 and $187.3 million in 2003. Income from operations for the three and six months ended June 30, 2004, would have been $12.7 and $24.0 million respectively, compared to loss from operations of $(7.1) and $(10.3) million in 2003. Net income for the three and six months ended June 30, 2004, would have been $5.6 and $12.8 million respectively compared to loss of $(8.4) and $(14.7) million in 2003. Earnings per share for the three and six months ended June 30, 2004, would have been $0.32 and $0.66 respectively, compared to loss per share of $(0.40) and $(0.71) in 2003.

13

TITAN INTERNATIONAL, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

O.	Stock Repurchase
	On April 20, 2004, the Company purchased the shares of Titan International stock held by Citicorp Venture Capital, Ltd. (CVC) (approximately 4.9 million shares) for $15.0 million. CVC was formerly the largest single stockholder of Titan. In connection with this purchase of Titan’s common stock, the Company recorded an accrued contingent liability of $5.0 million for contingent obligations under the stock purchase agreement. These treasury shares were valued at $20.0 million. For further information, see the Company’s Form 8-K filed on April 22, 2004.
P.	Lease Commitments
	The Company leases certain buildings and equipment under operating leases, including a lease for the building in Brownsville, Texas. The Brownsville, Texas, lease has been renewed until September 2005, with this facility continuing to be used as a tire, distribution and warehouse center for the Company. Titan also maintains a purchase option for the one million square foot building at a price of approximately $12.9 million, depending on the exercise date and other items. Certain lease agreements provide for renewal options, fair value purchase options, and payment of property taxes, maintenance and insurance by the Company.
	At June 30, 2004, future minimum commitments under noncancellable operating leases with initial or remaining terms of one year were as follows (in thousands):

July 1 - December 31, 2004	$	1,304
2005		1,758
2006		807
2007		803
2008		241
Thereafter		12
	$	4,925

14

TITAN INTERNATIONAL, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

Q.	New Accounting Standards
	Financial Accounting Standards Board Interpretation Number 46
	In December 2003, Financial Accounting Standards Board Interpretation (FIN) No. 46, “Consolidation of Variable Interest Entities,” was revised. FIN No. 46 was originally issued in January 2003 and requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the activities of the variable interest entity or is entitled to receive a majority of the entity’s residual returns. The consolidation requirements of FIN No. 46 apply immediately to variable interest entities created after January 31, 2003. For entities created prior to this date, adoption of the statement and interpretations is required to be applied in the first interim period ending after March 15, 2004. Certain disclosure requirements were required for all financial statements issued after January 1, 2003. The adoption of this interpretation had no material effect on the Company’s financial position, cash flows or results of operations.
	Statement of Financial Accounting Standards Number 132
	In December 2003, Statement of Financial Accounting Standards (SFAS) No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” was revised. The new Statement does not change the measurement or recognition of those plans that is required by previously issued standards. The Statement retains the disclosure requirements contained in SFAS No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” which it replaces, and also requires additional disclosures about the assets, obligations, cash flows and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. The additional disclosures required by SFAS No. 132 (revised 2003) are effective for fiscal years ending after December 15, 2003. The Company has disclosed the additional information required by this statement. The adoption of SFAS No. 132 (revised 2003) had no material effect on the Company’s financial position, cash flows or results of operations.

15

TITAN INTERNATIONAL, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

R.	Subsequent Events – Debt Restructuring
	New $100 Million Revolving Credit Facility
	On July 23, 2004, the Company secured a new $100 million revolving credit agreement with agents LaSalle Bank National Association and General Electric Capital Corporation. This new facility replaces the Company’s former $20 million revolving loan agreement and term loan. Both of these former facilities were terminated on July 23, 2004. Restricted cash of $15.0 million relating to the old revolving loan agreement was released on the date of the transaction. The new revolving credit facility will be secured by a first priority security interest in certain assets of Titan’s domestic subsidiaries. The borrowings under the facility will bear interest at a floating rate of either prime rate plus 1.5% or at LIBOR plus 3.0%. The facility contains certain financial covenants and other customary affirmative and negative covenants.
	New 5.25% Senior Unsecured Convertible Notes
	On July 26, 2004, the Company sold $115 million of 5.25% senior unsecured convertible notes due 2009. These notes are convertible into shares of the Company’s stock at any time on or before maturity at a conversion price of $13.50 per common share. The net proceeds from the sale of $111.3 million will be applied to the outstanding principal of the Company’s 8.75% senior subordinated notes.
	Redemption of 8.75% Senior Subordinated Notes
	On July 26, 2004, the Company notified the trustee to redeem all of Titan’s outstanding 8.75% senior subordinated notes. The redemption date will be August 26, 2004, for the total $136.8 million of notes outstanding at a redemption price of 101.458% per note (expressed as a percentage of the principal amount).
	Termination Expenses
	In connection with the termination of the Company’s $20 million revolving loan agreement and term loan and the redemption of the 8.75% senior subordinated notes, Titan expects to record expenses of approximately $3.8 million in the third quarter of 2004. These expenses are related to unamortized deferred financing, redemption costs, and prepayment penalty.

16

TITAN INTERNATIONAL, INC.

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

Overview

Titan is a manufacturer of off-highway wheels and tires for agricultural, earthmoving/construction and consumer equipment. Titan manufactures both wheels and tires for the majority of these applications, allowing the Company to provide the value-added service of delivering complete wheel and tire assemblies. The Company offers a broad range of products that are manufactured in relatively short production runs to meet the specifications of original equipment manufacturers (OEMs) and/or the requirements of aftermarket customers.

The Company’s major OEM customers include large manufacturers of off-highway equipment such as Deere & Company, CNH Global N.V., Caterpillar Inc., AGCO Corporation, and Kubota Corporation, in addition to many other off-highway equipment manufacturers. The Company distributes products directly to OEMs, independent and OEM affiliated dealers, and through a network of Titan distribution facilities.

The Company recorded sales of $121.2 million for the second quarter of 2004. Pro forma second quarter 2003 sales were $94.0 million, after removing the sales of Titan Europe. (See Recent Developments.) The sales increase is mainly the result of agricultural market sales, which increased by approximately 44% as compared to second quarter 2003.

Titan’s net income was $5.6 million for the second quarter, compared to the second quarter 2003 net loss of $(8.2) million. Earnings per share was $.32 for the quarter versus loss per share of $(.39) for the same quarter of the previous year.

Recent Developments

Sale of Titan Europe

On April 7, 2004, Titan Luxembourg, a wholly-owned European subsidiary, sold 70% of the common stock of Titan Europe, to the public on the AIM market in London. Titan Luxembourg is the largest single stockholder in Titan Europe Plc, retaining a 30% interest. Titan Luxembourg’s proceeds from the sale of Titan Europe shares were approximately $62.0 million, before fees and expenses of approximately $2.8 million. The Company recorded cash receipts of $50.0 million and a note receivable from the newly created public company, Titan Europe Plc, of $9.2 million.

In the first quarter of 2004, Titan recognized a $3.0 million goodwill impairment on the pending sale of Titan Europe in accordance with the Company’s goodwill impairment policy. Approximately $26.4 million of the cash receipts from the sale of Titan Europe were used to reduce the Company’s debt balances in April 2004. An additional $15.0 million of the cash receipts were used to purchase the shares of Titan International stock (approximately 4.9 million shares) held by Citicorp Venture Capital, Ltd.

17

TITAN INTERNATIONAL, INC.

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

The Company is accounting for its 30% interest in Titan Europe as an equity investment. Titan recognized equity income on its investment in Titan Europe of $0.8 million in the second quarter of 2004. The carrying value of the Company’s equity investment in Titan Europe was $28.0 million at June 30, 2004.

Had the transaction occurred on January 1, 2003, net sales for the three and six months ended June 30, 2004, would have been $121.2 and $238.7 million respectively, compared to $94.0 and $187.3 million in 2003. Income from operations for the three and six months ended June 30, 2004, would have been $12.7 and $24.0 million respectively, compared to loss from operations of $(7.1) and $(10.3) million in 2003. Net income for the three and six months ended June 30, 2004, would have been $5.6 and $12.8 million respectively compared to loss of $(8.4) and $(14.7) million in 2003. Income per share for the three and six months ended June 30, 2004, would have been $0.32 and $0.66 respectively, compared to loss per share of $(0.40) and $(0.71) in 2003.

Stock Repurchase

On April 20, 2004, the Company purchased the shares of Titan International stock held by Citicorp Venture Capital, Ltd. (CVC) (approximately 4.9 million shares) for $15.0 million. CVC was formerly the largest single stockholder of Titan. In connection with this purchase of Titan’s common stock, the Company recorded an accrued contingent liability of $5.0 million for contingent obligations under the stock purchase agreement. These treasury shares were valued at $20.0 million. For further information, see the Company’s Form 8-K filed on April 22, 2004.

Debt Restructuring

New $100 Million Revolving Credit Facility – On July 23, 2004, the Company secured a new $100 million revolving credit agreement with agents LaSalle Bank National Association and General Electric Capital Corporation. This new facility replaces the Company’s former $20 million revolving loan agreement and term loan. Both of these former facilities were terminated on July 23, 2004. Restricted cash of $15.0 million relating to the old revolving loan agreement was released on the date of the transaction. The new revolving credit facility will be secured by a first priority security interest in certain assets of Titan’s domestic subsidiaries. The borrowings under the facility will bear interest at a floating rate of either prime rate plus 1.5% or at LIBOR plus 3.0%. The facility contains certain financial covenants and other customary affirmative and negative covenants.

New 5.25% Senior Unsecured Convertible Notes – On July 26, 2004, the Company sold $115 million of 5.25% senior unsecured convertible notes due 2009. These notes are convertible into shares of the Company’s stock at any time on or before maturity at a conversion price of $13.50 per common share. The net proceeds from the sale of $111.3 million will be applied to the outstanding principal of the Company’s 8.75% senior subordinated notes.

18

TITAN INTERNATIONAL, INC.

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

Redemption of 8.75% Senior Subordinated Notes – On July 26, 2004, the Company notified the trustee to redeem all of Titan’s outstanding 8.75% senior subordinated notes. The redemption date will be August 26, 2004, for the total $136.8 million of notes outstanding at a redemption price of 101.458% per note (expressed as a percentage of the principal amount).

Termination Expenses – In connection with the termination of the Company’s $20 million revolving loan agreement and term loan and the redemption of the 8.75% senior subordinated notes, Titan expects to record expenses of approximately $3.8 million in the third quarter of 2004. These expenses are related to unamortized deferred financing, redemption costs, and prepayment penalty.

Critical Accounting Policies

Preparation of the financial statements and related disclosures in compliance with generally accepted accounting principles requires the application of appropriate technical accounting rules and guidance, as well as the use of estimates. The Company’s application of these policies involves judgments regarding many factors, which, in and of themselves, could materially impact the financial statements and disclosures. A future change in the assumptions or judgments applied in determining the following matters, among others, could have a material impact on future financial results.

Revenue Recognition

The Company records sales revenue and cost of sales when products are shipped to customers and both title and the risks and rewards of ownership are transferred. Provisions are established for sales returns and uncollectible accounts based on historical experience. Should these experience trends change, adjustments to the estimated provisions would be necessary.

Impairment of Fixed Assets

The Company reviews fixed assets to assess recoverability from future operations whenever events and circumstances indicate that the carrying values may not be recoverable. Impairment losses are recognized in operating results when expected undiscounted future cash flows are less than the carrying value of the asset. Impairment losses are measured as the excess of the carrying value of the asset over the discounted expected future cash flows, or the fair value of the asset. The Company had assets held for sale of $37.4 million at June 30, 2004. Depreciation is not recorded on assets held for sale in accordance with SFAS No. 144. Appraisals from third-party valuation firms support the fair market value of the machinery and equipment at these facilities to be in excess of the carrying value. Significant assumptions relating to future operations must be made when estimating future cash flows. Should unforeseen events occur or should operating trends change significantly, impairment losses could occur.

19

TITAN INTERNATIONAL, INC.

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

Product Costing

Inventories are valued at the lower of cost or market. Cost is determined using the last-in, first-out (LIFO) method for approximately 54% of inventories and the first-in, first-out (FIFO) method for the remainder of inventories at June 30, 2004. Market is estimated based on current selling prices. Estimated provisions are established for excess and obsolete inventory, as well as inventory carried above market price, based on historical experience. Should this experience change, adjustments to the estimated provisions would be necessary.

Impairment of Goodwill

The Company’s goodwill was $11.7 million at June 30, 2004, as compared to $18.8 million at December 31, 2003. This $7.1 million reduction was due to the sale of Titan Europe. The Company reviews goodwill to assess recoverability from future operations during the fourth quarter of each annual reporting period, and whenever events and circumstances indicate that the carrying values may not be recoverable. Significant assumptions relating to future operations must be made when estimating future cash flows in analyzing goodwill for impairment. Should unforeseen events occur or should operating trends change significantly, impairment losses could occur.

Valuation of Investments Accounted for Under the Equity Method

The Company had an equity investment in Titan Europe Plc of $28.0 million at June 30, 2004. The Company assesses the carrying value of its equity investments whenever events and circumstances indicate that the carrying value may not be recoverable. Should unforeseen events occur or should investment trends change significantly, impairment losses could occur.

Retirement Benefit Obligations

Pension benefit obligations are based on various assumptions used by third-party actuaries in calculating these amounts. These assumptions include discount rates, expected return on plan assets, mortality rates and other factors. Revisions in assumptions and actual results that differ from the assumptions affect future expenses, cash funding requirements and obligations. During the six months ended June 30, 2004, the Company contributed $2.9 million to its pension plans. The Company presently anticipates contributing approximately $5.5 million to its pension plans in the remainder of 2004. For more information concerning these costs and obligations, see the discussion of the “Pensions” and Note 20 to the Company’s financial statements on Form 10-K for the fiscal year ended December 31, 2003.

20

TITAN INTERNATIONAL, INC.

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

Results of Operations

Net Sales

Net sales for the quarter ended June 30, 2004, were $121.2 million, compared to 2003 second quarter net sales of $131.0 million. Net sales for the six months ended June 30, 2004, were $288.2 million, compared to 2003 net sales of $260.0 million. The second quarter net sales decrease is attributed to the sale of Titan Europe on April 7, 2004. Had the transaction occurred on January 1, 2003, net sales for the quarter ended June 30, 2003, would have been $94.0 million. The increase in net sales on a comparable basis was $27.2 million. Of this amount, approximately one-third was due to price increases related to higher raw material costs. The remaining two-thirds was attributed to higher demand, primarily from the Company’s agricultural segment, which increased 44% when compared to the previous year’s quarter.

Cost of Sales and Gross Profit

Cost of sales were $99.9 and $239.6 million for the second quarter and for the six months ended June 30, 2004, as compared to $124.9 and $243.5 million in 2003. Gross profit for the second quarter of 2004 was $21.3 million or 17.6% of net sales, compared to $6.1 million or 4.6% of net sales for the second quarter of 2003. Gross profit for the six months ended June 30, 2004, was $48.6 million or 16.9% of net sales, compared to $16.5 million or 6.3% of net sales for 2003. Gross profit was positively impacted by higher sales levels, which allowed the Company to operate more efficiently. Also, the Company has been able to institute certain price increases required due to higher raw material costs.

The Company’s profit margins continue to be affected by the excess capacity at the idle Brownsville, Texas, and Natchez, Mississippi, facilities. The Brownsville location continues as a tire, distribution and warehouse center for the Company. In December 2003, certain machinery and equipment at the Brownsville and Natchez facilities, with a net book value of $15.6 million and $17.3 million, respectively, were reclassified to assets held for sale. Depreciation is not being recorded on assets held for sale in 2004 in accordance with SFAS No. 144. Certain operating costs continue to be incurred at the Brownsville and Natchez facilities. For the quarter and six months ended June 30, 2004, these costs totaled approximately $1.1 and $2.3 million. In the second quarter of 2003, these facilities incurred costs associated with excess capacity of approximately $4.7 million. The $3.6 million reduction in costs at the Brownsville and Natchez facilities in second quarter 2004 as compared to second quarter 2003 positively impacted gross profit.

21

TITAN INTERNATIONAL, INC.

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

Administrative Expenses

Selling, general and administrative (SG&A) and research and development (R&D) expenses for the second quarter of 2004 were $8.6 million or 7.1% of net sales, compared to $11.7 million or 8.9% of net sales for 2003. Expenses for SG&A and R&D, combined with goodwill impairment charges for the six months ended June 30, 2004 were $24.2 million or 8.4% of net sales, compared to $23.7 million or 9.1% of net sales in 2003. Despite the significant increase in sales, the Company was able to maintain administrative expenses near the previous year’s level. Also, administrative expenses as a percentage of net sales were positively impacted by the sale of Titan Europe, which had administrative expenses that averaged 10% to 11% on a historical basis.

Operating Results and Other

Income from operations for the second quarter of 2004 was $12.7 million or 10.5% of net sales, compared to loss from operations of $(5.6) million or (4.3)% in 2003. Income from operations for the six months ended June 30, 2004 was $24.4 million or 8.5% of net sales, compared to loss of $(7.3) million or (2.8)% for 2003. Operating results were primarily impacted by efficiency related to higher sales as discussed in the “Cost of Sales” section. This efficiency was partially offset by the $3.0 million goodwill impairment on Titan Europe.

Interest expense was $4.6 million and $9.8 million for the second quarter and for the six months ended June 30, 2004, respectively, compared to $5.0 million and $10.0 million in 2003. The decreased interest expense in 2004 was primarily due to lower debt balances partially offset by a slightly higher average interest rate.

Income tax expense recorded was $3.3 and $4.7 million for the second quarter and for the six months ended June 30, 2004, as compared to an income tax benefit of $(0.4) and $(0.7) million in 2003. The Company’s income tax expense differs from the amount of income tax determined by applying the statutory U.S. federal income tax rate to pre-tax income (loss) primarily as a result of income tax expense to be paid in foreign jurisdictions and the application of a valuation allowance on the domestic net deferred tax asset balance. As a result of several years of previous losses, the Company had reserved its net deferred tax asset position, consistent with the Company’s accounting policies. As a result of the sale of Titan Europe, the Company will reverse a $15.0 million valuation allowance and use the deferred tax asset to offset the taxable proceeds from the sale. At June 30, 2004, the Company had no remaining valuation allowance.

22

TITAN INTERNATIONAL, INC.

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

Net Income (Loss)

Net income for the second quarter and for the six months ended June 30, 2004, was $5.6 and $10.9 million, respectively, compared to loss of $(8.2) and $(14.1) million in 2003. Basic and diluted earnings per share were $.32 and $.57 for the second quarter and for the six months ended June 30, 2004, compared to (loss) per share of $(.39) and $(.67) in 2003. Net income and earnings per share increased primarily due to higher sales levels and certain price increases required due to raw material costs.

Agricultural Segment Results

Net sales in the agricultural market were $79.8 and $183.1 million for the second quarter and the six months ended June 30, 2004, as compared to $75.8 and $153.9 million in 2003. Had the Titan Europe sale occurred on January 1, 2003, net sales in the agricultural market for the quarter ended June 30, 2003, would have been $55.4 million. Agricultural market net sales increased as a result of increased demand from the Company’s customers. Income from operations in the agricultural market was $13.0 and $25.7 million for the second quarter and the six months ended June 30, 2004, as compared to $0.2 and $3.6 million in 2003. Income from operations in the agricultural market was positively affected by efficiencies gained from higher production levels and certain price increases.

Earthmoving/Construction Segment Results

The Company’s earthmoving/construction market net sales were $33.7 and $87.1 million for the second quarter and the six months ended June 30, 2004, as compared to $45.1 and $86.2 million for 2003. Had the Titan Europe sale occurred on January 1, 2003, net sales in the earthmoving/ construction market for the quarter ended June 30, 2003, would have been $29.8 million. Income from operations in the earthmoving/construction market was $4.9 and $8.8 million for the second quarter and the six months ended June 30, 2004, versus $1.1 and $2.7 million in 2003. Income from operations in the earthmoving/construction market was positively affected by efficiencies gained from higher production levels and certain price increases.

Consumer Segment Results

Consumer market net sales were $7.7 and $18.0 million for the second quarter of 2004 and the six months ended June 30, 2004, as compared to $10.0 and $19.9 million for 2003. Had the Titan Europe sale occurred on January 1, 2003, net sales in the consumer market for the quarter ended June 30, 2003, would have been $8.8 million. Consumer market income from operations was $0.6 and $1.5 million for the second quarter of 2004 and the six months ended June 30, 2004, as compared to loss from operations of $(0.3) and $(0.1) million for 2003. The increase in income from operations in the consumer market was primarily attributed to a change in sales mix to higher margin products.

23

TITAN INTERNATIONAL, INC.

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

Corporate Expenses

Income from operations on a segment basis does not include corporate expenses or depreciation and amortization expense related to property, plant and equipment carried at the corporate level totaling $5.8 and $11.6 million for the second quarter and the six months ended June 30, 2004, respectively, as compared to $6.6 and $13.4 million for comparable periods in 2003. The reduction in corporate expenses is primarily attributed to the sale of Titan Europe.

Segment Results without Europe

The following results are computed as if the Titan Europe sale transaction occurred on January 1, 2003. Overall, net sales for the three and six months ended June 30, 2004, would have been $121.2 and $238.7 million respectively, compared to $94.0 and $187.3 million in 2003. Income from operations for the three and six months ended June 30, 2004, would have been $12.7 and $24.0 million respectively, compared to loss from operations of $(7.1) and $(10.3) million in 2003. Net income for the three and six months ended June 30, 2004, would have been $5.6 and $12.8 million respectively compared to loss of $(8.4) and $(14.7) million in 2003. Income per share for the three and six months ended June 30, 2004, would have been $0.32 and $0.66 respectively, compared to loss per share of $(0.40) and $(0.71) in 2003.

Agricultural Segment without Europe – If the Europe sale transaction occurred on January 1, 2003, the net sales and income (loss) from operations would have been as follows for the agricultural segment. Net sales would have been $79.8 and $158.9 million for the three and six months ended June 30, 2004, as compared to $55.4 and $113.4 million for 2003. Income (loss) from operations would have been $13.0 and $24.8 million for the three and six months ended June 30, 2004, as compared to $(1.1) and $0.9 million in 2003.

Earthmoving/Construction Segment without Europe – If the Europe sale transaction occurred on January 1, 2003, the net sales and income from operations would have been as follows for the earthmoving/construction segment. Net sales would have been $33.7 and $63.6 million for the three and six months ended June 30, 2004, as compared to $29.8 and $56.2 million for 2003. Income from operations would have been $4.9 and $8.4 million for the three and six months ended June 30, 2004, as compared to $0.3 and $1.1 million in 2003.

Consumer Segment without Europe – If the Europe sale transaction occurred on January 1, 2003, the net sales and income (loss) from operations would have been as follows for the consumer segment. Net sales would have been $7.7 and $16.3 million for the three and six months ended June 30, 2004, as compared to $8.8 and $17.7 million for 2003. Income (loss) from operations would have been $0.6 and $1.6 million for the three and six months ended June 30, 2004, as compared to $(0.3) and $(0.2) million in 2003.

24

TITAN INTERNATIONAL, INC.

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

Foreign Subsidiaries Sales

The Company recorded no net sales from foreign subsidiaries in the second quarter ended June 30, 2004, as compared to $37.0 million in 2003. For the six months ended June 30, 2004, foreign sales of $49.5 were recorded, as compared to $72.7 million in 2003. The sales decrease at foreign subsidiaries was due to the sale of Titan Europe. Titan retains a 30% ownership in Titan Europe. This 30% interest in Titan Europe is accounted for as an equity investment, and, therefore, their sales are no longer consolidated with Titan beginning in the second quarter of 2004.

Liquidity and Capital Resources

Cash Flows

As of June 30, 2004, the Company had $21.0 million of unrestricted cash deposited within various bank accounts. The unrestricted cash balance increased by $14.4 million from December 31, 2003, due to the cash flow items discussed in the following paragraphs.

In the first six months of 2004, positive cash flows from operating activities of $20.7 million resulted primarily from net income of $10.9 million and depreciation and amortization of $11.3 million. In comparison, in the first six months of 2003, positive cash flows from operating activities of $0.2 million resulted primarily from depreciation and amortization of $15.8 million, an income tax refund of $7.7 million and an inventory decrease of $3.7 million. These items were offset by the net loss of $(14.1) million and an increase in accounts receivable of $12.6 million.

The Company invested $3.4 million in capital expenditures in the first six months of 2004, as compared to $3.6 million in the first six months of 2003. The expenditures represent various equipment purchases and building improvements to enhance production capabilities. The Company estimates that its total capital expenditures for 2004 could range between $8 million and $10 million. The Company received net proceeds of $50.0 million on the sale of Titan Europe. The Company recorded a $9.2 million note receivable from the newly created public company, Titan Europe Plc.

In the first six months of 2004, $43.6 million was used for financing activities. This use of cash is primarily the result of net debt payment of $28.3 million and repurchase of common stock of $15.0 million. In the first six months of 2003, net cash received from debt borrowing was $5.5 million.

25

TITAN INTERNATIONAL, INC.

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

Debt Funding

The Company’s term loan and revolving loan agreements contain various covenants and restrictions. The financial covenants in these loan agreements require that the (i) Company’s adjusted minimum tangible net worth be equal to or greater than $150 million, (ii) value of equipment, accounts receivable, and inventory be equal to or greater than 3.00 times the outstanding principal balance of the term loan, and (iii) value of accounts receivable and inventory be equal to or greater than $100 million. Restrictions include (i) limits on payments of dividends and repurchases of the Company’s stock, (ii) restrictions on the ability of the Company to make additional borrowings, or to consolidate, merge or otherwise fundamentally change the ownership of the Company, and (iii) limitations on investments, dispositions of assets and guarantees of indebtedness. These covenants and restrictions could limit the Company’s ability to respond to market conditions, to provide for unanticipated capital investments, to raise additional debt or equity capital, to pay dividends or to take advantage of business opportunities, including future acquisitions. If the Company were unable to meet these covenants, the Company would be in default on these loan agreements.

The Company is in compliance with these covenants and restrictions as of June 30, 2004. The Company’s adjusted minimum tangible net worth is required to be equal to or greater than $150 million and the Company computed it to be $175.7 million at June 30, 2004. The value of the equipment, accounts receivable and inventory are required to be equal to or greater than 3.00 times the outstanding principal balance of the term loan and was calculated to be 5.63 times this balance at June 30, 2004. The value of the accounts receivable and inventory must be equal to or greater than $100 million and was computed to be $135.1 million at June 30, 2004.

Other Issues

New $100 Million Revolving Credit Facility – On July 23, 2004, the Company secured a new $100 million revolving credit agreement with agents LaSalle Bank National Association and General Electric Capital Corporation. This new facility replaces the Company’s former $20 million revolving loan agreement and term loan. Both of these former facilities were terminated on July 23, 2004. Restricted cash of $15.0 million relating to the old revolving loan agreement was released on the date of the transaction. The new revolving credit facility will be secured by a first priority security interest in certain assets of Titan’s domestic subsidiaries. The borrowings under the facility will bear interest at a floating rate of either prime rate plus 1.5% or at LIBOR plus 3.0%. The facility contains certain financial covenants and other customary affirmative and negative covenants.

New 5.25% Senior Unsecured Convertible Notes – On July 26, 2004, the Company sold $115 million of 5.25% senior unsecured convertible notes due 2009. These notes are convertible into shares of the Company’s stock at any time on or before maturity at a conversion price of $13.50 per common share. The net proceeds from the sale of $111.3 million will be applied to the outstanding principal of the Company’s 8.75% senior subordinated notes.

26

TITAN INTERNATIONAL, INC.

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

Redemption of 8.75% Senior Subordinated Notes – On July 26, 2004, the Company notified the trustee to redeem all of Titan’s outstanding 8.75% senior subordinated notes. The redemption date will be August 26, 2004, for the total $136.8 million of notes outstanding at a redemption price of 101.458% per note (expressed as a percentage of the principal amount).

Termination Expenses – In connection with the termination of the Company’s $20 million revolving loan agreement and term loan and the redemption of the 8.75% senior subordinated notes, Titan expects to record expenses of approximately $3.8 million in the third quarter of 2004. These expenses are related to unamortized deferred financing, redemption costs, and prepayment penalty.

The Company’s business is subject to seasonal sales variations that affect inventory levels and accounts receivable balances.

The Company had restricted cash of $51.0 million at June 30, 2004, and December 31, 2003. Restricted cash of $24.5 million is on deposit for a court appeal. Additionally, restricted cash of $15.0 million is collateral on a revolving loan agreement. The $15.0 million cash collateral on the revolving loan agreement was classified as a current asset at June 30, 2004, and released on July 23, 2004, when the revolving loan agreement was terminated. The remaining $11.5 million is collateral on outstanding letters of credit for an industrial revenue bond of $9.6 million and another letter of credit for $1.9 million.

Liquidity Outlook

At June 30, 2004, the Company had unrestricted cash and cash equivalents of $21.0 million and no amount was drawn on the $20 million revolving loan agreement. After the previously described July 2004 debt restructuring, the Company had additional scheduled debt principal payments due amounting to $0.1 million for the remainder of 2004 and $0.2 million in the next twelve months ending June 30, 2005. The Company presently anticipates contributing approximately $5.5 million to its pension plans in the remainder of 2004.

Cash on hand, anticipated internal cash flows from operations and utilization of remaining available borrowings are expected to provide sufficient liquidity for working capital needs, capital expenditures, and payments required on short-term debt for the near term. However, if the Company were to exhaust all currently available working capital sources or were not to meet the financial covenants and conditions of its loan agreements, the Company might find it difficult to secure additional funding in order to meet working capital requirements.

27

TITAN INTERNATIONAL, INC.

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

Outlook

In the first half of 2004, the Company benefited from increased demand for its products. This demand was driven by the increase in sales of new agricultural and earthmoving/construction vehicles that use the Company’s products. Many of the Company’s customers continue to have positive outlooks for the remainder of 2004. During the first half of 2004, the Company was able to offset higher raw material costs with certain price increases. The higher sales levels have allowed the Company to manufacture its products in a more efficient operating environment. Given these facts, the Company is optimistic that it will continue to show improved results as compared to the last several years. However, if the increased demand seen in the first half of 2004 subsides, the Company’s operating results may deteriorate. The Company’s customers generally operate in businesses that have cyclical demand. Historically, the Company sees higher sales levels in the first half of the year because of seasonal demand. As a result, sales in the third and fourth quarters will decline. Because much of our overhead expenses are fixed, seasonal trends can cause reductions in our quarterly profit margins and financial conditions. However, the Company believes third and fourth quarter sales may be stronger than customary for those respective quarters.

Agricultural Segment

Agricultural market sales are expected to remain at an elevated level for the remainder of 2004. Crop and livestock prices have remained high, lifting farm income. The healthy farm economy combined with favorable tax depreciation provisions in the United States is supporting an upturn in the sale of agricultural equipment. Many variables, including weather, export markets, and future government policies and payments can greatly influence the overall health of the agricultural economy.

Earthmoving/Construction Segment

Sales for the earthmoving/construction market are expected to remain higher for the rest of 2004. Rental firms and contractors are replenishing stocks of construction equipment. Military sales, which are included in this segment, are also expected to remain strong. The earthmoving/construction segment is sensitive to interest rate changes, and, therefore, sales in the earthmoving/construction segment may decrease as interest rates increase.

Consumer Segment

Sales in the consumer market are expected to be stable for the duration of 2004. The all terrain vehicle (ATV) wheel and tire market is expected to continue to offer future growth opportunities for Titan. Many items affect the consumer market including weather, competitive pricing, energy prices, and consumer attitude, which has improved but remains cautious.

28

TITAN INTERNATIONAL, INC.

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

Market Risk Sensitive Instruments

The Company’s risks related to commodity prices and interest rates are consistent with those for 2003. For more information, see the “Market Risk Sensitive Instruments” discussion in the Company’s Form 10-K for the fiscal year ended December 31, 2003.

Exchange Rate Sensitivity

The Company is exposed to fluctuations in the Euro, British pound and other world currencies. Titan does not hedge foreign currency transaction or translation exposures. The Company’s net investment in foreign entities translated into U.S. dollars at June 30, 2004, was $40.0 million. This amount changed significantly from the December 31, 2003, amount of $67.5 million as a result of the sale of 70% of Titan Europe. The hypothetical potential loss in value of the Company’s net investment in foreign entities resulting from a 10% adverse change in foreign currency exchange rates at June 30, 2004, would amount to $4.0 million.

Pensions

The Company has two frozen defined benefit pension plans. These plans are described in Note 20 of the Company’s Notes to Consolidated Financial Statements in the 2003 Form 10-K. The Company’s recorded liability for pensions is based on a number of assumptions, including discount rates, rates of return on investments, mortality rates and other factors. Certain of these assumptions are determined with the assistance of outside actuaries. Assumptions are based on past experience and anticipated future trends. These assumptions are reviewed on a regular basis and revised when appropriate. Revisions in assumptions and actual results that differ from the assumptions affect future expenses, cash funding requirements and the carrying value of the related obligations. During the six months ended June 30, 2004, the Company contributed $2.9 million to the pension plans. The Company presently anticipates contributing approximately $5.5 million to the pension plans in the remainder of 2004.

29

TITAN INTERNATIONAL, INC.

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

New Accounting Standards

Financial Accounting Standards Board Interpretation Number 46

In December 2003, Financial Accounting Standards Board Interpretation (FIN) No. 46, “Consolidation of Variable Interest Entities,” was revised. FIN No. 46 was originally issued in January 2003 and requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the activities of the variable interest entity or is entitled to receive a majority of the entity’s residual returns. The consolidation requirements of FIN No. 46 apply immediately to variable interest entities created after January 31, 2003. For entities created prior to this date, adoption of the statement and interpretations is required to be applied in the first interim period ending after March 15, 2004. Certain disclosure requirements were required for all financial statements issued after January 1, 2003. The adoption of this interpretation had no material effect on the Company’s financial position, cash flows or results of operations.

Statement of Financial Accounting Standards Number 132

In December 2003, Statement of Financial Accounting Standards (SFAS) No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” was revised. The new Statement does not change the measurement or recognition of those plans that is required by previously issued standards. The Statement retains the disclosure requirements contained in SFAS No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” which it replaces, and also requires additional disclosures about the assets, obligations, cash flows and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. The additional disclosures required by SFAS No. 132 (revised 2003) are effective for fiscal years ending after December 15, 2003. The Company has disclosed the additional information required by this statement. The adoption of SFAS No. 132 (revised 2003) had no material effect on the Company’s financial position, cash flows or results of operations.

30

TITAN INTERNATIONAL, INC.

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

Safe Harbor under The Private Securities Litigation Reform Act of 1995

This Form 10-Q contains forward-looking statements, including statements regarding, among other items, (i) anticipated trends in the Company’s business, (ii) future expenditures for capital projects, (iii) the Company’s ability to continue to control costs and maintain quality, (iv) meeting financial covenants and conditions of its loan agreements, (v) the Company’s business strategies, including its intention to introduce new products, (vi) expectations concerning the performance and commercial success of the Company’s existing and new products and (vii) the Company’s intention to consider and pursue acquisitions and divestitures. Readers of this Form 10-Q should understand that these forward-looking statements are based on the Company’s expectations and are subject to a number of risks and uncertainties, certain of which are beyond the Company’s control.

Actual results could differ materially from these forward-looking statements as a result of certain factors, including, (i) changes in the Company’s end-user markets as a result of world economic or regulatory influences, (ii) fluctuations in currency translations, (iii) changes in the competitive marketplace, including new products and pricing changes by the Company’s competitors, (iv) availability and price of raw materials, (v) levels of operating efficiencies, (vi) actions of domestic and foreign governments, (vii) results of investments, and (vii) ability to secure financing at reasonable terms. Any changes in such factors could lead to significantly different results. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this document will in fact transpire.

31

TITAN INTERNATIONAL, INC.

PART I. FINANCIAL INFORMATION

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Reference is made to Item 2, Part I of this report.

Item 4. Controls and Procedures

The Company’s principal executive officer and principal financial officer believe the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) are effective based on their most recent evaluation, which was completed as of June 30, 2004. During the quarter ended June 30, 2004, there were no significant changes in internal controls or other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

32

TITAN INTERNATIONAL, INC.

PART II. FINANCIAL INFORMATION

Item 2. Changes in Securities and use of Proceeds

The following table presents the share repurchases by the Company in the quarter ended June 30, 2004 (in thousands, except average price paid per share):

					Total number of		Maximum number of
					shares purchased as		shares that may yet
					part of publicly		be purchased under
	Total number of		Average price paid		announced plans or		the plans or
Period	shares purchased		per share		programs		programs
April		4,894	$	3.06		0		2,451
May		0		N/A		0		2,451
June		0		N/A		0		2,451
Total		4,894	$	3.06		0

(a)

In May 1996, the Company’s Board of Directors authorized the Company to repurchase up to five million shares of its common stock. In February 1997, the Company’s Board of Directors authorized the Company to repurchase an additional five million shares of its common stock for a total of ten million shares. No expiration date was given to this program.

(b)

On April 20, 2004, the Company purchased the shares of Titan International stock held by Citicorp Venture Capital, Ltd. (CVC) for $15 million. CVC was formerly the largest single stockholder of Titan. In connection with this purchase of Titan’s common stock, the Company recorded an accrued contingent liability of $5.0 million for contingent obligations under the stock purchase agreement. These treasury shares were valued at $20.0 million and the Company’s Board of Directors approved these transactions in April, 2004.

33

TITAN INTERNATIONAL, INC.

PART II. FINANCIAL INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

The Company held its Annual Meeting of Stockholders on May 20, 2004, for the purposes of electing two directors to serve for three-year terms and approving the appointment of the independent registered public accounting firm.

Both the nominees for directors as listed in the proxy statement were elected with the following vote:

	Shares		Shares
	Voted For		Withheld
Edward J. Campbell		16,085,760		315,455
Maurice M. Taylor Jr.		16,083,061		318,154

The appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm was approved by the following vote:

Shares	Shares		Shares
Voted For	Against		Abstaining
16,106,426		286,801		7,988

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

10.1	Credit Agreement dated July 23, 2004, among the Company and LaSalle Bank National Association and General Electric Capital Corporation
10.2	Indenture between the Company and U.S. Bank National Association dated July 26, 2004
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

34

TITAN INTERNATIONAL, INC.

PART II. FINANCIAL INFORMATION

(b)	Reports on Form 8-K
	In a Current Report filed on Form 8-K dated April 6, 2004, the Company furnished a copy of the press release regarding Titan Europe’s admittance to trading on London’s AIM exchange.
	In a Current Report filed on Form 8-K dated April 7, 2004, the Company reported the sale of 70% of the common stock of Titan Europe.
	In a Current Report filed on Form 8-K dated April 19, 2004, the Company reported the amendment of its term loan with General Electric Capital Corporation and reported the agreement to repurchase approximately 4.9 million shares of Titan International, Inc. stock held by Cititcorp Venture Capital, Ltd.
	In a Current Report filed on Form 8-K dated April 29, 2004, the Company furnished a copy of the press release reporting its first quarter 2004 financial results.
	In a Current Report filed on Form 8-K dated June 30, 2004, the Company furnished a copy of the press release regarding Titan Wheel Corporation of Illinois employees receiving record summer bonus.

