EXHIBIT 4.1



                             HARLEYSVILLE GROUP INC.


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

                                     SENIOR
                                    INDENTURE

                       Dated as of ________________, 2003

           Providing for Issuance of Senior Debt Securities in Series

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




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

                J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION,

                                   as Trustee

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


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

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                                TABLE OF CONTENTS


<S>     <C>                                                                                                     <C>
ARTICLE 1.        DEFINITIONS AND INCORPORATION BY REFERENCE.....................................................1

         Section 1.01.         Definitions.......................................................................1

         Section 1.02.         Other Definitions.................................................................4

         Section 1.03.         Incorporation by Reference of Trust Indenture Act.................................4

         Section 1.04.         Rules of Construction.............................................................5

         Section 1.05.         Acts of Holders...................................................................5

ARTICLE 2.        THE SECURITIES.................................................................................6

         Section 2.01.         Form and Dating...................................................................6

         Section 2.02.         Amount Unlimited; Issuable in Series..............................................7

         Section 2.03.         Denominations....................................................................10

         Section 2.04.         Execution and Authentication.....................................................10

         Section 2.05.         Registrar and Paying Agent; Appointment of Depositary............................11

         Section 2.06.         Paying Agent to Hold Money in Trust..............................................11

         Section 2.07.         Holder Lists.....................................................................12

         Section 2.08.         Transfer and Exchange............................................................12

         Section 2.09.         Replacement Securities...........................................................15

         Section 2.10.         Outstanding Securities...........................................................15

         Section 2.11.         Treasury Securities..............................................................16

         Section 2.12.         Temporary Securities.............................................................16

         Section 2.13.         Cancellation.....................................................................16

         Section 2.14.         Defaulted Interest...............................................................17

ARTICLE 3.        REDEMPTION AND PREPAYMENT.....................................................................17

         Section 3.01.         Applicability of Article.........................................................17

         Section 3.