SIGNATURES

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

		TITAN INTERNATIONAL, INC.
		(Registrant)
Date: July 29, 2004	By:	/s/ Maurice M. Taylor Jr.
		Maurice M. Taylor Jr.
		President and Chief Executive Officer
	By:	/s/ Kent W. Hackamack
		Kent W. Hackamack
		Vice President of Finance and Treasurer
		(Principal Financial Officer and
		Principal Accounting Officer)

35

EXHIBIT INDEX

Ex No.	DESCRIPTION
10.1	Credit Agreement dated July 23, 2004, among the Company and LaSalle Bank National Association and General Electric Capital Corporation
10.2	Indenture between the Company and U.S. Bank National Association dated July 26, 2004
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

36

EX-10.1

                                                                    Exhibit 10.1

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

                                CREDIT AGREEMENT

                            DATED AS OF JULY 23, 2004

                                      AMONG

                           TITAN INTERNATIONAL, INC.,
                                 AS THE COMPANY

                       LASALLE BANK NATIONAL ASSOCIATION,
                    AND GENERAL ELECTRIC CAPITAL CORPORATION,
                             AS INITIATING LENDERS,

                                       AND

                       LASALLE BANK NATIONAL ASSOCIATION,
                             AS ADMINISTRATIVE AGENT
                                       AND
                      GENERAL ELECTRIC CAPITAL CORPORATION,
                                   AS CO-AGENT

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



                                                                                                            
SECTION 1       DEFINITIONS.................................................................................    1
         1.1    Definitions.................................................................................    1
         1.2    Other Interpretive Provisions...............................................................   18
SECTION 2       COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES...........   19
         2.1    Commitments.................................................................................   19
                2.1.1      Revolving Loan Commitment........................................................   19
                2.1.2      Intentionally omitted............................................................   19
                2.1.3      L/C Commitment...................................................................   19
         2.2    Loan Procedures.............................................................................   19
                2.2.1      Various Types of Loans...........................................................   20
                2.2.2      Borrowing Procedures.............................................................   20
                2.2.3      Conversion and Continuation Procedures...........................................   20
         2.3    Letter of Credit Procedures.................................................................   21
                2.3.1      L/C Applications.................................................................   21
                2.3.2      Participations in Letters of Credit..............................................   22
                2.3.3      Reimbursement Obligations........................................................   22
                2.3.4      Funding by Lenders to Issuing Lender.............................................   23
         2.4    Commitments Several.........................................................................   24
         2.5    Certain Conditions..........................................................................   24
SECTION 3       EVIDENCING OF LOANS.........................................................................   24
         3.1    Notes.......................................................................................   24
         3.2    Recordkeeping...............................................................................   24
SECTION 4       INTEREST....................................................................................   25
         4.1    Interest Rates..............................................................................   25
         4.2    Interest Payment Dates......................................................................   25
         4.3    Setting and Notice of LIBOR Rates...........................................................   25
         4.4    Computation of Interest.....................................................................   25
SECTION 5       FEES........................................................................................   26
         5.1    Non-Use Fee.................................................................................   26
         5.2    Letter of Credit Fees.......................................................................   26
         5.3    Administrative Agent's Fees.................................................................   26
         5.4    Closing Fee.................................................................................   26
         5.5    Arrangement Fee.............................................................................   26
SECTION 6       REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT; PREPAYMENTS...........................   26
         6.1    Reduction or Termination of the Revolving Commitment........................................   26
                6.1.1      Voluntary Reduction or Termination of the Revolving Commitment...................   27
                6.1.2      Mandatory Reductions of Revolving Commitment.....................................   27
                6.1.3      All Reductions of the Revolving Commitment.......................................   27
         6.2    Prepayments.................................................................................   27
                6.2.1      Voluntary Prepayments............................................................   27



                                       i



                                                                                                            
         6.3    Manner of Prepayments.......................................................................   28
                6.3.1      All Prepayments..................................................................   28
         6.4    Repayments..................................................................................   28
                6.4.1      Revolving Loans..................................................................   28
SECTION 7       MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.............................................   28
         7.1    Making of Payments..........................................................................   28
         7.2    Application of Certain Payments.............................................................   29
         7.3    Due Date Extension..........................................................................   29
         7.4    Setoff......................................................................................   29
         7.5    Proration of Payments.......................................................................   29
         7.6    Taxes.......................................................................................   30
SECTION 8       INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS.........................................   31
         8.1    Increased Costs.............................................................................   31
         8.2    Basis for Determining Interest Rate Inadequate or Unfair....................................   33
         8.3    Changes in Law Rendering LIBOR Loans Unlawful...............................................   33
         8.4    Funding Losses..............................................................................   33
         8.5    Right of Lenders to Fund through Other Offices..............................................   34
         8.6    Discretion of Lenders as to Manner of Funding...............................................   34
         8.7    Mitigation of Circumstances; Replacement of Lenders.........................................   34
         8.8    Conclusiveness of Statements; Survival of Provisions........................................   35
SECTION 9       REPRESENTATIONS AND WARRANTIES..............................................................   35
         9.1    Organization................................................................................   35
         9.2    Authorization; No Conflict..................................................................   35
         9.3    Validity and Binding Nature.................................................................   35
         9.4    Financial Condition.........................................................................   36
         9.5    No Material Adverse Change..................................................................   36
         9.6    Litigation and Contingent Liabilities.......................................................   36
         9.7    Ownership of Properties; Liens..............................................................   36
         9.8    Equity Ownership; Subsidiaries..............................................................   36
         9.9    Pension Plans...............................................................................   36
         9.10   Investment Company Act......................................................................   37
         9.11   Public Utility Holding Company Act..........................................................   37
         9.12   Regulation U................................................................................   37
         9.13   Taxes.......................................................................................   37
         9.14   Solvency, etc...............................................................................   38
         9.15   Environmental Matters.......................................................................   38
         9.16   Insurance...................................................................................   39
         9.17   Real Property...............................................................................   39
         9.18   Information.................................................................................   39
         9.19   Intellectual Property.......................................................................   39
         9.20   Burdensome Obligations......................................................................   40
         9.21   Labor Matters...............................................................................   40
         9.22   No Default..................................................................................   40



                                       ii



                                                                                                            
         9.23   Subordinated Debt...........................................................................   40
SECTION 10      AFFIRMATIVE COVENANTS.......................................................................   40
         10.1   Reports, Certificates and Other Information.................................................   40
                10.1.1     Annual Report....................................................................   40
                10.1.2     Interim Reports..................................................................   41
                10.1.3     Compliance Certificates..........................................................   41
                10.1.4     Notice of Default, Litigation and ERISA Matters..................................   41
                10.1.5     Borrowing Base Certificates......................................................   42
                10.1.6     Management Reports...............................................................   42
                10.1.7     Projections......................................................................   42
                10.1.8     Subordinated Debt Notices........................................................   43
                10.1.9     Other Information................................................................   43
         10.2   Books, Records and Inspections..............................................................   43
         10.3   Maintenance of Property; Insurance..........................................................   43
         10.4   Compliance with Laws; Payment of Taxes and Liabilities......................................   44
         10.5   Maintenance of Existence, etc...............................................................   45
         10.6   Use of Proceeds.............................................................................   45
         10.7   Employee Benefit Plans......................................................................   45
         10.8   Environmental Matters.......................................................................   46
         10.9   Further Assurances..........................................................................   46
         10.10  Deposit Accounts............................................................................   47
         10.11  Intentionally omitted.......................................................................   47
         10.12  Syndication.................................................................................   47
SECTION 11      NEGATIVE COVENANTS..........................................................................   47
         11.1   Debt........................................................................................   48
         11.2   Liens.......................................................................................   49
         11.3   Operating Leases............................................................................   50
         11.4   Restricted Payments.........................................................................   50
         11.6   Modification of Organizational Documents....................................................   51
         11.7   Transactions with Affiliates................................................................   51
         11.8   Unconditional Purchase Obligations..........................................................   51
         11.9   Inconsistent Agreements.....................................................................   51
         11.10  Business Activities; Issuance of Equity.....................................................   52
         11.11  Investments.................................................................................   52
         11.12  Restriction of Amendments to Certain Documents..............................................   53
         11.13  Fiscal Year. Not change its Fiscal Year.....................................................   53
         11.14  Financial Covenants.........................................................................   53
                11.14.1    Minimum Book Value...............................................................   53
                11.14.2    Fixed Charge Coverage Ratio......................................................   53
                11.14.3    Collateral Coverage..............................................................   53
         11.15  Cancellation of Debt........................................................................   53
SECTION 12      EFFECTIVENESS; CONDITIONS OF LENDING, ETC...................................................   54



                                       iii



                                                                                                            
         12.1   Initial Credit Extension....................................................................   54
                12.1.1     Notes............................................................................   54
                12.1.2     Authorization Documents..........................................................   54
                12.1.3     Consents, etc....................................................................   54
                12.1.4     Letter of Direction..............................................................   54
                12.1.5     Guaranty and Collateral Agreement................................................   54
                12.1.6     Perfection Certificate...........................................................   54
                12.1.7     Real Estate Documents............................................................   55
                12.1.8     Appraisal........................................................................   55
                12.1.9     Opinions of Counsel..............................................................   55
                12.1.10    Insurance........................................................................   55
                12.1.11    Subordination....................................................................   55
                12.1.12    Payment of Fees..................................................................   55
                12.1.15    Intentionally omitted............................................................   56
                12.1.16    Search Results; Lien Terminations................................................   56
                12.1.17    Filings, Registrations and Recordings............................................   56
                12.1.18    Borrowing Base Certificate.......................................................   56
                12.1.19    Closing Certificate, Consents and Permits........................................   56
                12.1.20    Other............................................................................   56
         12.2   Conditions..................................................................................   56
                12.2.1     Compliance with Warranties, No Default, etc......................................   57
                12.2.2     Confirmatory Certificate.........................................................   57
SECTION 13      EVENTS OF DEFAULT AND THEIR EFFECT..........................................................   57
         13.1   Events of Default...........................................................................   57
                13.1.1     Non-Payment of the Loans, etc....................................................   57
                13.1.2     Non-Payment of Other Debt........................................................   57
                13.1.3     Other Material Obligations.......................................................   57
                13.1.4     Bankruptcy, Insolvency, etc......................................................   58
                13.1.5     Non-Compliance with Loan Documents...............................................   58
                13.1.6     Representations; Warranties......................................................   58
                13.1.7     Pension Plans....................................................................   58
                13.1.8     Judgments........................................................................   58
                13.1.9     Invalidity of Collateral Documents, etc..........................................   59
                13.1.10    Invalidity of Subordination Provisions, etc......................................   59
                13.1.11    Change of Control................................................................   59
                13.1.12    Material Adverse Effect..........................................................   59
         13.2   Effect of Event of Default..................................................................   59
SECTION 14      THE AGENTS..................................................................................   60
         14.1   Appointment and Authorization...............................................................   60
         14.2   Issuing Lender..............................................................................   60
         14.3   Delegation of Duties........................................................................   60
         14.4   Exculpation of Administrative Agent.........................................................   60
         14.5   Reliance by Administrative Agent............................................................   61



                                       iv



                                                                                                            
         14.6   Notice of Default...........................................................................   61
         14.7   Credit Decision.............................................................................   62
         14.8   Indemnification.............................................................................   62
         14.9   Administrative Agent in Individual Capacity.................................................   63
         14.10  Successor Administrative Agent..............................................................   63
         14.11  Collateral Matters..........................................................................   63
         14.12  Administrative Agent May File Proofs of Claim...............................................   64
         14.13  Other Agents; Arrangers and Managers........................................................   64
SECTION 15      GENERAL.....................................................................................   65
         15.1   Waiver; Amendments..........................................................................   65
         15.2   Confirmations...............................................................................   65
         15.3   Notices.....................................................................................   65
         15.4   Computations................................................................................   66
         15.5   Costs, Expenses and Taxes...................................................................   66
         15.6   Assignments; Participations.................................................................   66
                15.6.1     Assignments......................................................................   67
                15.6.2     Participations...................................................................   68
         15.7   Register....................................................................................   69
         15.8   Governing Law...............................................................................   69
         15.9   Confidentiality.............................................................................   69
         15.10  Severability................................................................................   70
         15.11  Nature of Remedies..........................................................................   70
         15.12  Entire Agreement............................................................................   70
         15.13  Counterparts................................................................................   70
         15.14  Successors and Assigns......................................................................   70
         15.15  Captions....................................................................................   71
         15.16  Customer Identification - USA Patriot Act Notice............................................   71
         15.17  Indemnification By The Company..............................................................   71
         15.18  Nonliability of Lenders.....................................................................   72
         15.19  Forum Selection and Consent to Jurisdiction.................................................   73
         15.20  Waiver of Jury Trial........................................................................   73



                                       v



                                     ANNEXES

ANNEX A           Lenders and Pro Rata Shares
ANNEX B           Addresses for Notices

                                    SCHEDULES

SCHEDULE 9.6      Litigation and Contingent Liabilities
SCHEDULE 9.8      Subsidiaries
SCHEDULE 9.16     Insurance
SCHEDULE 9.17     Real Property
SCHEDULE 9.21     Labor Matters
SCHEDULE 11.1     Existing Debt
SCHEDULE 11.2     Existing Liens
SCHEDULE 11.7     Affiliate Transactions
SCHEDULE 11.11    Investments

                                    EXHIBITS

EXHIBIT A         Form of Note (Section 3.1)
EXHIBIT B         Form of Compliance Certificate (Section 10.1.3)
EXHIBIT C         Form of Borrowing Base Certificate (Section 1.1)
EXHIBIT D         Form of Assignment Agreement (Section 15.6.1)
EXHIBIT E         Form of Notice of Borrowing (Section 2.2.2)
EXHIBIT F         Form of Notice of Conversion/Continuation (Section 2.2.3)



                                CREDIT AGREEMENT

         THIS CREDIT AGREEMENT dated as of July 23, 2004 (this "Agreement") is
entered into among TITAN INTERNATIONAL, INC. (the "Company"), the financial
institutions that are or may from time to time become parties hereto (together
with their respective successors and assigns, the "Lenders"), LASALLE BANK
NATIONAL ASSOCIATION (in its individual capacity, "LaSalle"), as administrative
agent for the Lenders and GENERAL ELECTRIC CAPITAL CORPORATION (in its
individual capacity, "GE Capital") as Co-Agent for the Lenders. (LaSalle and GE
are sometimes collectively referred to as the "Agents" or as the "Initiating
Lenders").

         The Lenders have agreed to make available to the Company a revolving
credit facility (which includes letters of credit) upon the terms and conditions
set forth herein.

         In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:

         SECTION 1 DEFINITIONS.

         1.1      Definitions. When used herein the following terms shall have
the following meanings:

         Account Debtor is defined in the Guaranty and Collateral Agreement.

         Account or Accounts is defined in the UCC.

         Acquisition means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of all or substantially
all of any business or division of a Person, (b) the acquisition of in excess of
50% of the Capital Securities of any Person, or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any other combination
with another Person (other than a Person that is already a Subsidiary).

         Administrative Agent means LaSalle in its capacity as administrative
agent for the Lenders hereunder and any successor thereto in such capacity.

         Affected Loan - see Section 8.3.

         Affiliate of any Person means (a) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person, (b) any officer or director of such Person and (c) with respect to any
Lender, any entity administered or managed by such Lender or an Affiliate or
investment advisor thereof and which is engaged in making,



purchasing, holding or otherwise investing in commercial loans. A Person shall
be deemed to be "controlled by" any other Person if such Person possesses,
directly or indirectly, power to vote 5% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of directors or
managers or power to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise. Unless expressly
stated otherwise herein, neither the Administrative Agent nor any Lender shall
be deemed an Affiliate of any Loan Party.

         Agents means LaSalle and GE.

         Agreement - see the Preamble.

         Applicable Margin means, for any day, the rate per annum equal to: (i)
for LIBOR Loans, the LIBOR Margin and (ii) for Base Rate Loans, the Base Rate
Margin.

         Asset Disposition means the sale, lease, assignment or other transfer
for value (each, a "Disposition") by any Loan Party to any Person (other than a
Loan Party) of any asset or right of such Loan Party (including, the loss,
destruction or damage of any thereof or any actual or threatened (in writing to
any Loan Party) condemnation, confiscation, requisition, seizure or taking
thereof) other than (a) the Disposition of any asset which is to be replaced,
and is in fact replaced, within 180 days with other like assets, and (b) the
sale or lease of Inventory in the ordinary course of business.

         Assignee - see Section 15.6.1.

         Assignment Agreement - see Section 15.6.1.

         Attorney Costs means, with respect to any Person, all reasonable fees
and charges of any counsel to such Person, the reasonable allocable cost of
internal legal services of such Person, all reasonable disbursements of such
internal counsel and all court costs and similar legal expenses.

         Bank Product Agreements means those certain cash management service
agreements entered into from time to time between any Loan Party and a Lender or
its Affiliates in connection with any of the Bank Products.

         Bank Product Obligations means all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by the Loan Parties to any
Lender or its Affiliates pursuant to or evidenced by the Bank Product Agreements
and irrespective of whether for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all such amounts that a Loan Party is obligated
to reimburse to the Administrative Agent or any Lender as a result of the
Administrative Agent or such Lender purchasing participations or executing
indemnities or reimbursement obligations with respect to the Bank Products
provided to the Loan Parties pursuant to the Bank Product Agreements.

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         Bank Products means any service or facility extended to any Loan Party
by any Lender or its Affiliates including: (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions,
(f) cash management, including controlled disbursement, accounts or services, or
(g) Hedging Agreements.

         Base Rate means at any time the greater of (a) the Federal Funds Rate
plus 0.5% and (b) the Prime Rate.

         Base Rate Loan means any Loan which bears interest at or by reference
to the Base Rate.

         Base Rate Margin means one and one-half percent (1.50%).

         Borrowing Base means an amount equal to the total of (a) 75% of the
book value of all Eligible Accounts plus (b) 45% of the book value of all
Eligible Inventory plus (c) 80% of the Orderly Liquidation Value of Equipment.
Upon the request of the Company and the receipt by Lenders of acceptable field
exams, Lenders may, in their sole discretion, increase such advance rates.

         Borrowing Base Certificate means a certificate substantially in the
form of Exhibit C.

         BSA - see Section 10.4.

         Business Day means any day on which LaSalle is open for commercial
banking business in Chicago, Illinois and, in the case of a Business Day which
relates to a LIBOR Loan, on which dealings are carried on in the London
interbank eurodollar market.

         Capital Expenditures means all expenditures which, in accordance with
GAAP, would be required to be capitalized and shown on the consolidated balance
sheet of the Company, including expenditures in respect of Capital Leases, but
excluding expenditures made in connection with the replacement, substitution or
restoration of assets to the extent financed (a) from insurance proceeds (or
other similar recoveries) paid on account of the loss of or damage to the assets
being replaced or restored or (b) with awards of compensation arising from the
taking by eminent domain or condemnation of the assets being replaced.

         Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.

         Capital Securities means, with respect to any Person, all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's capital, whether now outstanding or
issued or acquired after the Closing Date, including common shares, preferred
shares, membership interests in a limited liability company, limited or general
partnership interests in a partnership, interests in a Trust, interests in other
unincorporated organizations or any other equivalent of such ownership interest.

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         Cash Collateralize means to deliver one hundred five percent (105%) of
the amount of letters of credit from time to time outstanding cash collateral to
the Administrative Agent, to be held as cash collateral for outstanding Letters
of Credit, pursuant to documentation satisfactory to the Administrative Agent.
Derivatives of such term have corresponding meanings.

         Change of Control means any of the following: (a) any person or group
of persons (within the meaning of the Securities Exchange Act of 1934, as
amended) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended) of 30% or more of the issued and outstanding
shares of Capital Securities of the Company have the right to vote for the
election of directors of the Company under ordinary circumstances; (b) during
any period of twelve (12) consecutive calendar months, individuals who at the
beginning of such period constituted the board of directors of the Company
(together with any new directors whose election by the board of directors of the
Company or whose nomination for election by the stockholders of the Company was
approved by a vote of a least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose elections or
nomination for election was previously so approved) cease for any reason other
than retirement, death or disability to constitute a majority of the directors
then in office, (c) the Company shall cease to own and control, directly or
indirectly, all of the economic and voting rights associated with all of the
outstanding Capital Securities of any Domestic Subsidiary, or (d) Maurice M.
Taylor, Jr. for a period in excess of 180 consecutive days, shall cease to be a
director or executive officer of the Company for any reason, including without
limitation death, resignation, retirement or incapacity, and an individual
acceptable to Agents and Lenders shall not be performing the duties and
functions of such director or executive officer of the Company within said 180
day period provided that such acceptance may not be unreasonably withheld.

         Closing Date - see Section 12.1.

         Code means the Internal Revenue Code of 1986.

         Collateral Access Agreement means an agreement in form and substance
reasonably satisfactory to the Administrative Agent pursuant to which a
mortgagee or lessor of real property on which collateral is stored or otherwise
located, or a warehouseman, processor or other bailee of Inventory or other
property owned by any Loan Party, acknowledges the Liens of the Administrative
Agent and waives any Liens held by such Person on such property, and, in the
case of any such agreement with a mortgagee or lessor, permits the
Administrative Agent reasonable access to and use of such real property
following the occurrence and during the continuance of an Event of Default to
assemble, complete and sell any collateral stored or otherwise located thereon.

         Co-Agent means GE CAPITAL in its capacity as Co-Agent for the Lenders
hereunder and any successor thereto in such capacity.

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         Collateral Documents means, collectively, the Guaranty and Collateral
Agreement, each Mortgage, each Collateral Access Agreement, each Perfection
Certificate, each control agreement and any other agreement or instrument
pursuant to which the Company, any Subsidiary or any other Person grants or
purports to grant collateral to the Administrative Agent for the benefit of the
Lenders or otherwise relates to such collateral.

         Commitment means, as to any Lender, such Lender's commitment to make
Loans, and to issue or participate in Letters of Credit, under this Agreement.
The initial amount of each Initial Lender's commitment to make Loans is set
forth on Annex A.

         Commitment Letter means the Commitment Letter and attached Term Sheet
executed by the Agents and the Company on July 13, 2004.

         Company - see the Preamble.

         Compliance Certificate means a Compliance Certificate in substantially
the form of Exhibit B.

         Computation Period means each period of four consecutive Fiscal
Quarters ending on the last day of a Fiscal Quarter.

         Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, as computed on a consolidated basis, the net income
(or loss) of the Company and its Subsidiaries for such period excluding any
gains or losses from Asset Dispositions, any extraordinary gains or losses and
any gains or losses from discontinued operations.

         Contingent Liability means, with respect to any Person, each obligation
and liability of such Person and all such obligations and liabilities of such
Person incurred pursuant to any agreement, undertaking or arrangement by which
such Person: (a) guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
dividend, obligation or other liability of any other Person in any manner (other
than by endorsement of instruments in the course of collection), including any
indebtedness, dividend or other obligation which may be issued or incurred at
some future time; (b) guarantees the payment of dividends or other distributions
upon the Capital Securities of any other Person; (c) undertakes or agrees
(whether contingently or otherwise): (i) to purchase, repurchase, or otherwise
acquire any indebtedness, obligation or liability of any other Person or any
property or assets constituting security therefor, (ii) to advance or provide
funds for the payment or discharge of any indebtedness, obligation or liability
of any other Person (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), or to maintain solvency, assets, level of
income, working capital or other financial condition of any other Person, or
(iii) to make payment to any other Person other than for value received; (d)
agrees to lease property or to purchase securities, property or services from
such other Person with the purpose or intent of assuring the owner of such
indebtedness or

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obligation of the ability of such other Person to make payment of the
indebtedness or obligation; (e) to induce the issuance of, or in connection with
the issuance of, any letter of credit for the benefit of such other Person; or
(f) undertakes or agrees otherwise to assure a creditor against loss. The amount
of any Contingent Liability shall (subject to any limitation set forth herein)
be deemed to be the outstanding principal amount (or maximum permitted principal
amount, if larger) of the indebtedness, obligation or other liability guaranteed
or supported thereby.

         Controlled Group means all members of a controlled group of
corporations, all members of a controlled group of trades or businesses (whether
or not incorporated) under common control and all members of an affiliated
service group which, together with the Company or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code or Section 4001 of
ERISA.

         Debt of any Person means, without duplication, (a) all indebtedness of
such Person, (b) all borrowed money of such Person, whether or not evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of such
Person as lessee under Capital Leases which have been or should be recorded as
liabilities on a balance sheet of such Person in accordance with GAAP, (d) all
obligations of such Person to pay the deferred purchase price of property or
services (excluding trade accounts payable in the ordinary course of business),
(e) all indebtedness secured by a Lien on the property of such Person, whether
or not such indebtedness shall have been assumed by such Person; provided that
if such Person has not assumed or otherwise become liable for such indebtedness,
such indebtedness shall be measured at the fair market value of such property
securing such indebtedness at the time of determination, (f) all obligations,
contingent or otherwise, with respect to the face amount of all letters of
credit (whether or not drawn), bankers' acceptances and similar obligations
issued for the account of such Person (including the Letters of Credit), (g) all
Hedging Obligations of such Person, (h) all Contingent Liabilities of such
Person and (i) all Debt of any partnership of which such Person is a general
partner.

         Default means any event that, if it continues uncured, will, with lapse
of time or notice or both, constitute an Event of Default.

         Designated Proceeds - see Section 6.2.2(a).

         Domestic Subsidiaries means collectively, Titan Tire Corporation, an
Illinois corporation, Titan Wheel Corporation of Illinois, an Illinois
corporation and Titan Wheel Corporation of Virginia, a Virginia corporation and
any Subsidiary formed in compliance with this Agreement after the Closing Date.

         Dollar and the sign "$" mean lawful money of the United States of
America.

         EBITDA means, for any period, Consolidated Net Income for such period
plus, to the extent deducted in determining such Consolidated Net Income,
Interest Expense, federal, state and local income tax expense, depreciation and
amortization for such period.

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         Eligible Account means an Account owing to the Company or any Domestic
Subsidiary which meets each of the following requirements:

                  (a)      it arises from the sale or lease of goods or the
         rendering of services which have been fully performed by the Company or
         the applicable Domestic Subsidiary;

                  (b)      it (i) is subject to a perfected, first priority Lien
         in favor of the Agents and (ii) is not subject to any other assignment,
         claim or Lien;

                  (c)      it is a valid, legally enforceable and unconditional
         obligation of the Account Debtor with respect thereto, and is not
         subject to the fulfillment of any condition whatsoever or any
         counterclaim, set off, or adjustment by the Account Debtor outside of
         the ordinary course of business with respect thereto;

                  (d)      there is no bankruptcy, insolvency or liquidation
         proceeding pending by or against the Account Debtor with respect
         thereto;

                  (e)      the Account Debtor (except for Titan Europe Plc and
         its wholly-owned subsidiaries)with respect thereto is a resident or
         citizen of, and is located within, the United States, unless the sale
         of goods or services giving rise to such Account is on letter of
         credit, banker's acceptance or other credit terms reasonably
         satisfactory to the Administrative Agent;

                  (f)      it arises in the ordinary course of business of the
         Company or the applicable Domestic Subsidiary;

                  (g)      if the Account Debtor is the United States or any
         department, agency or instrumentality thereof, the Company or the
         applicable Domestic Subsidiary has assigned its right to payment of
         such Account to the Administrative Agent pursuant to the Assignment of
         Claims Act of 1940 (but which Assignment shall not be filed by the
         Administrative Agent except upon the occurrence of an Event of
         Default);

                  (h)      if the Account is evidenced by chattel paper or an
         instrument, the originals of such chattel paper or instrument shall
         have been endorsed and/or assigned and delivered to the Administrative
         Agent or, in the future case of electronic chattel paper, shall be in
         the control of the Administrative Agent, in each case in a manner
         satisfactory to the Administrative Agent;

                  (i)      the Account Debtor with respect thereto is not the
         Company or an Affiliate (except for Titan Europe Plc. and its
         wholly-owned subsidiaries) of the Company; and

                  (j)      all of the applicable representations and warranties
         with respect to such Account that are contained in any of the Loan
         Documents remain true and correct.

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An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account.

         Eligible Inventory means Inventory of the Company or any Domestic
Subsidiary which meets each of the following requirements:

                  (a)      it (i) is subject to a perfected, first priority Lien
         in favor of the Agents and (ii) is not subject to any other assignment,
         claim or Lien;

                  (b)      it is salable and not obsolete or discontinued;

                  (c)      it is not Inventory produced in violation of the Fair
         Labor Standards Act and subject to the "hot goods" provisions contained
         in Title 29 U.S.C. Section 215;

                  (d)      it is not subject to any agreement or license which
         would restrict the Agents' ability to sell or otherwise dispose of such
         Inventory;

                  (e)      it is located in the United States or in any
         territory or possession of the United States that has adopted Article 9
         of the Uniform Commercial Code;

                  (f)      it does not materially breach any of the
         representations, warranties or covenants pertaining to Inventory set
         forth in the Loan Documents; and

                  (g)      it has a value not in excess of $15,000,000 in the
         aggregate if it is stored outside of the Mortgaged Real Property and
         that facility currently occupied by Titan Wheel Corporation of Virginia
         as it principal place of business.

Inventory which is at any time Eligible Inventory but which subsequently fails
to meet any of the foregoing requirements shall forthwith cease to be Eligible
Inventory.

Inventory housed other than in the Mortgaged Real Property or that facility
currently occupied by Titan Wheel Corporation of Virginia as it principal place
of business, to the extent it has a value less than $15,000,000 in the aggregate
and is subject to an account payable of the Company, shall be deducted in the
amount of such account payable from the Borrowing Base.

         Environmental Claims means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.

         Environmental Laws means all present or future federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative or judicial orders, consent agreements,
directed duties, requests, licenses, authorizations and permits of, and
agreements with, any governmental authority, in each case relating to any matter
arising out of or relating to public health and safety, or pollution or
protection of the environment or workplace, including any of the foregoing
relating to the presence, use, production,

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generation, handling, transport, treatment, storage, disposal, distribution,
discharge, emission, release, threatened release, control or cleanup of any
Hazardous Substance.

         Equipment shall mean all machinery and equipment now owned or hereafter
acquired by an Obligor, and located at the principal place of business of an
Obligor, including all such Obligor's processing equipment, conveyors, machine
tools and all engineering, processing and manufacturing equipment, office
machinery, furniture, tools, attachments, accessories, molds, dies, stamps, and
other machinery and equipment, but not including any motor vehicles or other
titled assets.

         ERISA means the Employee Retirement Income Security Act of 1974.

         Event of Default means any of the events described in Section 13.1.

         Excluded Taxes means taxes based upon, or measured by, the Lender's or
Administrative Agent's (or a branch of the Lender's or Administrative Agent's)
overall net income, overall net receipts, or overall net profits (including
franchise taxes imposed in lieu of such taxes), but only to the extent such
taxes are imposed by a taxing authority (a) in a jurisdiction in which such
Lender or Administrative Agent is organized, (b) in a jurisdiction which the
Lender's or Administrative Agent's principal office is located, or (c) in a
jurisdiction in which such Lender's or Administrative Agent's lending office (or
branch) in respect of which payments under this Agreement are made is located.

         Existing Term Loan shall mean that certain term loan described in the
Credit Agreement dated December 21, 2001 between certain Loan Parties, the
lenders signatory thereto, and GE Capital, as agent and lender.

         Federal Funds Rate means, for any day, a fluctuating interest rate
equal for each day during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by the Administrative Agent. The Administrative
Agent's determination of such rate shall be binding and conclusive absent
manifest error.

         Fiscal Quarter means a fiscal quarter of a Fiscal Year.

         Fiscal Year means the fiscal year of the Company and its Subsidiaries,
which period shall be the 12-month period ending on December 31st of each year.
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., "Fiscal Year 2004") refer to the Fiscal Year ending on December 31st of
such calendar year.

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         Fixed Charge Coverage Ratio means commencing January 1, 2004, for any
Computation Period, the ratio of (a) the total for such period of EBITDA minus
the sum of income taxes paid in cash by the Loan Parties and all unfinanced
Capital Expenditures to (b) the sum for such period of (i) cash Interest Expense
plus (ii) required payments of principal of Funded Debt (excluding the Revolving
Loans).

         Foreign Affiliate Loan means the loan from one of the Company's
Affiliates not organized under a United States jurisdiction in approximate the
principal amount of $50,000,000.

         Foreign Subsidiary means any Subsidiaries organized under the laws of a
jurisdiction outside of the United States of America.

         FRB means the Board of Governors of the Federal Reserve System or any
successor thereto.

         Funded Debt means, as to any Person, all Debt of such Person that
matures more than one year from the date of its creation (or is renewable or
extendible, at the option of such Person, to a date more than one year from such
date).

         GAAP means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession) and the Securities and Exchange Commission, which are applicable to
the circumstances as of the date of determination.

         Group - see Section 2.2.1.

         Guaranty and Collateral Agreement means the Guaranty and Collateral
Agreement dated as of the date hereof executed and delivered by the Loan
Parties, together with any joinders thereto and any other guaranty and
collateral agreement executed by a Loan Party, in each case in form and
substance satisfactory to the Administrative Agent.

         Hazardous Substances means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, dielectric fluid containing levels of
polychlorinated biphenyls, radon gas and mold; (b) any chemicals, materials,
pollutant or substances defined as or included in the definition of "hazardous
substances", "hazardous waste", "hazardous materials", "extremely hazardous
substances", "restricted hazardous waste", "toxic substances", "toxic
pollutants", "contaminants", "pollutants" or words of similar import, under any
applicable Environmental Law; and (c) any other chemical, material or substance,
the exposure to, or release of which is prohibited, limited or regulated by any
governmental authority or for which any duty or standard of care is imposed
pursuant to, any Environmental Law.

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         Hedging Agreement means any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.

         Hedging Obligation means, with respect to any Person, any liability of
such Person under any Hedging Agreement. The amount of any Person's obligation
in respect of any Hedging Obligation shall be deemed to be the incremental
obligation that would be reflected in the financial statements of such Person in
accordance with GAAP.

         Indemnified Liabilities - see Section 15.16.

         Interest Expense means for any period the consolidated interest expense
of the Company and its Subsidiaries for such period (including all imputed
interest on Capital Leases).

         Interest Period means, as to any LIBOR Loan, the period commencing on
the date such Loan is borrowed or continued as, or converted into, a LIBOR Loan
and ending on the date one, two or three months thereafter as selected by the
Company pursuant to Section 2.2.2 or 2.2.3, as the case may be; provided that:

                           (a)      if any Interest Period would otherwise end
                  on a day that is not a Business Day, such Interest Period
                  shall be extended to the following Business Day unless the
                  result of such extension would be to carry such Interest
                  Period into another calendar month, in which event such
                  Interest Period shall end on the preceding Business Day;

                           (b)      any Interest Period that begins on a day for
                  which there is no numerically corresponding day in the
                  calendar month at the end of such Interest Period shall end on
                  the last Business Day of the calendar month at the end of such
                  Interest Period; and

                           (c)      the Company may not select any Interest
                  Period for a Revolving Loan which would extend beyond the
                  scheduled Termination Date

         Inventory is defined in the Guaranty and Collateral Agreement.

         Investment means, with respect to any Person, any investment in another
Person, whether by acquisition of any debt or Capital Security, by making any
loan or advance, by becoming obligated with respect to a Contingent Liability in
respect of obligations of such other Person (other than travel and similar
advances to employees in the ordinary course of business) or by making an
Acquisition.

         IRB means the industrial revenue bonds of the Company currently in
place.

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         Issuing Lender means LaSalle, in its capacity as the issuer of Letters
of Credit hereunder, or any Affiliate of LaSalle that may from time to time
issue Letters of Credit, and their successors and assigns in such capacity.

         LaSalle - see the Preamble.

         L/C Application means, with respect to any request for the issuance of
a Letter of Credit, a letter of credit application in the form being used by the
Issuing Lender at the time of such request for the type of letter of credit
requested.

         L/C Fee Rate shall mean 3.00%

         Lender - see the Preamble. References to the "Lenders" shall include
the Issuing Lender; for purposes of clarification only, to the extent that
LaSalle (or any successor Issuing Lender) may have any rights or obligations in
addition to those of the other Lenders due to its status as Issuing Lender, its
status as such will be specifically referenced. In addition to the foregoing,
for the purpose of identifying the Persons entitled to share in the Collateral
and the proceeds thereof under, and in accordance with the provisions of, this
Agreement and the Collateral Documents, the term "Lender" shall include
Affiliates of a Lender providing a Bank Product.

         Lender Party - see Section 15.16.

         Letter of Credit - see Section 2.1.3.

         LIBOR Loan means any Loan which bears interest at a rate determined by
reference to the LIBOR Rate.

         LIBOR Margin means three percent (3.00%).

         LIBOR Office means with respect to any Lender the office or offices of
such Lender which shall be making or maintaining the LIBOR Loans of such Lender
hereunder. A LIBOR Office of any Lender may be, at the option of such Lender,
either a domestic or foreign office.

         LIBOR Rate means a rate of interest equal to (a) the per annum rate of
interest at which United States dollar deposits in an amount comparable to the
amount of the relevant LIBOR Loan and for a period equal to the relevant
Interest Period are offered in the London Interbank Eurodollar market at 11:00
A.M. (London time) two (2) Business Days prior to the commencement of such
Interest Period (or three (3) Business Days prior to the commencement of such
Interest Period if banks in London, England were not open and dealing in
offshore United States dollars on such second preceding Business Day), as
displayed in the Bloomberg Financial Markets system (or other authoritative
source selected by the Administrative Agent in its sole discretion) or, if the
Bloomberg Financial Markets system or another authoritative source is not
available, as the LIBOR Rate is otherwise determined by the Administrative Agent
in its sole and absolute discretion, divided by (b) a number determined by
subtracting from 1.00 the then stated maximum reserve percentage for determining
reserves to be maintained by member

                                       12



banks of the Federal Reserve System for Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D), such rate to remain fixed for such Interest Period. The
Administrative Agent's determination of the LIBOR Rate shall be conclusive,
absent manifest error.

         Lien means, with respect to any Person, any interest granted by such
Person in any real or personal property, asset or other right owned or being
purchased or acquired by such Person (including an interest in respect of a
Capital Lease) which secures payment or performance of any obligation and shall
include any mortgage, lien, encumbrance, title retention lien, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.

         Loan Documents means this Agreement, the Notes, the Letters of Credit,
the Master Letter of Credit Agreement, the L/C Applications, the Commitment
Letter, the Collateral Documents, the Subordination Agreements and all
documents, instruments and agreements delivered in connection with the
foregoing.

         Loan Party means the Company and each Subsidiary other than the Foreign
Subsidiaries and other than Dyneer Corporation, Dico, Inc. and Titan Tire
Corporation of Natchez.

         Loan or Loans means, as the context may require, Revolving Loans.

         Mandatory Prepayment Event - see Section 6.2.2(a).

         Margin Stock means any "margin stock" as defined in Regulation U.

         Master Letter of Credit Agreement means, at any time, with respect to
the issuance of Letters of Credit, a master letter of credit agreement or
reimbursement agreement in the form, if any, being used by the Issuing Lender at
such time.

         Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of the Obligors taken as a whole, (b) a
material impairment of the ability of any Obligor to perform any of the
Obligations under any Loan Document or (c) a material adverse effect upon any of
the collateral under the Collateral Documents or upon the legality, validity,
binding effect or enforceability against any Loan Party of any Loan Document.
Without limiting the foregoing, any event or occurrence adverse to one or more
Obligors which results or could reasonably be expected to result in costs and/or
liabilities and/or loss of revenues, individually or in the aggregate, to any
Obligor in any 30-day period in excess of 50% of the sum of (a) the net amount
available to be drawn on the date of determination under the Revolving Credit
Commitment, plus (b) the available cash and unrestricted cash equivalents of
Obligors on such date, shall be deemed to have had a Material Adverse Effect.

         Mortgage means a mortgage, deed of trust, or similar instrument
granting the Administrative Agent a Lien on real property of any Loan Party.

                                       13



         Mortgaged Real Property shall mean the real property of the Company
identified in the Mortgages, and located in Quincy, Illinois and Des Moines,
Iowa.

         Multiemployer Pension Plan means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Company or any other member of the
Controlled Group may have any liability.

         Net Cash Proceeds means:

         (a)      with respect to any Asset Disposition, the aggregate cash
                  proceeds (including cash proceeds received pursuant to
                  policies of insurance or by way of deferred payment of
                  principal pursuant to a note, installment receivable or
                  otherwise, but only as and when received) received by any Loan
                  Party pursuant to such Asset Disposition net of (i) the direct
                  costs relating to such sale, transfer or other disposition
                  (including sales commissions and legal, accounting and
                  investment banking fees), (ii) taxes paid or reasonably
                  estimated by the Company to be payable as a result thereof
                  (after taking into account any available tax credits or
                  deductions and any tax sharing arrangements) and (iii) amounts
                  required to be applied to the repayment of any Debt secured by
                  a Lien on the asset subject to such Asset Disposition (other
                  than the Loans);

         (b)      with respect to any issuance of Capital Securities, the
                  aggregate cash proceeds received by any Loan Party pursuant to
                  such issuance, net of the direct costs relating to such
                  issuance (including sales and underwriters' commissions); and

         (c)      with respect to any issuance of Debt, the aggregate cash
                  proceeds received by any Loan Party pursuant to such issuance,
                  net of the direct costs of such issuance (including up-front,
                  underwriters' and placement fees).

         Non-U.S. Participant - see Section 7.6(d).

         Non-Use Fee Rate shall mean three-eights of one percent (.375%).

         Note means a promissory note substantially in the form of Exhibit A.

         Notice of Borrowing - see Section 2.2.2.

         Notice of Conversion/Continuation - see Section 2.2.3.

         Obligors shall mean the Company and its Domestic Subsidiaries.

         Obligations means all obligations (monetary (including post-petition
interest, allowed or not) or otherwise) of any Loan Party under this Agreement
and any other Loan Document including Attorney Costs and any reimbursement
obligations of each Loan Party in respect of Letters of Credit and surety bonds,
all Hedging Obligations permitted hereunder which are owed

                                       14



to any Lender, and all Bank Products Obligations, all in each case howsoever
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due.

         OFAC - see Section 10.4.

         Orderly Liquidation Value shall mean (a) the in place orderly
liquidation value, as determined by the most recent appraisal prepared for
Lenders, or (b) in the case of assets not subject to such appraisals, the book
value of such assets.

         Operating Lease means any lease of (or other agreement conveying the
right to use) any real or personal property by any Loan Party, as lessee, other
than any Capital Lease.

         PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

         Participant - see Section 15.6.2.

         Pension Plan means a "pension plan", as such term is defined in Section
3(2) of ERISA, which is subject to Title IV of ERISA or the minimum funding
standards of ERISA (other than a Multiemployer Pension Plan), and as to which
the Company or any member of the Controlled Group may have any liability,
including any liability by reason of having been a substantial employer within
the meaning of Section 4063 of ERISA at any time during the preceding five
years, or by reason of being deemed to be a contributing sponsor under Section
4069 of ERISA.

         Permitted Lien means a Lien expressly permitted hereunder pursuant to
Section 11.2.

         Person means any natural person, corporation, partnership, trust,
limited liability company, association, governmental authority or unit, or any
other entity, whether acting in an individual, fiduciary or other capacity.

         Prime Rate means, for any day, the rate of interest in effect for such
day as publicly announced from time to time by the Administrative Agent as its
prime commercial rate (whether or not such rate is actually charged by the
Administrative Agent), which is not intended to be the Administrative Agent's
lowest or most favorable rate of interest at any one time. Any change in the
Prime Rate announced by the Administrative Agent shall take effect at the
opening of business on the day specified in the public announcement of such
change; provided that the Administrative Agent shall not be obligated to give
notice of any change in the Prime Rate.

         Pro Rata Share means:

         (a)      with respect to a Lender's obligation to make Revolving Loans,
                  participate in Letters of Credit, reimburse the Issuing
                  Lender, and receive payments of principal, interest, fees,
                  costs, and expenses with respect thereto, (x) prior to the
                  Revolving Commitment being terminated or reduced to zero, the
                  percentage

                                       15



                  obtained by dividing (i) such Lender's Commitment, by (ii) the
                  aggregate Revolving Commitment of all Lenders and (y) from and
                  after the time the Revolving Commitment has been terminated or
                  reduced to zero, the percentage obtained by dividing (i) the
                  aggregate unpaid principal amount of such Lender's Revolving
                  Outstandings by (ii) the aggregate unpaid principal amount of
                  all Revolving Outstandings;

         (b)      with respect to all other matters as to a particular Lender,
                  the percentage obtained by dividing (i) such Lender's
                  Commitment, by (ii) the aggregate amount of Revolving
                  Commitment of all Lenders; provided that in the event the
                  Commitments have been terminated or reduced to zero, Pro Rata
                  Share shall be the percentage obtained by dividing (A) the
                  principal amount of such Lender's Revolving Outstandings by
                  (B) the principal amount of all outstanding Revolving
                  Outstandings.

         Regulation D means Regulation D of the FRB.

         Regulation U means Regulation U of the FRB.

         Reportable Event means a reportable event as defined in Section 4043 of
ERISA and the regulations issued thereunder as to which the PBGC has not waived
the notification requirement of Section 4043(a), or the failure of a Pension
Plan to meet the minimum funding standards of Section 412 of the Code (without
regard to whether the Pension Plan is a plan described in Section 4021(a)(2) of
ERISA) or under Section 302 of ERISA.

         Required Lenders means, at any time, Lenders whose Pro Rata Shares
exceed 66-2/3%.

         Revolving Commitment means $100,000,000, as reduced from time to time
pursuant to Section 6.1.

         Revolving Loan - see Section 2.1.1.

         Revolving Loan Availability means the lesser of (i) the Revolving
Commitment and (ii) the Borrowing Base.

         Revolving Outstandings means, at any time, the sum of (a) the aggregate
principal amount of all outstanding Revolving Loans, plus (b) the Stated Amount
of all Letters of Credit.

         SEC means the Securities and Exchange Commission or any other
governmental authority succeeding to any of the principal functions thereof.

         Senior Convertible Notes means the $100,000,000 Senior Convertible
Notes due 2009, to be issued by the Company on or about the Closing Date.

                                       16



         Senior Debt means all Debt of the Company and its Subsidiaries other
than Subordinated Debt.

         Senior Officer means, with respect to any Loan Party, any of the chief
executive officer, the chief financial officer, the chief operating officer,
secretary or the treasurer of such Loan Party.

         Stated Amount means, with respect to any Letter of Credit at any date
of determination, (a) the maximum aggregate amount available for drawing
thereunder under any and all circumstances plus (b) the aggregate amount of all
unreimbursed payments and disbursements under such Letter of Credit.

         Subordinated Debt means the Subordinated Notes, the Senior Convertible
Notes, the Foreign Affiliate Loan and any other unsecured Debt of the Company
which has subordination terms, covenants, pricing and other terms which have
been approved in writing by the Required Lenders.

         Subordinated Debt Documents means all documents and instruments
relating to the Subordinated Debt and all amendments and modifications thereof.

         Subordinated Notes means the existing 8.75% Senior Subordinated Notes
of the Company due April 1, 2007.

         Subordination Agreements means all subordination agreements executed by
a holder of Subordinated Debt in favor of the Administrative Agent and the
Lenders from time to time after the Closing Date.

         Subsidiary means, with respect to any Person, a corporation,
partnership, limited liability company or other entity of which such Person
owns, directly or indirectly, such number of outstanding Capital Securities as
have more than 50% of the ordinary voting power for the election of directors or
other managers of such corporation, partnership, limited liability company or
other entity. Unless the context otherwise requires, each reference to
Subsidiaries herein shall be a reference to Subsidiaries of the Company.

         Taxes means any and all present and future taxes, duties, levies,
imposts, deductions, assessments, charges or withholdings, and any and all
liabilities (including interest and penalties and other additions to taxes) with
respect to the foregoing, but excluding Excluded Taxes.

         Termination Date means the earlier to occur of (a) July 23, 2007;
provided, however, that to the extent any of the Subordinated Notes remain
outstanding as of February 1, 2007, then the Termination Date shall mean March
1, 2007, or (b) such other date on which the Commitments terminate pursuant to
Section 6 or 13.

                                       17



         Termination Event means, with respect to a Pension Plan that is subject
to Title IV of ERISA, (a) a [material] Reportable Event, (b) the withdrawal of
Company or any other member of the Controlled Group from such Pension Plan
during a plan year in which Company or any other member of the Controlled Group
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA which has
a Material Adverse Effect, or was deemed such under Section 4068(f) of ERISA,
(c) the termination of such Pension Plan, the filing of a notice of intent to
terminate the Pension Plan or the treatment of an amendment of such Pension Plan
as a termination under Section 4041 of ERISA which has a Material Adverse
Effect, (d) the institution by the PBGC of proceedings to terminate such Pension
Plan which has a Material Adverse Effect or (e) any event or condition that
might constitute grounds under Section 4042 of ERISA for the termination of, or
appointment of a trustee to administer, such Pension Plan which has a Material
Adverse Effect.

         Total Plan Liability means, at any time, the present value of all
vested and unvested accrued benefits under all Pension Plans, determined as of
the then most recent valuation date for each Pension Plan, using PBGC actuarial
assumptions for single employer plan terminations.

         Type - see Section 2.2.1.

         UCC is defined in the Guaranty and Collateral Agreement.

         Unfunded Liability means the amount (if any) by which the present value
of all vested and unvested accrued benefits under all Pension Plans exceeds the
fair market value of all assets allocable to those benefits, all determined as
of the then most recent valuation date for each Pension Plan, using PBGC
actuarial assumptions for single employer plan terminations.

         Withholding Certificate - see Section 7.6(d).

         Wholly-Owned Subsidiary means, as to any Person, a Subsidiary all of
the Capital Securities of which (except directors' qualifying Capital
Securities) are at the time directly or indirectly owned by such Person and/or
another Wholly-Owned Subsidiary of such Person.

         1.2      Other Interpretive Provisions. (a) The meanings of defined
terms are equally applicable to the singular and plural forms of the defined
terms.

         (b)      Section, Annex, Schedule and Exhibit references are to this
Agreement unless otherwise specified.

         (c)      The term "including" is not limiting and means "including
without limitation."

         (d)      In the computation of periods of time from a specified date to
a later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding", and the word "through" means "to
and including."

                                       18



         (e)      Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement and the other Loan Documents) and other
contractual instruments shall be deemed to include all subsequent amendments,
restatements, supplements and other modifications thereto, but only to the
extent such amendments, restatements, supplements and other modifications are
not prohibited by the terms of any Loan Document, and (ii) references to any
statute or regulation shall be construed as including all statutory and
regulatory provisions amending, replacing, supplementing or interpreting such
statute or regulation.

         (f)      This Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and each
shall be performed in accordance with its terms.

         (g)      This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Company, the Lenders and the other parties thereto and are the
products of all parties. Accordingly, they shall not be construed against the
Administrative Agent or the Lenders merely because of the Administrative Agent's
or Lenders' involvement in their preparation.

         SECTION  2 COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER
                    OF CREDIT PROCEDURES.

         2.1      Commitments. On and subject to the terms and conditions of
this Agreement, each of the Lenders, severally and for itself alone, agrees to
make loans to, and to issue or participate in letters of credit for the account
of, the Company as follows:

         2.1.1    Revolving Loan Commitment. Each Lender with a Revolving Loan
Commitment agrees to make loans on a revolving basis ("Revolving Loans") from
time to time until the Termination Date in such Lender's Pro Rata Share of such
aggregate amounts as the Company may request from all Lenders; provided that the
Revolving Outstandings will not at any time exceed Revolving Loan Availability.
Within the limits and provisions of this Agreement Company may make such
borrowings, repay such advances, and make additional borrowing under the Loan.

         2.1.2    Intentionally omitted.

         2.1.3    L/C Commitment. Subject to Section 2.3.1, the Issuing Lender
agrees to issue letters of credit, in each case containing such terms and
conditions as are permitted by this Agreement and are reasonably satisfactory to
the Issuing Lender (each, a "Letter of Credit"), at the request of and for the
account of the Company from time to time before the scheduled Termination Date
and, as more fully set forth in Section 2.3.2, each Lender agrees to purchase a
participation in each such Letter of Credit; provided that (a) the aggregate
Stated Amount of all Letters of Credit shall not at any time exceed $20,000,000
and (b) the Revolving Outstandings shall not at any time exceed Revolving Loan
Availability.

         2.2      Loan Procedures.

                                       19



         2.2.1    Various Types of Loans. Each Revolving Loan shall be divided
into tranches which are either a Base Rate Loan or a LIBOR Loan (each a "type"
of Loan), as the Company shall specify in the related notice of borrowing or
conversion pursuant to Section 2.2.2 or 2.2.3. LIBOR Loans having the same
Interest Period which expire on the same day are sometimes called a "Group" or
collectively "Groups". Base Rate Loans and LIBOR Loans may be outstanding at the
same time, provided that not more than five (5) different Groups of LIBOR Loans
shall be outstanding at any one time. All borrowings, conversions and repayments
of Revolving Loans shall be effected so that each Lender will have a ratable
share (according to its Pro Rata Share) of all types and Groups of Loans.
Notwithstanding the foregoing or any other provision of this Agreement, the
Company may not select any Interest Period for a LIBOR Loan which is longer than
the date or dates selected by the Administrative Agent from time to time for any
syndication of the Loans.

         2.2.2    Borrowing Procedures. The Company shall give written notice
(each such written notice, a "Notice of Borrowing") substantially in the form of
Exhibit E or telephonic notice (followed immediately by a Notice of Borrowing)
to the Administrative Agent of each proposed borrowing not later than (a) in the
case of a Base Rate borrowing, 12:00 P.M., Chicago time, on the proposed date of
such borrowing, and (b) in the case of a LIBOR borrowing, 12:00 P.M., Chicago
time, at least three Business Days prior to the proposed date of such borrowing.
Each such notice shall be effective upon receipt by the Administrative Agent,
shall be irrevocable, and shall specify the date, amount and type of borrowing
and, in the case of a LIBOR borrowing, the initial Interest Period therefor.
Promptly upon receipt of such notice, the Administrative Agent shall advise each
Lender thereof. Not later than 1:00 P.M., Chicago time, on the date of a
proposed borrowing, each Lender shall provide the Administrative Agent at the
office specified by the Administrative Agent with immediately available funds
covering such Lender's Pro Rata Share of such borrowing and, so long as the
Administrative Agent has not received written notice that the conditions
precedent set forth in Section 11 with respect to such borrowing have not been
satisfied, the Administrative Agent shall pay over the funds received by the
Administrative Agent to the Company on the requested borrowing date. Each
borrowing shall be on a Business Day. Each Base Rate borrowing shall be in an
aggregate amount of at least Five Hundred Thousand and No/100 Dollars
($500,000.00) and an integral multiple of One Hundred Thousand and No/100
Dollars ($100,000.00), and each LIBOR borrowing shall be in an aggregate amount
of at least One Million and No/100 Dollars ($1,000,000.00) and an integral
multiple of at least One Hundred Thousand and No/100 Dollars ($100,000.00).

         2.2.3    Conversion and Continuation Procedures. (a) Subject to Section
2.2.1, the Company may, upon irrevocable written notice to the Administrative
Agent in accordance with clause (b) below:

                  (A)      elect, as of any Business Day, to convert any Loans
(or any part thereof in an aggregate amount not less than Five Hundred Thousand
and No/100 Dollars ($500,000.00) or a higher integral multiple of One Hundred
Thousand and No/100 Dollars ($100,000.00) into Loans of the other type; or

                                       20



                  (B)      elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Loans having Interest Periods expiring on such day
(or any part thereof in an aggregate amount not less than One Million and No/100
Dollars ($1,000,000.00) or a higher integral multiple of One Hundred Thousand
and No/100 Dollars ($100,000.00) for a new Interest Period;

provided that after giving effect to any prepayment, conversion or continuation,
the aggregate principal amount of each Group of LIBOR Loans shall be at least
One Million and No/100 Dollars ($1,000,000.00) and an integral multiple of One
Hundred Thousand and No/100 Dollars ($100,000.00).

         (b)      The Company shall give written notice (each such written
notice, a "Notice of Conversion/Continuation") substantially in the form of
Exhibit F or telephonic notice (followed immediately by a Notice of
Conversion/Continuation) to the Administrative Agent of each proposed conversion
or continuation not later than (i) in the case of conversion into Base Rate
Loans, 12:00 P.M., Chicago time, on the proposed date of such conversion and
(ii) in the case of conversion into or continuation of LIBOR Loans, 12:00 P.M.,
Chicago time, at least three Business Days prior to the proposed date of such
conversion or continuation, specifying in each case:

                  (A)      the proposed date of conversion or continuation;

                  (B)      the aggregate amount of Loans to be converted or
continued;

                  (C)      the type of Loans resulting from the proposed
conversion or continuation; and

                  (D)      in the case of conversion into, or continuation of,
LIBOR Loans, the duration of the requested Interest Period therefor.

         (c)      If upon the expiration of any Interest Period applicable to
LIBOR Loans, the Company has failed to select timely a new Interest Period to be
applicable to such LIBOR Loans, the Company shall be deemed to have elected to
convert such LIBOR Loans into Base Rate Loans effective on the last day of such
Interest Period.

         (d)      The Administrative Agent will promptly notify each Lender of
its receipt of a notice of conversion or continuation pursuant to this Section
2.2.3 or, if no timely notice is provided by the Company, of the details of any
automatic conversion.

         (e)      Any conversion of a LIBOR Loan on a day other than the last
day of an Interest Period therefor shall be subject to Section 8.4.

         2.3      Letter of Credit Procedures.

         2.3.1    L/C Applications. The Company shall execute and deliver to the
Issuing Lender the Master Letter of Credit Agreement from time to time in
effect. The Company shall give

                                       21



notice to the Administrative Agent and the Issuing Lender of the proposed
issuance of each Letter of Credit on a Business Day which is at least three
Business Days (or such lesser number of days as the Administrative Agent and the
Issuing Lender shall agree in any particular instance in their sole discretion)
prior to the proposed date of issuance of such Letter of Credit. Each such
notice shall be accompanied by an L/C Application, duly executed by the Company
and in all respects satisfactory to the Administrative Agent and the Issuing
Lender, together with such other documentation as the Administrative Agent or
the Issuing Lender may request in support thereof, it being understood that each
L/C Application shall specify, among other things, the date on which the
proposed Letter of Credit is to be issued, the expiration date of such Letter of
Credit (which shall not be later than the scheduled Termination Date (unless
such Letter of Credit is Cash Collateralized)) and whether such Letter of Credit
is to be transferable in whole or in part. Any Letter of Credit outstanding
after the scheduled Termination Date which is Cash Collateralized for the
benefit of the Issuing Lender shall be the sole responsibility of the Issuing
Lender. So long as the Issuing Lender has not received written notice that the
conditions precedent set forth in Section 12 with respect to the issuance of
such Letter of Credit have not been satisfied, the Issuing Lender shall issue
such Letter of Credit on the requested issuance date. The Issuing Lender shall
promptly advise the Administrative Agent of the issuance of each Letter of
Credit and of any amendment thereto, extension thereof or event or circumstance
changing the amount available for drawing thereunder. In the event of any
inconsistency between the terms of the Master Letter of Credit Agreement, any
L/C Application and the terms of this Agreement, the terms of this Agreement
shall control.

         2.3.2    Participations in Letters of Credit. Concurrently with the
issuance of each Letter of Credit, the Issuing Lender shall be deemed to have
sold and transferred to each Lender with a Revolving Loan Commitment, and each
such Lender shall be deemed irrevocably and unconditionally to have purchased
and received from the Issuing Lender, without recourse or warranty, an undivided
interest and participation, to the extent of such Lender's Pro Rata Share, in
such Letter of Credit and the Company's reimbursement obligations with respect
thereto. If the Company does not pay any reimbursement obligation when due, the
Company shall be deemed to have immediately requested that the Lenders make a
Revolving Loan which is a Base Rate Loan in a principal amount equal to such
reimbursement obligations. The Administrative Agent shall promptly notify such
Lenders of such deemed request and, without the necessity of compliance with the
requirements of Section 2.2.2, 12.2 or otherwise such Lender shall make
available to the Administrative Agent its Pro Rata Share of such Loan. The
proceeds of such Loan shall be paid over by the Administrative Agent to the
Issuing Lender for the account of the Company in satisfaction of such
reimbursement obligations. For the purposes of this Agreement, the
unparticipated portion of each Letter of Credit shall be deemed to be the
Issuing Lender's "participation" therein. The Issuing Lender hereby agrees, upon
request of the Administrative Agent or any Lender, to deliver to the
Administrative Agent or such Lender a list of all outstanding Letters of Credit
issued by the Issuing Lender, together with such information related thereto as
the Administrative Agent or such Lender may reasonably request.

         2.3.3    Reimbursement Obligations. (a) The Company hereby
unconditionally and irrevocably agrees to reimburse the Issuing Lender for each
payment or disbursement made by

                                       22



the Issuing Lender under any Letter of Credit honoring any demand for payment
made by the beneficiary thereunder, in each case on the date that such payment
or disbursement is made. Any amount not reimbursed on the date of such payment
or disbursement shall bear interest from the date of such payment or
disbursement to the date that the Issuing Lender is reimbursed by the Company
therefor, payable on demand, at a rate per annum equal to the Base Rate from
time to time in effect plus the Base Rate Margin from time to time in effect
plus, beginning on the third Business Day after receipt of notice from the
Issuing Lender of such payment or disbursement, 2%. The Issuing Lender shall
notify the Company and the Administrative Agent whenever any demand for payment
is made under any Letter of Credit by the beneficiary thereunder; provided that
the failure of the Issuing Lender to so notify the Company or the Administrative
Agent shall not affect the rights of the Issuing Lender or the Lenders in any
manner whatsoever.

                  (b)      The Company's reimbursement obligations hereunder
shall be irrevocable and unconditional under all circumstances, including (a)
any lack of validity or enforceability of any Letter of Credit, this Agreement
or any other Loan Document, (b) the existence of any claim, set-off, defense or
other right which any Loan Party may have at any time against a beneficiary
named in a Letter of Credit, any transferee of any Letter of Credit (or any
Person for whom any such transferee may be acting), the Administrative Agent,
the Issuing Lender, any Lender or any other Person, whether in connection with
any Letter of Credit, this Agreement, any other Loan Document, the transactions
contemplated herein or any unrelated transactions (including any underlying
transaction between any Loan Party and the beneficiary named in any Letter of
Credit), (c) the validity, sufficiency or genuineness of any document which the
Issuing Lender has determined complies on its face with the terms of the
applicable Letter of Credit, even if such document should later prove to have
been forged, fraudulent, invalid or insufficient in any respect or any statement
therein shall have been untrue or inaccurate in any respect, or (d) the
surrender or impairment of any security for the performance or observance of any
of the terms hereof. Without limiting the foregoing, no action or omission
whatsoever by the Administrative Agent or any Lender (excluding any Lender in
its capacity as the Issuing Lender) under or in connection with any Letter of
Credit or any related matters shall result in any liability of the
Administrative Agent or any Lender to the Company, or relieve the Company of any
of its obligations hereunder to any such Person.

         2.3.4    Funding by Lenders to Issuing Lender. If the Issuing Lender
makes any payment or disbursement under any Letter of Credit and (a) the Company
has not reimbursed the Issuing Lender in full for such payment or disbursement
by 12:00 P.M., Chicago time, on the date of such payment or disbursement, (b) a
Revolving Loan may not be made in accordance with Section 2.3.2 or (c) any
reimbursement received by the Issuing Lender from the Company is or must be
returned or rescinded upon or during any bankruptcy or reorganization of the
Company or otherwise, each other Lender with a Revolving Loan Commitment shall
be obligated to pay to the Administrative Agent for the account of the Issuing
Lender, in full or partial payment of the purchase price of its participation in
such Letter of Credit, its Pro Rata Share of such payment or disbursement (but
no such payment shall diminish the obligations of the Company under Section
2.3.3), and, upon notice from the Issuing Lender, the Administrative Agent shall
promptly notify each other Lender thereof. Each other Lender irrevocably and

                                       23



unconditionally agrees to so pay to the Administrative Agent in immediately
available funds for the Issuing Lender's account the amount of such other
Lender's Pro Rata Share of such payment or disbursement. If and to the extent
any Lender shall not have made such amount available to the Administrative Agent
by 1:00 P.M., Chicago time, on the Business Day on which such Lender receives
notice from the Administrative Agent of such payment or disbursement (it being
understood that any such notice received after noon, Chicago time, on any
Business Day shall be deemed to have been received on the next following
Business Day), such Lender agrees to pay interest on such amount to the
Administrative Agent for the Issuing Lender's account forthwith on demand, for
each day from the date such amount was to have been delivered to the
Administrative Agent to the date such amount is paid, at a rate per annum equal
to (a) for the first three days after demand, the Federal Funds Rate from time
to time in effect and (b) thereafter, the Base Rate from time to time in effect.
Any Lender's failure to make available to the Administrative Agent its Pro Rata
Share of any such payment or disbursement shall not relieve any other Lender of
its obligation hereunder to make available to the Administrative Agent such
other Lender's Pro Rata Share of such payment, but no Lender shall be
responsible for the failure of any other Lender to make available to the
Administrative Agent such other Lender's Pro Rata Share of any such payment or
disbursement.

         2.4      Commitments Several. The failure of any Lender to make a
requested Loan on any date shall not relieve any other Lender of its obligation
(if any) to make a Loan on such date, but no Lender shall be responsible for the
failure of any other Lender to make any Loan to be made by such other Lender.

         2.5      Certain Conditions. Except as otherwise provided in this
Agreement, no Lender shall have an obligation to make any Loan, or to permit the
continuation of or any conversion into any LIBOR Loan, and the Issuing Lender
shall not have any obligation to issue any Letter of Credit, if an Event of
Default or Default exists.

         SECTION 3 EVIDENCING OF LOANS.

         3.1      Notes. The Loans of each Lender shall be evidenced by a Note,
with appropriate insertions, payable to the order of such Lender in a face
principal amount equal to such Lender's Revolving Loan Commitment.

         3.2      Recordkeeping. The Administrative Agent, on behalf of each
Lender, shall record in its records, the date and amount of each Loan made by
each Lender, each repayment or conversion thereof and, in the case of each LIBOR
Loan, the dates on which each Interest Period for such Loan shall begin and end.
The aggregate unpaid principal amount so recorded shall be rebuttably
presumptive evidence of the principal amount of the Loans owing and unpaid. The
failure to so record any such amount or any error in so recording any such
amount shall not, however, limit or otherwise affect the Obligations of the
Company hereunder or under any Note to repay the principal amount of the Loans
hereunder, together with all interest accruing thereon.

                                       24



         SECTION 4 INTEREST.

         4.1      Interest Rates. The Company promises to pay interest on the
unpaid principal amount of each Loan for the period commencing on the date of
such Loan until such Loan is paid in full as follows:

         (a)      at all times while such Loan is a Base Rate Loan, at a rate
per annum equal to the sum of the Base Rate from time to time in effect plus the
Base Rate Margin from time to time in effect; and

         (b)      at all times while such Loan is a LIBOR Loan, at a rate per
annum equal to the sum of the LIBOR Rate applicable to each Interest Period for
such Loan plus the LIBOR Margin from time to time in effect;

provided that at any time an Event of Default exists, and only as long as it
continues, unless the Required Lenders otherwise consent, the interest rate
applicable to each Loan shall be increased by 2% (and, in the case of
Obligations not bearing interest, such Obligations shall bear interest at the
Base Rate applicable to Revolving Loans plus 2%), provided further that such
increase may thereafter be rescinded by the Required Lenders, notwithstanding
Section 15.1. Notwithstanding the foregoing, upon the occurrence of an Event of
Default under Section 13.1.1 or 13.1.4, such increase shall occur automatically.

         4.2      Interest Payment Dates. Accrued interest on each Base Rate
Loan shall be payable in arrears on the first day of each calendar month, upon a
prepayment of such Loan and at maturity. Accrued interest on each LIBOR Loan
shall be payable on the last day of each Interest Period relating to such Loan
(and, in the case of a LIBOR Loan with an Interest Period in excess of three
months, on the three-month anniversary of the first day of such Interest
Period), upon a prepayment of such Loan, and at maturity. After maturity, and at
any time an Event of Default exists, accrued interest on all Loans shall be
payable on demand.

         4.3      Setting and Notice of LIBOR Rates. The applicable LIBOR Rate
for each Interest Period shall be determined by the Administrative Agent, and
notice thereof shall be given by the Administrative Agent promptly to the
Company and each Lender. Each determination of the applicable LIBOR Rate by the
Administrative Agent shall be conclusive and binding upon the parties hereto, in
the absence of demonstrable error. The Administrative Agent shall, upon written
request of the Company or any Lender, deliver to the Company or such Lender a
statement showing the computations used by the Administrative Agent in
determining any applicable LIBOR Rate hereunder.

         4.4      Computation of Interest. Interest shall be computed for the
actual number of days elapsed on the basis of a year of 365/366 days for
purposes of each Base Rate Loan, and 360 days for each LIBOR Loan. The
applicable interest rate for each Base Rate Loan shall change simultaneously
with each change in the Base Rate.

                                       25



         SECTION 5 FEES.

         5.1      Non-Use Fee. The Company agrees to pay to the Administrative
Agent for the account of each Lender a non-use fee ("Non-Use Fee"), for the
period from the Closing Date to the Termination Date, at the Non-Use Fee Rate of
such Lender's Pro Rata Share (as adjusted from time to time) of the average
daily unused amount of the Revolving Commitment calculated on a quarterly basis.
For purposes of calculating usage under this Section, the Revolving Commitment
shall be deemed used to the extent of Revolving Outstandings. Such Non-Use Fee
shall be payable in arrears on the first day of each calendar quarter and on the
Termination Date for any period then ending for which such non-use fee shall not
have previously been paid. The Non-Use Fee shall be computed for the actual
number of days elapsed on the basis of a year of 360 days.

         5.2      Letter of Credit Fees. (a) The Company agrees to pay to the
Administrative Agent for the account of each Lender a letter of credit fee for
each Letter of Credit equal to the L/C Fee Rate of such Lender's Pro Rata Share
(as adjusted from time to time) of the undrawn amount of such Letter of Credit
(computed for the actual number of days elapsed on the basis of a year of 360
days); provided that, unless the Required Lenders otherwise consent, the rate
applicable to each Letter of Credit shall be increased by 2% at any time, but
only for so long as, that an Event of Default exists. Such letter of credit fee
shall be payable in arrears on the first day of each calendar quarter and on the
Termination Date (or such later date on which such Letter of Credit expires or
is terminated) for the period from the date of the issuance of each Letter of
Credit (or the last day on which the letter of credit fee was paid with respect
thereto) to the date such payment is due or, if earlier, the date on which such
Letter of Credit expired or was terminated.

         (b)      In addition, with respect to each Letter of Credit, the
Company agrees to pay to the Issuing Lender, for its own account, (i) such fees
and expenses as the Issuing Lender customarily requires in connection with the
issuance, negotiation, processing and/or administration of letters of credit in
similar situations and (ii) a letter of credit fronting fee in the amount and at
the times agreed to by the Company and the Issuing Lender.

         5.3      Administrative Agent's Fees. The Company agrees to pay to the
Administrative Agent such agent's fees set forth in the Commitment Letter.

         5.4      Closing Fee. The Company shall pay the Initiating Lenders a
closing fee as set forth in the Commitment Letter.

         5.5      Arrangement Fee. The Company shall pay the Initiating Lenders
a one-time arrangement fee as set forth in the Commitment Letter.

         SECTION 6 REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT;
                   PREPAYMENTS.

         6.1      Reduction or Termination of the Revolving Commitment.

                                       26



         6.1.1    Voluntary Reduction or Termination of the Revolving
Commitment. The Company may from time to time on at least five (5) Business
Days' prior written notice received by the Administrative Agent (which shall
promptly advise each Lender thereof) permanently reduce the Revolving Commitment
to an amount not less than the Revolving Outstandings. Any such reduction shall
be in an amount not less than One Million and No/100 Dollars ($1,000,000.00) or
a higher integral multiple of One Hundred Thousand and No/100 Dollars
($100,000.00). Concurrently with any reduction of the Revolving Commitment to
zero, the Company shall pay all interest on the Revolving Loans, all non-use
fees and all letter of credit fees and shall Cash Collateralize in full all
obligations arising with respect to the Letters of Credit.

         6.1.2    Mandatory Reductions of Revolving Commitment. On the date of
any Mandatory Prepayment Event, the Revolving Commitment shall not be reduced by
any amount.

         6.1.3    All Reductions of the Revolving Commitment. All reductions of
the Revolving Commitment shall reduce the Commitments ratably among the Lenders
according to their respective Pro Rata Shares.

         6.2      Prepayments.

         6.2.1    Voluntary Prepayments. The Company may from time to time
prepay the Loans in whole or in part; provided that the Company shall give the
Administrative Agent (which shall promptly advise each Lender) notice thereof
not later than 12:00 P.M., Chicago time, on the day of such prepayment (which
shall be a Business Day), specifying the Loans to be prepaid and the date and
amount of prepayment. Any such partial prepayment shall be in an amount equal to
Five Hundred Thousand and No/100 Dollars ($500,000.00) or a higher integral
multiple of One Hundred Thousand and No/100 Dollars ($100,000.00) for Base Rate
Loans and One Million and No/100 Dollars ($1,000,000.00) or a higher integral
multiple of One Hundred Thousand and No/100 Dollars ($100,000.00) for LIBOR
Loans.

         6.2.2    Mandatory Prepayments.

         (a)      The Company shall make a prepayment of the Loans until paid in
full upon the occurrence of any of the following (each a "Mandatory Prepayment
Event") at the following times and in the following amounts (such applicable
amounts being referred to as "Designated Proceeds"):

                  (i)      Concurrently with the receipt by any Loan Party of
                           any Net Cash Proceeds from any Asset Disposition, in
                           an amount equal to 100% of such Net Cash Proceeds.

                  (ii)     Concurrently with the receipt by any Loan Party of
                           any Net Cash Proceeds from any [private equity]
                           issuance of Capital Securities of any Loan Party
                           (excluding (x) any issuance of Capital Securities
                           pursuant to any employee or director option program,
                           benefit plan or compensation program and (y)

                                       27



                           any issuance by a Subsidiary to the Company or
                           another Subsidiary), in an amount equal to 100% of
                           such Net Cash Proceeds (except to the extent such
                           proceeds are intended to be, and in fact are,
                           reinvested within 180 days from such date of
                           issuance).

                  (iii)    Concurrently with the receipt by any Loan Party of
                           any Net Cash Proceeds from any issuance of any Debt
                           of any Loan Party (excluding Debt permitted by
                           Section 11.1 hereof), in an amount equal to 100% of
                           such Net Cash Proceeds to the extent not used for
                           acquisitions by a Loan Party within one hundred
                           eighty (180) days thereafter.

         (b)      If on any day the Revolving Outstandings exceeds the Borrowing
Base, the Company shall immediately prepay Revolving Loans and/or Cash
Collateralize the outstanding Letters of Credit, or do a combination of the
foregoing, in an amount sufficient to eliminate such excess.

         (c)      If on any day on which the Revolving Commitment is reduced
pursuant to Section 6.1.2 the Revolving Outstandings exceeds the Revolving
Commitment, the Company shall immediately prepay Revolving Loans or Cash
Collateralize the outstanding Letters of Credit, or do a combination of the
foregoing, in an amount sufficient to eliminate such excess.

         6.3      Manner of Prepayments.

         6.3.1    All Prepayments. Each voluntary partial prepayment shall be in
a principal amount of Five Hundred Thousand and No/100 Dollars ($500,000.00) or
a higher integral multiple of One Hundred Thousand and No/100 Dollars
($100,000.00) for Base Rate Loans and One Million and No/100 Dollars
($1,000,000.00) or a higher integral multiple of One Hundred Thousand and No/100
Dollars ($100,000.00) for LIBOR Loans. Any partial prepayment of a Group of
LIBOR Loans shall be subject to the proviso of Section 2.2.3(a). Any prepayment
of a LIBOR Loan on a day other than the last day of an Interest Period therefor
shall include interest on the principal amount being repaid and shall be subject
to Section 8.4. Except as otherwise provided by this Agreement, all principal
payments in respect of the Loans shall be applied first, to repay outstanding
Base Rate Loans and then to repay outstanding LIBOR Rate Loans in direct order
of Interest Period maturities.

         6.4      Repayments.

         6.4.1    Revolving Loans. The Revolving Loans of each Lender shall be
paid in full and the Revolving Commitment shall terminate on the Termination
Date.

         SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.

         7.1      Making of Payments. All payments of principal or interest on
the Notes, and of all fees, shall be made by the Company to the Administrative
Agent in immediately available funds at the office specified by the
Administrative Agent not later than 1:00 p.m., Chicago time,

                                       28



on the date due; and funds received after that hour shall be deemed to have been
received by the Administrative Agent on the following Business Day. The
Administrative Agent shall promptly remit to each Lender its share of all such
payments received in collected funds by the Administrative Agent for the account
of such Lender. All payments under Section 8.1 shall be made by the Company
directly to the Lender entitled thereto without setoff, counterclaim or other
defense.

         7.2      Application of Certain Payments. So long as no Default or
Event of Default has occurred and is continuing, (a) payments matching specific
scheduled payments then due shall be applied to those scheduled payments and (b)
voluntary and mandatory prepayments shall be applied as set forth in Sections
6.2 and 6.3. After the occurrence and during the continuance of an Default or
Event of Default, all amounts collected or received by the any Agent or any
Lender as proceeds from the sale of, or other realization upon, all or any part
of the collateral shall be applied as the Agents shall determine in their
discretion or, in the absence of a specific determination by the Agents, as set
forth in the Guaranty and Collateral Agreement. Concurrently with each
remittance to any Lender of its share of any such payment, the Administrative
Agent shall advise such Lender as to the application of such payment.

         7.3      Due Date Extension. If any payment of principal or interest
with respect to any of the Loans, or of any fees, falls due on a day which is
not a Business Day, then such due date shall be extended to the immediately
following Business Day (unless, in the case of a LIBOR Loan, such immediately
following Business Day is the first Business Day of a calendar month, in which
case such due date shall be the immediately preceding Business Day) and, in the
case of principal, additional interest shall accrue and be payable for the
period of any such extension.

         7.4      Setoff. The Company agrees that the Collateral Agent,
Administrative Agent and each Lender have all rights of set-off and bankers'
lien provided by applicable law, and in addition thereto, the Company agrees
that at any time any Event of Default exists, the Administrative Agent and each
Lender may apply to the payment of any Obligations of the Company hereunder,
whether or not then due, any and all balances, credits, deposits, accounts or
moneys of the Company then or thereafter with the Administrative Agent or such
Lender.

         7.5      Proration of Payments. If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of offset or
otherwise), on account of (a) principal of or interest on any Loan, but
excluding (i) any payment pursuant to Section 5, Section 8.7 or 15.6, (ii)
payments of interest on any Affected Loan or (iii) payments to LaSalle with
respect to the letter of credit supporting an existing IRB or to GE CAPITAL with
respect to the Existing Term Loan; or (iv) payments to GE Capital with respect
to the lease of the property in Brownsville, Texas or the "aircraft lease"
pertaining to the private aircraft used by the Company, or (b) its participation
in any Letter of Credit in excess of its applicable Pro Rata Share of payments
and other recoveries obtained by all Lenders on account of principal of and
interest on the Loans (or such participation) then held by them, then such
Lender shall purchase from the other Lenders such participations in the Loans
(or sub-participations in Letters of Credit) held by them as shall be necessary
to cause such purchasing Lender to share the excess payment or other

                                       29



recovery ratably with each of them; provided that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery.

         7.6      Taxes.

         (a)      All payments made by the Company hereunder or under any Loan
Documents shall be made without setoff, counterclaim, or other defense. To the
extent permitted by applicable law, all payments hereunder or under the Loan
Documents (including any payment of principal, interest, or fees) to, or for the
benefit, of any person shall be made by the Company free and clear of and
without deduction or withholding for, or account of, any Taxes now or
hereinafter imposed by any taxing authority.

         (b)      If the Company makes any payment hereunder or under any Loan
Document in respect of which it is required by applicable law to deduct or
withhold any Taxes, the Company shall increase the payment hereunder or under
any such Loan Document such that after the reduction for the amount of Taxes
withheld (and any taxes withheld or imposed with respect to the additional
payments required under this Section 7.6(b)), the amount paid to the Lenders or
the Administrative Agent equals the amount that was payable hereunder or under
any such Loan Document without regard to this Section 7.6(b). To the extent the
Company withholds any Taxes on payments hereunder or under any Loan Document,
the Company shall pay the full amount deducted to the relevant taxing authority
within the time allowed for payment under applicable law and shall deliver to
the Administrative Agent within 30 days after it has made payment to such
authority a receipt issued by such authority (or other evidence satisfactory to
the Administrative Agent) evidencing the payment of all amounts so required to
be deducted or withheld from such payment.

         (c)      If any Lender or any Agent is required by law to make any
payments of any Taxes on or in relation to any amounts received or receivable
hereunder or under any other Loan Document, or any Tax is assessed against a
Lender or an Agent with respect to amounts received or receivable hereunder or
under any other Loan Document, the Company will indemnify such person against
(i) such Tax (and any reasonable counsel fees and expenses associated with such
Tax) and (ii) any taxes imposed as a result of the receipt of the payment under
this Section 7.6(c). A certificate prepared in good faith as to the amount of
such payment by such Lender or Agent shall, absent manifest error, be final,
conclusive, and binding on all parties.

         (d)      (i)      To the extent permitted by applicable law, each
Lender that is not a United States person within the meaning of Code section
7701(a)(30) (a "Non-U.S. Participant") shall deliver to the Company and the
Administrative Agent on or prior to the Closing Date (or in the case of a Lender
that is an Assignee, on the date of such assignment to such Lender) two accurate
and complete original signed copies of IRS Form W-8BEN, W-8ECI, or W-8IMY (or
any successor or other applicable form prescribed by the IRS) certifying to such
Lender's entitlement to a complete exemption from, or a reduced rate in, United
States withholding tax on interest payments to be made hereunder or any Loan. If
a Lender that is a Non-U.S. Participant

                                       30



is claiming a complete exemption from withholding on interest pursuant to
Sections 871(h) or 881(c) of the Code, the Lender shall deliver (along with two
accurate and complete original signed copies of IRS Form W-8BEN) a certificate
in form and substance reasonably acceptable to Administrative Agent (any such
certificate, a "Withholding Certificate"). In addition, each Lender that is a
Non-U.S. Participant agrees that from time to time after the Closing Date, (or
in the case of a Lender that is an Assignee, after the date of the assignment to
such Lender), when a lapse in time (or change in circumstances occurs) renders
the prior certificates hereunder obsolete or inaccurate in any material respect,
such Lender shall, to the extent permitted under applicable law, deliver to the
Company and the Administrative Agent two new and accurate and complete original
signed copies of an IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or
other applicable forms prescribed by the IRS), and if applicable, a new
Withholding Certificate, to confirm or establish the entitlement of such Lender
or the Administrative Agent to an exemption from, or reduction in, United States
withholding tax on interest payments to be made hereunder or any Loan. No
Non-U.S. Participant shall become a Lender if such Person fails to deliver a
Withholding Certificate.

         (ii)     Each Lender that is not a Non-U.S. Participant (other than any
such Lender which is taxed as a corporation for U.S. federal income tax
purposes) shall provide two properly completed and duly executed copies of IRS
Form W-9 (or any successor or other applicable form) to the Company and the
Administrative Agent certifying that such Lender is exempt from United States
backup withholding tax. To the extent that a form provided pursuant to this
Section 7.6(d)(ii) is rendered obsolete or inaccurate in any material respects
as result of change in circumstances with respect to the status of a Lender,
such Lender shall, to the extent permitted by applicable law, deliver to the
Company and the Administrative Agent revised forms necessary to confirm or
establish the entitlement to such Lender's or Agent's exemption from United
States backup withholding tax.

         (iii)    The Company shall not be required to pay additional amounts to
a Lender, or indemnify any Lender, under this Section 7.6 to the extent that
such obligations would not have arisen but for the failure of such Lender to
comply with Section 7.6(d).

         (iv)     Each Lender agrees to indemnify the Administrative Agent and
hold the Administrative Agent harmless for the full amount of any and all
present or future Taxes and related liabilities (including penalties, interest,
additions to tax and expenses, and any Taxes imposed by any jurisdiction on
amounts payable to the Administrative Agent under this Section 7.6) which are
imposed on or with respect to principal, interest or fees payable to such Lender
hereunder and which are not paid by the Company pursuant to this Section 7.6,
whether or not such Taxes or related liabilities were correctly or legally
asserted. This indemnification shall be made within 30 days from the date the
Administrative Agent makes written demand therefor.

         SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS.

         8.1      Increased Costs. (a) If, after the date hereof, the adoption
of, or any change in, any applicable law, rule or regulation, or any change in
the interpretation or administration of

                                       31



any applicable law, rule or regulation by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency: (i) shall impose, modify or deem applicable any reserve (including any
reserve imposed by the FRB, but excluding any reserve included in the
determination of the LIBOR Rate pursuant to Section 4), special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by any Lender; or (ii) shall impose on any Lender any other
condition affecting its LIBOR Loans, its Note or its obligation to make LIBOR
Loans; and the result of anything described in clauses (i) and (ii) above is to
increase the cost to (or to impose a cost on) such Lender (or any LIBOR Office
of such Lender) of making or maintaining any LIBOR Loan, or to reduce the amount
of any sum received or receivable by such Lender (or its LIBOR Office) under
this Agreement or under its Note with respect thereto, then upon demand by such
Lender (which demand shall be accompanied by a statement setting forth the basis
for such demand and a calculation of the amount thereof in reasonable detail, a
copy of which shall be furnished to the Administrative Agent), the Company shall
pay directly to such Lender such additional amount as will compensate such
Lender for such increased cost or such reduction, so long as such amounts have
accrued on or after the day which is 180 days prior to the date on which such
Lender first made demand therefor.

         (b)      If any Lender shall reasonably determine that any change in,
or the adoption or phase-in of, any applicable law, rule or regulation regarding
capital adequacy, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or the compliance by any Lender or
any Person controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Lender's or such controlling Person's capital as a
consequence of such Lender's obligations hereunder or under any Letter of Credit
to a level below that which such Lender or such controlling Person could have
achieved but for such change, adoption, phase-in or compliance (taking into
consideration such Lender's or such controlling Person's policies with respect
to capital adequacy) by an amount deemed by such Lender or such controlling
Person to be material, then from time to time, upon demand by such Lender (which
demand shall be accompanied by a statement setting forth the basis for such
demand and a calculation of the amount thereof in reasonable detail, a copy of
which shall be furnished to the Administrative Agent), the Company shall pay to
such Lender such additional amount as will compensate such Lender or such
controlling Person for such reduction so long as such amounts have accrued on or
after the day which is 180 days prior to the date on which such Lender first
made demand therefor. Each Lender agrees that, a promptly as practicable after
it becomes aware of any circumstances referred to above which would result in
any such increased cost, the affected Lender shall, to the extent not
inconsistent with such Lender's internal policies of general application, use
reasonable commercial efforts to minimize costs and expenses incurred by it and
payable to it by Company pursuant to this Section.

                                       32



         8.2      Basis for Determining Interest Rate Inadequate or Unfair. If

         (a)      the Administrative Agent reasonably determines (which
determination shall be binding and conclusive on the Company) that by reason of
circumstances affecting the interbank LIBOR market adequate and reasonable means
do not exist for ascertaining the applicable LIBOR Rate; or

         (b)      the Required Lenders advise the Administrative Agent that the
LIBOR Rate as determined by the Administrative Agent will not adequately and
fairly reflect the cost to such Lenders of maintaining or funding LIBOR Loans
for such Interest Period (taking into account any amount to which such Lenders
may be entitled under Section 8.1) or that the making or funding of LIBOR Loans
has become impracticable as a result of an event occurring after the date of
this Agreement which in the opinion of such Lenders materially affects such
Loans;

then the Administrative Agent shall promptly notify the other parties thereof
and, so long as such circumstances shall continue, (i) no Lender shall be under
any obligation to make or convert any Base Rate Loans into LIBOR Loans and (ii)
on the last day of the current Interest Period for each LIBOR Loan, such Loan
shall, unless then repaid in full, automatically convert to a Base Rate Loan.

         8.3      Changes in Law Rendering LIBOR Loans Unlawful. If any change
in, or the adoption of any new, law or regulation, or any change in the
interpretation of any applicable law or regulation by any governmental or other
regulatory body charged with the administration thereof, should make it (or in
the good faith judgment of any Lender cause a substantial question as to whether
it is) unlawful for any Lender to make, maintain or fund LIBOR Loans, then such
Lender shall promptly notify each of the other parties hereto and, so long as
such circumstances shall continue, (a) such Lender shall have no obligation to
make or convert any Base Rate Loan into a LIBOR Loan (but shall make Base Rate
Loans concurrently with the making of or conversion of Base Rate Loans into
LIBOR Loans by the Lenders which are not so affected, in each case in an amount
equal to the amount of LIBOR Loans which would be made or converted into by such
Lender at such time in the absence of such circumstances) and (b) on the last
day of the current Interest Period for each LIBOR Loan of such Lender (or, in
any event, on such earlier date as may be required by the relevant law,
regulation or interpretation), such LIBOR Loan shall, unless then repaid in
full, automatically convert to a Base Rate Loan. Each Base Rate Loan made by a
Lender which, but for the circumstances described in the foregoing sentence,
would be a LIBOR Loan (an "Affected Loan") shall remain outstanding for the
period corresponding to the Group of LIBOR Loans of which such Affected Loan
would be a part absent such circumstances.

         8.4      Funding Losses. The Company hereby agrees that upon demand by
any Lender (which demand shall be accompanied by a statement setting forth the
basis for the amount being claimed, a copy of which shall be furnished to the
Administrative Agent), the Company will indemnify such Lender against any net
loss or expense which such Lender may sustain or incur (including any net loss
or expense incurred by reason of the liquidation or reemployment of

                                       33



deposits or other funds acquired by such Lender to fund or maintain any LIBOR
Loan), as reasonably determined by such Lender, as a result of (a) any payment,
prepayment or conversion of any LIBOR Loan of such Lender on a date other than
the last day of an Interest Period for such Loan (including any conversion
pursuant to Section 8.3) or (b) any failure of the Company to borrow, convert or
continue any Loan on a date specified therefor in a notice of borrowing,
conversion or continuation pursuant to this Agreement. For this purpose, all
notices to the Administrative Agent pursuant to this Agreement shall be deemed
to be irrevocable.

         8.5      Right of Lenders to Fund through Other Offices. Each Lender
may, if it so elects, fulfill its commitment as to any LIBOR Loan by causing a
foreign branch or Affiliate of such Lender to make such Loan; provided that in
such event for the purposes of this Agreement such Loan shall be deemed to have
been made by such Lender and the obligation of the Company to repay such Loan
shall nevertheless be to such Lender and shall be deemed held by it, to the
extent of such Loan, for the account of such branch or Affiliate.

         8.6      Discretion of Lenders as to Manner of Funding. Notwithstanding
any provision of this Agreement to the contrary, each Lender shall be entitled
to fund and maintain its funding of all or any part of its Loans in any manner
it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if such Lender had
actually funded and maintained each LIBOR Loan during each Interest Period for
such Loan through the purchase of deposits having a maturity corresponding to
such Interest Period and bearing an interest rate equal to the LIBOR Rate for
such Interest Period.

         8.7      Mitigation of Circumstances; Replacement of Lenders. (a) Each
Lender shall promptly notify the Company and the Administrative Agent of any
event of which it has knowledge which will result in, and will use reasonable
commercial efforts available to it (and not, in such Lender's sole judgment,
otherwise disadvantageous to such Lender) to mitigate or avoid, (i) any
obligation by the Company to pay any amount pursuant to Section 7.6 or 8.1 or
(ii) the occurrence of any circumstances described in Section 8.2 or 8.3 (and,
if any Lender has given notice of any such event described in clause (i) or (ii)
above and thereafter such event ceases to exist, such Lender shall promptly so
notify the Company and the Administrative Agent). Without limiting the
foregoing, each Lender will designate a different funding office if such
designation will avoid (or reduce the cost to the Company of) any event
described in clause (i) or (ii) above and such designation will not, in such
Lender's sole judgment, be otherwise disadvantageous to such Lender.

         (b)      If the Company becomes obligated to pay additional amounts to
any Lender pursuant to Section 7.6 or 8.1, or any Lender gives notice of the
occurrence of any circumstances described in Section 8.2 or 8.3, the Company may
designate another bank which is acceptable to the Agents and the Issuing Lender
in their reasonable discretion (such other bank being called a "Replacement
Lender") to purchase the Loans of such Lender and such Lender's rights
hereunder, without recourse to or warranty by, or expense to, such Lender, for a
purchase price equal to the outstanding principal amount of the Loans payable to
such Lender plus any accrued but unpaid interest on such Loans and all accrued
but unpaid fees owed to such Lender and any

                                       34



other amounts payable to such Lender under this Agreement, and to assume all the
obligations of such Lender hereunder, and, upon such purchase and assumption
(pursuant to an Assignment Agreement), such Lender shall no longer be a party
hereto or have any rights hereunder (other than rights with respect to
indemnities and similar rights applicable to such Lender prior to the date of
such purchase and assumption) and shall be relieved from all obligations to the
Company hereunder, and the Replacement Lender shall succeed to the rights and
obligations of such Lender hereunder.

         8.8      Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Lender pursuant to Section 8.1, 8.2, 8.3 or
8.4 shall be conclusive absent demonstrable error. Lenders may use reasonable
averaging and attribution methods in determining compensation under Sections 8.1
and 8.4, and the provisions of such Sections shall survive repayment of the
Obligations, cancellation of any Notes, expiration or termination of the Letters
of Credit and termination of this Agreement.

         SECTION 9 REPRESENTATIONS AND WARRANTIES.

         To induce the Agents and the Lenders to enter into this Agreement and
to induce the Lenders to make Loans and issue and participate in Letters of
Credit hereunder, the Company represents and warrants to the Agents and the
Lenders that:

         9.1      Organization. Each Loan Party is validly existing and in good
standing under the laws of its jurisdiction of organization; and each Loan Party
is duly qualified to do business in each jurisdiction where, because of the
nature of its activities or properties, such qualification is required, except
for such jurisdictions where the failure to so qualify would not have a Material
Adverse Effect.

         9.2      Authorization; No Conflict. Each Loan Party is duly authorized
to execute and deliver each Loan Document to which it is a party, the Company is
duly authorized to borrow monies hereunder and each Loan Party is duly
authorized to perform its Obligations under each Loan Document to which it is a
party. The execution, delivery and performance by each Loan Party of each Loan
Document to which it is a party, and the borrowings by the Company hereunder, do
not and will not (a) require any consent or approval of any governmental agency
or authority (other than any consent or approval which has been obtained and is
in full force and effect), (b) conflict with (i) any provision of law, (ii) the
charter, by-laws or other organizational documents of any Loan Party or (iii)
any agreement, indenture, instrument or other document, or any judgment, order
or decree, which is binding upon any Loan Party or any of their respective
properties or (c) require, or result in, the creation or imposition of any Lien
on any asset of any Loan Party (other than Liens in favor of the Administrative
Agent created pursuant to the Collateral Documents).

         9.3      Validity and Binding Nature. Each of this Agreement and each
other Loan Document to which any Loan Party is a party is the legal, valid and
binding obligation of such Person, enforceable against such Person in accordance
with its terms, subject to bankruptcy,

                                       35



insolvency and similar laws affecting the enforceability of creditors' rights
generally and to general principles of equity.

         9.4      Financial Condition. The audited consolidated financial
statements of the Company and its Subsidiaries as at Company's Fiscal Year 2003,
and the unaudited consolidated condensed financial statements of the Company and
the Subsidiaries as at March 31, 2004, copies of each of which have been
delivered to each Lender, were prepared in accordance with GAAP (subject, in the
case of such unaudited statements, to the absence of footnotes and to normal
year-end adjustments) and present fairly the consolidated financial condition of
the Company and its Subsidiaries as at such date(s) and the results of their
operations for the periods then ended.

         9.5      No Material Adverse Change. Since Company's Fiscal Year 2003,
there has been no material adverse change in the financial condition,
operations, assets, business, properties or prospects of the Loan Parties taken
as a whole.

         9.6      Litigation and Contingent Liabilities. No litigation
(including derivative actions), arbitration proceeding or governmental
investigation or proceeding is pending or, to the Company's knowledge,
threatened against any Loan Party which might reasonably be expected to have a
Material Adverse Effect, except as set forth in Schedule 9.6. Other than any
liability incident to such litigation or proceedings, no Loan Party has any
material contingent liabilities not listed on Schedule 9.6 or permitted by
Section 11.1.

         9.7      Ownership of Properties; Liens. Each Loan Party owns good and,
in the case of real property, marketable title to all of its properties and
assets, real and personal, tangible and intangible, of any nature whatsoever
(including patents, trademarks, trade names, service marks and copyrights), free
and clear of all Liens, charges and claims (including infringement claims with
respect to patents, trademarks, service marks, copyrights and the like) except
as permitted by Section 11.2.

         9.8      Equity Ownership; Subsidiaries. All issued and outstanding
Capital Securities of each Domestic Subsidiary are duly authorized and validly
issued, fully paid, non-assessable, and free and clear of all Liens other than
those in favor of the Administrative Agent, and such securities were issued in
compliance with all applicable state and federal laws concerning the issuance of
securities. Schedule 9.8 sets forth the authorized Capital Securities of each
Domestic Subsidiary as of the Closing Date and all of the issued and outstanding
Capital Securities of each Domestic Subsidiary is, directly or indirectly, owned
by the Company. As of the Closing Date, except as set forth on Schedule 9.8,
there are no pre-emptive or other outstanding rights, options, warrants,
conversion rights or other similar agreements or understandings for the purchase
or acquisition of any Capital Securities of any Domestic Subsidiary.

         9.9      Pension Plans. (a) Each Pension Plan complies in all material
respects with all applicable requirements of law and regulations. No
contribution failure under Section 412 of the Code, Section 302 of ERISA or the
terms of any Pension Plan has occurred with respect to any

                                       36



Pension Plan, sufficient to give rise to a Lien under Section 302(f) of ERISA,
or otherwise to have a Material Adverse Effect. There are no pending or, to the
knowledge of Company, threatened, claims, actions, investigations or lawsuits
against any Pension Plan, any fiduciary of any Pension Plan, or Company or other
any member of the Controlled Group with respect to a Pension Plan which could
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any other member of the Controlled Group has engaged in any prohibited
transaction (as defined in Section 4975 of the Code or Section 406 of ERISA) in
connection with any Pension Plan which would subject that Person to any material
liability. Within the past five years, neither the Company nor any other member
of the Controlled Group has engaged in a transaction which resulted in a Pension
Plan with an Unfunded Liability being transferred out of the Controlled Group,
which could reasonably be expected to have a Material Adverse Effect. No
Termination Event has occurred or is reasonably expected to occur with respect
to any Pension Plan, which could reasonably be expected to have a Material
Adverse Effect.

         (b)      All contributions (if any) have been made to any Multiemployer
Pension Plan that are required to be made by the Company or any other member of
the Controlled Group under the terms of the plan or of any collective bargaining
agreement or by applicable law; neither the Company nor any other member of the
Controlled Group has withdrawn or partially withdrawn from any Multiemployer
Pension Plan, incurred any withdrawal liability with respect to any such plan or
received notice of any claim or demand for withdrawal liability or partial
withdrawal liability from any such plan, and no condition has occurred which, if
continued, could result in a withdrawal or partial withdrawal from any such plan
[which would have a Material Adverse Effect]; and neither the Company nor any
other member of the Controlled Group has received any notice that any
Multiemployer Pension Plan is in reorganization, that increased contributions
may be required to avoid a reduction in plan benefits or the imposition of any
excise tax, that any such plan is or has been funded at a rate less than that
required under Section 412 of the Code, that any such plan is or may be
terminated [which could reasonably be expected to have a Material Adverse
Effect], or that any such plan is or may become insolvent.

         9.10     Investment Company Act. No Loan Party is an "investment
company" or a company "controlled" by an "investment company" or a "subsidiary"
of an "investment company," within the meaning of the Investment Company Act of
1940.

         9.11     Public Utility Holding Company Act. No Loan Party is a
"holding company", or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935.

         9.12     Regulation U. The Company is not engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.

         9.13     Taxes. Each Loan Party has timely filed all tax returns and
reports required by law to have been filed by it and has paid all taxes and
governmental charges due and payable

                                       37



with respect to such return, except any such taxes or charges which are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books. The Loan Parties have made adequate reserves on their books and records
in accordance with GAAP for all taxes that have accrued but which are not yet
due and payable. No Loan Party has participated in any transaction that relates
to a year of the taxpayer (which is still open under the applicable statute of
limitations) which is a "reportable transaction" within the meaning of Treasury
Regulation Section 1.6011-4(b)(2) (irrespective of the date when the transaction
was entered into).

         9.14     Solvency, etc. On the Closing Date, and immediately prior to
and after giving effect to the issuance of each Letter of Credit and each
borrowing hereunder and the use of the proceeds thereof, with respect to each
Loan Party other than as set forth in Schedule 9.14 hereto, individually, (a)
the fair value of its assets is greater than the amount of its liabilities
(including disputed, contingent and unliquidated liabilities) as such value is
established and liabilities evaluated in accordance with GAAP, (b) the present
fair saleable value of its assets is not less than the amount that will be
required to pay the probable liability on its debts as they become absolute and
matured, (c) it is able to realize upon its assets and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
they mature in the normal course of business, (d) it does not intend to, and
does not believe that it will, incur debts or liabilities beyond its ability to
pay as such debts and liabilities mature and (e) it is not engaged in business
or a transaction, and is not about to engage in business or a transaction, for
which its property would constitute unreasonably small capital.

         9.15     Environmental Matters. The on-going operations of each Loan
Party comply in all respects with all Environmental Laws, except such
non-compliance which could not (if enforced in accordance with applicable law)
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect. Each Loan Party has obtained, and maintained in good
standing, all licenses, permits, authorizations, registrations and other
approvals required under any Environmental Law and required for their respective
ordinary course operations, and for their reasonably anticipated future
operations, and each Loan Party is in compliance with all terms and conditions
thereof, except where the failure to do so could not reasonably be expected to
result in material liability to any Loan Party and could not reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect. No Loan Party or any of its properties or operations is subject
to, or reasonably anticipates the issuance of, any written order from or
agreement with any Federal, state or local governmental authority, nor subject
to any judicial or docketed administrative or other proceeding, respecting any
Environmental Law, Environmental Claim or Hazardous Substance. There are no
Hazardous Substances or other conditions or circumstances existing with respect
to any property, arising from operations prior to the Closing Date, or relating
to any waste disposal, of any Loan Party that would reasonably be expected to
result, either individually or in the aggregate, in a Material Adverse Effect.
No Loan Party has any underground storage tanks that are not properly registered
or permitted under applicable Environmental Laws or, to the best of Company's
knowledge, have released, leaked, disposed of or otherwise discharged Hazardous
Substances.

                                       38



         9.16     Insurance. Set forth on Schedule 9.16 is a complete and
materially accurate summary of the property and casualty insurance program of
the Loan Parties as of the Closing Date (including the names of all insurers,
policy numbers, expiration dates, amounts and types of coverage, annual
premiums, exclusions, deductibles, self-insured retention, and a description in
reasonable detail of any self-insurance program, retrospective rating plan,
fronting arrangement or other risk assumption arrangement involving any Loan
Party). Each Loan Party and its properties are insured with financially sound
and reputable insurance companies which are not Affiliates of the Loan Parties,
in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where such Loan Parties operate.

         9.17     Real Property. Set forth on Schedule 9.17 is a complete and
materially accurate list, as of the Closing Date, of the address of all real
property owned or leased by any Loan Party, together with, in the case of leased
property, the name and mailing address of the lessor of such property.

         9.18     Information. All information heretofore or contemporaneously
herewith furnished in writing by any Loan Party to the Administrative Agent or
any Lender for purposes of or in connection with this Agreement and the
transactions contemplated hereby is, and all written information hereafter
furnished by or on behalf of any Loan Party to the Administrative Agent or any
Lender pursuant hereto or in connection herewith will be, true and accurate in
every material respect on the date as of which such information is dated or
certified, and none of such information is or will be incomplete by omitting to
state any material fact necessary to make such information not misleading in
light of the circumstances under which made (it being recognized by the
Administrative Agent and the Lenders that any projections and forecasts provided
by the Company are based on good faith estimates and assumptions believed by the
Company to be reasonable as of the date of the applicable projections or
assumptions and that actual results during the period or periods covered by any
such projections and forecasts may differ from projected or forecasted results).
The Lenders acknowledged that these projections and forecasts are based on the
Company's expectations and are subject to a number of risks and uncertainties,
certain of which are beyond the Company's control. Actual results could differ
materially from these projections and forecasts as a result of certain factors,
including, (i) changes in the Company's end-user markets as a result of world
economics or regulatory influences, (ii) fluctuations in currency translations,
(iii) changes in the competitors, (iv) availability and price of raw materials,
(v) levels of operating efficiencies, (vi) actions of domestic and foreign
governments, (vii) results of investments, and (viii) ability to secure
financing at reasonable terms. Any changes in such factors could lead to
significantly different results. The Company undertakes no obligation to update
or revise any such projections or forecasts, whether as a result of new
information, future events or otherwise. In light of these risks and
uncertainties, there can be no assurance that the projections and forecasts
contained in this Agreement will in fact transpire.

         9.19     Intellectual Property. Each Loan Party owns and possesses or
has a license or other right to use all patents, patent rights, trademarks,
trademark rights, trade names, trade name

                                       39



rights, service marks, service mark rights and copyrights as are necessary for
the conduct of the businesses of the Loan Parties, without any infringement upon
rights of others which could reasonably be expected to have a Material Adverse
Effect.

         9.20     Burdensome Obligations. No Loan Party is a party to any
agreement or contract or subject to any restriction contained in its
organizational documents which could reasonably be expected to have a Material
Adverse Effect.

         9.21     Labor Matters. Except as set forth on Schedule 9.21, no Loan
Party is subject to any labor or collective bargaining agreement. There are no
existing or threatened strikes, lockouts or other labor disputes involving any
Loan Party that singly or in the aggregate could reasonably be expected to have
a Material Adverse Effect. Hours worked by and payment made to employees of the
Loan Parties are not in violation of the Fair Labor Standards Act or any other
applicable law, rule or regulation dealing with such matters which could
reasonably be expected to have a Material Adverse Effect.

         9.22     No Default. No Event of Default or Default exists or would
result from the incurrence by any Loan Party of any Debt hereunder or under any
other Loan Document.

         9.23     Subordinated Debt. The subordination provisions of the
Subordinated Debt are enforceable against the holders of the Subordinated Debt
by the Administrative Agent and the Lenders. All Obligations constitute
"Designated Senior Indebtedness" as defined in that certain Indenture, dated as
of March 21, 1997, with respect to the Subordinated Notes and are entitled to
the benefits of the subordination provisions contained in the Subordinated
Notes. The Company acknowledges that the Administrative Agent and each Lender
are entering into this Agreement and are extending the Commitments and making
the Loans in reliance upon the subordination provisions of the Subordinated
Notes and this Section 9.23.

         9.24     Subsidiary Assets. No Subsidiary, other than the Foreign
Subsidiaries and Domestic Subsidiaries, owns assets other than as disclosed on
Schedule 9.24, which Schedule describes both the type and approximate value of
such assets.

         SECTION 10 AFFIRMATIVE COVENANTS.

         Until the expiration or termination of the Commitments and thereafter
until all Obligations hereunder and under the other Loan Documents are paid in
full and all Letters of Credit have been terminated, the Company agrees that,
unless at any time the Required Lenders shall otherwise expressly consent in
writing, it will:

         10.1     Reports, Certificates and Other Information. Except as such
information is available to the public by disclosures required by the United
States Securities and Exchange Commission, furnish to the Administrative Agent
and each Lender:

         10.1.1   Annual Report. Promptly when available and in any event within
90 days after the close of each Fiscal Year: (a) a copy of the annual audit
report of the Company and its

                                       40



Subsidiaries for such Fiscal Year, including therein consolidated balance sheets
and statements of earnings and cash flows of the Company and its Subsidiaries as
at the end of such Fiscal Year, certified without adverse reference to going
concern value and without qualification by independent auditors of recognized
standing selected by the Company and reasonably acceptable to the Administrative
Agent, together with (i) to the extent the Company's independent auditors will
provide it, a written statement from such accountants to the effect that in
making the examination necessary for the signing of such annual audit report by
such accountants, nothing came to their attention that caused them to believe
that the Company was not in compliance with any provision of Section 11.1, 11.3,
11.4 or 11.14 of this Agreement insofar as such provision relates to accounting
matters or, if something has come to their attention that caused them to believe
that the Company was not in compliance with any such provision, describing such
non-compliance in reasonable detail.

         10.1.2   Interim Reports. (a) Promptly when available and in any event
within 45 days after the end of each Fiscal Quarter, consolidated and
consolidating balance sheets of the Company and its Subsidiaries as of the end
of such Fiscal Quarter, together with consolidated and consolidating statements
of earnings and cash flows for such Fiscal Quarter and for the period beginning
with the first day of such Fiscal Year and ending on the last day of such Fiscal
Quarter, certified by a Senior Officer of the Company; and if either Agent
requests, (b) promptly when available and in any event within 30 days after the
end of each month, consolidated and consolidating balance sheets of the Company
and its Subsidiaries as of the end of such month, together with consolidated and
consolidating statements of earnings and a consolidated statement of cash flows
for such month and for the period beginning with the first day of such Fiscal
Year and ending on the last day of such month, certified by a Senior Officer of
the Company.

         10.1.3   Compliance Certificates. Contemporaneously with the furnishing
of a copy of each annual audit report pursuant to Section 10.1.1 and each set of
quarterly statements pursuant to Section 10.1.2, a duly completed compliance
certificate in the form of Exhibit B, with appropriate insertions, dated the
date of such annual report or such quarterly statements and signed by a Senior
Officer of the Company, containing a computation of each of the financial ratios
and restrictions set forth in Section 11.14 and to the effect that such officer
has not become aware of any Event of Default or Default that has occurred and is
continuing or, if there is any such event, describing it and the steps, if any,
being taken to cure it.

         10.1.4   Notice of Default, Litigation and ERISA Matters. Promptly upon
becoming aware of any of the following, written notice describing the same and
the steps being taken by the Company or the Subsidiary affected thereby with
respect thereto:

                  (a)      the occurrence of an Event of Default or an Default;

                  (b)      any litigation, arbitration or governmental
         investigation or proceeding not previously disclosed by the Company to
         the Lenders which has been instituted or, to the knowledge of the
         Company, is threatened against any Loan Party or to which any of the

                                       41



         properties of any thereof is subject which might reasonably be expected
         to have a Material Adverse Effect;

                  (c)      the institution of any steps by any member of the
         Controlled Group or any other Person to terminate any Pension Plan, or
         the failure of any member of the Controlled Group to make a required
         contribution to any Pension Plan (if such failure is sufficient to give
         rise to a Lien under Section 302(f) of ERISA) or to any Multiemployer
         Pension Plan, or the taking of any action with respect to a Pension
         Plan which could result in the requirement that the Company furnish a
         bond or other security to the PBGC or such Pension Plan, or the
         occurrence of any event with respect to any Pension Plan or
         Multiemployer Pension Plan which could result in the incurrence by any
         member of the Controlled Group of any material liability, fine or
         penalty (including any claim or demand for withdrawal liability or
         partial withdrawal from any Multiemployer Pension Plan), or any
         material increase in the contingent liability of the Company with
         respect to any post-retirement welfare benefit plan or other employee
         benefit plan of the Company or another member of the Controlled Group,
         or any notice that any Multiemployer Pension Plan is in reorganization,
         that increased contributions may be required to avoid a reduction in
         plan benefits or the imposition of an excise tax, that any such plan is
         or has been funded at a rate less than that required under Section 412
         of the Code, that any such plan is or may be terminated, or that any
         such plan is or may become insolvent;

                  (d)      any cancellation or material change in any insurance
         maintained by any Loan Party; or

                  (e)      any other event (including (i) any violation of any
         Environmental Law or the assertion of any Environmental Claim or (ii)
         the enactment or effectiveness of any law, rule or regulation) which
         might reasonably be expected to have a Material Adverse Effect.

         10.1.5   Borrowing Base Certificates. Within thirty (30) days of the
end of each Fiscal Quarter, a Borrowing Base Certificate dated as of the end of
such Fiscal Quarter and executed by a Senior Officer of the Company on behalf of
the Company (provided that (a) the Company shall deliver a Borrowing Base
Certificate within twenty-five (25) days after the end of each calendar month if
during such month the average daily balance of the Revolving Outstandings
exceeded $75,000,000; and (b) at any time an Event of Default exists, the
Administrative Agent may require the Company to deliver Borrowing Base
Certificates more frequently than quarterly).

         10.1.6   Management Reports. Promptly upon receipt thereof, if
requested by either Agent and if not otherwise prohibited, copies of all
detailed financial and management reports submitted to the Company by
independent auditors in connection with each annual or interim audit made by
such auditors of the books of the Company.

         10.1.7   Projections. As soon as practicable, and in any event not
later than 30 days after the commencement of each Fiscal Year, financial
projections for the Company and its

                                       42



Subsidiaries for such Fiscal Year (including annual operating and cash flow
budgets) prepared in a manner consistent with the projections delivered by the
Company to the Lenders prior to the Closing Date or otherwise in a manner
reasonably satisfactory to the Administrative Agent, and such projections shall
have been prepared by the Company in good faith.

         10.1.8   Subordinated Debt Notices. Promptly following receipt, copies
of any notices (including notices of default or acceleration) received from any
holder or trustee of, under or with respect to any Subordinated Debt.

         10.1.9   Other Information. Promptly from time to time, such other
information concerning the Loan Parties as any Lender or the Administrative
Agent may reasonably request.

         10.2     Books, Records and Inspections. Keep, and cause each other
Loan Party to keep, its books and records in accordance with sound business
practices sufficient to allow the preparation of financial statements in
accordance with GAAP; permit, and cause each other Loan Party to permit, any
Lender or the Administrative Agent or any representative thereof to inspect the
properties and operations of the Loan Parties; and permit, and cause each other
Loan Party to permit, at any reasonable time and with reasonable notice (or at
any time without notice if an Event of Default exists), any Lender or the
Administrative Agent or any representative thereof to visit any or all of its
offices, to discuss its financial matters with its officers and its independent
auditors (and after and as long as an Event of Default continues the Company
hereby authorizes such independent auditors to discuss such financial matters
with any Lender or the Administrative Agent or any representative thereof), and
to examine (and, at the expense of the Loan Parties, photocopy extracts from)
any of its books or other records; and permit, and cause each other Loan Party
to permit, the Administrative Agent and its representatives to inspect the
Inventory and other tangible assets of the Loan Parties, to perform appraisals
of the equipment of the Loan Parties, and to inspect, audit, check and make
copies of and extracts from the books, records, computer data, computer
programs, journals, orders, receipts, correspondence and other data relating to
Inventory, Accounts and any other collateral, all at the expense of the
Administrative Agent (except as set out in this Agreement). If an Event of
Default or Default exists, all such inspections or audits by the Administrative
Agent shall be at the Company's expense.

         10.3     Maintenance of Property; Insurance. (a) Keep, and cause each
other Loan Party to keep, all property useful and necessary in the business of
the Loan Parties in normal working order and condition, ordinary wear and tear
excepted.


         (b)      Maintain, and cause each other Loan Party to maintain, with
responsible insurance companies acceptable to the Agents, such insurance
coverage as may be required by any law or governmental regulation or court
decree or order applicable to it and such other insurance, to such extent and
against such hazards and liabilities, as is customarily maintained by companies
similarly situated, but which shall insure against all risks and liabilities of
the type identified on Schedule 9.16 and shall have insured amounts no less
than, and deductibles no

                                       43



higher than, those set forth on such schedule; and, upon request of the
Administrative Agent or any Lender, furnish to the Administrative Agent or such
Lender annually or upon any renewal of any policy a certificate setting forth in
reasonable detail the nature and extent of all insurance maintained by the Loan
Parties and delineating thereon the special provisions enumerated herein. The
Company shall cause each issuer of an insurance policy to provide the
Administrative Agent, for the benefit of any Lender, with an endorsement (i)
showing the Administrative Agent as additional insured and loss payee with
respect to each policy of property insurance and naming the Administrative Agent
and each Lender as an additional insured with respect to each policy of
liability insurance, (ii) providing that 30 days' notice will be given to the
Administrative Agent prior to any cancellation of, material reduction or change
in coverage provided by or other material modification to such policy, (iii)
providing breach of warranty coverage with respect to each policy of property
insurance, and (iv) providing a waiver of subrogation in favor of the
Administrative Agent and each Lender. The Company shall execute and deliver to
the Administrative Agent a collateral assignment, in form and substance
satisfactory to the Administrative Agent, of each business interruption
insurance policy maintained by the Company.

                  (c)      UNLESS THE COMPANY PROVIDES THE ADMINISTRATIVE AGENT
WITH EVIDENCE OF THE INSURANCE COVERAGE CAPITAL REQUIRED BY THIS AGREEMENT, THE
ADMINISTRATIVE AGENT MAY PURCHASE INSURANCE AT THE COMPANY'S EXPENSE TO PROTECT
THE ADMINISTRATIVE AGENT'S AND THE LENDERS' INTERESTS IN THE COLLATERAL. THIS
INSURANCE MAY, BUT NEED NOT, PROTECT ANY LOAN PARTY'S INTERESTS. THE COVERAGE
THAT THE ADMINISTRATIVE AGENT PURCHASES MAY NOT PAY ANY CLAIM THAT IS MADE
AGAINST ANY LOAN PARTY IN CONNECTION WITH THE COLLATERAL. THE COMPANY MAY LATER
CANCEL ANY INSURANCE PURCHASED BY THE ADMINISTRATIVE AGENT, BUT ONLY AFTER
PROVIDING THE ADMINISTRATIVE AGENT WITH EVIDENCE THAT THE COMPANY HAS OBTAINED
INSURANCE AS REQUIRED BY THIS AGREEMENT. IF THE ADMINISTRATIVE AGENT PURCHASES
INSURANCE FOR THE COLLATERAL, THE COMPANY WILL BE RESPONSIBLE FOR THE COSTS OF
THAT INSURANCE, INCLUDING INTEREST AND ANY OTHER CHARGES THAT MAY BE IMPOSED
WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE
CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE
ADDED TO THE PRINCIPAL AMOUNT OF THE LOANS OWING HEREUNDER. THE COSTS OF THE
INSURANCE MAY BE MORE THAN THE COST OF THE INSURANCE THE LOAN PARTIES MAY BE
ABLE TO OBTAIN ON THEIR OWN.

         10.4     Compliance with Laws; Payment of Taxes and Liabilities. (a)
Comply, and cause each other Loan Party to comply, in all material respects with
all applicable laws, rules, regulations, decrees, orders, judgments, licenses
and permits, except where failure to comply could not reasonably be expected to
have a Material Adverse Effect; (b) without limiting clause (a) above, ensure,
and cause each other Loan Party to ensure, that no person who owns a

                                       44



controlling interest in or otherwise controls a Loan Party is or shall be (i)
listed on the Specially Designated Nationals and Blocked Person List maintained
by the Office of Foreign Assets Control ("OFAC"), Department of the Treasury,
and/or any other similar lists maintained by OFAC pursuant to any authorizing
statute, Executive Order or regulation or (ii) a person designated under Section
1(b), (c) or (d) of Executive Order No. 13224 (September 23, 2001), any related
enabling legislation or any other similar Executive Orders, (c) without limiting
clause (a) above, comply, and cause each other Loan Party to comply, with all
applicable Bank Secrecy Act ("BSA") and anti-money laundering laws and
regulations and (d) pay, and cause each other Loan Party to pay, prior to
delinquency, all taxes and other governmental charges against it or any
collateral, as well as claims of any kind which, if unpaid, could become a Lien
on any of its property; provided that the foregoing shall not require any Loan
Party to pay any such tax or charge so long as it shall contest the validity
thereof in good faith by appropriate proceedings and shall set aside on its
books adequate reserves with respect thereto in accordance with GAAP and, in the
case of a claim which could become a Lien on any collateral, such contest
proceedings shall stay the foreclosure of such Lien or the sale of any portion
of the collateral to satisfy such claim.

         10.5     Maintenance of Existence, etc. Maintain and preserve, and
(subject to Section 11.5) cause each other Loan Party to maintain and preserve,
(a) its existence and good standing in the jurisdiction of its organization and
(b) its qualification to do business and good standing in each jurisdiction
where the nature of its business makes such qualification necessary (other than
such jurisdictions in which the failure to be qualified or in good standing
could not reasonably be expected to have a Material Adverse Effect).

         10.6     Use of Proceeds. Use the proceeds of the Loans, and the
Letters of Credit, solely to pay in full the outstanding principal balance of
the Existing Term Loan, to retire the Subordinated Notes, to terminate the
revolving credit loan from LaSalle to facilitate the Company's issuance of the
Senior Convertible Notes, for working capital purposes, for Capital Expenditures
and for other general business purposes; and not use or permit any proceeds of
any Loan to be used, either directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of "purchasing or carrying" any Margin Stock.

         10.7     Employee Benefit Plans.

         (a)      Unless and to the extent any Pension Plan is terminated,
maintain, and cause each other member of the Controlled Group to maintain, each
Pension Plan in substantial compliance with all applicable requirements of law
and regulations.

         (b)      Make, and cause each other member of the Controlled Group to
make, on a timely basis, all required contributions to any Multiemployer Pension
Plan.

         (c)      Without the Agents' prior consent, not to be unreasonably
withheld, not, and not permit any other member of the Controlled Group to (i)
seek a waiver of the minimum funding standards of ERISA, (ii) terminate or
withdraw from any Pension Plan or Multiemployer Pension

                                       45



Plan or (iii) take any other action with respect to any Pension Plan that would
reasonably be expected to entitle the PBGC to terminate, impose liability in
respect of, or cause a trustee to be appointed to administer, any Pension Plan,
unless the actions or events described in clauses (i), (ii) and (iii)
individually or in the aggregate would not have a Material Adverse Effect.

         (d)      If any Person institutes steps to terminate a Pension Plan,
and as a result of such termination the Company or any member of the Controlled
Group could be required to make a contribution to such Pension Plan or otherwise
incur a liability to such Pension Plan, the Company shall promptly notify the
Agents.

         10.8     Environmental Matters. If any release or threatened release or
other disposal of Hazardous Substances shall occur or shall have occurred on any
real property or any other assets of any Loan Party, the Company shall, or shall
cause the applicable Loan Party to, cause the prompt containment and removal of
such Hazardous Substances and the remediation of such real property or other
assets as necessary to comply with all Environmental Laws and to preserve the
value of such real property or other assets. Without limiting the generality of
the foregoing, the Company shall, and shall cause each other Loan Party to,
comply with any Federal or state judicial or administrative order requiring the
performance at any real property of any Loan Party of activities in response to
the release or threatened release of a Hazardous Substance. To the extent that
the transportation of Hazardous Substances is permitted by this Agreement, the
Company shall, and shall cause its Subsidiaries to, dispose of such Hazardous
Substances, or of any other wastes, only at licensed disposal facilities
operating in compliance with Environmental Laws.

         10.9     Further Assurances. Take, and cause each other Loan Party to
take, such actions as are necessary or as the Administrative Agent or the
Required Lenders may reasonably request from time to time to ensure that the
Obligations of each Loan Party under the Loan Documents are secured by
substantially all of the assets of the Company and each Domestic Subsidiary as
well as all Capital Securities of each Domestic Subsidiary and guaranteed by
each Domestic Subsidiary (including, upon the acquisition or creation thereof,
any Subsidiary acquired or created after the Closing Date), in each case as the
Administrative Agent may determine, including (a) the execution and delivery of
guaranties, security agreements, pledge agreements, mortgages, deeds of trust,
financing statements and other documents, and the filing or recording of any of
the foregoing and (b) the delivery of certificated securities and other
collateral with respect to which perfection is obtained by possession. If the
Agents at any time have a reasonable basis to believe that there may be a
violation of any Environmental Laws by any Loan Party, on, at, in, under, above,
to, from or about any of its Mortgaged Real Property, which, in each case, could
reasonably be expected to have a Material Adverse Effect then each Loan Party,
with respect to such Mortgaged Real Property, upon the Agents' written respect
shall cause the performance of such environmental audits, including subsurface
sampling of soil and groundwater, and preparation of such environmental reports,
as the Company's expense, as the Agents and the Company may mutually agree, or,
if any Default or Event of Default then exists and is continuing, as the
environmental consulting firms reasonably acceptable to the Agents and shall be
in form and substance acceptable to the Agents.

                                       46



         10.10    Deposit Accounts. Unless the Administrative Agent otherwise
consents in writing, in order to facilitate the Administrative Agent's and the
Lenders' maintenance and monitoring of their security interests in the
collateral, maintain its and all of Domestic Subsidiaies' principal deposit
accounts with the Administrative Agent.

         10.11    Intentionally omitted.

         10.12    Syndication. Enter into such modifications to the Loan
Documents as the Agents may reasonably request as necessary for the syndication
of the Loans and the Commitments.

         10.13    Appraisals. Each Loan Party shall, upon the Agents' written
request, (i) cause the performance of such appraisals of the Collateral
(excluding the Real Estate), at Lenders' expense (except with respect to the
initial appraisals and any appraisal undertaken after an Event of Default which
shall be at Company's expense), as Administrative Agent may from time to time
reasonably request, which shall be conducted by reputable firms reasonably
acceptable to Administrative Agent and shall be in form and substance acceptable
to Administrative Agent, and (ii) permit Administrative Agent or its
representatives to have access to all Real Estate for the purpose of conducting
such appraisals as Administrative Agent deems appropriate; provided that if an
Event of Default shall not have occurred, Administrative Agent shall request
such appraisals no more frequently than once annually from and after the Closing
Date. Obligors shall reimburse Administrative Agent for the costs of such
appraisals for which they are responsible, and the same will constitute a part
of the Obligations secured hereunder. Administrative Agent agrees to use
reasonable efforts to limit the costs of such appraisals to not more than
$75,000 per year without limiting the scope of any such appraisal. Agent agrees
to notify Company if any such appraisal exceeds or is anticipated to exceed such
amount.

         10.14    Subsidiaries' Assets. Not permit any Subsidiaries other than a
Foreign Subsidiary or a Domestic Subsidiary to own assets having an aggregate
book value which is greater than 115% of that aggregate amount expressed in
Schedule 9.24.

         10.15    Escrow. All payment Assignments made by the Obligors to the
Administrative Agent pursuant to the Assignment of Claims Act of 1940, all
Pledged Equity (as defined in the Collateral and Guaranty Agreement among
parties hereto dated as of July 23, 2004) and stock powers relating thereto, and
all Suborination Agreements shall be delivered to that law firm located in
Chicago, Illinois selected by the Company ("Escrowee"). If the Administrative
Agent notifies the Company and Escrowee that an Event of Default has occurred
Escrowee shall immediately deliver all such Assignments, Pledged Equity and
stock powers and Subordination Agreements to the Administrative Agent, who shall
than be free to take all measures with respect to all such items as it deems
desirable for the Lenders' benefit pursuant to this Agreement.

         SECTION 11 NEGATIVE COVENANTS

         Until the expiration or termination of the Commitments and thereafter
until all Obligations hereunder and under the other Loan Documents are paid in
full and all Letters of

                                       47



Credit have been terminated, the Company agrees that, unless at any time the
Required Lenders shall otherwise expressly consent in writing, it will:

         11.1     Debt. Not, and not permit any other Loan Party to, create,
incur, guaranty, assume or suffer to exist any Debt, except:

                  (a)      Obligations under this Agreement and the other Loan
         Documents;

                  (b)      Debt secured by Liens permitted by Section 11.2(d),
         and extensions, renewals and refinancings thereof; provided that the
         aggregate amount of all such Debt at any time outstanding shall not
         exceed $3,000,000.00;

                  (c)      Debt of the Company to any Domestic Subsidiary or
         Debt of any Domestic Subsidiary to the Company or another Domestic
         Subsidiary; provided that such Debt shall be evidenced by a demand note
         in form and substance reasonably satisfactory to the Administrative
         Agent and pledged and delivered to the Administrative Agent pursuant to
         the Collateral Documents as additional collateral security for the
         Obligations, and the obligations under such demand note shall be
         subordinated to the Obligations of the Company hereunder in a manner
         reasonably satisfactory to the Administrative Agent;

                  (d)      Subordinated Debt;

                  (e)      Hedging Obligations approved by Administrative Agent
         and incurred in favor of a Lender or an Affiliate thereof for bona fide
         hedging purposes and not for speculation;

                  (f)      Debt described on Schedule 11.1 and any extension,
         renewal or refinancing thereof so long as the principal amount thereof
         is not increased nor the amortization thereof is not decreased;

                  (g)      Unfunded pension fund and other employee benefit plan
         obligations and liabilities to the extent they are permitted to remain
         unfunded under applicable law;

                  (h)      Debt in respect of Taxes, assessments, governmental
         charges or levies and claims for labor, materials, and supplies to the
         extent payment thereof shall not at the time be required by Section
         10.4.

                  (i)      Contingent Liabilities arising with respect to
         customary indemnification obligations in favor of sellers in connection
         with Acquisitions permitted under Section 11.5 and purchasers in
         connection with dispositions permitted under Section 11.5; and

                  (j)      other unsecured subordinated Debt, in addition to the
         Debt listed above, in an aggregate outstanding amount not at any time
         exceeding $3,000,000.00.

                                       48



         11.2     Liens. Not, and not permit any other Loan Party to, create or
permit to exist any Lien on any of its real or personal properties, assets or
rights of whatsoever nature (whether now owned or hereafter acquired), except:

                  (a)      Liens for taxes or other governmental charges not at
         the time delinquent or thereafter payable without penalty or being
         contested in good faith by appropriate proceedings and, in each case,
         for which it maintains adequate reserves;

                  (b)      Liens arising in the ordinary course of business
         (such as (i) Liens of carriers, warehousemen, mechanics and materialmen
         and other similar Liens imposed by law and securing obligations not
         exceeding in the aggregate $3,000,000.00 at any time and (ii) Liens in
         the form of deposits or pledges incurred in connection with worker's
         compensation, unemployment compensation and other types of social
         security (excluding Liens arising under ERISA) or in connection with
         surety bonds, bids, performance bonds and similar obligations) for sums
         not overdue or being contested in good faith by appropriate proceedings
         and not involving any advances or borrowed money or the deferred
         purchase price of property or services and, in each case, for which it
         maintains adequate reserves;

                  (c)      Liens described on Schedule 11.2 as of the Closing
         Date;

                  (d)      subject to the limitation set forth in Section
         11.1(b), (i) Liens arising in connection with Capital Leases (and
         attaching only to the property being leased), (ii) Liens existing on
         property at the time of the acquisition thereof by any Loan Party (and
         not created in contemplation of such acquisition) and (iii) Liens that
         constitute purchase money security interests on any property securing
         debt incurred for the purpose of financing all or any part of the cost
         of acquiring such property, provided that any such Lien attaches to
         such property within 20 days of the acquisition thereof and attaches
         solely to the property so acquired;

                  (e)      attachments, appeal bonds, judgments and other
         similar Liens, which would not be reasonably expected to result in a
         Material Adverse Effect arising in connection with court proceedings,
         provided the execution or other enforcement of such Liens is
         effectively stayed and the claims secured thereby are being actively
         contested in good faith and by appropriate proceedings;

                  (f)      easements, rights of way, restrictions, minor defects
         or irregularities in title and other similar Liens not interfering in
         any material respect with the ordinary conduct of the business of any
         Loan Party;

                  (g)      Liens arising under the Loan Documents; and

                  (h)      the replacement, extension or renewal of any Lien
         permitted by clause (c) above upon or in the same property subject
         thereto arising out of the extension, renewal or replacement of the
         Debt secured thereby (without increase in the amount thereof).

                                       49



         11.3     Operating Leases. Not permit the aggregate amount of all
rental payments under Operating Leases made (or scheduled to be made) by the
Loan Parties (on a consolidated basis) to exceed $6,000,000 in any Fiscal Year,
except in any Fiscal Year when prepayment described in Section 11.4(e)(vi) may
occur.

         11.4     Restricted Payments. Not, and not permit any other Loan Party
to, (a) make any distribution to any holders of its Capital Securities, (b)
purchase or redeem any of its Capital Securities in excess of $1,000,000
aggregate in any Fiscal Year, (c) pay any management fees or similar fees to any
of its equityholders or any Affiliate thereof, (d) make any redemption,
prepayment, defeasance, repurchase or any other payment in respect of any
Subordinated Debt (other than a Debt secured by a Permitted Lien if the asset
securing such Debt is sold in accordance with Section 11.5), or (e) set aside
funds for any of the foregoing. Notwithstanding the foregoing, (i) any
Subsidiary may pay dividends or make other distributions to the Company or to a
Domestic Subsidiary; (ii) the Company may make regularly scheduled payments of
interest in respect of Subordinated Debt to the extent permitted under the
subordination provisions thereof; (iii) the Company may pay in whole or in part
any IRB or Subordinated Notes at any time; (iv) the Company may pay a cash
dividend in any Fiscal Quarter of not more than $500,000 in the aggregate; (v)
the Company may pay directors' fees and reimbursable expenses; and (vi) the
Company may prepay its obligations pursuant to its lease of property located in
Brownsville, Texas and its lease of the aircraft currently used by the Company.

         11.5     Mergers, Consolidations, Sales. Not, and not permit any other
Loan Party to, (a) create any Subsidiary; (b) without the Agents' prior written
consent, not to be unreasonably withheld, to consummate any merger or
consolidation, or purchase or otherwise acquire all or substantially all of the
assets or any Capital Securities of any class of, or any partnership or joint
venture interest in, any other Person, (c) sell, transfer, convey or lease all
or any substantial part of its assets or Capital Securities (including the sale
of Capital Securities of any Subsidiary) except for sales of Inventory in the
ordinary course of business or as otherwise allowed in this Agreement, or (d)
sell or assign with or without recourse any receivables. Notwithstanding the
foregoing, the following shall be permitted: (i) with Required Lenders' prior
written consent (such consent not to be unreasonably withheld) the sale,
transfer, conveyance or other disposition by a Loan Party of machinery and
equipment during the term of this Agreement having an Orderly Liquidation Value
not exceeding $50,000,000 in the aggregate, provided however, no disposition may
occur if and to the extent that any such contemplated disposition is for a cash
amount which is less than the Orderly Liquidation Value of any such asset; (ii)
transfers between Obligors provided that the Agents maintain a first priority
perfected security interest in the asset transferred; (iii) sales of the Capital
Securities of any Foreign Subsidiary; and (iv) the sale, transfer, conveyance or
other disposition by a Loan Party of equipment or fixtures that are obsolete or
no longer used or useful in such Loan Party's business and having a value not
exceeding $3,000,000 in the aggregate in any Fiscal Year, provided such
equipment or fixtures is replaced by equipment or fixtures of comparable value
or worth and provided further that Agents maintain a first priority perfected
security interest in the replacement equipment or fixtures. With respect to any
disposition of assets or other properties permitted pursuant to clause (i)
above, Agents agree, upon reasonable prior written notice, to release the Lien
on such assets or other

                                       50



properties in order to permit the applicable Loan Party to effect such
disposition and shall execute and deliver to Company at Company's expense,
appropriate UCC-3 termination statements and other releases as reasonably
requested by Company.

         11.6     Modification of Organizational Documents. Not permit the
charter, by-laws or other organizational documents of any Loan Party to be
amended or modified in any way which could reasonably be expected to materially
adversely affect the interests of the Lenders.

         11.7     Transactions with Affiliates. Not, and not permit any other
Loan Party to, enter into, or cause, suffer or permit to exist any transaction,
arrangement or contract with any of its other Affiliates (other than the Loan
Parties) other than in the ordinary course of business and which is on fair and
reasonable terms which are no less favorable than are obtainable from any Person
which is not one of its Affiliates. In addition, if any such transaction or
series of related transactions involves payments in excess of $1,000,000 in the
aggregate, the terms of these transactions if not previously disclosed in
Schedule 11.7 must be disclosed in advance to Agents. All such transactions
existing as of the date hereof are described on Schedule 11.7. No Loan Party
shall enter into any lending or borrowing transaction with any employees of any
Loan Party, except loans to their respective employees on an arm's-length basis
in the ordinary course of business consistent with past practices for travel
expenses, relocation costs and similar purposes and stock option financing up to
a maximum of $250,000 in the aggregate at any one time outstanding.

         11.8     Unconditional Purchase Obligations. Not, and not permit any
other Loan Party to, enter into or be a party to any contract for the purchase
of materials, supplies or other property or services if such contract requires
that payment be made by it regardless of whether delivery is ever made of such
materials, supplies or other property or services, which is outside of the
ordinary course of business and inconsistent with past practices.

         11.9     Inconsistent Agreements. Not, and not permit any other Loan
Party to, enter into any agreement containing any provision which would (a) be
violated or breached by any borrowing by the Company hereunder or by the
performance by any Loan Party of any of its Obligations hereunder or under any
other Loan Document, (b) prohibit any Loan Party from granting to the
Administrative Agent and the Lenders, a Lien on any of its assets or (c) create
or permit to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (i) pay dividends or make other distributions to
the Company or any other Subsidiary, or pay any Debt owed to the Company or any
other Subsidiary, (ii) make loans or advances to any Loan Party or (iii)
transfer any of its assets or properties to any Loan Party, other than (A)
customary restrictions and conditions contained in agreements relating to the
sale of all or a substantial part of the assets of any Subsidiary pending such
sale, provided that such restrictions and conditions apply only to the
Subsidiary to be sold and such sale is permitted hereunder (B) restrictions or
conditions imposed by any agreement relating to purchase money Debt, Capital
Leases and other secured Debt permitted by this Agreement if such restrictions
or conditions apply only to the property or assets securing such Debt and (C)
customary provisions in leases and other contracts restricting the assignment
thereof.

                                       51



         11.10    Business Activities; Issuance of Equity. Not, and not permit
any other Loan Party to, engage in any line of business other than the
businesses engaged on the date hereof and businesses reasonably related thereto
and shall not and not permit any other Loan Party to change its business
objectives, purposes or operations if such activities could in any way adversely
effect the repayment of the Loans or any other Debt or could reasonably be
expected to result in a Material Adverse Effect. Not, and not permit any other
Loan Party to, issue any Capital Securities other than (a) any issuance of
shares of the Company's common Capital Securities pursuant to any employee or
director option program, benefit plan or compensation program, (b) any issuance
by a Subsidiary to the Company or another Subsidiary in accordance with Section
11.4, (c) the issuance of any other Capital Securities as set out in this
Agreement (e.g. the Senior Convertible Notes conversion to common Capital
Securities); or (d) for a merger or acquisition with the prior written consent
of the Agents, which shall not be unreasonably withheld.

         11.11    Investments. Except as otherwise expressly permitted by this
Section 11, no Loan Party shall make or permit to exist any Investment in, any
Person, except that (a) Obligors may hold investments comprised of notes
payable, or stock or other securities issued by Account Debtors to any Obligor
pursuant to negotiated agreements with respect to settlement of such Account
Debtor's Accounts in the ordinary course of business, so long as Obligors
deliver physical possession of such note payable, stock or other security to
Collateral Agent along with all endorsements and stock powers requested by
Collateral Agent with respect to any such note payable, stock or security that
exceeds $100,000; (b) each Loan Party may maintain its existing investments in
its Subsidiaries and in Titan Europe Plc as of the Closing Date; (c) the Company
may maintain the IRB collateral; (d) so long as no Unmatured Event of Default or
Event of Default shall have occurred and be continuing, Obligors may invest (x)
up to $500,000 in the aggregate at any time in which any Revolving Loans are
outstanding, or (y) the Obligors' available unrestricted cash balances at any
time in which no Revolving Loans are outstanding, subject to a perfected
security interest in such investment in favor of Agents, (i) marketable direct
obligations issued or unconditionally guaranteed by the United States of America
or any agency thereof maturing within one year from the date of acquisition
thereof, (ii) commercial paper maturing no more than one year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Ratings Group or Moody's Investors Service, Inc., (iii)
certificates of deposit, maturing no more than one year from the date of
creation thereof, issued by commercial banks incorporated under the laws of the
United States of America, each having combined capital, surplus and undivided
profits of not less than $200,000,000 and having a senior unsecured rating of
"A" or better by a nationally recognized rating agency (an "A Rated Bank"), (iv)
time deposits, maturing no more than 30 days from the date of creation thereof
with A Rated Banks and (v) mutual funds that invest solely in one or more of the
investments described in clauses (i) through (iv) above; and (e) Obligors may
hold notes payable or other indebtedness from any Foreign Subsidiary of any Loan
Party, provided that (A) each such Foreign Subsidiary shall have executed and
delivered to each such Obligor, a demand note (collectively, the "Intercompany
Notes") to evidence any such intercompany Indebtedness owing at any time by such
Foreign Subsidiary to such Obligor, which Intercompany Notes shall be in form
and substance satisfactory to Agents and shall be pledged

                                       52



and delivered to Administrative Agent pursuant to a pledge agreement or security
agreement in form and content satisfactory to Agents in their sole discretion as
additional collateral security for the Obligations, (B) each Loan Party shall
record all intercompany transactions on its books and records in a manner
consistent with past practices, (C) at the time any such intercompany loan or
advance is made by any Obligor to any Foreign Subsidiary and after giving effect
thereto, each such Obligor shall be Solvent, (D) no Default or Default or Event
of Default exists or would occur and be continuing after giving effect to any
such proposed intercompany loan, (E) the recipient of such intercompany loans
shall be creditworthy as determined by Agent, and (F) such intercompany loans do
not exceed at any time, in the aggregate, the sum of $5,000,000.

         11.12    Restriction of Amendments to Certain Documents. Not amend or
otherwise modify, or waive any rights under, the Subordinated Notes, IRB, the
Foreign Affiliate Loan, or Senior Convertible Notes if, in any case, such
amendment, modification or waiver could be adverse to the interests of the
Lenders.

         11.13    Fiscal Year. Not change its Fiscal Year.

         11.14    Financial Covenants.

         11.14.1  Minimum Book Value. Not permit the aggregate book value of
Eligible Accounts and Eligible Inventory to be less than $75,000,000 at any
time.

         11.14.2  Fixed Charge Coverage Ratio. In the event the average daily
balance of the Revolving Outstandings exceed $75,000,000 during any 30 day
period ending during any Fiscal Quarter, not permit the Fixed Charge Coverage
Ratio for the Computation Period ending on the last day of such Fiscal Quarter
to be less than 1.0 to 1.0.

         11.14.3  Collateral Coverage. Not permit (a) the sum of the Borrowing
Base, plus the unrestricted cash of all Obligors; divided by (b) the Revolving
Outstandings, to be less than one and one-half (1.50).

         11.15    Cancellation of Debt. Not, and not permit any other Loan Party
to, cancel any claim or debt owing to it, except for reasonable consideration
negotiated on an arms-length basis and in the ordinary course of business
consistent with past practices and customary write downs and charge offs for bad
debts consistent with past practices.

         11.16    ERISA. No Loan Party shall cause or permit to occur an event
which could result in the imposition of a Lien under Section 412 of the IRC or
Section 302 or 4068 of ERISA or cause or permit to occur an Termination Event to
the extent such Termination Event could reasonably be expected to have a
Material Adverse Effect.

         11.17    Inventory. Not permit Inventory having an aggregate book value
exceeding Fifteen Million and No/100 Dollars ($15,000,000.00) at any time to be
in a location or locations other than the Mortgaged Real Property and that
facility currently acquired by Titan Wheel Corporation of Virginia as its
principal place of business.

                                       53



         SECTION 12 EFFECTIVENESS; CONDITIONS OF LENDING, ETC.

         The obligation of each Lender to make its Loans and of the Issuing
Lender to issue Letters of Credit is subject to the following conditions
precedent:

         12.1     Initial Credit Extension. The obligation of the Lenders to
make the initial Loans and the obligation of the Issuing Lender to issue its
initial Letter of Credit (whichever first occurs) is, in addition to the
conditions precedent specified in Section 12.2, subject to the condition
precedent that (i) the Existing Term Loans have been (or concurrently with the
initial borrowing hereunder will be) paid in full, and that all agreements and
instruments governing the Existing Term Loan and that all Liens securing such
Existing Term Loan have been (or within 30 days after Closing will be)
terminated and (b) the Administrative Agent shall have received all of the
following, each duly executed and dated the Closing Date (or such earlier date
as shall be satisfactory to the Administrative Agent), in form and substance
satisfactory to the Administrative Agent (and the date on which all such
conditions precedent have been satisfied or waived in writing by the
Administrative Agent and the Lenders is called the "Closing Date"):

         12.1.1   Notes. A Note for each Lender.

         12.1.2   Authorization Documents. For each Loan Party, such Person's
(a) charter (or similar formation document), certified by the secretary of each
Loan Party; (b) good standing certificates in its state of incorporation (or
formation) and in each other state requested by the Administrative Agent; (c)
bylaws (or similar governing document); (d) resolutions of its board of
directors (or similar governing body) approving and authorizing such Person's
execution, delivery and performance of the Loan Documents to which it is party
and the transactions contemplated thereby; and (e) signature and incumbency
certificates of its officers executing any of the Loan Documents (it being
understood that the Administrative Agent and each Lender may conclusively rely
on each such certificate until formally advised by a like certificate of any
changes therein), all certified by its secretary or an assistant secretary (or
similar officer) as being in full force and effect without modification.

         12.1.3   Consents, etc. Certified copies of all documents evidencing
any necessary corporate or partnership action, consents and governmental
approvals (if any) required for the execution, delivery and performance by the
Loan Parties of the documents referred to in this Section 12.

         12.1.4   Letter of Direction. A letter of direction containing funds
flow information with respect to the proceeds of the Loans on the Closing Date.

         12.1.5   Guaranty and Collateral Agreement. A counterpart of the
Guaranty and Collateral Agreement executed by each Loan Party, together with all
instruments, transfer powers and other items required to be delivered in
connection therewith.

         12.1.6   Intentionally omitted.

                                       54



         12.1.7   Real Estate Documents. With respect to each parcel of
Mortgaged Real Property, a duly executed Mortgage providing for a fully
perfected Lien, in favor of the Agents for the benefit of the Lenders, in all
right, title and interest of the Company or such Domestic Subsidiary in such
Mortgaged Real Property, together with:

                  (a)      an ALTA Loan Title Insurance Policy, issued by an
         insurer acceptable to the Agents, insuring the Lenders' Lien on such
         Mortgaged Real Property and containing such endorsements as the Agents
         may reasonably require;

                  (b)      copies of all documents of record concerning such
         Mortgaged Real Property as shown on the commitment for the ALTA Loan
         Title Insurance Policy referred to above;

                  (c)      original or certified copies of all insurance
         policies required to be maintained with respect to such Mortgaged Real
         Property by this Agreement, the applicable Mortgage or any other Loan
         Document;

                  (d)      a survey certified to the Agents for the benefit of
         the Lenders meeting such standards as the Agents may reasonably
         establish and otherwise reasonably satisfactory to the Agents;

                  (e)      a flood insurance policy concerning such Mortgaged
         Real Property, if required by the Flood Disaster Protection Act of
         1973; and

                  (f)      an Environmental Indemnity for each Mortgaged Real
         Property.

         12.1.8   Appraisal. An appraisal of all Equipment with the results
thereof satisfactory to Agents in their reasonable discretion.

         12.1.9   Opinions of Counsel. Opinions of counsel for each Obligor,
including local counsel reasonably requested by the Administrative Agent,
covering the laws of the states of Iowa and Illinois.

         12.1.10  Insurance. Evidence of the existence of insurance required to
be maintained pursuant to Section 10.3(b), together with evidence that the
Administrative Agent has been named as a lender's loss payee and an additional
insured on all related insurance policies.

         12.1.11  Subordination. A duly executed subordination letter with
respect to the Foreign Affiliate Loan.

         12.1.12  Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with all Attorney Costs of the Agents to the
extent invoiced prior to the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute the Agents' reasonable estimate of Attorney
Costs incurred or to be incurred by the Agents through the closing proceedings

                                       55



(provided that such estimate shall not thereafter preclude final settling of
accounts between the Company and the Agents).

         12.1.13  Intentionally omitted.

         12.1.14  Pro Forma. A consolidated pro forma balance sheet of the
Company as at the Closing Date, adjusted to give effect to the financings
contemplated hereby as if such transactions had occurred on such date,
consistent in all material respects with the sources and uses of cash as
previously described to the Lenders and the forecasts previously provided to the
Lenders.

         12.1.15  Intentionally omitted.

         12.1.16  Search Results; Lien Terminations. Certified copies of Uniform
Commercial Code search reports dated a date reasonably near to the Closing Date,
listing all effective financing statements which name any Obligor (under their
present names and any previous names) as debtors, together with (a) copies of
such financing statements, (b) payoff letters evidencing repayment in full of
Existing Term Loan, the termination of all agreements relating thereto and the
release of all Liens granted in connection therewith, with Uniform Commercial
Code or other appropriate termination statements and documents effective to
evidence the foregoing (other than Liens permitted by Section 11.2) and (c) such
other Uniform Commercial Code termination statements as the Administrative Agent
may reasonably request.

         12.1.17  Filings, Registrations and Recordings. The Administrative
Agent shall have received each document (including Uniform Commercial Code
financing statements) required by the Collateral Documents or under law or
reasonably requested by the Administrative Agent to be filed, registered or
recorded in order to create in favor of the Administrative Agent, for the
benefit of the Lenders, a perfected Lien on the collateral described therein,
prior to any other Liens (subject only to Liens permitted pursuant to Section
11.2), in proper form for filing, registration or recording.

         12.1.18  Borrowing Base Certificate. A Borrowing Base Certificate with
an effective date as of the end of the most recently completed Fiscal Quarter.

         12.1.19  Closing Certificate, Consents and Permits. A certificate
executed by an officer of the Company on behalf of the Company certifying (a)
the matters set forth in Section 12.2.1 as of the Closing Date.

         12.1.20  Other. Such other documents as any Agent or any Lender may
reasonably request.

         12.2     Conditions. The obligation (a) of each Lender to make each
Loan and (b) of the Issuing Lender to issue each Letter of Credit is subject to
the following further conditions precedent that:

                                       56



         12.2.1   Compliance with Warranties, No Default, etc. Both before and
after giving effect to any borrowing and the issuance of any Letter of Credit,
the following statements shall be true and correct:

                  (a)      the representations and warranties of each Loan Party
         set forth in this Agreement and the other Loan Documents shall be true
         and correct in all respects with the same effect as if then made
         (except to the extent stated to relate to a specific earlier date, in
         which case such representations and warranties shall be true and
         correct as of such earlier date); and

                  (b)      no Event of Default or Default shall have then
         occurred and be continuing.

         12.2.2   Confirmatory Certificate. If requested by the Administrative
Agent or any Lender, the Administrative Agent shall have received a certificate
dated the date of such requested Loan or Letter of Credit and signed by a duly
authorized representative of the Company as to the matters set out in Section
12.2.1 (it being understood that each request by the Company for the making of a
Loan or the issuance of a Letter of Credit shall be deemed to constitute a
representation and warranty by the Company that the conditions precedent set
forth in Section 12.2.1 will be satisfied at the time of the making of such Loan
or the issuance of such Letter of Credit), together with such other documents as
the Administrative Agent or any Lender may reasonably request in support
thereof.

         SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT.

         13.1     Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:

         13.1.1   Non-Payment of the Loans, etc. Default in the payment when due
of the principal of any Loan; or default, and continuance thereof for five days,
in the payment when due of any interest, fee, reimbursement obligation with
respect to any Letter of Credit or other amount payable by the Company hereunder
or under any other Loan Document.

         13.1.2   Non-Payment of Other Debt. Any default shall occur which is
not cured within any applicable cure period under the terms applicable to any
Debt of any Loan Party in an aggregate amount (for all such Debt so affected and
including undrawn committed or available amounts and amounts owing to all
creditors under any combined or syndicated credit arrangement) exceeding Ten
Million and No/100 Dollars ($10,000,000.00) and such default shall (a) consist
of the failure to pay such Debt when due, whether by acceleration or otherwise,
or (b) accelerate the maturity of such Debt or permit the holder or holders
thereof, or any trustee or agent for such holder or holders, to cause such Debt
to become due and payable (or require any Loan Party to purchase or redeem such
Debt or post cash collateral in respect thereof) prior to its expressed
maturity.

         13.1.3   Other Material Obligations. Default which is not cured within
any applicable cure period in the payment when due, or in the performance or
observance of, any material

                                       57



obligation of, or condition agreed to by, any Loan Party with respect to any
material purchase or lease of goods or services where such default, singly or in
the aggregate with all other such defaults, might reasonably be expected to have
a Material Adverse Effect.

         13.1.4   Bankruptcy, Insolvency, etc. Any Loan Party becomes insolvent
or generally fails to pay, or admits in writing its inability or refusal to pay,
debts as they become due; or any Loan Party applies for, consents to, or
acquiesces in the appointment of a trustee, receiver or other custodian for such
Loan Party or any property thereof, or makes a general assignment for the
benefit of creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for any Loan
Party or for a substantial part of the property of any thereof and is not
discharged within 60 days; or any bankruptcy, reorganization, debt arrangement,
or other case or proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is commenced in respect of any Loan
Party, and if such case or proceeding is not commenced by such Loan Party, it is
consented to or acquiesced in by such Loan Party, or remains for 60 days
undismissed; or any Loan Party takes any action to authorize, or in furtherance
of, any of the foregoing.

         13.1.5   Non-Compliance with Loan Documents. (a) Failure by any Loan
Party to comply with or to perform any covenant set forth in Section 10.1.5,
10.3(b),10.5 or 10.6 or Section 11; or (b) failure by any Loan Party to comply
with or to perform any other provision of this Agreement or any other Loan
Document (and not constituting an Event of Default under any other provision of
this Section 13) and continuance of such failure described in this clause (b)
for 30 days.

         13.1.6   Representations; Warranties. Any representation or warranty
made by any Loan Party herein or any other Loan Document is breached or is false
or misleading in any material respect, or any schedule, certificate, financial
statement, report, notice or other writing furnished by any Loan Party to the
Administrative Agent or any Lender in connection herewith is false or misleading
in any material respect on the date as of which the facts therein set forth are
stated or certified.

         13.1.7   Pension Plans. (a) any Loan Party does not materially comply
with ERISA and all other federal and local laws concerning benefit plans, or (b)
there shall occur any withdrawal or partial withdrawal from a Multiemployer
Pension Plan and the withdrawal liability (without unaccrued interest) to
Multiemployer Pension Plans as a result of such withdrawal (including any
outstanding withdrawal liability that the Company or any member of the
Controlled Group have incurred on the date of such withdrawal) is material.

         13.1.8   Judgments. Final judgments which could result in a Material
Adverse Effect rendered against any Loan Party and shall not have been paid,
discharged or vacated or had execution thereof stayed pending appeal within 90
days after entry or filing of such judgments, provided that the Party is
diligently pursuing post-judgment relief.

                                       58



         13.1.9   Invalidity of Collateral Documents, etc. Any Collateral
Document shall cease to be in full force and effect; or any Loan Party (or any
Person by, through or on behalf of any Loan Party) shall contest in any manner
the validity, binding nature or enforceability of any Collateral Document.

         13.1.10  Invalidity of Subordination Provisions, etc. Any subordination
provision in any document or instrument governing Subordinated Debt, or any
subordination provision in any guaranty by any Subsidiary of any Subordinated
Debt, shall cease to be in full force and effect, or any Loan Party or any other
Person (including the holder of any applicable Subordinated Debt) shall contest
in any manner the validity, binding nature or enforceability of any such
provision.

         13.1.11  Change of Control. A Change of Control shall occur.

         13.1.12  Material Adverse Effect. The occurrence of any event having a
Material Adverse Effect, as reasonably determined by the Agents.

         13.1.13  Cross Default. Any default or breach by any Obligor shall
occur and be continuing under any agreement, including without limitation, any
security agreement, pledge agreement, credit agreement or loan agreement, any
note, loan or lease, including without limitation, any personal property lease,
real property lease, synthetic lease or aircraft lease, or any credit facility
with or in favor of GE Capital, either individually, or as agent for others, and
any modification, extension, amendment or restatement of any of the foregoing.

         13.2     Effect of Event of Default. If any Event of Default described
in Section 13.1.4 shall occur in respect of the Company, the Commitments shall
immediately terminate and the Loans and all other Obligations hereunder shall
become immediately due and payable and the Company shall become immediately
obligated to Cash Collateralize all Letters of Credit, all without presentment,
demand, protest or notice of any kind; and, if any other Event of Default shall
occur and be continuing, the Agents may (and, upon the written request of the
Required Lenders shall) declare the Commitments to be terminated in whole or in
part and/or declare all or any part of the Loans and all other Obligations
hereunder to be due and payable and/or demand that the Company immediately Cash
Collateralize all or any Letters of Credit, whereupon the Commitments shall
immediately terminate (or be reduced, as applicable) and/or the Loans and other
Obligations hereunder shall become immediately due and payable (in whole or in
part, as applicable) and/or the Company shall immediately become obligated to
Cash Collateralize the Letters of Credit (all or any, as applicable), all
without presentment, demand, protest or notice of any kind. The Administrative
Agent shall promptly advise the Company of any such declaration, but failure to
do so shall not impair the effect of such declaration. Any cash collateral
delivered hereunder shall be held by the Administrative Agent (without liability
for interest thereon) and applied to the Obligations arising in connection with
any drawing under a Letter of Credit. After the expiration or termination of all
Letters of Credit, such cash collateral shall be applied by the Administrative
Agent to any remaining Obligations hereunder and any excess shall be delivered
to the Company or as a court of competent jurisdiction may elect. During the
existence of any

                                       59



Event of Default or Default the Agents shall specifically be permitted to
communicate directly with the Company's certified public accountants and Company
hereby authorizes and instructs those accountants to disclose such financial
information as Agents shall request.

         SECTION 14 THE AGENTS.

         14.1     Appointment and Authorization. Each Lender hereby irrevocably
(subject to Section 14.10) appoints, designates and authorizes the Agents to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agents shall not have any duty or
responsibility except those expressly set forth herein, nor shall the Agents
have or be deemed to have any fiduciary relationship with any Lender or
participant, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agents. Without limiting the generality
of the foregoing sentence, the use of the term "agent" herein and in other Loan
Documents with reference to the Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.

         14.2     Issuing Lender. The Issuing Lender shall act on behalf of the
Lenders (according to their Pro Rata Shares) with respect to any Letters of
Credit issued by it and the documents associated therewith. The Issuing Lender
shall have all of the benefits and immunities (a) provided to the Administrative
Agent in this Section 14 with respect to any acts taken or omissions suffered by
the Issuing Lender in connection with Letters of Credit issued by it or proposed
to be issued by it and the applications and agreements for letters of credit
pertaining to such Letters of Credit as fully as if the term "Administrative
Agent", as used in this Section 14, included the Issuing Lender with respect to
such acts or omissions and (b) as additionally provided in this Agreement with
respect to the Issuing Lender.

         14.3     Delegation of Duties. The Administrative Agent or Co-Agent may
execute any of its duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys-in-fact and shall be entitled to advice
of counsel and other consultants or experts concerning all matters pertaining to
such duties. The Administrative Agent or Co-Agent shall not be responsible for
the negligence or misconduct of any agent or attorney-in-fact that it selects in
the absence of gross negligence or willful misconduct. Any decision to foreclose
a Mortgaged Real Property shall require the consent of both Agents.

         14.4     Exculpation of Agents. None of the Agents nor any of their
directors, officers, employees or agents shall (a) be liable for any action
taken or omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions

                                       60



contemplated hereby (except to the extent resulting from their own gross
negligence or willful misconduct in connection with its duties expressly set
forth herein as determined by a final, nonappealable judgment by a court of
competent jurisdiction), or (b) be responsible in any manner to any Lender or
participant for any recital, statement, representation or warranty made by any
Loan Party or Affiliate of the Company, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
any Agent under or in connection with, this Agreement or any other Loan
Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document (or the creation,
perfection or priority of any Lien or security interest therein), or for any
failure of the Company or any other party to any Loan Document to perform its
Obligations hereunder or thereunder. The Agents shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Company or any of the Company's Subsidiaries or Affiliates.

         14.5     Reliance by Agents. The Agents shall be entitled to rely, and
shall be fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, electronic mail
message, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Company), independent accountants and other experts selected by the Agents. The
Agents shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate and, if it
so requests, confirmation from the Lenders of their obligation to indemnify the
Agents against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agents shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon each Lender. For purposes of determining
compliance with the conditions specified in Section 12, each Lender that has
signed this Agreement shall be deemed to have consented to, approved or accepted
or to be satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless the
Agents shall have received written notice from such Lender prior to the proposed
Closing Date specifying its objection thereto.

         14.6     Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Event of Default or
Default except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Agents for the account of the Lenders,
unless the Agents shall have received written notice from a Lender or the
Company referring to this Agreement, describing such Event of Default or Default
and stating that such notice is a "notice of default". The Agents will notify
the Lenders of its receipt of any such notice. The Agents shall take such action
with respect to such Event of Default or Default

                                       61



as may be requested by the Required Lenders in accordance with Section 13;
provided that unless and until the Agents have received any such request, the
Agents may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Event of Default or Default as it shall
deem advisable or in the best interest of the Lenders.

         14.7     Credit Decision. Each Lender acknowledges that the Agents has
not made any representation or warranty to it, and that no act by the Agents
hereafter taken, including any consent and acceptance of any assignment or
review of the affairs of the Loan Parties, shall be deemed to constitute any
representation or warranty by the Agents to any Lender as to any matter,
including whether the Agents have disclosed material information in their
possession. Each Lender represents to the Agents that it has, independently and
without reliance upon the Agents and based on such documents and information as
it has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties, and made its own decision to enter into
this Agreement and to extend credit to the Company hereunder. Each Lender also
represents that it will, independently and without reliance upon the Agents and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other documents
expressly herein required to be furnished to the Lenders by the Agents, the
Agents shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial or other condition or creditworthiness of the Company which
may come into the possession of the Agents.

         14.8     Indemnification. Whether or not the transactions contemplated
hereby are consummated, each Lender shall indemnify upon demand the Agents and
their respective directors, officers, employees and agents (to the extent not
reimbursed by or on behalf of the Company and without limiting the obligation of
the Company to do so), according to its applicable Pro Rata Share, from and
against any and all Indemnified Liabilities (as hereinafter defined); provided
that no Lender shall be liable for any payment to any such Person of any portion
of the Indemnified Liabilities to the extent determined by a final,
nonappealable judgment by a court of competent jurisdiction to have resulted
from the applicable Person's own gross negligence or willful misconduct. No
action taken in accordance with the directions of the Required Lenders shall be
deemed to constitute gross negligence or willful misconduct for purposes of this
Section. Without limitation of the foregoing, each Lender shall reimburse the
Agents upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs and Taxes) incurred by the Agents in connection with
the preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Agents are not reimbursed for such expenses by or on
behalf of the Company. The undertaking in this Section shall survive

                                       62



repayment of the Loans, cancellation of the Notes, expiration or termination of
the Letters of Credit, any foreclosure under, or modification, release or
discharge of, any or all of the Collateral Documents, termination of this
Agreement and the resignation or replacement of the Agents.

         14.9     Agents in Individual Capacity. LaSalle, GE Capital and their
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the Loan
Parties and Affiliates as though LaSalle and GE Capital were not the Agents
hereunder and without notice to or consent of any Lender. Each Lender
acknowledges that, pursuant to such activities, LaSalle, GE Capital or their
Affiliates may receive information regarding the Company or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of the Company or such Affiliate) and acknowledge that the Agents shall be
under no obligation to provide such information to them. With respect to their
Loans (if any), LaSalle, GE Capital and their Affiliates shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though LaSalle and GE Capital were not the Agents, and the terms
"Lender" and "Lenders" include LaSalle, GE Capital and their Affiliates, to the
extent applicable, in their individual capacities.

         14.10    Successor Agents. The Administrative Agent or Co-Agent may
resign as Agent upon 30 days' notice to the Lenders. If an Agent resigns under
this Agreement, the Required Lenders shall, with (so long as no Event of Default
exists) the consent of the Company (which shall not be unreasonably withheld or
delayed), appoint from among the Lenders a successor agent for the Lenders. If
no successor agent is appointed prior to the effective date of the resignation
of the Agent, the Agent may appoint, after consulting with the Lenders and the
Company, a successor agent from among the Lenders. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Agent and the term
"Administrative Agent" or "Co-Agent" as applicable shall mean such successor
agent, and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 14 and Sections 15.5 and 15.16 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent by
the date which is 30 days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above.

         14.11    Collateral Matters. The Lenders irrevocably authorize the
Administrative Agent, at its option and in its discretion, (a) to release any
Lien granted to or held by such Agent under any Collateral Document (i) upon
termination of the Commitments and payment in full of all Loans and all other
obligations of the Company hereunder and the expiration or termination of all
Letters of Credit; (ii) constituting property sold or to be sold or disposed of
as part of or in connection with any disposition permitted hereunder; or (iii)
subject to Section 15.1, if approved, authorized or ratified in writing by the
Required Lenders; or (b) to subordinate its interest in any

                                       63



collateral to any holder of a Lien on such collateral which is permitted by
Section 11.2(d)(i) or (d)(iii) (it being understood that the Agents may
conclusively rely on a certificate from the Company in determining whether the
Debt secured by any such Lien is permitted by Section 11.1(b)). Upon request by
the Administrative Agent at any time, the Lenders will confirm in writing the
Administrative Agent's authority to release, or subordinate its interest in,
particular types or items of collateral pursuant to this Section 14.11. Each
Lender hereby authorizes the Administrative Agent to give blockage notices in
connection with any Subordinated Debt at the direction of Required Lenders and
agrees that it will not act unilaterally to deliver such notices.

         14.12    Agents 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
any Loan Party, the Agents (irrespective of whether the principal of any Loan
shall then be due and payable as herein expressed or by declaration or otherwise
and irrespective of whether the Agents shall have made any demand on the
Company) shall be entitled and empowered, by intervention in such proceeding or
otherwise:

         (a)      to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Loans, and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders and the Agents
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Lenders and the Agents and their respective agents and
counsel and all other amounts due the Lenders and the Agents under Sections 5,
15.5 and 15.16) allowed in such judicial proceedings; and

         (b)      to collect and receive any monies or other property payable or
deliverable on any such claims 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 Lender to make such payments to the Administrative Agent and, in the event
that the Agents shall consent to the making of such payments directly to the
Lenders, to pay to the Agents any amount due for the reasonable compensation,
expenses, disbursements and advances of the Agents and their agents and counsel,
and any other amounts due the Administrative Agent under Sections 5, 15.5 and
15.16.

         Nothing contained herein shall be deemed to authorize the Agents to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lender or to authorize the Agents to vote in respect of the
claim of any Lender in any such proceeding.

         14.13    Other Agents; Arrangers and Managers. None of the Lenders or
other Persons identified on the facing page or signature pages of this Agreement
as a "syndication agent," "documentation agent," "co-agent," "book manager,"
"lead manager," "arranger," "lead arranger" or "co-arranger", if any, shall have
any right, power, obligation, liability, responsibility or duty under this
Agreement and, in the case of such Lenders, those applicable to all Lenders as

                                       64



such. Without limiting the foregoing, none of the Lenders or other Persons so
identified shall have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges that it has not relied, and will not rely, on
any of the Lenders or other Persons so identified in deciding to enter into this
Agreement or in taking or not taking action hereunder.

         SECTION 15 GENERAL.

         15.1     Waiver; Amendments. No delay on the part of any Agent, or any
Lender in the exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by any of them of any right,
power or remedy preclude other or further exercise thereof, or the exercise of
any other right, power or remedy. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement or the other Loan
Documents shall in any event be effective unless the same shall be in writing
and acknowledged by Lenders having an aggregate Pro Rata Shares of not less than
the aggregate Pro Rata Shares expressly designated herein with respect thereto
or, in the absence of such designation as to any provision of this Agreement, by
the Required Lenders, and then any such amendment, modification, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No amendment, modification, waiver or consent shall (a)
extend or increase the Commitment of any Lender without the written consent of
such Lender, (b) extend the date scheduled for payment of any principal
(excluding mandatory prepayments) of or interest on the Loans or any fees
payable hereunder without the written consent of each Lender directly affected
thereby, (c) reduce the principal amount of any Loan, the rate of interest
thereon or any fees payable hereunder, without the consent of each Lender
directly affected thereby; or (d) release any party from its obligations under
the Guaranty or all or any substantial part of the collateral granted under the
Collateral Documents, change the definition of Required Lenders, any provision
of this Section 15.1 or reduce the aggregate Pro Rata Share required to effect
an amendment, modification, waiver or consent, without, in each case, the
written consent of all Lenders. No provision of Sections 6.2.2 or 6.3 with
respect to the timing or application of mandatory prepayments of the Loans shall
be amended, modified or waived without the consent of Required Lenders. No
provision of Section 14 or other provision of this Agreement affecting the any
Agent in its capacity as such shall be amended, modified or waived without the
consent of the such Agent. No provision of this Agreement relating to the rights
or duties of the Issuing Lender in its capacity as such shall be amended,
modified or waived without the consent of the Issuing Lender.

         15.2     Confirmations. The Company and each holder of a Note agree
from time to time, upon written request received by it from the other, to
confirm to the other in writing (with a copy of each such confirmation to the
Administrative Agent) the aggregate unpaid principal amount of the Loans then
outstanding under such Note.

         15.3     Notices. Except as otherwise provided in Sections 2.2.2 and
2.2.3, all notices hereunder shall be in writing (including facsimile
transmission) and shall be sent to the applicable party at its address shown on
Annex B or at such other address as such party may, by written notice received
by the other parties, have designated as its address for such purpose.

                                       65



Notices sent by facsimile transmission shall be deemed to have been given when
sent; notices sent by mail shall be deemed to have been given three Business
Days after the date when sent by registered or certified mail, postage prepaid;
and notices sent by hand delivery or overnight courier service shall be deemed
to have been given when received. For purposes of Sections 2.2.2 and 2.2.3, the
Agents shall be entitled to rely on telephonic instructions from any person that
the Agents in good faith believe is an authorized officer or employee of the
Company, and the Company shall hold the Agents and each other Lender harmless
from any loss, cost or expense resulting from any such reliance.

         15.4     Computations. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with GAAP, consistently applied; provided that if the Company
notifies the Administrative Agent that the Company wishes to amend any covenant
in Section 10 (or any related definition) to eliminate or to take into account
the effect of any change in GAAP on the operation of such covenant (or if the
Administrative Agent notifies the Company that the Required Lenders wish to
amend Section 10 (or any related definition) for such purpose), then the
Company's compliance with such covenant shall be determined on the basis of GAAP
in effect immediately before the relevant change in GAAP became effective, until
either such notice is withdrawn or such covenant (or related definition) is
amended in a manner satisfactory to the Company and the Required Lenders.

         15.5     Costs, Expenses and Taxes. The Company agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Agents (including
Attorney Costs and any Taxes) in connection with the preparation, execution,
syndication, delivery and administration (including perfection and protection of
any collateral and the costs of Intralinks (or other similar service), if
applicable) of this Agreement, the other Loan Documents and all other documents
provided for herein or delivered or to be delivered hereunder or in connection
herewith (including any amendment, supplement or waiver to any Loan Document),
whether or not the transactions contemplated hereby or thereby shall be
consummated, and all reasonable out-of-pocket costs and expenses (including
Attorney Costs and any Taxes) incurred by the Agents and each Lender after an
Event of Default in connection with the collection of the Obligations or the
enforcement of this Agreement, the other Loan Documents or any such other
documents or during any workout, restructuring or negotiations in respect
thereof. In addition, the Company agrees to pay, and to save the Agents and the
Lenders harmless from all liability for, any fees of the Company's auditors in
connection with any reasonable exercise by the Agents and the Lenders of their
rights pursuant to Section 10.2. All Obligations provided for in this Section
15.5 shall survive repayment of the Loans, cancellation of the Notes, expiration
or termination of the Letters of Credit and termination of this Agreement until
expiration of the applicable statute of limitations period.

         15.6     Assignments; Participations.

                                       66



         15.6.1   Assignments. (a) Any Lender may at any time assign to one or
more Persons (any such Person, an "Assignee") all or any portion of such
Lender's Loans and Commitments, with the prior written consent of the Agents,
the Issuing Lender and, so long as no Event of Default exists, the Company
(which consents shall not be unreasonably withheld or delayed and shall not be
required for an assignment by a Lender to a Lender or an Affiliate of a Lender).
Except as the Administrative Agent may otherwise agree, any such assignment
shall be in a minimum aggregate amount equal to $5,000,000 or, if less, the
remaining Commitment and Loans held by the assigning Lender. The Company and the
Agents shall be entitled to continue to deal solely and directly with such
Lender in connection with the interests so assigned to an Assignee until the
Agents shall have received and accepted an effective assignment agreement in
substantially the form of Exhibit D hereto (an "Assignment Agreement") executed,
delivered and fully completed by the applicable parties thereto and a processing
fee of $3,500 payable by Assignor or Assignee. No assignment may be made to any
Person if at the time of such assignment the Company would be obligated to pay
any greater amount under Section 7.6 or 8 to the Assignee than the Company is
then obligated to pay to the assigning Lender under such Sections (and if any
assignment is made in violation of the foregoing, the Company will not be
required to pay such greater amounts). Any attempted assignment not made in
accordance with this Section 15.6.1 shall be treated as the sale of a
participation under Section 15.6.2. The Company shall be deemed to have granted
its consent to any assignment requiring its consent hereunder unless the Company
has expressly objected to such assignment within three Business Days after
notice thereof.

         (b)      From and after the date on which the conditions described
above have been met, (i) such Assignee shall be deemed automatically to have
become a party hereto and, to the extent that rights and obligations hereunder
have been assigned to such Assignee pursuant to such Assignment Agreement, shall
have the rights and obligations of a Lender hereunder and (ii) the assigning
Lender, to the extent that rights and obligations hereunder have been assigned
by it pursuant to such Assignment Agreement, shall be released from its rights
(other than its indemnification rights) and obligations hereunder. Upon the
request of the Assignee (and, as applicable, the assigning Lender) pursuant to
an effective Assignment Agreement, the Company shall execute and deliver to the
Administrative Agent for delivery to the Assignee (and, as applicable, the
assigning Lender) a Note in the principal amount of the Assignee's Pro Rata
Share of the Revolving Commitment (and, as applicable, a Note in the principal
amount of the Pro Rata Share of the Revolving Commitment retained by the
assigning Lender. Each such Note shall be dated the effective date of such
assignment. Upon receipt by the assigning Lender of such Note, the assigning
Lender shall return to the Company any prior Note held by it.

         (c)      Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

                                       67



         (d)      Notwithstanding the foregoing provisions of this Section 15.6,
any lender (a "Granting Lender"), may grant to a special purpose funding vehicle
(an "SPC"), identified as such in writing by the Granting Lender to the
Administrative Agent and the Company, the option to provide to the Company all
or any part of any Loans that such Granting Lender would otherwise be obligated
to make the Company pursuant to this Agreement; provided that (i) nothing herein
shall constitute a commitment by any SPC to make any Loan; and (ii) if an SPC
elects not to exercise such option or otherwise fails to provide all or any part
of such Loan, the Granting Lender shall be obligated to make such Loan pursuant
to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the
Commitment of the Granting Lender to the same extent, and as if such Loan were
made by such Granting Lender. No SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which shall
remain with the Granting Lender). Any SPC may (i) with notice to, but without
the prior written consent of, the Company and the Administrative Agent and
without paying any processing fee therefore, assign all or a portion of its
interests in any Loans to the Granting Lender or to any financial institutions
(consented to by the Company and the Agents) providing liquidity and/or credit
support to or for the account of such SPC to support the funding or maintenance
of Loans and (ii) disclose on a confidential basis any non-public information
relating to its Loans to any rating agency, commercial paper dealer or provider
of any surety, guarantee or credit or liquidity enhancement to such SPC. This
Section 15.6.1(d) may not be amended without the prior written consent of each
Granting Lender, all or any of whose Loans are being funded by an SPC at the
time of such amendment. For the avoidance of doubt, the Granting Lender shall
for all purposes, including without limitation, the approval of any amendment or
waiver of any provision of any Loan Document or the obligation to pay any amount
otherwise payable by the Granting Lender under the Loan Documents, continue to
be the Lender of record hereunder.

         15.6.2   Participations. Any Lender may at any time sell to one or more
Persons participating interests in its Loans, Commitments or other interests
hereunder (any such Person, a "Participant"). In the event of a sale by a Lender
of a participating interest to a Participant, (a) such Lender's obligations
hereunder shall remain unchanged for all purposes, (b) the Company and the
Agents shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations hereunder and (c) all amounts payable
by the Company shall be determined as if such Lender had not sold such
participation and shall be paid directly to such Lender. No Participant shall
have any direct or indirect voting rights hereunder except with respect to any
event described in Section 15.1 expressly requiring the unanimous vote of all
Lenders or, as applicable, all affected Lenders. Each Lender agrees to
incorporate the requirements of the preceding sentence into each participation
agreement which such Lender enters into with any Participant. The Company agrees
that if amounts outstanding under this Agreement are due and payable (as a
result of acceleration or otherwise), each Participant shall be deemed to have
the right of set-off in respect of its participating interest in amounts owing
under this Agreement and with respect to any Letter of Credit to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement; provided that such right of set-off shall be
subject to the obligation of each Participant to share with the Lenders, and the
Lenders agree to share with each Participant, as provided in Section 7.5. The
Company also agrees that each Participant shall be entitled to the benefits of
Section 7.6 or 8 as

                                       68



if it were a Lender (provided that on the date of the participation no
Participant shall be entitled to any greater compensation pursuant to Section
7.6 or 8 than would have been paid to the participating Lender on such date if
no participation had been sold and that each Participant complies with Section
7.6(d) as if it were an Assignee).

         15.7     Register. The Administrative Agent shall maintain a copy of
each Assignment Agreement delivered and accepted by it and register (the
"Register") for the recordation of names and addresses of the Lenders and the
Commitment of each Lender from time to time and whether such Lender is the
original Lender or the Assignee. No assignment shall be effective unless and
until the Assignment Agreement is accepted and registered in the Register. All
records of transfer of a Lender's interest in the Register shall be conclusive,
absent manifest error, as to the ownership of the interests in the Loans. The
Administrative Agent shall provide the Co-Agent a copy of the Register promptly
upon the Co-Agent's request. The Administrative Agent shall not incur any
liability of any kind with respect to any Lender with respect to the maintenance
of the Register.

         15.8     GOVERNING LAW. THIS AGREEMENT AND EACH NOTE SHALL BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

         15.9     Confidentiality. As required by federal law and the
Administrative Agent's policies and practices, the Administrative Agent may need
to obtain, verify, and record certain customer identification information and
documentation in connection with opening or maintaining accounts, or
establishing or continuing to provide services. The Agents and each Lender agree
to use commercially reasonable efforts (equivalent to the efforts the Agents or
such Lender applies to maintain the confidentiality of its own confidential
information) to maintain as confidential all information provided to them by any
Loan Party and designated as confidential for a period of 2 years following
receipt thereof, except that the Agents and each Lender may disclose such
information (a) to Persons employed or engaged by the such Agent or such Lender
in evaluating, approving, structuring or administering the Loans and the
Commitments; (b) to any assignee or participant or potential assignee or
participant that has agreed to comply with the covenant contained in this
Section 15.9 (and any such assignee or participant or potential assignee or
participant may disclose such information to Persons employed or engaged by them
as described in clause (a) above); (c) as required or requested by any federal
or state regulatory authority or examiner, or any insurance industry
association, or as reasonably believed by the such Agent or such Lender to be
compelled by any court decree, subpoena or legal or administrative order or
process; (d) as, on the advice of such Agent's or such Lender's counsel, is
required by law; (e) in connection with the exercise of any right or remedy
under the Loan Documents or in connection with any litigation to which such
Agent or such Lender is a party; (f) to any nationally recognized rating agency
that requires access to information about a Lender's investment portfolio in
connection with ratings issued with respect to such Lender; (g) to any Affiliate
of any Agent, the Issuing Lender or any other Lender who may provide Bank

                                       69



Products to the Loan Parties; or (h) that ceases to be confidential through no
fault of any Agent or any Lender. Notwithstanding the foregoing, the Company
consents to the publication by any Agent or any Lender of a tombstone or similar
advertising material relating to the financing transactions contemplated by this
Agreement, and the Agents reserve the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements; provided that GE Capital may not be referenced in any such
advertising material without GE Capital's prior written consent.

         15.10    Severability. Whenever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement. All obligations of the
Company and rights of the Agents and the Lenders expressed herein or in any
other Loan Document shall be in addition to and not in limitation of those
provided by applicable law.

         15.11    Nature of Remedies. All Obligations of the Company and rights
of the Administrative Agent and the Lenders expressed herein or in any other
Loan Document shall be in addition to and not in limitation of those provided by
applicable law. No failure to exercise and no delay in exercising, on the part
of any Agent or any Lender, any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.

         15.12    Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the parties
hereto and supersedes all prior or contemporaneous agreements and understandings
of such Persons, verbal or written, relating to the subject matter hereof and
thereof (except as relates to the fees described in Section 5.3) and any prior
arrangements made with respect to the payment by the Company of (or any
indemnification for) any fees, costs or expenses payable to or incurred (or to
be incurred) by or on behalf of the Agents or the Lenders.


         15.13    Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement. Receipt
of an executed signature page to this Agreement by facsimile or other electronic
transmission shall constitute effective delivery thereof. Electronic records of
executed Loan Documents maintained by the Lenders shall be deemed to be
originals.

         15.14    Successors and Assigns. This Agreement shall be binding upon
the Company, the Lenders and the Agents and their respective successors and
assigns, and shall inure to the benefit of the Company, the Lenders and the
Agents and the successors and assigns of the Lenders and the Agents. No other
Person shall be a direct or indirect legal beneficiary of, or have any direct

                                       70



or indirect cause of action or claim in connection with, this Agreement or any
of the other Loan Documents. The Company may not assign or transfer any of its
rights or Obligations under this Agreement without the prior written consent of
the Agents and each Lender.

         15.15    Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.

         15.16    Customer Identification - USA Patriot Act Notice. Each Lender
and LaSalle (for itself and not on behalf of any other party) hereby notifies
the Loan Parties that, pursuant to the requirements of the USA Patriot Act,
Title III of Pub. L. 107-56, signed into law October 26, 2001 (the "Act"), it is
required to obtain, verify and record information that identifies the Loan
Parties, which information includes the name and address of the Loan Parties and
other information that will allow such Lender or LaSalle, as applicable, to
identify the Loan Parties in accordance with the Act.

         15.17    INDEMNIFICATION BY THE COMPANY. IN CONSIDERATION OF THE
EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE AGENTS AND THE LENDERS AND THE
AGREEMENT TO EXTEND THE COMMITMENTS PROVIDED HEREUNDER, THE COMPANY HEREBY
AGREES TO INDEMNIFY, EXONERATE AND HOLD EACH AGENT, EACH LENDER AND EACH OF THE
OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES AND AGENTS OF THE AGENTS AND EACH
LENDER (EACH A "LENDER PARTY") FREE AND HARMLESS FROM AND AGAINST ANY AND ALL
ACTIONS, CAUSES OF ACTION, SUITS, LOSSES, LIABILITIES, DAMAGES AND EXPENSES,
INCLUDING ATTORNEY COSTS (COLLECTIVELY, THE "INDEMNIFIED LIABILITIES"), INCURRED
BY THE LENDER PARTIES OR ANY OF THEM AS A RESULT OF, OR ARISING OUT OF, OR
RELATING TO (A) ANY TENDER OFFER, MERGER, PURCHASE OF CAPITAL SECURITIES,
PURCHASE OF ASSETS OR OTHER SIMILAR TRANSACTION FINANCED OR PROPOSED TO BE
FINANCED IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITH THE PROCEEDS OF ANY
OF THE LOANS, (B) THE USE, HANDLING, RELEASE, EMISSION, DISCHARGE,
TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANY HAZARDOUS SUBSTANCE AT ANY
PROPERTY OWNED OR LEASED BY ANY LOAN PARTY, (C) ANY VIOLATION OF ANY
ENVIRONMENTAL LAWS WITH RESPECT TO CONDITIONS AT ANY PROPERTY OWNED OR LEASED BY
ANY LOAN PARTY OR THE OPERATIONS CONDUCTED THEREON, (D) THE INVESTIGATION,
CLEANUP OR REMEDIATION OF OFFSITE LOCATIONS AT WHICH ANY LOAN PARTY OR THEIR
RESPECTIVE PREDECESSORS ARE ALLEGED TO HAVE DIRECTLY OR INDIRECTLY DISPOSED OF
HAZARDOUS SUBSTANCES OR (E) THE EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT
OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BY ANY OF THE LENDER PARTIES,
EXCEPT FOR ANY SUCH INDEMNIFIED LIABILITIES ARISING ON ACCOUNT OF CLAIMS AMONG
OR BETWEEN THE LENDERS (EXCEPT UPON THE OCCURRENCE OF A DEFAULT OR EVENT OF

                                       71



DEFAULT) OR THE APPLICABLE LENDER PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
AS DETERMINED BY A FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT
JURISDICTION. IF AND TO THE EXTENT THAT THE FOREGOING UNDERTAKING MAY BE
UNENFORCEABLE FOR ANY REASON, THE COMPANY HEREBY AGREES TO MAKE THE MAXIMUM
CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIED
LIABILITIES WHICH IS PERMISSIBLE UNDER APPLICABLE LAW. ALL OBLIGATIONS PROVIDED
FOR IN THIS SECTION 15.17 SHALL SURVIVE REPAYMENT OF THE LOANS, CANCELLATION OF
THE NOTES, EXPIRATION OR TERMINATION OF THE LETTERS OF CREDIT, ANY FORECLOSURE
UNDER, OR ANY MODIFICATION, RELEASE OR DISCHARGE OF, ANY OR ALL OF THE
COLLATERAL DOCUMENTS AND TERMINATION OF THIS AGREEMENT. UNTIL THE EXPIRATION OF
THE APPLICABLE STATUTE OF LIMITATIONS PERIOD.

         15.18    Nonliability of Lenders. The relationship between the Company
on the one hand and the Lenders, Administrative Agent and Co-Agent on the other
hand shall be solely that of borrower and lender. Neither the Administrative
Agent, Co-Agent nor any Lender has any fiduciary relationship with or duty to
any Loan Party arising out of or in connection with this Agreement or any of the
other Loan Documents, and the relationship between the Loan Parties, on the one
hand, and the Administrative Agent, Co-Agent and the Lenders, on the other hand,
in connection herewith or therewith is solely that of debtor and creditor.
Neither the Administrative Agent, Co-Agent nor any Lender undertakes any
responsibility to any Loan Party to review or inform any Loan Party of any
matter in connection with any phase of any Loan Party's business or operations.
The Company agrees, on behalf of itself and each other Loan Party, that neither
the Administrative Agent, Co-Agent nor any Lender shall have liability to any
Loan Party (whether sounding in tort, contract or otherwise) for losses suffered
by any Loan Party in connection with, arising out of, or in any way related to
the transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. NO LENDER PARTY
SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY OTHERS OF ANY
INFORMATION OR OTHER MATERIALS OBTAINED THROUGH INTRALINKS OR OTHER SIMILAR
INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT, NOR SHALL
ANY LENDER PARTY HAVE ANY LIABILITY WITH RESPECT TO, AND THE COMPANY ON BEHALF
OF ITSELF AND EACH OTHER LOAN PARTY, HEREBY WAIVES, RELEASES AND AGREES NOT TO
SUE FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ARISING OUT OF ITS ACTIVITIES IN
CONNECTION HEREWITH OR THEREWITH (WHETHER BEFORE OR AFTER THE CLOSING DATE). The
Company acknowledges that it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents to which
it is a party. No joint venture is created

                                       72



hereby or by the other Loan Documents or otherwise exists by virtue of the
transactions contemplated hereby among the Lenders or among the Loan Parties and
the Lenders.

         15.19    FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
CIRCUIT COURT OF COOK COUNTY, ILLINOIS OR IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO PRECLUDE THE ADMINISTRATIVE AGENT FROM BRINGING
SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. THE COMPANY HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE CIRCUIT COURT OF
COOK COUNTY, ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.
THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
ILLINOIS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.

         15.20    WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE AGENTS AND EACH
LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.

                                       73

EX-10.2

                                                                    Exhibit 10.2

                            TITAN INTERNATIONAL, INC.

                         5-1/4% Senior Convertible Notes

                                    due 2009

                                    INDENTURE

                         U.S. BANK NATIONAL ASSOCIATION

                            Dated as of July 26, 2004



                             CROSS REFERENCE TABLE*



TIA Section                                                                           Indenture Section
                                                                                   
310(a)(1)...........................................................................       7.10
   (a)(2)...........................................................................       N.A.
   (a)(3)...........................................................................       N.A.
   (a)(4)...........................................................................       N.A.
   (a)(5)...........................................................................       N.A.
   (b)..............................................................................       7.10
   (c)..............................................................................       N.A.
311(a)..............................................................................       7.11
   (b)..............................................................................       7.11
   (c)..............................................................................       N.A.
312(a)..............................................................................       N.A.
   (b)..............................................................................      11.03
   (c)..............................................................................      11.03
313(a)..............................................................................       7.06
   (b)..............................................................................       7.06
   (c)..............................................................................       N.A.
   (d)..............................................................................       N.A.
314(a)..............................................................................       4.02
   (b)..............................................................................       N.A.
   (c)(1)...........................................................................       N.A.
   (c)(2)...........................................................................       N.A.
   (c)(3)...........................................................................       N.A.
   (d)..............................................................................       N.A.
   (e)..............................................................................       N.A.
   (f)..............................................................................       N.A.
315(a)..............................................................................       7.01
   (b)..............................................................................       7.05
   (c)..............................................................................       N.A.
   (d)(1)...........................................................................       7.01
   (d)(2)...........................................................................       7.01
   (d)(3)...........................................................................       7.01
   (e)..............................................................................       6.11
316(a) (last sentence)..............................................................       N.A.
   (a)(1)(A)........................................................................       6.05
   (a)(1)(B)........................................................................       6.04
   (a)(2)...........................................................................       N.A.
   (b)..............................................................................       N.A.
317(a)(1)...........................................................................       N.A.
   (a)(2)...........................................................................       N.A.
   (b)..............................................................................       N.A.
318(a)..............................................................................       N.A.


- ----------
* Note: This Cross Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.



                                TABLE OF CONTENTS



                                                                                                               PAGE
                                                                                                            
                                                         ARTICLE 1
                                  DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 1.01      Definitions.............................................................................       1
SECTION 1.02      Other Definitions.......................................................................       7
SECTION 1.03      Incorporation by Reference of Trust Indenture Act.......................................       8
SECTION 1.04      Rules of Construction...................................................................       8
SECTION 1.05      Acts of Holders.........................................................................       8

                                                         ARTICLE 2
                                                       THE SECURITIES

SECTION 2.01      Form and Dating.........................................................................       9
SECTION 2.02      Execution and Authentication............................................................      11
SECTION 2.03      Registrar, Paying Agent, Bid Solicitation Agent and Conversion Agent....................      11
SECTION 2.04      Paying Agent to Hold Money and Securities in Trust......................................      12
SECTION 2.05      Holder Lists............................................................................      12
SECTION 2.06      Transfer and Exchange...................................................................      12
SECTION 2.07      Replacement Securities..................................................................      14
SECTION 2.08      Outstanding Securities; Determinations of Holders' Action...............................      15
SECTION 2.09      Temporary Securities....................................................................      15
SECTION 2.10      Cancellation............................................................................      16
SECTION 2.11      Persons Deemed Owners...................................................................      16
SECTION 2.12      Global Securities.......................................................................      16
SECTION 2.13      CUSIP Numbers...........................................................................      21
SECTION 2.14      Defaulted Interest......................................................................      21
SECTION 2.15      Registration Default....................................................................      21

                                                         ARTICLE 3
                                                  PURCHASES OF SECURITIES

SECTION 3.01      Purchase of Securities at Option of the Holder upon Change in Control...................      22
SECTION 3.02      Effect of Change in Control Purchase Notice.............................................      28
SECTION 3.03      Deposit of Change in Control Purchase Price.............................................      29
SECTION 3.04      Securities Purchased in Part............................................................      29
SECTION 3.05      Covenant to Comply with Securities Laws upon Purchase of Securities.....................      29
SECTION 3.06      Repayment to the Company................................................................      30

                                                         ARTICLE 4
                                                         COVENANTS

SECTION 4.01      Payment of Principal, Premium, Interest on the Securities...............................      30
SECTION 4.02      SEC and Other Reports...................................................................      30
SECTION 4.03      Compliance Certificate..................................................................      31
SECTION 4.04      Further Instruments and Acts............................................................      31




                                                                                                             
SECTION 4.05      Maintenance of Office or Agency.........................................................      31
SECTION 4.06      Delivery of Certain Information.........................................................      31
SECTION 4.07      Additional Interest Amounts Notice......................................................      32

                                                         ARTICLE 5
                                                   SUCCESSOR CORPORATION

SECTION 5.01      When Company May Merge or Transfer Assets...............................................      32

                                                         ARTICLE 6
                                                   DEFAULTS AND REMEDIES

SECTION 6.01      Events of Default.......................................................................      33
SECTION 6.02      Acceleration............................................................................      35
SECTION 6.03      Other Remedies..........................................................................      35
SECTION 6.04      Waiver of Past Defaults.................................................................      35
SECTION 6.05      Control by Majority.....................................................................      36
SECTION 6.06      Limitation on Suits.....................................................................      36
SECTION 6.07      Rights of Holders to Receive Payment and to Convert.....................................      36
SECTION 6.08      Collection Suit by Trustee..............................................................      37
SECTION 6.09      Trustee May File Proofs of Claim........................................................      37
SECTION 6.10      Priorities..............................................................................      37
SECTION 6.11      Undertaking for Costs...................................................................      38
SECTION 6.12      Waiver of Stay, Extension or Usury Laws.................................................      38

                                                         ARTICLE 7
                                                          TRUSTEE

SECTION 7.01      Duties of Trustee.......................................................................      38
SECTION 7.02      Rights of Trustee.......................................................................      39
SECTION 7.03      Individual Rights of Trustee............................................................      41
SECTION 7.04      Trustee's Disclaimer....................................................................      41
SECTION 7.05      Notice of Defaults......................................................................      41
SECTION 7.06      Reports by Trustee to Holders...........................................................      42
SECTION 7.07      Compensation and Indemnity..............................................................      42
SECTION 7.08      Replacement of Trustee..................................................................      42
SECTION 7.09      Successor Trustee by Merger.............................................................      43
SECTION 7.10      Eligibility; Disqualification...........................................................      43
SECTION 7.11      Preferential Collection of Claims Against Company.......................................      43

                                                         ARTICLE 8
                                                   DISCHARGE OF INDENTURE

SECTION 8.01      Discharge of Liability on Securities....................................................      44
SECTION 8.02      Repayment of the Company................................................................      44
SECTION 8.03      Deposited Monies to Be Held in Trust by Trustee.........................................      44
SECTION 8.04      Reinstatement...........................................................................      44






                                                                                                             
                                                         ARTICLE 9
                                                         AMENDMENTS

SECTION 9.01      Without Consent of Holders..............................................................      45
SECTION 9.02      With Consent of Holders.................................................................      46
SECTION 9.03      Compliance with Trust Indenture Act.....................................................      46
SECTION 9.04      Revocation and Effect of Consents, Waivers and Actions..................................      46
SECTION 9.05      Notation on or Exchange of Securities...................................................      47
SECTION 9.06      Trustee to Sign Supplemental Indentures.................................................      47
SECTION 9.07      Effect of Supplemental Indentures.......................................................      47

                                                         ARTICLE 10
                                                         CONVERSION

SECTION 10.01     Conversion Right and Conversion Rate....................................................      47
SECTION 10.02     Exercise of Conversion Right............................................................      47
SECTION 10.03     Fractions of Shares.....................................................................      49
SECTION 10.04     Adjustment of Conversion Rate...........................................................      49
SECTION 10.05     Notice of Adjustments of Conversion Rate................................................      55
SECTION 10.06     Notice Prior to Certain Actions.........................................................      56
SECTION 10.07     Company to Reserve Common Stock.........................................................      57
SECTION 10.08     Taxes on Conversions....................................................................      57
SECTION 10.09     Covenant as to Common Stock.............................................................      57
SECTION 10.10     Cancellation of Converted Securities....................................................      57
SECTION 10.11     Effect of Reclassification, Consolidation, Merger or Sale...............................      57
SECTION 10.12     Adjustment for Other Distributions......................................................      58
SECTION 10.13     Responsibility of Trustee for Conversion Provisions.....................................      59
SECTION 10.14     Rights Issued in Respect of Common Stock Issued Upon Conversion.........................      60

                                                         ARTICLE 11
                                                       MISCELLANEOUS

SECTION 11.01     Trust Indenture Act Controls............................................................      60
SECTION 11.02     Notices.................................................................................      60
SECTION 11.03     Communication by Holders with Other Holders.............................................      61
SECTION 11.04     Certificate and Opinion as to Conditions Precedent......................................      61
SECTION 11.05     Statements Required in an Officers' Certificate or Opinion..............................      61
SECTION 11.06     Separability Clause.....................................................................      62
SECTION 11.07     Rules by Trustee, Paying Agent, Conversion Agent and Registrar..........................      62
SECTION 11.08     Legal Holidays..........................................................................      62
SECTION 11.09     GOVERNING LAW...........................................................................      62
SECTION 11.10     No Recourse Against Others..............................................................      62
SECTION 11.11     Successors..............................................................................      62
SECTION 11.12     Multiple Originals......................................................................      62






                                                                                                             
EXHIBITS

Exhibit A         Form of Global Security.................................................................      A-1
Exhibit B         Form of Certificated Security...........................................................      B-1
Exhibit C         Transfer Certificate....................................................................      C-1






         INDENTURE dated as of July 26, 2004 between TITAN INTERNATIONAL, INC.,
an Illinois corporation (the "Company"), and U.S. BANK NATIONAL ASSOCIATION, as
Trustee hereunder (the "Trustee").

                             RECITALS OF THE COMPANY

         The Company has duly authorized the creation of an issue of its 5-1/4%
Senior Convertible Notes due 2009 (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 the Securities are
executed by the Company and authenticated and delivered hereunder, the valid
obligations of the Company, and to make this Indenture a valid and binding
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 covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:

                                   ARTICLE 1

             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

         SECTION 1.01 Definitions. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:

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

                  (2) all accounting terms not otherwise defined herein have the
         meanings assigned to them in accordance with GAAP; and

                  (3) 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.

         "144A Global Security" means a permanent Global Security in the form of
the Security attached hereto as Exhibit A, and that is deposited with and
registered in the name of the Depositary, representing Securities sold in
reliance on Rule 144A under the Securities Act.



         "30-day Option" means the 30-day option granted by the Company to the
Initial Purchasers to purchase up to an additional $15,000,000 aggregate
principal amount of Securities pursuant to the Purchase Agreement.

         "Additional Interest Amount" means the additional interest amount
payable by the Company upon the occurrence of an Event (as defined in the
Registration Rights Agreement), in the manner and in the amounts provided by the
Registration Rights Agreement.

         "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 purposes of this definition, "control"
when used with respect to any specified person means the power to direct or
cause the direction of 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.

         "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 Security, in each case to the
extent applicable to such transaction and as in effect from time to time.

         "bank credit facilities" means the Company's three-year $100 million
senior secured revolving credit facility entered into as of July 23, 2004 among
the Company and LaSalle Bank Association and General Electric Capital
Corporation.

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

         "Bid Solicitation Agent" means any person authorized by the Company to
solicit bids in accordance with Article 10 hereof.

         "Board of Directors" means either the board of directors of the Company
or any duly authorized committee of such 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 be in full force and effect on the date of such certification,
shall have been delivered to the Trustee.

         "Business Day" means each day of the year other than a Saturday or a
Sunday on which banking institutions are not required or authorized to close in
The City of New York.

         "Capital Stock" of any corporation means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) stock or other equity issued by that
corporation.

         "Certificated Securities" means Securities that are in the form of the
Securities attached hereto as Exhibit B.

                                       2


         "Closing Time" has the meaning specified in the Purchase Agreement.

         "Common Stock" means the Common Stock, no par value per share, of the
Company as it exists on the date of this Indenture. Subject to the provisions of
Section 10.11, shares issuable on conversion 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" means any stock of any class of Capital Stock which has
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the issuer.

         "Company" means the party named as the "Company" in the first paragraph
of this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture, and, thereafter, "Company" shall mean such
successor. The foregoing sentence shall likewise apply to any subsequent such
successor or successors.

         "Company Request" or "Company Order" means a written request or order
signed in the name of the Company by any two Officers.

         "Conversion Agent" means any person authorized by the Company to
convert Securities in accordance with Article 10 hereof. On the date of this
Indenture, the Company hereby appoints the Trustee as the Conversion Agent.

         "Conversion Price" means $1,000 divided by the applicable Conversion
Rate.

         "Conversion Value" for the Securities is equal to the product of (i)
the Sale Price per share of the Common Stock on a given day and (ii) the then
current Conversion Rate.

"Corporate Trust Office" means the principal office of the Trustee at which at
any time its corporate trust business shall be administered, which office at the
date hereof is located at U.S. Bank, Corporate Trust Services, 100 Wall Street,
Suite 1600, New York, New York 10005, or such other address as the Trustee may
designate from time to time by notice to the Holders and the Company, or the
principal corporate trust office of any successor Trustee (or such other address
as a successor Trustee may designate from time to time by notice to the Holders
and the Company).

         "Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.

         "Date of Delivery" has the meaning specified in the Purchase Agreement.

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

                                       3


         "Dollar" or "U.S.$" means a dollar or other equivalent unit in such
coin or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.

         "GAAP" means United States generally accepted accounting principles as
in effect from time to time.

         "Global Securities" means Securities that are in the form of the
Securities attached hereto as Exhibit A and, to the extent that such Securities
are required to bear the Legend required by Section 2.06, such Securities will
be in the form of a 144A Global Security.

         "Holder" means a person in whose name a Security is registered on the
Registrar's books.

         "Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof, including the provisions of the TIA
that are deemed to be a part hereof.

         "Initial Purchasers" mean Merrill Lynch, Pierce, Fenner & Smith
Incorporated, LaSalle Debt Capital Markets, a division of ABN AMRO Financial
Services, Inc. and Harris Nesbitt Corp.

         "Interest Payment Date" means the date specified in the Securities as
the fixed date on which an installment of interest on the Securities is due and
payable.

         "Interest Rate" means 5-1/4% per annum.

         "Issue Date" of any Security means the date on which the Security was
originally issued or deemed issued as set forth on the face of the Security.

         "Officer" means the Chairman of the Board, the Vice Chairman, the Chief
Executive Officer, the President, any Executive Vice President, any Senior Vice
President, any Vice President, the Treasurer or the Secretary or any Assistant
Treasurer or Assistant Secretary of the Company.

         "Officers' Certificate" means a written certificate containing the
information specified in Section 11.05, signed in the name of the Company by any
two Officers, and delivered to the Trustee. An Officers' Certificate given
pursuant to Section 4.03 shall be signed by one authorized financial or
accounting Officer of the Company but need not contain the information specified
in Section 11.05.

         "Opinion of Counsel" means a written opinion containing the information
specified in Sections 11.04 and 11.05, from legal counsel who is reasonably
acceptable to the Trustee. The counsel may be an employee of, or counsel to, the
Company or the Trustee.

         "person" or "Person" means any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, or government or any agency or political
subdivision thereof, including any

                                       4


subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business.

         "principal" of a Security means the principal amount due on the Stated
Maturity as set forth on the face of the Security.

         "Purchase Agreement" means the Purchase Agreement, dated as of July 20,
2004, between the Company and the Initial Purchasers.

         "Registration Rights Agreement" means the Registration Rights Agreement
dated as of July 26, 2004 entered into by the Company and the Initial
Purchasers.

         "Regular Record Date" means, with respect to the interest payable on
any Interest Payment Date, the close of business on the June 15 or December 15
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date.

         "Responsible Officer" means, when used with respect to the Trustee, any
officer within the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Trustee who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person's knowledge of and familiarity with the particular
subject.

         "Restricted Security" means a Security required to bear the restrictive
legend set forth in the form of Security set forth in Exhibits A and B of this
Indenture.

         "Rule 144" means Rule 144 under the Securities Act (or any successor
provision), as it may be amended from time to time.

         "Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.

         "Sale Price" as of any date means the closing per share sale price (or
if no closing sale price is reported, the average of the bid price and ask
prices or, if more than one in either case, the average of the average bid and
average ask prices) on such date on the New York Stock Market or such other
principal United States securities exchange on which the Common Stock is traded
or, if the Common Stock is not listed on a United States national or regional
securities exchange, as reported by the National Association of Securities
Dealers Automated Quotation System or by the National Quotation Bureau
Incorporated. In the absence of a quotation, the Company will determine the sale
price on the basis of such quotations as the Company considers appropriate.

         "SEC" means the Securities and Exchange Commission.

         "Securities" has the meaning ascribed to it in the first paragraph
under the caption "Recitals of the Company."

                                       5


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

         "Significant Subsidiary" means any Subsidiary that would be, as of the
date of the applicable action set forth in Section 6.01(6) or Section 6.01(7)
hereof, a "significant subsidiary" of the Company within the meaning of Rule
1-02(w) of Regulation S-X promulgated by the SEC.

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

         "Subsidiary" means, with respect to any person, (1) any corporation of
which at least a majority of the outstanding stock having by the terms thereof
voting power for the election of directors for such corporation under ordinary
circumstances is at the time, directly or indirectly, owned by such person or
(2) any other person of which at least a majority of the outstanding voting
interest under ordinary circumstances is at the time, directly or indirectly,
owned by such person.

         "TIA" means the Trust Indenture Act of 1939 as in effect on the date of
this Indenture, provided, however, that in the event the TIA is amended after
such date, TIA means, to the extent required by any such amendment, the TIA as
so amended.

         "Trading Day" means a day during which trading in securities generally
occurs on the New York Stock Exchange or, if the Common Stock is not listed on a
national or regional securities exchange, on the National Association of
Securities Dealers Automated Quotation System, or, if the Common Stock is not
quoted on the National Association of Securities Dealers Automated Quotation
System, on the principal other market on which the Common Stock is then traded.

         "Trustee" means the party named as the "Trustee" in the first paragraph
of this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.

         "United States" means the United States of America (including the
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction (its "possessions" including Puerto Rico, the
U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands).

         "U.S. Government Obligations" means (A) securities that are (i) direct
obligations of the United States of America, for the payment of which the full
faith and credit of the United States is pledged or (ii) obligations of a Person
controlled or supervised by or acting as an agency or instrumentality of the
United States, the payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States, which, in either case, are not
callable or redeemable at the option of the issuer thereof at any time prior to
the stated maturity thereof, or (B) any mutual fund that has at least 95% of its
assets continuously invested in investments of the type described in clause (A)
above and has the highest rating attainable by

                                       6


Moody's Investor Services and Standard & Poor's Ratings Services, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such U.S. Government Obligation or a specific payment of interest
on or principal of any such U.S. Government Obligation held by such custodian
for the account of the holder of a depository receipt; provided that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the U.S. Government Obligation for the specific
payment of interest on or principal of the U.S. Government Obligation evidenced
by such depository receipt.

         SECTION 1.02 Other Definitions.



Term                                                                                          Defined in Section
- ----                                                                                          ------------------
                                                                                           
"Act"...............................................................................             1.05(a)
"Additional Interest Amounts Notice.................................................             4.07
"Agent Members".....................................................................             2.12(f)(5)
"Change in Control".................................................................             3.01(a)
"Change in Control Purchase Date"...................................................             3.01(a)
"Change in Control Purchase Notice".................................................             3.01(c)
"Change in Control Purchase Price"..................................................             3.01(a)
"Conversion Date"...................................................................             10.02
"Conversion Rate"...................................................................             10.01
"Current Market Price"..............................................................             10.04(g)
"Depositary"........................................................................             2.01(a)
"dividend threshold amount".........................................................             10.04(e)
"DTC"...............................................................................             2.01(a)
"Effective Date"....................................................................             3.01(a)
"Event of Default"..................................................................             6.01
"Exchange Act"......................................................................             3.01(a)
"excluded securities"...............................................................             10.04(d)
"Expiration Time"...................................................................             10.04(f)
"Ex-Dividend Date"..................................................................             10.12
"fair market value".................................................................             10.04(g)
"Legal Holiday".....................................................................             11.08
"Legend"............................................................................             2.06(f)
"Make-Whole Premium"................................................................             3.01(a)
"Non-Electing Share"................................................................             10.11
"Notice of Default".................................................................             6.01
"Paying Agent"......................................................................             2.03
"Purchased Shares"..................................................................             10.04(f)
"Post-Distribution Price"...........................................................             10.12
"QIBs"..............................................................................             2.01(a)
"Record Date".......................................................................             10.04(g)
"Reference Period"..................................................................             10.04(d)
"Registrar".........................................................................             2.03
"Rights Plan".......................................................................             10.14
"Rule 144A Information".............................................................             4.06


                                       7


                                                                                      
"Stock Price".......................................................................     3.01(a)
"transfer"..........................................................................     2.12(e)



         SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:

         "Commission" means the SEC.

         "indenture Securities" means the Securities.

         "indenture Security holder" means a Holder.

         "indenture trustee" or "institutional trustee" means the Trustee.

         "obligor" on the indenture Securities means the Company.

         All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.

         SECTION 1.04 Rules of Construction. Unless the context otherwise
requires:

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

         (b) an accounting term not otherwise defined has the meaning assigned
      to it in accordance with GAAP as in effect from time to time;

         (c) "or" is not exclusive;

         (d) "including" means including, without limitation; and

         (e) words in the singular include the plural, and words in the plural
      include the singular.

         SECTION 1.05 Acts of Holders.

         (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 their agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of 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

                                       8


of this Indenture and conclusive in favor of the Trustee and the Company, if
made in the manner provided in this Section.

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

         (c) The ownership of Securities shall be proved by the register for the
Securities or by a certificate of the Registrar.

         (d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the holder of every Security issued upon the
registration of transfer thereof or in exchange therefor 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.

         (e) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a resolution of the Board of Directors, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be
Holders for purposes of determining whether Holders of the requisite proportion
of outstanding Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other Act,
and for that purpose the outstanding Securities shall be computed as of such
record date; provided that no such authorization, agreement or consent by the
Holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than six months
after the record date.

                                   ARTICLE 2

                                 THE SECURITIES

         SECTION 2.01 Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibits A
and B, which are incorporated into and made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule or usage (provided that any such notation,

                                       9


legend or endorsement required by usage is in a form acceptable to the Company).
The Company shall provide any such notations, legends or endorsements to the
Trustee in writing. Each Security shall be dated the date of its authentication.

         (a) 144A Global Securities. Securities offered and sold within the
United States to "qualified institutional buyers" as defined in Rule 144A
("QIBs") in reliance on Rule 144A shall be issued initially in the form of a
144A Global Security, which shall be deposited with the Trustee at its Corporate
Trust Office, as custodian for, and registered in the name of, The Depository
Trust Company ("DTC") or its nominee (such depositary, or any successor thereto,
and any such nominee being hereinafter referred to as the "Depositary") duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the 144A Global Security may from
time to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary as hereinafter provided.

         (b) Global Securities in General. Except as provided in Section 2.06 or
2.12, owners of beneficial interests in Global Securities will not be entitled
to receive physical delivery of Certificated Securities. Each Global Security
shall represent such of the outstanding Securities as shall be specified therein
and each shall provide that it shall represent the aggregate principal amount of
outstanding Securities from time to time endorsed thereon and that the aggregate
principal amount of outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges and
conversions.

         Any adjustment of the aggregate principal amount of a Global Security
to reflect the amount of any increase or decrease in the principal amount of
outstanding Securities represented thereby shall be made by the Trustee in
accordance with instructions given by the Holder thereof as required by Section
2.12 hereof and shall be made on the records of the Trustee and the Depositary.

         (c) Book-Entry Provisions. This Section 2.01(c) shall apply only to
Global Security deposited with or on behalf of the Depositary.

         The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(c), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depositary, (b) shall
be delivered by the Trustee to the Depositary or pursuant to the Depositary's
instructions or held by the Trustee as custodian for such Depositary and (c)
shall bear legends substantially to the following effect:

         "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
         OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER 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 THE DEPOSITORY TRUST
         COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
         ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
         DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR

                                       10


         VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
         OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

         TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS, IN
         WHOLE BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR
         TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
         PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
         ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE
         INDENTURE REFERRED TO ON THE REVERSE HEREOF."

         (d) Certificated Securities. Securities not issued as interests in the
Global Securities will be issued in certificated form substantially in the form
of Exhibit B attached hereto.

         SECTION 2.02 Execution and Authentication. An Officer shall sign the
Security for the Company by manual or facsimile signature.

         Securities bearing the manual or facsimile signatures of individuals
who were at the time of the execution of the Securities 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
authentication of such Securities.

         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 duly
executed by the Trustee by manual signature of an authorized signatory of the
Trustee, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder.

         The Trustee shall authenticate and deliver Securities for original
issue in an aggregate principal amount of up to $100,000,000, or an aggregate
principal amount of up to $15,000,000 if the 30-day Option is exercised fully,
upon a Company Order without any further action by the Company. The aggregate
principal amount of Securities outstanding at any time may not exceed the amount
set forth in the foregoing sentence, except as provided in Section 2.07.

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

         SECTION 2.03 Registrar, Paying Agent, Bid Solicitation Agent and
Conversion Agent. The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities may be presented for
purchase or payment ("Paying Agent") and an office or agency where Securities
may be presented for conversion ("Conversion Agent"). The Company shall also
appoint a Bid Solicitation Agent to act pursuant to Article 10. The Registrar
shall keep a

                                       11


register of the Securities and of their transfer and exchange. The Company may
have one or more co-registrars, one or more additional paying agents and one or
more additional conversion agents. The term Paying Agent includes any additional
paying agent, including any named pursuant to Section 4.05. The term Conversion
Agent includes any additional conversion agent, including any named pursuant to
Section 4.05.

         The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent, Conversion Agent or co-registrar (other than the
Trustee). The agreement shall implement the provisions of this Indenture that
relate to such agent. The Company shall notify the Trustee of the name and
address of any such agent. If the Company fails to maintain a Registrar, Paying
Agent or Conversion Agent, the Trustee shall act as such and shall be entitled
to appropriate compensation therefor pursuant to Section 7.07. The Company or
any Subsidiary or an Affiliate of either of them may act as Paying Agent,
Registrar, Conversion Agent or co-registrar.

         The Company initially appoints the Trustee as Registrar, Conversion
Agent and Paying Agent in connection with the Securities. None of the Company or
any Subsidiary or any Affiliate of the Company may act as Bid Solicitation
Agent.

         SECTION 2.04 Paying Agent to Hold Money and Securities in Trust. Except
as otherwise provided herein, on or prior to each due date of payments in
respect of any Security, the Company shall deposit with the Paying Agent a sum
of money (in immediately available funds if deposited on the due date)
sufficient to make such payments when so becoming due. The Company shall require
each Paying Agent (other than the Trustee) to agree in writing that the Paying
Agent shall hold in trust for the benefit of Holders or the Trustee all money
held by the Paying Agent for the making of payments in respect of the Securities
and shall notify the Trustee of any default by the Company in making any such
payment. At any time during the continuance of any such default, the Paying
Agent shall, upon the written request of the Trustee, forthwith pay to the
Trustee all money so held in trust. If the Company, a Subsidiary or an Affiliate
of either of them acts as Paying Agent, it shall segregate the money held by it
as Paying Agent and hold it as a separate trust fund. The Company at any time
may require a Paying Agent to pay all money held by it to the Trustee and to
account for any funds disbursed by it. Upon doing so, the Paying Agent shall
have no further liability for the money.

         SECTION 2.05 Holder Lists. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of Holders. If the Trustee is not the Registrar, the Company
shall cause to be furnished to the Trustee at least semiannually on each June 15
and December 15 during the term of the Securities a listing of Holders dated
within 13 days of the date on which the list is furnished and at such other
times as the Trustee may request in writing a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Holders.

         SECTION 2.06 Transfer and Exchange. Subject to Sections 2.01(b),
2.06(b) and 2.12 hereof,

                                       12


         (a) (i) upon surrender for registration of transfer of any Security,
together with a written instrument of transfer satisfactory to the Registrar
duly executed by the Holder or such Holder's attorney duly authorized in
writing, at the office or agency of the company designated as Registrar or
co-registrar pursuant to Section 2.03, 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 denomination or
denominations, of a like aggregate principal amount. The Company shall not
charge a service charge for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to pay all taxes, assessments or
other governmental charges that may be imposed in connection with the transfer
or exchange of the Securities from the Holder requesting such transfer or
exchange.

         (ii) At the option of the Holder, Securities may be exchanged for other
      Securities of any authorized denomination or denominations, of a like
      aggregate principal amount, upon surrender of the Securities to be
      exchanged, together with a written instrument of transfer satisfactory to
      the Registrar duly executed by the Holder or such Holder's attorney duly
      authorized in writing, 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 that the Holder
      making the exchange is entitled to receive.

         (iii) The Company shall not be required to make, and the Registrar need
      not register, transfers or exchanges of Securities in respect of which a
      Change in Control Purchase Notice has been given and not withdrawn by the
      Holder thereof in accordance with the terms of this Indenture (except, in
      the case of Securities to be purchased in part, the portion thereof not to
      be purchased).

         (b) Notwithstanding any provision to the contrary herein, so long as a
Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, shall be made
only in accordance with Section 2.12 and this Section 2.06(b). Transfers of a
Global Security shall be limited to transfers of such Global Security in whole,
or in part, to nominees of the Depositary or to a successor of the Depositary or
such successor's nominee.

         (c) Successive registrations and registrations of transfers and
exchanges as aforesaid may be made from time to time as desired, and each such
registration shall be noted on the register for the Securities.

         (d) Any Registrar appointed pursuant to Section 2.03 hereof shall
provide to the Trustee such information as the Trustee may reasonably require in
connection with the delivery by such Registrar of Securities upon transfer or
exchange of Securities.

         (e) No Registrar shall be required to make registrations of transfer or
exchange of Securities during any periods designated in the text of the
Securities or in this Indenture as periods during which such registration of
transfers and exchanges need not be made.

                                       13


         (f) If Securities are issued upon the transfer, exchange or replacement
of Securities subject to restrictions on transfer and bearing the legends set
forth on the form of Security attached hereto as Exhibits A and B setting forth
such restrictions (collectively, the "Legend"), or if a request is made to
remove the Legend on a Security, the Securities so issued shall bear the Legend,
or the Legend shall not be removed, as the case may be, unless there is
delivered to the Company and the Registrar such satisfactory evidence, which
shall include an Opinion of Counsel, as may be reasonably required by the
Company and the Registrar, that neither the Legend nor the restrictions on
transfer set forth therein are required to ensure that transfers thereof comply
with the provisions of Rule 144A or Rule 144 under the Securities Act or that
such Securities are not "restricted" within the meaning of Rule 144 under the
Securities Act. Upon (i) provision of such satisfactory evidence, or (ii)
notification by the Company to the Trustee and Registrar of the sale of such
Security pursuant to a registration statement that is effective at the time of
such sale, the Trustee, at the written direction of the Company, shall
authenticate and deliver a Security that does not bear the Legend.

         (g) Any Security or Common Stock issued upon the conversion or exchange
of a Security that is purchased or owned by the Company or any Affiliate thereof
may not be resold by the Company or such Affiliate unless registered under the
Securities Act or resold pursuant to an exemption from the registration
requirements of the Securities Act in a transaction which results in such
Securities or Common Stock, as the case may be, no longer being "restricted
securities" (as defined under Rule 144).

         SECTION 2.07 Replacement Securities. If (a) any mutilated Security is
surrendered to the Trustee, or (b) the Company and the Trustee receive evidence
to their satisfaction of the destruction, loss or theft of any Security, and
there is delivered to the Company and the Trustee such Security or indemnity as
may be required by them to save each of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
protected purchaser, the Company shall execute and upon its written request the
Trustee shall authenticate and deliver, in exchange for any such mutilated
Security or in lieu of any such destroyed, lost or stolen Security, a new
Security of like tenor and principal amount, 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, or is about to be purchased by the
Company pursuant to Article 3 hereof, the Company in its discretion may, instead
of issuing a new Security, pay or purchase such Security, as the case may be.

         Upon the issuance of any new Securities under this Section 2.07, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

         Every new Security issued pursuant to this Section 2.07 in lieu of any
mutilated, 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 benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.

                                       14


         The provisions of this Section 2.07 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 2.08 Outstanding Securities; Determinations of Holders' Action.
Securities outstanding at any time are all the Securities authenticated by the
Trustee except for those cancelled by it or delivered to it for cancellation,
those paid pursuant to Section 2.07 and those described in this Section 2.08 as
not outstanding. A Security does not cease to be outstanding because the Company
or an Affiliate thereof holds the Security; provided, however, that in
determining whether the Holders of the requisite principal amount of the
outstanding Securities have given or concurred in 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 such other obligor shall be disregarded and deemed not to be
outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which a Responsible Officer of the Trustee
knows to be so owned shall be so disregarded. Subject to the foregoing, only
Securities outstanding at the time of such determination shall be considered in
any such determination (including, without limitation, determinations pursuant
to Articles 6 and 9).

         If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a protected purchaser.

         If the Paying Agent holds, in accordance with this Indenture, on or
prior to the Business Day following the Change in Control Purchase Date, or on
the Stated Maturity, money or securities, if permitted hereunder, sufficient to
pay Securities payable on that date, then immediately after such Change in
Control Purchase Date or Stated Maturity, as the case may be, such Securities
shall cease to be outstanding and interest on such Securities shall cease to
accrue.

         If a Security is converted in accordance with Article 10, then from and
after the time of conversion on the conversion date, such Security shall cease
to be outstanding and interest shall cease to accrue on such Security.

         SECTION 2.09 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 conclusively evidenced by their execution of such Securities.

         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 the office
or agency of the Company designated for such purpose pursuant to Section 2.03,
without charge to the Holder. Upon surrender for cancellation of any


                                       15

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.

            SECTION 2.10 Cancellation. All Securities surrendered for payment,
purchase by the Company pursuant to Article 3, conversion or registration of
transfer or exchange shall, if surrendered to any person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. The Company may not reissue, reoffer or
resell new Securities to replace Securities it has paid or delivered to the
Trustee for cancellation or that any Holder has converted pursuant to Article
10. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section 2.10, except as expressly
permitted by this Indenture. All cancelled Securities shall be disposed of by
the Trustee in accordance with its customary procedures.

            SECTION 2.11 Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of the Security or the payment of any Change in Control Purchase Price
in respect thereof, and interest thereon, for the purpose of conversion 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 2.12 Global Securities.

            (a)   Notwithstanding any other provisions of this Indenture or the
      Securities, (A) transfers of a Global Security, in whole or in part, shall
      be made only in accordance with Sections 2.06 and 2.12(a)(i), (B) transfer
      of a beneficial interest in a Global Security for a Certificated Security
      shall comply with Sections 2.06 and 2.12(a)(ii) below, and (C) transfers
      of a Certificated Security shall comply with Section 2.06 and Sections
      2.12(a)(iii) and (iv) below.

            (i)   Transfer of Global Security. A Global Security may not be
      transferred, in whole or in part, to any Person other than the Depositary
      or a nominee or any successor thereof, and no such transfer to any such
      other Person may be registered; provided that this clause (i) shall not
      prohibit any transfer of a Security that is issued in exchange for a
      Global Security but is not itself a Global Security. No transfer of a
      Security to any Person shall be effective under this Indenture or the
      Securities unless and until such Security has been registered in the name
      of such Person. Nothing in this Section 2.12(a)(i) shall prohibit or
      render ineffective (i) any transfer of a beneficial interest in a Global
      Security effected in accordance with the other provisions of this Section
      2.12(a); and (ii) the transfer and exchange of beneficial interests in a
      Global Security effected through the Depositary in accordance with this
      Indenture and the procedures of the Depositary.

                                       16


            (ii)  Restrictions on Transfer of a Beneficial Interest in a Global
      Security for a Certificated Security. A beneficial interest in a Global
      Security may not be exchanged for a Certificated Security except upon
      satisfaction of the requirements set forth below. Upon receipt by the
      Trustee of a transfer of a beneficial interest in a Global Security in
      accordance with Applicable Procedures for a Certificated Security in the
      form satisfactory to the Trustee, together with:

            (1)   so long as the Securities are Restricted Securities, a
      certification in the form set forth in Exhibit C;

            (2)   written instructions from the Company to the Trustee to make,
      or direct the Registrar to make, an adjustment on its books and records
      with respect to such Global Security to reflect a decrease in the
      aggregate principal amount of the Securities represented by the Global
      Security, such instructions to contain information regarding the
      Depositary account to be credited with such decrease; and

            (3)   if the Company or Registrar so requests, an opinion of counsel
      or other evidence reasonably satisfactory to them as to the compliance
      with the restrictions set forth in the Legend,

then the Trustee shall cause, or direct the Registrar to cause, in accordance
with the standing instructions and procedures existing between the Depositary
and the Registrar, the aggregate principal amount of Securities represented by
the Global Security to be decreased by the aggregate principal amount of the
Certificated Security to be issued, shall issue such Certificated Security and
shall debit or cause to be debited to the account of the Person specified in
such instructions a beneficial interest in the Global Security equal to the
principal amount of the Certificated Security so issued.

            (iii) Transfer and Exchange of Certificated Securities. When
      Certificated Securities are presented to the Registrar with a request:

                  (x)   to register the transfer of such Certificated
            Securities; or

                  (y)   to exchange such Certificated Securities for an equal
            principal amount of Certificated Securities of other authorized
            denominations,

      the Registrar shall register the transfer or make the exchange as
      requested if its reasonable requirements for such transaction are met;
      provided, however, that the Certificated Securities surrendered for
      transfer or exchange:

                  (1)   shall be duly endorsed or accompanied by a written
            instrument of transfer in form reasonably satisfactory to the
            Company and the Registrar, duly executed by the Holder thereof or
            his attorney duly authorized in writing; and

                  (2)   so long as such Securities are Restricted Securities,
            such Securities are being transferred or exchanged pursuant to an
            effective registration statement under the Securities Act or
            pursuant to clause (A), (B) or (C) below, and are

                                       17


            accompanied by the following additional information and documents,
            as applicable:

                        (A)   if such Certificated Securities are being
                  delivered to the Registrar by a Holder for registration in the
                  name of such Holder, without transfer, a certification from
                  such Holder to that effect; or

                        (B)   if such Certificated Securities are being
                  transferred to the Company, a certification to that effect; or

                        (C)   if such Certificated Securities are being
                  transferred pursuant to an exemption from registration, (i) a
                  certification to that effect (in the form set forth in Exhibit
                  C, if applicable) and (ii) if the Company or Registrar so
                  requests, an Opinion of Counsel or other evidence reasonably
                  satisfactory to them as to the compliance with the
                  restrictions set forth in the Legend.

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

                  (1)   so long as the Securities are Restricted Securities,
            certification, in the form set forth in Exhibit C, that such
            Certificated Security is being transferred to a QIB in accordance
            with Rule 144A; and

                  (2)   written instructions directing the Trustee to make, or
            to direct the Registrar to make, an adjustment on its books and
            records with respect to such Global Security to reflect an increase
            in the aggregate principal amount of the Securities represented by
            the Global Security, such instructions to contain information
            regarding the Depositary account to be credited with such increase,
            then the Trustee shall cancel such Certificated Security and cause,
            or direct the Registrar to cause, in accordance with the standing
            instructions and procedures existing between the Depositary and the
            Registrar, the aggregate principal amount of Securities represented
            by the Global Security to be increased by the aggregate principal
            amount of the Certificated Security to be exchanged, and shall
            credit or cause to be credited to the account of the Person
            specified in such instructions a beneficial interest in the Global
            Security equal to the principal amount of the Certificated Security
            so cancelled. If no Global Securities are then outstanding, the
            Company shall issue and the Trustee shall authenticate, upon written
            order of the Company in the form of an Officers' Certificate, a new
            Global Security in the appropriate principal amount.

                                       18


            (b)   Subject to the succeeding paragraph, every Security shall be
subject to the restrictions on transfer provided in the Legend, including the
delivery of an Opinion of Counsel, if so provided. Whenever any Restricted
Security is presented or surrendered for registration of transfer or for
exchange for a Security registered in a name other than that of the Holder, such
Security must be accompanied by a certificate in substantially the form set
forth in Exhibit C, dated the date of such surrender and signed by the Holder of
such Security, as to compliance with such restrictions on transfer. The
Registrar shall not be required to accept for such registration of transfer or
exchange any Security not so accompanied by a properly completed certificate and
other evidence the Registrar may request as to the compliance with the
restrictions set forth in the Legend.

            (c)   The restrictions imposed by the Legend upon the
transferability of any Security shall cease and terminate when such Security has
been sold pursuant to an effective registration statement under the Securities
Act or transferred in compliance with Rule 144 or, if earlier, upon the
expiration of the holding period applicable to sales thereof under Rule 144(k).
Any Security as to which such restrictions on transfer shall have expired in
accordance with their terms or shall have terminated may, upon a surrender of
such Security for exchange to the Registrar in accordance with the provisions of
this Section 2.12 (accompanied, in the event that such restrictions on transfer
have terminated by reason of a transfer in compliance with Rule 144, by an
Opinion of Counsel having substantial experience in practice under the
Securities Act and otherwise reasonably acceptable to the Company, addressed to
the Company and in form acceptable to the Company, to the effect that the
transfer of such Security has been made in compliance with Rule 144 or such
successor provision), be exchanged for a new Security, of like tenor and
aggregate principal amount, which shall not bear the restrictive Legend. The
Company shall inform the Trustee of the effective date of any registration
statement registering the Securities under the Securities Act. The Trustee shall
have no obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Indenture or under
applicable law with respect to any transfer of any interest in any Security
(including any transfers between or among DTC participants, members or
beneficial owners in any Global Security) other than to require delivery of such
certificates and other documentation or evidence as are expressly required by,
and to do so if and when expressly required by, the terms of this Indenture, and
to examine the same to determine substantial compliance as to form with the
express requirements hereof. The Trustee shall not be liable for any action
taken or omitted to be taken by it in good faith in accordance with the
aforementioned opinion of counsel or registration statement.

            (d)   In the event that Rule 144(k) as promulgated under the
Securities Act is amended to shorten the two-year restriction period, then
restrictions on transfer on the Securities and the Common Stock will be deemed
to refer to the shortened restriction period. The Company undertakes to inform
the Trustee if such change to Rule 144(k) occurs and the effect (if any) to the
restrictions on transfer applicable to the Securities and Common Stock and shall
provide additional information (including an Opinion of Counsel and/or an
Officers' Certificate) if so requested by the Trustee.

            (e)   As used in the preceding two paragraphs of this Section 2.12,
the term "transfer" encompasses any sale, pledge, transfer, hypothecation or
other disposition of any Security.

                                       19


            (f)   The provisions of clauses (1), (2), (3), (4) and (5) below
shall apply only to Global Securities:

                  (1)   Notwithstanding any other provisions of this Indenture
            or the Securities, except as provided in Section 2.12(a)(i), a
            Global Security shall not be exchanged in whole or in part for a
            Security registered in the name of any Person other than the
            Depositary or one or more nominees thereof; provided that a Global
            Security may be exchanged for Securities registered in the names of
            any person designated by the Depositary in the event that (i) the
            Depositary has notified the Company that it is unwilling or unable
            to continue as Depositary for such Global Security or such
            Depositary has ceased to be a "clearing agency" registered under the
            Exchange Act, and a successor Depositary is not appointed by the
            Company within 90 days or (ii) an Event of Default has occurred and
            is continuing with respect to the Securities. Any Global Security
            exchanged pursuant to clause (i) above shall be so exchanged in
            whole and not in part, and any Global Security exchanged pursuant to
            clause (ii) above may be exchanged in whole or from time to time in
            part as directed by the Depositary. Any Security issued in exchange
            for a Global Security or any portion thereof shall be a Global
            Security; provided that any such Security so issued that is
            registered in the name of a Person other than the Depositary or a
            nominee thereof shall not be a Global Security.

                  (2)   Securities issued in exchange for a Global Security or
            any portion thereof shall be issued in definitive, fully registered
            form, without interest coupons, shall have an aggregate principal
            amount equal to that of such Global Security or portion thereof to
            be so exchanged, shall be registered in such names and be in such
            authorized denominations as the Depositary shall designate and shall
            bear the applicable legends provided for herein. Any Global Security
            to be exchanged in whole shall be surrendered by the Depositary to
            the Trustee, as Registrar. With regard to any Global Security to be
            exchanged in part, either such Global Security shall be so
            surrendered for exchange or, if the Trustee is acting as custodian
            for the Depositary or its nominee with respect to such Global
            Security, the principal amount thereof shall be reduced, by an
            amount equal to the portion thereof to be so exchanged, by means of
            an appropriate adjustment made on the records of the Trustee. Upon
            any such surrender or adjustment, the Trustee shall authenticate and
            deliver the Security issuable on such exchange to or upon the order
            of the Depositary or an authorized representative thereof.

                  (3)   Subject to the provisions of clause (5) below, the
            registered Holder may grant proxies and otherwise authorize any
            Person, including Agent Members (as defined below) and persons that
            may hold interests through Agent Members, to take any action which a
            Holder is entitled to take under this Indenture or the Securities.

                  (4)   In the event of the occurrence of any of the events
            specified in clause (1) above, the Company will promptly make
            available to the Trustee a reasonable supply of Certificated
            Securities in definitive, fully registered form, without interest
            coupons.

                                       20


                  (5)   Neither any members of, or participants in, the
            Depositary (collectively, the "Agent Members") nor any other Persons
            on whose behalf Agent Members may act shall have any rights under
            this Indenture with respect to any Global Security registered in the
            name of the Depositary or any nominee thereof, or under any such
            Global Security, and the Depositary or such nominee, as the case may
            be, may be treated by the Company, the Trustee and any agent of the
            Company or the Trustee as the absolute owner and Holder of such
            Global Security for all purposes whatsoever. Notwithstanding the
            foregoing, nothing herein shall prevent the Company, the Trustee or
            any agent of the Company or the Trustee from giving effect to any
            written certification, proxy or other authorization furnished by the
            Depositary or such nominee, as the case may be, or impair, as
            between the Depositary, its Agent Members and any other person on
            whose behalf an Agent Member may act, the operation of customary
            practices of such Persons governing the exercise of the rights of a
            Holder of any Security.

            SECTION 2.13 CUSIP Numbers. The Company in issuing the Securities
may use "CUSIP" numbers; provided that any such notice may state that no
representation is made as to the correctness of such numbers as printed on the
Securities and that reliance may be placed only on the other identification
numbers printed on the Securities. The Company will promptly notify the Trustee
of any change in the CUSIP numbers.

            SECTION 2.14 Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, it shall pay, or shall deposit with the
Paying Agent money in immediately available funds sufficient to pay, the
defaulted interest, plus (to the extent lawful) any interest payable on the
defaulted interest, to the Persons who are Holders on a subsequent special
record date. A special record date, as used in this Section 2.14 with respect to
the payment of any defaulted interest, shall mean the 15th day next preceding
the date fixed by the Company for the payment of defaulted interest, whether or
not such day is a Business Day. At least 15 days before the subsequent special
record date, the Company shall mail to each Holder and to the Trustee (or cause
the Trustee to mail to each Holder) a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest to be paid.

            SECTION 2.15 Registration Default. The Additional Interest Amount
shall be payable upon the Securities in the case of an Event (as defined in the
Registration Rights Agreement). If an Event occurs, the Company shall deliver to
the Trustee an Officers' Certificate stating (1) the Additional Interest Amount
payable, (2) when such Additional Interest Amount began accruing and (3) when
such Additional Interest Amount is payable. Unless and until a Responsible
Officer of the Trustee receives such an Officer's Certificate, the Trustee shall
assume that no Additional Interest Amount is payable.

                                       21


                                   ARTICLE 3

                             PURCHASES OF SECURITIES

            SECTION 3.01 Purchase of Securities at Option of the Holder upon
Change in Control.

            (a)   If there shall have occurred a Change in Control, all or any
portion of the Securities of any Holder equal to $1,000 or a whole multiple of
$1,000 shall be purchased by the Company in cash, at the option of such Holder,
at a purchase price equal to 100% of the principal amount of the Securities to
be purchased, together with accrued and unpaid interest, if any, to, but not
including, the purchase date (the "Change in Control Purchase Price"), on the
date (the "Change in Control Purchase Date") that is not later than 30 Business
Days after the date the Company provides notice of a Change in Control in
accordance with Section 3.01(b) hereof, provided, however, that if the Change in
Control Purchase Date is after a Regular Record Date but on or prior to the
corresponding Interest Payment Date, the accrued and unpaid interest becoming
due on such Interest Payment Date shall be payable to the Holders of such
Securities, or one or more predecessor Securities, registered as such on the
relevant Regular Record Date according to their terms, and the Change in Control
Purchase Price shall not include such interest payment.

            If there shall have occurred a Change in Control pursuant to clause
(i) or (ii) of the definition thereof, the Company will pay on the Change in
Control Purchase Date a Make-Whole Premium to the Holders of the Securities in
addition to the Change in Control Purchase Price. The Make-Whole Premium will
also be paid on the Change in Control Purchase Date to the Holders of Securities
who convert their Securities on or after the date on which the Company has given
a notice to all Holders of Securities in accordance with Section 3.01(b) hereof
and on or before the Change in Control Purchase Date.

            The "Make-Whole Premium" will be determined by reference to the
table below and is based on the date on which the Change in Control becomes
effective (the "Effective Date") and the price (the "Stock Price") paid per
share of the Company's Common Stock in the transaction constituting the Change
in Control. If the holders of the Company's Common Stock receive only cash in
the transaction, the Stock Price shall be the cash amount paid per share of the
Company's Common Stock. Otherwise, the Stock Price shall be equal to the average
Sale Price per share of the Company's Common Stock over the five Trading Day
period ending on the Trading Day immediately preceding the Effective Date.

            The following table shows what the Make-Whole Premium would be for
each hypothetical Stock Price and Effective Date set forth below, expressed as a
percentage of the principal amount of the Securities.

                                       22


          MAKE-WHOLE PREMIUM UPON A CHANGE IN CONTROL (% OF FACE VALUE)



                                                              Effective Date
                      -----------------------------------------------------------------------------------------------
  Stock Price
  on Effective             July 26,         July 26,        July 26,         July 26,         July 26,       July 26,
      Date                   2004             2005            2006             2007             2008           2009
  ------------             --------         --------        --------         --------         --------       --------
                                                                                           
      $ 9.87                  0.0%            0.0%             0.0%            0.0%             0.0%           0.0%
      $13.00                 25.8%           23.8%            21.2%           17.7%            12.4%           0.0%
      $16.00                 26.4%           23.8%            20.5%           16.1%             9.9%           0.0%
      $19.00                 24.2%           21.4%            17.7%           13.0%             6.9%           0.0%
      $22.00                 22.7%           19.6%            15.9%           11.2%             5.6%           0.0%
      $25.00                 21.4%           18.4%            14.6%           10.2%             5.0%           0.0%
      $28.00                 20.4%           17.4%            13.8%            9.5%             4.7%           0.0%
      $40.00                 17.6%           14.9%            11.9%            8.3%             4.4%           0.0%
      $50.00                 15.5%           13.3%            10.7%            7.7%             4.2%           0.0%
      $60.00                 13.5%           11.6%             9.6%            7.1%             4.1%           0.0%
      $70.00                 11.5%            9.9%             8.5%            6.6%             3.9%           0.0%


      The Make-Whole Premiums set forth above are based upon an interest rate of
5 1/4%, a Sale Price per share of the Company's common stock of $9.87 on July
19, 2004 and a Conversion Rate that results in a Conversion Price of $13.50,
which is 36.78% higher than the Sale Price per share of the Company's common
stock on July 12, 2004.

      The actual Stock Price and Effective Date may not be set forth on the
table, in which case:

      -  If the actual Stock Price on the Effective Date is between two Stock
         Prices on the table or the actual Effective Date is between two
         Effective Dates on the table, the Make-Whole Premium will be determined
         by a straight-line interpolation between the Make-Whole Premiums set
         forth for the two Stock Prices and the two Effective Dates on the table
         based on a 365-day year, as applicable.

      -  If the Stock Price on the Effective Date exceeds $70.00 per share
         (subject to adjustment described below), no Make-Whole Premium will be
         paid.

      -  If the Stock Price on the Effective Date is less than $9.87 per share
         (subject to adjustment described below), no Make-Whole Premium will be
         paid.

            The Stock Prices set forth in the first column of the table above
will be adjusted as of any date on which the Conversion Rate is adjusted. The
adjusted Stock Prices will equal the Stock Prices applicable immediately prior
to such adjustment multiplied by a fraction, the numerator of which is the
Conversion Rate immediately prior to the adjustment giving rise to the Stock
Price adjustment and the denominator of which is the Conversion Rate so
adjusted.

                                       23


      The Company shall pay, at its option, the Make-Whole Premium in cash,
shares of its Common Stock or the same form of consideration used to pay for the
shares of the Company's Common Stock in connection with the transaction
constituting the Change in Control.

      If the Company pays the Make-Whole Premium in shares of its Common Stock,
the value of its Common Stock to be delivered in respect of the Make-Whole
Premium shall be deemed to be equal to the average Sale Price per share over the
ten Trading Day period ending on the Trading Day immediately preceding the
Change in Control Purchase Date. The Company may pay the Make-Whole Premium in
shares of its Common Stock only if the information necessary to calculate the
Sale Price per share is published in a daily newspaper of general circulation or
by other appropriate means.

      In addition, the Company's right to pay the Make-Whole Premium in shares
of its Common Stock is subject to the satisfaction of the following:

         -  listing such common stock on the principal United States securities
            exchange on which the Common Stock is then listed or, if not so
            listed, quoted on Nasdaq National Market;

         -  the registration of the common stock under the Securities Act and
            the Exchange Act, if required; and

         -  any necessary qualification or registration under applicable state
            securities law or the availability of an exemption from such
            qualification and registration.

      If such conditions are not satisfied with respect to a Holder prior to the
close of business on the Change in Control Purchase Date, the Company shall pay
the Make-Whole Premium in cash. The Company may not change the form of
consideration to be paid with respect to the Make-Whole Premium once it has
given notice set forth in Section 3.01(b) to Holders, except as described in the
immediately preceding sentence.

      If the Company pays the Make-Whole Premium in the same form of
consideration used to pay for the shares of the Company's Common Stock in
connection with the transaction constituting the Change in Control, the value of
the consideration to be delivered in respect of the Make-Whole Premium will be
calculated as follows:

         -  securities that are traded on a United States national securities
            exchange or approved for quotation on the Nasdaq National Market or
            any similar system of automated dissemination of quotations of
            securities prices will be valued based on the average closing price
            or last Sale Price, as applicable, over the ten Trading Day period
            ending on the Trading Day immediately preceding the Change in
            Control Purchase Date;

         -  other securities, assets or property (other than cash) will be
            valued based on 98% of the average of the fair market value of such
            securities, assets or property (other than cash) as determined by
            two independent nationally recognized investment banks selected by
            the trustee; and

                                       24


         -  100% of any cash.

            A "Change in Control" of the Company shall be deemed to have
      occurred at such time after the original issuance of Securities as any of
      the following events 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 Securities
      Exchange Act of 1934, as amended (the "Exchange Act"), of beneficial
      ownership, directly or indirectly, through a purchase, merger (except a
      merger by the Company described in Section 3.01(a)(ii)) or other
      acquisition transaction or series of transactions, of shares of the
      Capital Stock of the Company entitling that person to exercise 50% or more
      of the total voting power of all shares of such Capital Stock entitled to
      vote generally in elections of directors, other than any acquisition by
      the Company, any of its Subsidiaries or any employee benefit plans of the
      Company; or

            (ii)  any consolidation or merger of the Company with or into any
      other person, any merger of another person into the Company, or any
      conveyance, transfer, sale, lease or other disposition of all or
      substantially all of the Company's properties and assets to another
      person, other than:

                        (A)   any transaction (1) that does not result in any
                  reclassification, conversion, exchange or cancellation of
                  outstanding shares of the Capital Stock of the Company and (2)
                  pursuant to which holders of the Capital Stock of the Company
                  immediately prior to the transaction are entitled to exercise,
                  directly or indirectly, 50% or more of the total voting power
                  of all shares of the Capital Stock of the Company entitled to
                  vote generally in the election of directors of the continuing
                  or surviving person immediately after the transaction;

                        (B)   any merger, share exchange, transfer of assets or
                  similar transaction solely for the purpose of changing the
                  Company's jurisdiction of incorporation and resulting in a
                  reclassification, conversion or exchange of outstanding shares
                  of Common Stock solely into shares of Common Stock of the
                  surviving entity; or

                        (C)   all of the consideration for the Common Stock
                  (excluding cash payments for fractional shares and cash
                  payments made in respect of dissenters' appraisal rights) in
                  the transaction or transactions constituting the Change in
                  Control consists of common stock traded on a United States
                  national securities exchange or quoted on the Nasdaq National
                  Market, or which will be so traded or quoted when issued or
                  exchanged in connection with the Change in Control, and as a
                  result of such transaction or transactions the Securities
                  become convertible solely into such common stock, or

                                       25


            (iii) during any consecutive two-year period, individuals who at the
      beginning of that two-year period constituted the Board of Directors
      (together with any new directors whose election to the Board of Directors,
      or whose nomination for election by the shareholders of the Company, was
      approved by a vote of a majority of the directors then still in office who
      were either directors at the beginning of such period or whose election or
      nomination for election were previously so approved) cease for any reason
      to constitute a majority of the Board of Directors then in office.

Beneficial ownership shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Exchange Act.

            (b)   Prior to or on the 30th day after the occurrence of a Change
      in Control, the Company, or, at the written request and expense of the
      Company prior to or on the 30th day after such occurrence, the Trustee,
      shall give to all Holders, in the manner provided in Section 11.02 hereof,
      notice of the occurrence of the Change in Control and of the purchase
      right set forth herein arising as a result thereof. The Company shall also
      deliver a copy of such notice of a purchase right to the Trustee. The
      notice shall include a form of Change in Control Purchase Notice to be
      completed by the Holder and shall state:

                  (1)   briefly, the events causing a Change in Control and the
            date of such Change in Control;

                  (2)   the date by which the Change in Control Purchase Notice
            pursuant to this Section 3.01 must be given;

                  (3)   the Change in Control Purchase Date;

                  (4)   the Change in Control Purchase Price;

                  (5)   the name and address of the Paying Agent and the
            Conversion Agent;

                  (6)   that Securities as to which a Change in Control Purchase
            Notice has been given may be converted pursuant to Article 10 hereof
            only if the Change in Control Purchase Notice has been withdrawn in
            accordance with the terms of this Indenture;

                  (7)   that Securities must be surrendered to the Paying Agent
            to collect payment;

                  (8)   that the Change in Control Purchase Price for any
            Security as to which a Change in Control Purchase Notice has been
            duly given and not withdrawn will be paid promptly following the
            later of the Change in Control Purchase Date and the time of
            surrender of such Security as described in (7) above;

                  (9)   briefly, the procedures the Holder must follow to
            exercise rights under this Section 3.01;

                                       26


                  (10)  briefly, the conversion rights of the Securities,
            including the Conversion Rate and any adjustments thereto;

                  (11)  the procedures for withdrawing a Change in Control
            Purchase Notice;

                  (12)  the CUSIP number of the Securities;

                  (13)  whether a Make-Whole Premium shall be paid by the
            Company and the form of consideration to be paid in respect of the
            Make-Whole Premium; and

                  (14)  if a Make-Whole Premium is paid by the Company, that a
            Make-Whole Premium shall be paid by the Company on the Change of
            Control Purchase Date to Holders of Securities who have converted
            their Securities into the Company's Common Stock on or after the
            date the Company has given notice to all Holders in accordance with
            this Section 3.01(b) and on or before the Change in Control Purchase
            Date.

            (c)   A Holder may exercise its rights specified in Section 3.02(a)
hereof upon delivery of a written notice of purchase (a "Change in Control
Purchase Notice") to the Paying Agent prior to the Change in Control Purchase
Date, stating:

                  (1)   the certificate number of the Security, if any, which
            the Holder will deliver to be purchased or the appropriate
            Depositary procedures if the Securities are not in certificated
            form;

                  (2)   the portion of the principal amount of the Security
            which the Holder will deliver to be purchased, which portion must be
            $1,000 or any whole multiple thereof; and

                  (3)   that such Security shall be purchased pursuant to the
            terms and conditions specified in paragraph 5 on the reverse side of
            the Securities and in this Indenture.

            The delivery of such Security to the Paying Agent prior to the
Change in Control Purchase Date (together with all necessary endorsements) at
the offices of the Paying Agent shall be a condition to the receipt by the
Holder of the Change in Control Purchase Price therefor; provided, however, that
such Change in Control Purchase Price shall be so paid pursuant to this Section
3.01 only if the Security so delivered to the Paying Agent shall conform in all
respects to the description thereof set forth in the related Change in Control
Purchase Notice.

            The Company shall purchase from the Holder thereof, pursuant to this
Section 3.01, a portion of a Security so delivered for purchase if the principal
amount of such portion is $1,000 or an integral multiple of $1,000. Provisions
of this Indenture that apply to the purchase of all of a Security also apply to
the purchase of such portion of such Security.

                                       27


            Any purchase by the Company contemplated pursuant to the provisions
of this Section 3.01 shall be consummated by the delivery of the consideration
to be received by the Holder promptly following the later of the Change in
Control Purchase Date and the time of delivery of the Security to the Paying
Agent in accordance with this Section 3.01.

            Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Change in Control Purchase Notice
contemplated by this Section 3.01(c) shall have the right to withdraw such
Change in Control Purchase Notice at any time prior to the close of business on
the Change in Control Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.02.

            The Paying Agent shall promptly notify the Company of the receipt by
it of any Change in Control Purchase Notice or written withdrawal thereof.

            SECTION 3.02 Effect of Change in Control Purchase Notice. Upon
receipt by the Paying Agent of the Change in Control Purchase Notice specified
in Section 3.01(c), the Holder of the Security in respect of which such Change
in Control Purchase Notice was given shall (unless such Change in Control
Purchase Notice is withdrawn as specified in the following two paragraphs)
thereafter be entitled to receive solely the Change in Control Purchase Price
with respect to such Security. Such Purchase Price (along with the Make-Whole
Premium, if any) shall be paid to such Holder, subject to receipt of
consideration for the Securities by the Paying Agent, promptly following the
later of (x) the Change in Control Purchase Date with respect to such Security
(provided the conditions in Section 3.01(c), as the case may be, have been
satisfied) and (y) the time of delivery of such Security to the Paying Agent by
the Holder thereof in the manner required by Section 3.01(c), as the case may
be. Securities in respect of which a Change in Control Purchase Notice has been
given by the Holder thereof may not be converted pursuant to Article 10 hereof
on or after the date of the delivery of such Change in Control Purchase Notice
unless such Change in Control Purchase Notice has first been validly withdrawn
as specified in the following two paragraphs.

            A Change in Control Purchase Notice may be withdrawn by means of a
written notice of withdrawal delivered to the office of the Paying Agent in
accordance with the Change in Control Purchase Notice at any time prior to the
close of business on the Business Day immediately preceding the Change in
Control Purchase Date specifying:

                  (1)   the certificate number of the Security in respect of
            which such notice of withdrawal is being submitted or, if not in
            certificated form, the applicable Depositary procedures,

                  (2)   the principal amount of the Security with respect to
            which such notice of withdrawal is being submitted, and

                  (3)   the principal amount, if any, of such Security which
            remains subject to the original Change in Control Purchase Notice
            and which has been or will be delivered for purchase by the Company.

                                       28


            There shall be no purchase of any Securities pursuant to Section
3.01 if there has occurred (prior to, on or after, as the case may be, the
giving, by the Holders of such Securities, of the required Change in Control
Purchase Notice) and is continuing an Event of Default (other than a default in
the payment of the Change in Control Purchase Price with respect to such
Securities). The Paying Agent will promptly return to the respective Holders
thereof any Securities (x) with respect to which a Change in Control Purchase
Notice has been withdrawn in compliance with this Indenture, or (y) held by it
during the continuance of an Event of Default (other than a default in the
payment of the Change in Control Purchase Price with respect to such Securities)
in which case, upon such return, the Change in Control Purchase Notice with
respect thereto shall be deemed to have been withdrawn.

            SECTION 3.03 Deposit of Change in Control Purchase Price. Prior to
11:00 a.m. (New York City time) on the Change in Control Purchase Date, the
Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company or a Subsidiary or an Affiliate of either of them is acting as the
Paying Agent, shall segregate and hold in trust as provided in Section 2.04) an
amount of cash (in immediately available funds if deposited on such Business
Day) sufficient to pay the aggregate Change in Control Purchase Price of all the
Securities or portions thereof which are to be purchased as of the Change in
Control Purchase Date and an amount in cash or shares of Common Stock sufficient
to pay any Make-Whole Premium.

            If the Trustee or other Paying Agent appointed by the Company, or
the Company or an Affiliate of the Company, if it or such Affiliate is acting as
the Paying Agent, holds cash sufficient to pay the aggregate Change in Control
Purchase Price of all the Securities or portions thereof that are to be
purchased as of the Change in Control Purchase Date, on or after the Change in
Control Purchase Date, and an amount in cash or shares of Common Stock
sufficient to pay any Make-Whole Premium (i) such Securities will cease to be
outstanding, (ii) interest on such Securities will cease to accrue and (iii) all
other rights of the holders of such Securities will terminate, whether or not
book-entry transfer of the Securities has been made or the Securities have been
delivered to the Trustee or Paying Agent, other than the right to receive the
Change in Control Purchase Price and the Make-Whole Premium, if any, upon
delivery of the Securities.

            SECTION 3.04 Securities Purchased in Part. Any Security which is to
be purchased only in part shall be surrendered at the office of the Paying Agent
(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 such Holder's 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
portion of the principal amount of the Security so surrendered which is not
purchased.

            SECTION 3.05 Covenant to Comply with Securities Laws upon Purchase
of Securities. In connection with any offer to purchase or purchase of
Securities under Section 3.01 hereof (provided that such offer or purchase
constitutes an "issuer tender offer" for purposes of Rule 13e-4 (which term, as
used herein, includes any successor provision thereto) under the Exchange Act at
the time of such offer or purchase), the Company shall (i) comply with Rule

                                       29


13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act which
may then be applicable, (ii) file the related Schedule TO (or any successor
schedule, form or report) or any other schedule required under the Exchange Act,
and (iii) otherwise comply with all federal and state securities laws so as to
permit the rights and obligations under Section 3.01 to be exercised in the time
and in the manner specified in Section 3.01.

            SECTION 3.06 Repayment to the Company. The Trustee and the Paying
Agent shall return to the Company any cash or shares of Common Stock that
remains unclaimed as provided in paragraph 9 of the Securities, together with
interest or dividends, if any, thereon, held by them for the payment of the
Change in Control Purchase Price and Make-Whole Premium, if any; provided,
however, that to the extent that the aggregate amount of cash deposited by the
Company pursuant to Section 3.03 exceeds the aggregate Change in Control
Purchase Price of the Securities and Make-Whole Premium, if any, or portions
thereof which the Company is obligated to purchase as of the Change in Control
Purchase Date then promptly after the Business Day following the Change in
Control Purchase Date the Trustee shall return any such excess to the Company
together with interest or dividends, if any, thereon.

                                   ARTICLE 4

                                   COVENANTS

            SECTION 4.01 Payment of Principal, Premium, Interest on the
Securities. The Company will duly and punctually pay the principal of and
interest at the Interest Rate in respect of the Securities in accordance with
the terms of the Securities and this Indenture. The Company will deposit or
cause to be deposited with the Trustee as directed by the Trustee, no later than
11:00 a.m., New York time on the day of the Stated Maturity of any Security or
on any Interest Payment Date, all payments so due on such date. Principal amount
at Stated Maturity, Change in Control Purchase Price, and cash interest shall be
considered paid on the applicable date due if at 11:00 a.m., New York time on
such date the Trustee or the Paying Agent holds, in accordance with this
Indenture, money or securities, if permitted hereunder, sufficient to pay all
such amounts then due. Except as otherwise noted, all references to the payment
of interest include the payment of Additional Interest Amounts.

            The Company shall, to the extent permitted by law, pay cash interest
on overdue amounts at the rate per annum set forth in paragraph 1 on the reverse
side of the Securities, compounded semiannually, which interest shall accrue
from the date such overdue amount was originally due to the date payment of such
amount, including interest thereon, has been made or duly provided for. All such
overdue interest shall be payable on demand.

            SECTION 4.02 SEC and Other Reports. The Company shall file with the
Trustee, within 15 days after it files such annual and quarterly reports,
information, documents and other reports with the SEC, copies of its annual
report and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. If at any time the Company is not
subject to Section 13 or 15(d) of the Exchange Act, such reports shall be
provided at the times the Company would have been

                                       30


required to provide reports had it continued to have been subject to such
reporting requirements. The Company also shall comply with the other provisions
of TIA Section 314(a).

            SECTION 4.03 Compliance Certificate. The Company shall deliver to
the Trustee within 90 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on December 31, 2004) an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.

            SECTION 4.04 Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.

            SECTION 4.05 Maintenance of Office or Agency. The Company will
maintain in The Borough of Manhattan, the City of New York, an office or agency
of the Trustee, Registrar, Paying Agent and Conversion Agent where Securities
may be presented or surrendered for payment, where Securities may be surrendered
for registration of transfer, exchange, purchase or conversion and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The New York branch office of the Corporate Trust
Office of the Trustee, shall initially be such office or agency for all of the
aforesaid purposes. The Corporate Trust Office of the Trustee shall provide
appropriate contact information therefor upon request. The Company shall give
prompt written notice to the Trustee of the location, and of any change in the
location, of any such office or agency (other than a change in the location of
the office of the Trustee). If at any time the Company shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee set forth in Section 11.02.

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

            SECTION 4.06 Delivery of Certain Information. At any time when the
Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the
request of a holder or any beneficial holder of Securities or shares of Common
Stock issued upon conversion thereof, the Company will promptly furnish or cause
to be furnished Rule 144A Information (as defined below) to such Holder or any
beneficial holder of Securities or holder of shares of Common Stock issued upon
conversion of Securities, or to a prospective purchaser of any such security
designated by any such holder, as the case may be, to the extent required to
permit compliance by such Holder or holder with Rule 144A under the Securities
Act in connection with the resale of any such security. "Rule 144A Information"
shall be such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act.

                                       31


            SECTION 4.07 Additional Interest Amounts Notice. In the event that
the Company is required to pay Additional Interest Amounts to Holders pursuant
to the Registration Rights Agreement, the Company will provide written notice
("Additional Interest Amount Notice") to the Trustee of its obligation to pay
Additional Interest Amounts no later than fifteen (15) days prior to the
proposed payment date for the Additional Interest Amounts, and the Additional
Interest Amounts Notice shall set forth the amount of Additional Interest
Amounts to be paid by the Company on such payment date. The Trustee shall not at
any time be under any duty or responsibility to any Holder to determine the
Additional Interest Amounts, or with respect to the nature, extent or
calculation of the amount of Additional Interest Amounts when made, or with
respect to the method employed in such calculation of the Additional Interest
Amounts.

                                   ARTICLE 5

                             SUCCESSOR CORPORATION

            SECTION 5.01. When Company May Merge or Transfer Assets. The Company
shall not consolidate with, merge with or into any other person or convey,
transfer or lease its properties and assets substantially as an entirety to any
person, unless:

            (a)   either (1) the Company shall be the continuing corporation or
(2) the person (if other than the Company) formed by such consolidation or into
which the Company is merged or the person which acquires by conveyance, transfer
or lease the properties and assets of the Company substantially as an entirety
is a corporation, limited liability company, partnership or trust that (i) shall
be organized and validly existing under the laws of the United States or any
State of the United States and (ii) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, all of the obligations of the Company under the
Securities and this Indenture;

            (b)   at the time of such transaction, no Event of Default and no
event which, after notice or lapse of time, would become an Event of Default,
shall have occurred and be continuing; and

            (c)   the Company shall have delivered to the Trustee an Officers'
Certificate stating that such consolidation, merger, conveyance, transfer or
lease and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture, comply with this Article 5 and that
all conditions precedent herein provided for relating to such transaction have
been satisfied.

            For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise) of the properties and assets of one or more Subsidiaries
(other than to the Company or another Subsidiary), which, if such assets were
owned by the Company, would constitute all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.

                                       32


            The successor person formed by such consolidation or into which the
Company is merged or the successor person to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with the same effect as if
such successor had been named as the Company herein; and thereafter, except in
the case of a lease and obligations the Company may have under a supplemental
indenture pursuant to Section 10.11, the Company shall be discharged from all
obligations and covenants under this Indenture and the Securities. Subject to
Section 9.06, the Company, the Trustee and the successor person shall enter into
a supplemental indenture to evidence the succession and substitution of such
successor person and such discharge and release of the Company.

                                   ARTICLE 6

                             DEFAULTS AND REMEDIES

            SECTION 6.01 Events of Default. An "Event of Default" occurs if:

                  (1)   the Company fails to pay when due the principal of any
            of the Securities at Stated Maturity or the Change in Control
            Purchase Price on any Security when the same becomes due and
            payable;

                  (2)   the Company fails to pay an installment of interest (or
            Additional Interest Amounts, if any) on any of the Securities that
            continues for 30 days after the date when due;

                  (3)   the Company fails to deliver shares of Common Stock,
            together with cash in lieu of fractional shares, when such shares of
            Common Stock or cash in lieu of fractional shares is required to be
            delivered upon conversion of a Security and such failure continues
            for 10 days after written notice of default is given to the Company
            by the Trustee or to the Company and the Trustee by the Holder of
            such Security;

                  (4)   the Company fails to perform or observe any other term,
            covenant or agreement contained in the Securities or this Indenture
            for a period of 30 days after receipt by the Company of a Notice of
            Default (as defined in this Section 6.01);

                  (5)   the Company fails to make any payment by the end of the
            applicable grace period, if any, after the maturity of any
            indebtedness for borrowed money in an amount in excess of $10
            million, or there is an acceleration of indebtedness for borrowed
            money in an amount in excess of $10 million because of a default
            with respect to such indebtedness without such indebtedness having
            been discharged or such acceleration having been cured, waived,
            rescinded or annulled, in either case, for a period of 30 days after
            receipt by the Company of a Notice of Default;

                                       33


                  (6)   the Company or any Significant Subsidiary or any
            Subsidiaries of the Company in the aggregate that would constitute a
            Significant Subsidiary pursuant to or under or within the meaning of
            any Bankruptcy Law:

                        (A)   commences a voluntary case or proceeding;

                        (B)   consents to the entry of an order for relief
                  against it in an involuntary case or proceeding or the
                  commencement of any case against it;

                        (C)   consents to the appointment of a Custodian of it
                  or for any substantial part of its property;

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

                        (E)   files a petition in bankruptcy or answer or
                  consent seeking reorganization or relief; or

                        (F)   consents to the filing of such a petition or the
                  appointment of or taking possession by a Custodian;

                  (7)   a court of competent jurisdiction enters an order or
            decree under any Bankruptcy Law that:

                        (A)   is for relief against the Company or any
                  Significant Subsidiary or any Subsidiaries of the Company in
                  the aggregate that would constitute a Significant Subsidiary
                  in an involuntary case or proceeding, or adjudicates the
                  Company or any Significant Subsidiary or any Subsidiaries of
                  the Company in the aggregate would constitute a Significant
                  Subsidiary insolvent or bankrupt;

                        (B)   appoints a Custodian of the Company or any
                  Significant Subsidiary or any Subsidiaries of the Company in
                  the aggregate that would constitute a Significant Subsidiary
                  or for any substantial part of its or their properties; or

                        (C)   orders the winding up or liquidation of the
                  Company or any Significant Subsidiary or any Subsidiaries of
                  the Company in the aggregate that would constitute a
                  Significant Subsidiary;

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

            A Default under clause (4) or (5) above is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
aggregate principal amount of the Securities at the time outstanding notify the
Company and the Trustee, of the Default and the Company does not cure such
Default (and such Default is not waived) within the time specified in clause (4)
or (5) above after actual receipt of such notice. Any such notice must be in
writing,

                                       34


specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default".

            The Company will deliver to the Trustee, within five Business Days
of becoming aware of the occurrence of an Event of Default, written notice
thereof. In addition, the Company shall deliver to the Trustee, within 30 days
after it becomes aware of the occurrence thereof, written notice of any event
which with the giving of notice or the lapse of time, or both would become an
Event of Default under clause (4) or (5) above, its status and what action the
Company is taking or proposes to take with respect thereto.

            SECTION 6.02 Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.01(6) or (7)) occurs and is continuing,
the Trustee by notice to the Company, or the Holders of at least 25% in
aggregate principal amount of the Securities at the time outstanding by written
notice to the Company and the Trustee, may declare the Securities due and
payable at their principal amount together with accrued and unpaid interest.
Upon a declaration of acceleration, such principal and accrued and unpaid
interest to the date of payment shall be immediately due and payable.

            If an Event of Default specified in Section 6.01(6) or (7) above
occurs and is continuing, then the principal and the interest on all the
Securities shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders.

            The Holders of a majority in aggregate principal amount of the
Securities at the time outstanding, by notice to the Trustee (and without notice
to any other Holder) may rescind or annul an acceleration and its consequences
if the rescission would not conflict with any judgment or decree and if all
existing Events of Default have been cured or waived, except nonpayment of the
principal and any accrued and unpaid cash interest that have become due solely
as a result of acceleration, and if all amounts due to the Trustee under Section
7.07 have been paid. No such rescission shall affect any subsequent Default or
impair any right consequent thereto.

            SECTION 6.03 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of the principal and any accrued cash interest on the Securities or to enforce
the performance of any provision of the Securities or this Indenture.

            The Trustee may maintain a proceeding even if the Trustee does not
possess any of the Securities or produce any of the Securities in the
proceeding. A delay or omission by the Trustee or any Holder in exercising any
right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of, or acquiescence in, the Event of Default. No
remedy is exclusive of any other remedy. All available remedies are cumulative.

            SECTION 6.04 Waiver of Past Defaults. The Holders of a majority in
aggregate principal amount of the Securities at the time outstanding, by notice
to the Trustee (and without notice to any other Holder), may waive an existing
Default and its consequences except (1) an Event of Default described in Section
6.01(1) or (2), (2) a Default in respect of a

                                       35


provision that under Section 9.02 cannot be amended without the consent of each
Holder affected or (3) a Default which constitutes a failure to convert any
Security in accordance with the terms of Article 10. When a Default is waived,
it is deemed cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right. This Section 6.04 shall be in lieu of
Section 316(a)1(B) of the TIA and such Section 316(a)1(B) is hereby expressly
excluded from this Indenture, as permitted by the TIA.

            SECTION 6.05 Control by Majority. The Holders of a majority in
aggregate principal amount of the Securities at the time outstanding may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture or that the Trustee determines in good faith is unduly
prejudicial to the rights of other Holders or would involve the Trustee in
personal liability unless the Trustee is offered indemnity reasonably
satisfactory to it against loss, liability or expense. This Section 6.05 shall
be in lieu of Section 316(a)1(A) of the TIA and such Section 316(a)1(A) is
hereby expressly excluded from this Indenture, as permitted by the TIA.

            SECTION 6.06 Limitation on Suits. A Holder may not pursue any
remedy with respect to this Indenture or the Securities unless:

                  (1)   the Holder gives to the Trustee written notice stating
            that an Event of Default is continuing;

                  (2)   the Holders of at least 25% in aggregate principal
            amount of the Securities at the time outstanding make a written
            request to the Trustee to pursue the remedy;

                  (3)   such Holder or Holders offer to the Trustee reasonable
            security or indemnity satisfactory to the Trustee against any loss,
            liability or expense;

                  (4)   the Trustee does not comply with the request within 60
            days after receipt of such notice, request and offer of security or
            indemnity; and

                  (5)   the Holders of a majority in aggregate principal amount
            of the Securities at the time outstanding do not give the Trustee a
            direction inconsistent with the request during such 60-day period.

            A Holder may not use this Indenture to prejudice the rights of any
other Holder or to obtain a preference or priority over any other Holder.

            SECTION 6.07 Rights of Holders to Receive Payment and to Convert.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of the principal amount, Change in Control Purchase Price or
any accrued and unpaid cash interest in respect of the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, and to
convert the Securities in accordance with Article 10, or to bring suit for the
enforcement of any such payment on or after such respective dates or the right
to convert, shall not be impaired or affected adversely without the consent of
such Holder.

                                       36

         SECTION 6.08 Collection Suit by Trustee. If an Event of Default
described in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount owing with respect to the Securities and the
amounts provided for in Section 7.07.

         SECTION 6.09 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 their creditors, the Trustee (irrespective
of whether the principal amount, Change in Control Purchase Price or any accrued
and unpaid cash interest in respect of 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
any such amount) shall be entitled and empowered, by intervention in such
proceeding or otherwise:

         (a) to file and prove a claim for the whole amount of the principal
amount, Change in Control Purchase Price or any accrued and unpaid cash interest
and to file such other papers or documents 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 or any other amounts due the Trustee under Section 7.07) and of the
Holders allowed in such judicial proceeding, and

         (b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or 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 the Trustee any amount
due it for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07.

         Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

         SECTION 6.10 Priorities. If the Trustee collects any money pursuant to
this Article 6, it shall pay out the money in the following order:

         (1)      to the Trustee for amounts due under Section 7.07;

         (2)      to Holders for amounts due and unpaid on the Securities for
     the principal amount, Change in Control Purchase Price or any accrued and
     unpaid cash interest (including, Additional Interest Amounts, if any) as
     the case may be, ratably, without preference or priority of any kind,
     according to such amounts due and payable on the Securities; and

         (3)      the balance, if any, to the Company.

                                       37


         The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.10. At least 15 days before such record date,
the Trustee shall mail to each Holder and the Company a notice that states the
record date, the payment date and the amount to be paid.

         SECTION 6.11 Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant (other than the Trustee) in the suit of
an undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.07 or a suit by Holders of more than 10% in aggregate principal amount of the
Securities at the time outstanding. This Section 6.11 shall be in lieu of
Section 315(e) of the TIA and such Section 315(e) is hereby expressly excluded
from this Indenture, as permitted by the TIA.

         SECTION 6.12 Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury or other law
wherever enacted, now or at any time hereafter in force, which would prohibit or
forgive the Company from paying all or any portion of the principal amount,
Change in Control Purchase Price or any accrued and unpaid cash interest in
respect of Securities, or any interest on such amounts, as contemplated herein,
or which may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.

                                    ARTICLE 7

                                     TRUSTEE

         SECTION 7.01 Duties of Trustee.

         (a)      If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.

         (b)      Except during the continuance of an Event of Default:

                  (1)      the Trustee need perform only those duties that are
         specifically set forth in this Indenture and no others; and

                                       38


                  (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 case of any such certificates or opinions which
         by any provision hereof are specifically required to be furnished to
         the Trustee, the Trustee shall examine the certificates and opinions to
         determine whether or not they conform to the requirements of this
         Indenture, but need not confirm or investigate the accuracy of
         mathematical calculations or other facts stated therein.

This Section 7.01(b) shall be in lieu of Section 315(a) of the TIA and such
Section 315(a) is hereby expressly excluded from this Indenture, as permitted by
the TIA.

         (c)      The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:

                  (1)      this paragraph (c) does not limit the effect of
         paragraph (b) of this Section 7.01;

                  (2)      the Trustee shall not be liable for any error of
         judgment made in good faith by a Responsible Officer unless it is
         proved that the Trustee was negligent in ascertaining the pertinent
         facts; and

                  (3)      the Trustee shall not be liable with respect to any
         action it takes or omits to take in good faith in accordance with a
         direction received by it pursuant to Section 6.05.

Subparagraphs (c)(1), (2) and (3) shall be in lieu of Sections 315(d)(1),
315(d)(2) and 315(d)(3) of the TIA and such Sections 315(d)(1), 315(d)(2) and
315(d)(3) are hereby expressly excluded from this Indenture, as permitted by the
TIA.

         (d)      Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.01.

         (e)      The Trustee may refuse to perform any duty or exercise any
right or power or extend or risk its own funds or otherwise incur any financial
liability unless it receives indemnity satisfactory to it against any loss,
liability or expense.

         (f)      Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
(acting in any capacity hereunder) shall be under no liability for interest on
any money received by it hereunder unless otherwise agreed in writing with the
Company.

         SECTION 7.02 Rights of Trustee. Subject to its duties and
responsibilities under the provisions of Section 7.01, and, except as expressly
excluded from this Indenture pursuant to said Section 7.01, subject also to its
duties and responsibilities under the TIA:

                                       39


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

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

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

         (d)      the Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith which it believes to be
authorized or within its rights or powers conferred under this Indenture;

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

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

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

         (h)      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 at the sole cost of the Company (which cost shall be reasonable) and
shall incur no liability or additional liability of any kind by reason of such
inquiry or investigation;

         (i)      the Trustee shall not be deemed to have notice of any Default
or Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
Default is received by a Responsible Officer of

                                       40


the Trustee at the Corporate Trust Office of the Trustee, and such notice
references the Securities and this Indenture;

         (j)      the rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder; and

         (k)      the Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.

         (l)      the Trustee shall not be responsible for information in any
notice provision provided to the Trustee by the Company. Before the Trustee acts
or refrains from acting, it may require an Officer's Certificate and/or an
Opinion of Counsel. The Trustee shall be protected and it shall not be liable
for any action it takes or omits to take in good faith in reliance on such
certificate or opinion.

         SECTION 7.03 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, Conversion
Agent or co-registrar may do the same with like rights. However, the Trustee
must comply with Sections 7.10 and 7.11.

         SECTION 7.04 Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture, the Securities
or the Pledged Securities, it shall not be accountable for the Company's use or
application of the proceeds from the Securities, it shall not be responsible for
any statement in the registration statement for the Securities under the
Securities Act or in the Indenture or the Securities (other than its certificate
of authentication), or the determination as to which beneficial owners are
entitled to receive any notices hereunder.

         SECTION 7.05 Notice of Defaults. If a Default occurs and if it is
known to a Responsible Officer of the Trustee, the Trustee shall give to each
Holder notice of the Default within 90 days after the occurrence thereof, unless
such Default shall have been cured or waived before the giving of such notice.
Except in the case of a Default described in Section 6.01(1) or (2), the Trustee
may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the best
interest of Holders. The second sentence of this Section 7.05 shall be in lieu
of the proviso to Section 315(b) of the TIA and such proviso is hereby expressly
excluded from this Indenture, as permitted by the TIA. The Trustee shall not be
deemed to have knowledge of a Default unless a Responsible Officer of the
Trustee has received written notice of such Default.

                                       41


         SECTION 7.06 Reports by Trustee to Holders. Within 60 days after
each May 15 beginning with the May 15 following the date of this Indenture, the
Trustee shall mail to each Holder a brief report dated as of such May 15 that
complies with TIA Section 313(a), if required by such Section 313(a). The
Trustee also shall comply with TIA Section 313(b).

         A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each securities exchange, if any, on which the Securities
are listed. The Company agrees to promptly notify the Trustee whenever the
Securities become listed on any securities exchange and of any delisting
thereof.

         SECTION 7.07 Compensation and Indemnity. The Company agrees:

         (a)      to pay to the Trustee from time to time such reasonable
compensation as the Company and the Trustee shall from time to time agree in
writing for all services rendered by it hereunder (which compensation shall not
be limited (to the extent permitted by law) by any provision of law in regard to
the compensation of a trustee of an express trust);

         (b)      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, advances 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

         (c)      to indemnify the Trustee or any predecessor Trustee and their
agents for, and to hold them harmless against, any loss, damage, claim,
liability, cost or expense (including reasonable attorney's fees and expenses
and taxes (other than taxes based upon, measured by or determined by reference
to the income of the Trustee)) 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 reasonable costs and expenses of defending itself
against any claim (whether asserted by the Company or any Holder or any other
Person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder.

         To secure the Company's payment obligations in this Section 7.07, the
Holders shall have been deemed to have granted to the Trustee a lien prior to
the Securities on all money or property held or collected by the Trustee, except
for the money and property held in trust to pay the principal amount, Change in
Control Purchase Price, or cash interest, if any, as the case may be, on
particular Securities.

         The Company's payment obligations pursuant to this Section 7.07 shall
survive the discharge of this Indenture and the resignation or removal of the
Trustee. When the Trustee incurs expenses after the occurrence of a Default
specified in Section 6.01(6) or (7), the expenses, including the reasonable
charges and expenses of its counsel, are intended to constitute expenses of
administration under any Bankruptcy Law.

         SECTION 7.08 Replacement of Trustee. The Trustee may resign by so
notifying the Company; provided, however, no such resignation shall be effective
until a successor Trustee has accepted its appointment pursuant to this Section
7.08. The Holders of a majority in aggregate principal amount of the Securities
at the time outstanding may remove the

                                       42


Trustee by so notifying the Trustee and the Company. The Company may remove the
Trustee and shall remove the Trustee if:

         (1)      the Trustee fails to comply with Section 7.10;

         (2)      the Trustee is adjudged bankrupt or insolvent;

         (3)      a receiver or public officer takes charge of the Trustee or
                  its property; or

         (4)      the Trustee otherwise becomes incapable of acting.

         If the Trustee resigns or is removed or if a vacancy exists in the
office of the Trustee for any reason, the Company shall promptly appoint, by
resolution of its Board of Directors, a successor Trustee.

         A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company satisfactory in form and
substance to the retiring Trustee and the Company. Thereupon the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders. The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided for in Section
7.07.

         If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in aggregate principal amount of the Securities at the
time outstanding may petition any court of competent jurisdiction at the expense
of the Company for the appointment of a successor Trustee.

         If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

         SECTION 7.09 Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation, the resulting,
surviving or transferee corporation without any further act shall be the
successor Trustee.

         SECTION 7.10 Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA Sections 310(a)(1) and 310(b). The Trustee
(or its parent holding company) shall have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of
condition. Nothing herein contained shall prevent the Trustee from filing with
the Commission the application referred to in the penultimate paragraph of TIA
Section 310(b).

         SECTION 7.11 Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA

                                       43


Section 311(b). A Trustee who has resigned or been removed shall be subject to
TIA Section 311(a) to the extent indicated therein.

                                   ARTICLE 8

                             DISCHARGE OF INDENTURE

         SECTION 8.01 Discharge of Liability on Securities. When all outstanding
Securities will become due and payable within one year of their Stated Maturity
and the Company has deposited with the Trustee cash sufficient to pay and
discharge all outstanding Securities on the date of their Stated Maturity, then
the Company may discharge its obligations under this Indenture while Securities
remain outstanding; provided that provisions of Section 2.03, Section 2.04,
Section 2.05, Section 2.06, Section 2.07, Section 2.12, Section 4.01, Section
4.05, Section 7.07, Article 10 and this Article 8 shall survive until the
Securities have been paid in full. The Trustee shall join in the execution of a
document prepared by the Company acknowledging satisfaction and discharge of
this Indenture on demand of the Company accompanied by an Officers' Certificate
and Opinion of Counsel and at the cost and expense of the Company.

         SECTION 8.02 Repayment of the Company. The Trustee and the Paying
Agent shall promptly return to the Company upon written request (i) any excess
money held by them at any time and (ii) any money or securities held by them for
the payment of any amount with respect to the Securities that remains unclaimed
for two years, subject to applicable unclaimed property law. After return to the
Company, Holders entitled to the money or securities must look to the Company
for payment as general creditors unless an applicable abandoned property law
designates another person and the Trustee and the Paying Agent shall have no
further liability to the Holders with respect to such money or securities for
that period commencing after the return thereof.

         SECTION 8.03 Deposited Monies to Be Held in Trust by Trustee.
Subject to Section 8.02, all monies deposited with the Trustee pursuant to
Section 8.01 shall be held in trust for the sole benefit of the Holders and such
monies shall be applied by the Trustee to the payment, either directly or
through any Paying Agent (including the Company if acting as its own Paying
Agent), to the Holders for the payment of which such monies have been deposited
with the Trustee, of all sums due and to become due thereon for principal and
interest.

         SECTION 8.04 Reinstatement. If the Trustee or the Paying Agent is
unable to apply any money in accordance with Sections 8.01 and 8.03 by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under this Indenture and the Securities shall be revived and reinstated as
though no deposit had occurred pursuant to Section 8.01 until such time as the
Trustee or the Paying Agent is permitted to apply all such money in accordance
with Sections 8.01 and 8.03; provided, however, that if the Company makes any
payment of interest on or principal of any Security following the reinstatement
of its obligations, the Company shall be subrogated to the rights of the Holders
to receive such payment from the money held by the Trustee or Paying Agent.

                                       44


                                   ARTICLE 9

                                   AMENDMENTS

         SECTION 9.01 Without Consent of Holders. The Company and the Trustee
may amend this Indenture or the Securities without the consent of any Holder for
the purposes of, among other things:

         (1)      adding to the Company's covenants for the benefit of the
                  Holders;

         (2)      surrendering any right or power conferred upon the Company;

         (3)      providing for conversion rights of Holders if any
     reclassification or change of Common Stock or any consolidation, merger or
     sale of all or substantially all of the Company's assets occurs;

         (4)      increasing the Conversion Rate; provided that the increase
     will not adversely affect the interests of Holders in any material respect;

         (5)      complying with the requirements of the SEC in order to effect
     or maintain the qualification of this Indenture under the TIA;

         (6)      making any changes or modifications to this Indenture
     necessary in connection with the registration of the Securities under the
     Securities Act as contemplated by the Registration Rights Agreement;
     provided that this action does not adversely affect the interests of the
     Holders in any material respect;

         (7)      curing any ambiguity, omission, inconsistency or correcting or
     supplementing any defective provision contained in this Indenture; provided
     that such modification or amendment does not adversely affect the interests
     of the Holders in any material respect; or

         (8)      adding or modifying any other provisions which the Company and
                  the Trustee may deem necessary or desirable and which will not
                  adversely affect the interests of the Holders in any material
                  respect;

         (9)      complying with Article 5;

         (10)     providing for uncertificated Securities in addition to the
     Certificated Securities so long as such uncertificated Securities are in
     registered form for purposes of the Internal Revenue Code of 1986, as
     amended; or

         (11)     providing for the appointment of a successor trustee.

                                       45


         SECTION 9.02 With Consent of Holders. With the written consent of the
Holders of not less than a majority in aggregate principal amount of the
Securities at the time outstanding or by the adoption of a resolution at a
meeting of Holders at which a quorum is present by at least a majority in
aggregate principal amount of the Securities represented at the meeting, the
Company may modify and amend this Indenture or the Securities and waive
noncompliance by the Company. However, without the consent of each Holder
affected, a modification, amendment or waiver to this Indenture or the
Securities may not:

         (1)      change the maturity of the principal of or any installment of
     interest on any Security or any payment of Additional Interest Amounts;

         (2)      reduce the principal amount of, or interest on or any payment
     of Additional Interest Amounts on, any Security;

         (3)      change the currency of payment of principal of, or interest on
     any Security;

         (4)      impair the right to institute suit for the enforcement of any
     payment on or with respect to, or conversion of, any Security;

         (5)      except as otherwise permitted or contemplated by provisions of
     this Indenture concerning corporate reorganizations, materially adversely
     affect the purchase option of Holders or the conversion rights of Holders;
     or

         (6)      reduce the percentage in aggregate principal amount of
     Securities outstanding necessary to modify or amend this Indenture or to
     waive any past default.

         It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.

         After an amendment under this Section 9.02 becomes effective, the
Company shall mail to each Holder a notice briefly describing the amendment.

         SECTION 9.03 Compliance with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall comply with the TIA.

         SECTION 9.04 Revocation and Effect of Consents, Waivers and Actions.
Until an amendment, waiver or other action by Holders becomes effective, a
consent thereto by a Holder of a Security hereunder is a continuing consent by
the Holder and every subsequent Holder of that Security or portion of the
Security that evidences the same obligation as the consenting Holder's Security,
even if notation of the consent, waiver or action is not made on the Security.
However, any such Holder or subsequent Holder may revoke the consent, waiver or
action as to such Holder's Security or portion of the Security if the Trustee
receives the notice of revocation before the date the amendment, waiver or
action becomes effective. After an amendment, waiver or action becomes
effective, it shall bind every Holder.

                                       46


         SECTION 9.05 Notation on or Exchange of Securities. Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article 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 Board of Directors, 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.

         SECTION 9.06 Trustee to Sign Supplemental Indentures. The Trustee
shall sign any supplemental indenture authorized pursuant to this Article 9 if
the amendment contained therein does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign such supplemental indenture. In signing such supplemental indenture
the Trustee shall be entitled to receive, and (subject to the provisions of
Section 7.01) shall be fully protected in relying upon, an Officers' Certificate
and an Opinion of Counsel stating that such amendment is authorized or permitted
by this Indenture.

         SECTION 9.07 Effect of Supplemental Indentures. Upon the execution
of any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.

                                   ARTICLE 10

                                   CONVERSION

         SECTION 10.01 Conversion Right and Conversion RateA Holder of a
Security may convert the principal amount of such Security (or any portion
thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof)
into Common Stock at any time prior to the close of business on July 26, 2009,
at the Conversion Rate then in effect. The initial "Conversion Rate" is 74.0741
shares of Common Stock per $1,000 principal amount of the Securities and is
subject to adjustment as provided in this Article 10.

         In addition, a Holder may be entitled to the Make-Whole Premium in
addition to the shares of Common Stock deliverable upon conversion of such
Holder's Securities in accordance with Section 3.01 hereof.

         SECTION 10.02 Exercise of Conversion Right. To exercise the conversion
right, the Holder of any Security to be converted shall in the case of Global
Securities, comply with the procedures of the Depositary in effect at that time,
and, in the case of Certificated Securities, surrender such Security duly
endorsed or assigned to the Company or in blank, at the office of any Conversion
Agent, accompanied by a duly signed conversion notice substantially in the form
attached to the Security to the Company 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.

                                       47


         Securities surrendered for conversion during the period from the close
of business on any Regular Record Date to the opening of business on the next
succeeding Interest Payment Date shall be accompanied by payment in New York
Clearing House funds or other funds acceptable to the Company of an amount equal
to the interest to be received on such Interest Payment Date on the principal
amount of Securities being surrendered for conversion.

         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 (the "Conversion Date"), and at such
time the rights of the Holders of such Securities as Holders shall cease (and
all obligations of the Company with respect thereto shall be deemed satisfied,
including with respect to the principal amount and any accrued and unpaid
interest, including any Additional Interest), 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 cause
to be issued and delivered to such Conversion Agent a certificate or
certificates for or, if applicable, other book-entry confirmation representing
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 10.03
hereof.

         Except as specifically provided herein, no cash payment or other
adjustment will be made on conversion of any Securities for interest accrued
thereon or for dividends on any Common Stock. Accrued and unpaid interest will
be deemed paid in full rather than canceled, extinguished or forfeited.

         In the case of any Certificated 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 an aggregate principal
amount equal to the unconverted portion of the principal amount of such
Securities.

         If shares of Common Stock to be issued upon conversion of a Restricted
Security or portion thereof are to be registered in a name other than that of
the Holder of such Restricted Security, such Holder must deliver to the
Conversion Agent a certificate in substantially the form set forth in the form
of Security set forth in Exhibit C annexed hereto, dated the date of surrender
of such Restricted Security and signed by such Holder, as to compliance with the
restrictions on transfer applicable to such Restricted Security. Neither the
Trustee nor any Conversion Agent, Registrar or Transfer Agent shall be required
to register in a name other than that of the Holder shares of Common Stock or
Securities issued upon conversion of any such Restricted Security not so
accompanied by a properly completed certificate.

         If the Notes are converted after a Record Date for an Interest Payment
Date but prior to the next Interest Payment Date, those Notes must be
accompanied by funds equal to the interest payable to the Holder of the Notes on
such Record Date on the next Interest Payment Date on the principal amount so
converted.

                                       48


         SECTION 10.03 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 which shall be issued 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 issued upon conversion of any Security or
Securities (or specified portions thereof), the Company shall pay a cash
adjustment in respect of such fraction (calculated to the nearest one-100th of a
share) in an amount equal to the same fraction of the Sale Price per Share of
the Common Stock as of the Trading Day preceding the Conversion Date.

         SECTION 10.04 Adjustment of Conversion Rate. The Conversion Rate shall
be subject to adjustments, calculated by the Company, from time to time as
follows:

         (a)      In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Rate in effect at the opening of business on the date
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be increased by multiplying
such Conversion Rate by a fraction:

         (1)      the numerator of which shall be the sum of the number of
     shares of Common Stock outstanding at the close of business on the Record
     Date fixed for such determination and the total number of shares
     constituting such dividend or other distribution, and

         (2)      the denominator of which shall be the number of shares of
     Common Stock outstanding at the close of business on the Record Date fixed
     for such determination.

Such increase shall become effective immediately after the opening of business
on the Business Day following the Record Date. If any dividend or distribution
of the type described in this Section 10.04(a) is declared but not so paid or
made, the Conversion Rate shall again be adjusted to the Conversion Rate which
would then be in effect if such dividend or distribution had not been declared.

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

                                       49


business on the day following the day upon which such subdivision or combination
becomes effective.

         (c)      In case the Company shall issue rights or warrants to all
holders of its outstanding shares of Common Stock (other than as contemplated by
Section 10.14) entitling them (for a period of not more than 60 days) to
subscribe for or purchase shares of Common Stock (or securities convertible into
Common Stock) at a price per share (or having a Conversion Price per share) less
than the Current Market Price per share of Common Stock on the Record Date fixed
for the determination of stockholders entitled to receive such rights or
warrants, the Conversion Rate shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Rate in effect at the opening of
business on the date after such Record Date by a fraction:

                  (1)      the numerator of which shall be the number of shares
         of Common Stock outstanding on the close of business on the Record Date
         plus the total number of additional shares of Common Stock so offered
         for subscription or purchase (or into which the convertible securities
         so offered are convertible) at such below Current Market Price, and

                  (2)      the denominator of which shall be the number of
         shares of Common Stock outstanding at the close of business on the
         Record Date plus the number of shares which the aggregate offering
         price of the total number of shares so offered for subscription or
         purchase (or the aggregate Conversion Price of the convertible
         securities so offered) would purchase at such Current Market Price.

Such adjustment shall be successively made whenever any such rights or warrants
are issued and shall become effective immediately after the opening of business
on the day following the Record Date fixed for determination of stockholders
entitled to receive such rights or warrants. To the extent that shares of Common
Stock (or securities convertible into Common Stock) are not delivered pursuant
to such rights or warrants, upon the expiration or termination of such rights or
warrants the Conversion Rate shall be readjusted to the Conversion Rate which
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of the delivery of only the number of
shares of Common Stock (or securities convertible into Common Stock) actually
delivered. In the event that such rights or warrants are not so issued, the
Conversion Rate shall again be adjusted to be the Conversion Rate which would
then be in effect if such date fixed for the determination of stockholders
entitled to receive such rights or warrants had not been fixed. In determining
whether any rights or warrants entitle the holders to subscribe for or purchase
shares of Common Stock at less than such Current Market Price, and in
determining the aggregate offering price of such shares of Common Stock, there
shall be taken into account any consideration received for such rights or
warrants, the value of such consideration if other than cash, to be determined
by the Board of Directors.

         (d)      In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any class of Capital
Stock of the Company (other than any dividends or distributions to which Section
10.04(a) applies) or evidences of its indebtedness or other assets, including
securities, but excluding (1) any rights or warrants referred to in Section
10.04(c) or 10.14, (2) any dividends or distributions in connection with a
reclassification,

                                       50


change, merger, consolidation, statutory share exchange, combination, sale or
conveyance to which Section 10.11 hereof applies and (3) dividends and
distributions paid exclusively in cash referred to in Section 10.04(e) (the
securities described in foregoing clauses (1), (2) and (3) hereinafter in this
Section 10.04(d) called the "excluded securities"), then, in each such case,
subject to the second succeeding paragraph of this Section 10.04(d), the
Conversion Rate shall be adjusted so that the same shall be equal to the price
determined by multiplying the Conversion Rate in effect immediately prior to the
close of business on the Record Date with respect to such distribution by a
fraction:

                  (1)      the numerator of which shall be such Current Market
         Price per share of the Common Stock on the Record Date, and

                  (2)      the denominator of which shall be the Current Market
         Price per share of Common Stock on such date, less the then fair market
         value (as determined by the Board of Directors, whose determination
         shall be conclusive and set forth in a Board Resolution) on such date
         of the portion of the securities, evidences of indebtedness or other
         assets so distributed (other than excluded securities) applicable to
         one share of Common Stock (determined on the basis of the number of
         shares of the Common Stock outstanding on the Record Date).

Such increase shall become effective immediately prior to the opening of
business on the day following the Record Date. However, in the event that the
then fair market value (as so determined) of the portion of the securities,
evidences of indebtedness or other assets so distributed (other than excluded
securities) applicable to one share of Common Stock is equal to or greater than
the Current Market Price on the Record Date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall have the
right to receive upon conversion of a Security (or any portion thereof) the
amount of securities, evidences of indebtedness or other assets so distributed
(other than excluded securities) such Holder would have received had such Holder
converted such Security (or portion thereof) immediately prior to such Record
Date. In the event that such dividend or distribution is not so paid or made,
the Conversion Rate shall again be adjusted to be the Conversion Rate which
would then be in effect if such dividend or distribution had not been declared.

         If the Board of Directors determines the fair market value of any
distribution for purposes of this Section 10.04(d) by reference to the actual or
when issued trading market for any securities comprising all or part of such
distribution (other than excluded securities), it must in doing so consider the
prices in such market over the same period (the "Reference Period") used in
computing the Current Market Price pursuant to Section 10.04(g) to the extent
possible, unless the Board of Directors in a Board Resolution determines in good
faith that determining the fair market value during the Reference Period would
not be in the best interests of the Holder.

         For purposes of this Section 10.04(d) and Sections 10.04(a), 10.04(b)
and 10.04(c), any dividend or distribution to which this Section 10.04(d) is
applicable that also includes shares of Common Stock, a subdivision or
combination of Common Stock to which Section 10.04(b) applies, or rights or
warrants to subscribe for or purchase shares of Common

                                       51


Stock (or securities convertible into Common Stock) to which Section 10.04(c)
applies (or any combination thereof), shall be deemed instead to be:

         (1)      a dividend or distribution of the evidences of indebtedness,
     assets, shares of capital stock, rights or warrants other than such shares
     of Common Stock, such subdivision or combination or such rights or warrants
     to which Sections 10.04(a), 10.04(b) and 10.04(c) apply, respectively (and
     any Conversion Rate increase required by this Section 10.04(d) with respect
     to such dividend or distribution shall then be made), immediately followed
     by

         (2)      a dividend or distribution of such shares of Common Stock,
     such subdivision or combination or such rights or warrants (and any further
     Conversion Rate increase required by Sections 10.04(a), 10.04(b) and
     10.04(c) with respect to such dividend or distribution shall then be made),
     except:

                  (A)      the Record Date of such dividend or distribution
         shall be substituted as (x) "the date fixed for the determination of
         stockholders entitled to receive such dividend or other distribution",
         "Record Date fixed for such determinations" and "Record Date" within
         the meaning of Section 10.04(a), (y) "the day upon which such
         subdivision becomes effective" and "the day upon which such combination
         becomes effective" within the meaning of Section 10.04(b), and (z) as
         "the date fixed for the determination of stockholders entitled to
         receive such rights or warrants", "the Record Date fixed for the
         determination of the stockholders entitled to receive such rights or
         warrants" and such "Record Date" within the meaning of Section
         10.04(c), and

                  (B)      any shares of Common Stock included in such dividend
         or distribution shall not be deemed "outstanding at the close of
         business on the date fixed for such determination" within the meaning
         of Section 10.04(a) and any increase or reduction in the number of
         shares of Common Stock resulting from such subdivision or combination
         shall be disregarded in connection with such dividend or distribution.

         (e)      In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock, cash (excluding any cash (1) that
is distributed as part of a distribution referred to in Section 10.04(d) hereof,
and (2) any quarterly cash dividend on Common Stock to the extent that the
aggregate cash dividend per share of Common Stock in any quarter does not exceed
$0.005 (the "dividend threshold amount"); (the dividend threshold amount is
subject to adjustment on the same basis as the Conversion Rate, provided that no
adjustment will be made to the dividend threshold amount for any adjustment made
to the Conversion Rate pursuant to this Section 10.04(e)), then and in each such
case, immediately after the close of business on such date, the Conversion Rate
shall be increased so that the same shall equal the price determined by
multiplying the Conversion Rate in effect immediately prior to the close of
business on such Record Date by a fraction:

                                       52


         (i)      the numerator of which shall be equal to the Current Market
     Price on such Record Date, and

         (ii)     the denominator of which shall be equal to the Current Market
     Price on the Record Date less an amount equal to the quotient of (x) the
     aggregate amount of the cash distributed and (y) the number of shares of
     Common Stock outstanding on the Record Date.

In the event that such dividend or distribution is not so paid or made, the
Conversion Rate shall again be adjusted to be the Conversion Rate which would
then be in effect if such dividend or distribution had not been declared.

         (f)      In case the Company or any of its Subsidiaries pays holders of
the Common Stock in respect of a tender offer or exchange offer, other than an
odd-lot offer, by the Company or any of its Subsidiaries for shares of Common
Stock to the extent that the cash and fair market value of any other
consideration included in the payment per share of Common Stock exceeds the Sale
Price per share of Common Stock on the Trading Day next succeeding the last date
on which tenders or exchanges may be made pursuant to such tender offer or
exchange offer (the "Expiration Time"), then, and in each such case, the
Conversion Rate shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Rate in effect immediately prior to
close of business on the date of the Expiration Time by a fraction:

         (1)      the numerator of which shall be the sum of (x) the fair market
     value (determined as aforesaid) of the aggregate consideration payable to
     stockholders based on the acceptance (up to any maximum specified in the
     terms of the tender offer or exchange offer) 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") and (y) the product of the number of shares of Common Stock
     outstanding (less any Purchased Shares) at the Expiration Time and the Sale
     Price of the Common Stock on the Trading Day next succeeding the Expiration
     Time, and

         (2)      the denominator of which shall be the number of shares of
     Common Stock outstanding (including any tendered or exchanged shares) at
     the Expiration Time multiplied by the Sale Price of the Common Stock on the
     Trading Day next succeeding the Expiration Time.

Such increase (if any) shall become effective immediately prior to the opening
of business on the day following the Expiration Time. In the event that the
Company is obligated to purchase shares pursuant to any such tender offer or
exchange offer, but the Company is permanently prevented by applicable law from
effecting any such purchases or all such purchases are rescinded, the Conversion
Rate shall again be adjusted to be the Conversion Rate which would then be in
effect if such tender offer or exchange offer had not been made.

         (g)      For purposes of this Section 10.04, the following terms shall
have the meanings indicated:

                                       53


         "Current Market Price" shall mean the average of the daily Sale Prices
per share of Common Stock for the ten consecutive Trading Days ending not later
than the earlier of the date immediately prior to the date in question and the
day before the "ex" date with respect to the issuance, distribution, subdivision
or combination requiring such computation. If another issuance, distribution,
subdivision or combination to which Section 10.04 applies occurs during the
period applicable for calculating "Current Market Price" pursuant to the
preceding definition, then "Current Market Price" shall be appropriately
adjusted to reflect the impact of such issuance, distribution, subdivision or
combination on the Sale Price of the Common Stock during such period. For
purposes of this paragraph, the term "ex" date, when used:

         (A)      with respect to any issuance or distribution, means the first
     date on which the Common Stock trades regular way on the relevant exchange
     or in the relevant market from which the Sale Price was obtained without
     the right to receive such issuance or distribution;

         (B)      with respect to any subdivision or combination of shares of
     Common Stock, means the first date on which the Common Stock trades regular
     way on such exchange or in such market after the time at which such
     subdivision or combination becomes effective, and

         (C)      with respect to any tender or exchange offer, means the first
     date on which the Common Stock trades regular way on such exchange or in
     such market after the Expiration Time of such offer.

Notwithstanding the foregoing, whenever successive adjustments to the Conversion
Rate are called for pursuant to this Section 10.04, such adjustments shall be
made to the Current Market Price as may be necessary or appropriate to
effectuate the intent of this Section 10.04 and to avoid unjust or inequitable
results as determined in good faith by the Board of Directors.

         (2)      "fair market value" shall mean the amount which a willing
     buyer would pay a willing seller in an arm's length transaction.

         (3)      "Record Date" shall mean for purposes of this Article 10, with
     respect to any dividend, distribution or other transaction or event in
     which the holders of Common Stock have the right to receive any cash,
     securities or other property or in which the Common Stock (or other
     applicable security) is exchanged for or converted into any combination of
     cash, securities or other property, the date fixed for determination of
     stockholders entitled to receive such cash, securities or other property
     (whether such date is fixed by the Board of Directors or by statute,
     contract or otherwise).

         (h)      The Company may make such increases in the Conversion Rate, in
addition to those required by Section 10.04(a), (b), (c), (d), (e) or (f), as
the Board of Directors considers to be advisable to avoid or diminish any income
tax to holders of Common Stock or rights to purchase Common Stock resulting from
any dividend or distribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes.

                                       54


         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 and the increase is irrevocable during the period
and the Board of Directors determines in good faith that such increase would be
in the best interests of the Company, which determination shall be conclusive
and set forth in a Board Resolution. Whenever the Conversion Rate is increased
pursuant to the preceding sentence, the Company shall mail to the Trustee and
each Holder at the address of such Holder as it appears in the Register a notice
of the increase at least 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.

         (i)      No adjustment in the Conversion Rate shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Conversion Price then in effect; provided, however, that any adjustments which
by reason of this Section 10.04(i) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. In the event that,
on the date that is five Business Days prior to the maturity of the Securities
(whether at Stated Maturity or otherwise), an adjustment has been carried
forward pursuant to the preceding sentence but has not yet been taken into
account in an adjustment to the Conversion Rate and notwithstanding the first
sentence of this paragraph (i), an adjustment to the Conversion Rate will be
made on such date in accordance with the relevant paragraph of this Section
10.04. All calculations under this Article 10 shall be made by the Company and
shall be made to the nearest cent or to the nearest one hundredth of a share, as
the case may be. No adjustment need be made for a change in the par value or no
par value of the Common Stock. No adjustment in the Conversion Rate shall be
required if the Holders participate in the transactions that would otherwise
lead to an adjustment in the Conversion Rate pursuant to this Section 10.04.

         (j)      In any case in which this Section 10.04 provides that an
adjustment shall become effective immediately after a Record Date for an event,
the Company may defer until the occurrence of such event (i) issuing to the
Holder of any Security converted after such Record Date and before the
occurrence of such event the additional shares of Common Stock issuable upon
such conversion by reason of the adjustment required by such event over and
above the Common Stock issuable upon such conversion before giving effect to
such adjustment and (ii) paying to such Holder any amount in cash in lieu of any
fraction pursuant to Section 10.03 hereof.

         (k)      For purposes of this Section 10.04, 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.

         SECTION 10.05 Notice of Adjustments of Conversion Rate. Whenever the
Conversion Rate is adjusted as herein provided (other than in the case of an
adjustment pursuant to the second paragraph of Section 10.04(h) for which the
notice required by such paragraph has been provided), the Company shall promptly
file with the Trustee and any Conversion Agent other than the Trustee an
Officers' Certificate setting forth the adjusted Conversion Rate and showing in
reasonable detail the facts upon which such adjustment is based. Promptly after

                                       55


delivery of such Officers' Certificate, the Company shall prepare a notice
stating that the Conversion Rate has been adjusted and setting forth the
adjusted Conversion Rate and the date on which each adjustment becomes
effective, and shall mail, or cause the Trustee to mail, at the Company's
expense, such notice to each Holder at the address of such Holder as it appears
in the Register within 20 days of the effective date of such adjustment. Failure
to deliver such notice shall not affect the legality or validity of any such
adjustment.

         SECTION 10.06 Notice Prior to Certain Actions. In case at any time
after the date hereof:

         (1)      the Company shall declare a dividend (or any other
     distribution) on its Common Stock payable otherwise than in cash out of its
     capital surplus or its consolidated retained earnings;

         (2)      the Company shall authorize (other than pursuant to a Rights
     Plan) the granting to the holders of its Common Stock of rights or warrants
     to subscribe for or purchase any shares of capital stock of any class (or
     of securities convertible into shares of capital stock of any class) or of
     any other rights;

         (3)      there shall occur any reclassification of the Common Stock of
     the Company (other than a subdivision or combination of its outstanding
     Common Stock, a change in par value, a change from par value to no par
     value or a change from no par value to par value), or any merger,
     consolidation, statutory share exchange or combination to which the Company
     is a party and for which approval of any shareholders of the Company is
     required, or the sale, transfer or conveyance of all or substantially all
     of the assets of the Company; or

         (4)      there shall occur the voluntary or involuntary dissolution,
     liquidation or winding up of the Company;

the Company shall cause to be filed at each office or agency maintained for the
purpose of conversion of Securities pursuant to Section 4.05 hereof, and shall
cause to be provided to the Trustee and all Holders in accordance with Section
11.02 hereof, at least 15 days prior to the applicable record or effective date
hereinafter specified, a notice stating:

                  (A)      the date on which a record is to be taken for the
          purpose of such dividend, distribution, rights 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
          or warrants are to be determined, or

                  (B)      the date on which such reclassification, merger,
          consolidation, statutory share exchange, combination, sale, transfer,
          conveyance, 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, merger, consolidation, statutory share
          exchange, sale, transfer, dissolution, liquidation or winding up.

                                       56


         Neither the failure to give such notice nor any defect therein shall
affect the legality or validity of the proceedings or actions described in
clauses (1) through (4) of this Section 10.06.

         SECTION 10.07 Company to Reserve Common Stock. The Company shall at
all times use its best efforts to 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
fully paid and nonassessable Common Stock then issuable upon the conversion of
all Securities outstanding.

         SECTION 10.08 Taxes on Conversions. Except as provided in the next
sentence, the Company will pay any and all taxes (other than taxes on income)
and duties that may be payable in respect of the issue or delivery of shares of
Common Stock on conversion of Securities pursuant hereto. A Holder delivering a
Security for conversion shall be liable for and will 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 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.

         SECTION 10.09 Covenant as to Common Stock. The Company covenants
that all shares of Common Stock which may be issued upon conversion of
Securities will upon issue be fully paid and nonassessable.

         SECTION 10.10 Cancellation of Converted Securities. All Securities
delivered for conversion shall be delivered to the Trustee to be canceled by or
at the direction of the Trustee, which shall dispose of the same as provided in
Section 2.10.

         SECTION 10.11 Effect of Reclassification, Consolidation, Merger or
Sale. If any of following events occur, namely:

         (1)      any reclassification or change of the outstanding Common Stock
     (other than a change in par value, or from par value to no par value, or
     from no par value to par value, or as a result of a subdivision or
     combination),

         (2)      any merger, consolidation, statutory share exchange or
     combination of the Company with another corporation, or

         (3)      any sale or conveyance of all, or substantially all, the
     properties and assets of the Company to any other Person,

in each case, as a result of which holders of Common Stock shall be entitled to
receive stock, securities or other property or assets (including cash or any
combination thereof) with respect to or in exchange for such Common Stock, the
Company or the successor or purchasing corporation, as the case may be, shall
execute with the Trustee a supplemental indenture (which shall comply with the
TIA as in force at the date of execution of such supplemental indenture if such
supplemental indenture is then required to so comply) providing that such
Security shall be convertible into the kind and amount of shares of stock and
other securities or property or assets

                                       57


(including cash or any combination thereof) which such Holder would have been
entitled to receive upon such reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance had such Securities
been converted into Common Stock immediately prior to such reclassification,
change, merger, consolidation, statutory share exchange, combination, sale or
conveyance assuming such holder of Common Stock did not exercise its rights of
election, if any, as to the kind or amount of securities, cash or other property
receivable upon such reclassification, change, merger, consolidation, statutory
share exchange, combination, sale or conveyance (provided that, if the kind or
amount of securities, cash or other property receivable upon such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance is not the same for each share of Common Stock
in respect of which such rights of election shall not have been exercised
("Non-Electing Share"), then for the purposes of this Section 10.11 the kind and
amount of securities, cash or other property receivable upon such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance for 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 shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article 10. If, in the case of any such reclassification,
change, merger, consolidation, statutory share exchange, combination, sale or
conveyance, the stock or other securities and assets receivable thereupon by a
holder of shares of Common Stock includes shares of stock or other securities
and assets of a corporation other than the successor or purchasing corporation,
as the case may be, in such reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance, then such
supplemental indenture shall also be executed by such other corporation and
shall contain such additional provisions to protect the interests of the Holders
of the Securities as the Board of Directors shall reasonably consider necessary
by reason of the foregoing, including to the extent practicable the provisions
providing for the purchase rights set forth in Section 3.01 hereof.

         The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder, at the address of such Holder as it
appears on the Register, within 20 days after execution thereof. Failure to
deliver such notice shall not affect the legality or validity of such
supplemental indenture.

         The above provisions of this Section 10.11 shall similarly apply to
successive reclassifications, mergers, consolidations, statutory share
exchanges, combinations, sales and conveyances.

         If this Section 10.11 applies to any event or occurrence, Section 10.04
hereof shall not apply to such event or occurrence.

         SECTION 10.12 Adjustment for Other Distributions. If, after the Issue
Date of the Securities, the Company pays a dividend or makes a distribution to
all holders of its Common Stock consisting of Capital Stock of any class or
series, or similar equity interests as described in Section 10.04(d), of or
relating to a Subsidiary or other business unit of the Company, the Conversion
Rate shall be adjusted in accordance with the formula:

                                       58


                            P' = P x 1/(1 + M/F)

where:

      P' = the adjusted Conversion Rate.

      P  = the current Conversion Rate.

      F = the fair market value of the securities distributed in respect of each
share of Common Stock, which shall be the number of securities distributed in
respect of each share of Common Stock multiplied by the average of the
Post-Distribution Prices of those securities distributed for the 10 Trading Days
commencing on and including the fifth Trading Day after the Ex-Dividend Date.

      M = the average of the Post-Distribution Prices of the Common Stock for
the 10 Trading Days commencing on and including the fifth Trading Day after the
date on which "ex-dividend trading" commences for such dividend or distribution
on the New York Stock Exchange or such other national or regional exchange or
market which such securities are then listed or quoted (the "Ex-Dividend Date").

         "Post-Distribution Price" of Capital Stock or any similar equity
interest on any date means the closing per unit sale price (or, if no closing
sale price is reported, the average of the bid and ask prices or, if more than
one in either case, the average of the average bid and the average ask prices)
on such date for trading of such units on a "when issued" basis without due
bills (or similar concept) as reported in the composite transactions for the New
York Stock Exchange or such other national or regional exchange or market on
which such Capital Stock or equity interest is traded or, if the Capital Stock
or equity interest, as the case may be, is not listed on a United States
national or regional securities exchange or market, as reported by the Nasdaq
system or by the National Quotation Bureau Incorporated; provided that if on any
date such units have not traded on a "when issued" basis, the Post-Distribution
Price shall be the closing per unit sale price (or, if no closing sale price is
reported, the average of the bid and ask prices or, if more than one in either
case, the average of the average bid and the average ask prices) on such date
for trading of such units on a "regular way" basis without due bills (or similar
concept) as reported in the composite transactions for the New York Stock
Exchange or such other national or regional exchange on which such Capital Stock
or equity interest is traded or, if the Capital Stock or equity interest as the
case may be, is not listed on a United States national or regional securities
exchange, as reported by the Nasdaq system or by the National Quotation Bureau
Incorporated. In the absence of such quotation, the Company shall be entitled to
determine the Post-Distribution Price on the basis of such quotations, which
reflect the post-distribution value of the Capital Stock or equity interests as
it considers appropriate.


         SECTION 10.13 Responsibility of Trustee for Conversion Provisions. The
Trustee 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 intent of any such adjustments when made, or with respect to the
method employed, or herein or in any supplemental indenture provided to be
employed, in making the same. Neither the Trustee nor any Conversion Agent shall
be accountable with respect to the validity or value (of the kind or amount) of
any Common Stock, or of any other securities or property, 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 nor any
Conversion Agent

                                       59


shall be responsible for any failure of the Company to make any cash payment or
to issue, transfer or deliver any shares of stock or share certificates or other
securities or property upon the surrender of any Security for the purpose of
conversion; and the Trustee and any Conversion Agent shall not be responsible or
liable for any failure of the Company to comply with any of the covenants of the
Company contained in this Article.

         SECTION 10.14 Rights Issued in Respect of Common Stock Issued Upon
Conversion. In the event that the Company implements a new rights plan or any
similar plan (a "Rights Plan"), or the Company's current Rights Plan is still in
effect, upon conversion of the Securities into Common Stock, to the extent that
any such Rights Plan has been implemented and is still in effect upon such
conversion, the holders of Securities will receive, in addition to the Common
Stock, the rights described therein (whether or not the rights have separated
from the Common Stock at the time of conversion), subject to the limitations set
forth in the Rights Plan. Any distribution of rights or warrants pursuant to a
Rights Plan complying with the requirements set forth in the immediately
preceding sentence of this paragraph (including the issuance of the rights, the
distribution of separate certificates representing the rights, the exercise or
redemption of such rights in accordance with the applicable rights agreement and
the termination or invalidation of the rights) shall not constitute a
distribution of rights or warrants pursuant to Section 10.04.

                                   ARTICLE 11

                                  MISCELLANEOUS

         SECTION 11.01 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies, or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control. If any provision of this Indenture expressly modifies or excludes
any provision of the TIA that may be so modified or excluded, the Indenture
provision so modifying or excluding such provision of the TIA shall be deemed to
apply.

         SECTION 11.02 Notices. Any request, demand, authorization, notice,
waiver, consent or communication shall be in writing and delivered in person or
mailed by first-class mail, postage prepaid, addressed as follows, or, other
than notices to the Company, transmitted by facsimile transmission (confirmed by
guaranteed overnight courier) to the following facsimile numbers:

                                       60


   if to the Company:

         Titan International, Inc.
         2701 Spruce Street
         Quincy, Illinois 62301
         Attention: Cheri Holley
         Facsimile: (217) 228-3040

   if to the Trustee:

         U.S. Bank National Association
         101 West Washington Street
         Suite 655 S
         Indianapolis, Indiana 46255
         Attention: Ann Forey
         Facsimile: (317) 267-7658

         The Company or the Trustee by notice given to the other in the manner
provided above may designate additional or different addresses for subsequent
notices or communications.

         Any notice or communication given to a Holder shall be mailed to the
Holder, by first-class mail, postage prepaid, at the Holder's address as it
appears on the registration books of the Registrar and shall be sufficiently
given if so mailed within the time prescribed.

         Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not received by the addressee.

         If the Company mails a notice or communication to the Holders, it shall
mail a copy to the Trustee and each Registrar, Paying Agent, Conversion Agent or
co-registrar.

         SECTION 11.03 Communication by Holders with Other Holders. Holders may
communicate pursuant to TIA Section 312(b) with other Holders with respect to
their rights under this Indenture or the Securities. The Company, the Trustee,
the Registrar, the Paying Agent, the Conversion Agent and anyone else shall have
the protection of TIA Section 312(c).

         SECTION 11.04 Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.

         SECTION 11.05 Statements Required in an Officers' Certificate or
Opinion.Each Officers' Certificate or Opinion of Counsel with respect to
compliance with a covenant or condition provided for in this Indenture shall
include:

                  (1)      a statement that each person making such Officers'
         Certificate or Opinion of Counsel has read such covenant or condition;

                                       61


                  (2)      a brief statement as to the nature and scope of the
         examination or investigation upon which the statements or opinions
         contained in such Officers' Certificate or Opinion of Counsel are
         based;

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

                  (4)      a statement that, in the opinion of such person, such
         covenant or condition has been complied with.

         SECTION 11.06 Separability Clause. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

         SECTION 11.07 Rules by Trustee, Paying Agent, Conversion Agent and
Registrar. The Trustee may make reasonable rules for action by or a meeting of
Holders. The Registrar, Conversion Agent and the Paying Agent may make
reasonable rules for their functions.

         SECTION 11.08 Legal Holidays. A "Legal Holiday" is any day other than a
Business Day. If any specified date (including a date for giving notice) is a
Legal Holiday, the action shall be taken on the next succeeding day that is not
a Legal Holiday, and, if the action to be taken on such date is a payment in
respect of the Securities, no interest, if any, shall accrue for the intervening
period.

         SECTION 11.09 GOVERNING LAW. THIS INDENTURE AND THE NOTES WILL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

         SECTION 11.10 No Recourse Against Others. A director, officer, employee
or stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Holder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Securities.

         SECTION 11.11 Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.

         SECTION 11.12 Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.

                                       62

EX-31.1

                                                                    EXHIBIT 31.1
                                  CERTIFICATION

I, Maurice M. Taylor Jr., certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Titan International,
      Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report.

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

      a)    Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

      b)    Evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures, as of
            the end of the period covered by this report based on such
            evaluation; and

      c)    Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter (the registrant's fourth
            fiscal quarter in the case of an annual report) that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant's auditors and the audit committee of registrant's board
      of directors (or persons performing the equivalent function):

      a)    All significant deficiencies and material weaknesses in the design
            or operation of internal control over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

      b)    Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.

DATE:         July 29, 2004         BY: /s/ Maurice M. Taylor Jr.
                                        ----------------------------------------
                                           Maurice M. Taylor Jr.
                                           President and Chief Executive Officer

EX-31.2

                                                                    EXHIBIT 31.2

                                  CERTIFICATION

I, Kent W. Hackamack, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Titan International,
      Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report.

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

      a)    Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

      b)    Evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures, as of
            the end of the period covered by this report based on such
            evaluation; and

      c)    Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter (the registrant's fourth
            fiscal quarter in the case of an annual report) that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant's auditors and the audit committee of registrant's board
      of directors (or persons performing the equivalent function):

      a)    All significant deficiencies and material weaknesses in the design
            or operation of internal control over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

      b)    Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.

DATE:    July 29, 2004          BY:  /s/ Kent W. Hackamack
                                     -------------------------------------------
                                         Kent W. Hackamack
                                         Vice President of Finance and Treasurer
                                         (Principal Financial Officer and
                                          Principal Accounting Officer)

EX-32

                                                                      EXHIBIT 32

                                  CERTIFICATION

Each of the undersigned hereby certifies that, to the best of their knowledge,
this report fully complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934 and that information contained in this report
fairly presents, in all material respects, the financial condition and results
of operations of the Registrant.

                                            TITAN INTERNATIONAL, INC.
                                                   (REGISTRANT)

DATE: July 29, 2004              BY: /s/ Maurice M. Taylor Jr.
                                     ---------------------------------------
                                         Maurice M. Taylor Jr.
                                         President and Chief Executive Officer


                                 BY: /s/ Kent W. Hackamack
                                     ---------------------------------------
                                         Kent W. Hackamack
                                         Vice President of Finance and Treasurer
                                         (Principal Financial Officer and
                                          Principal Accounting Officer)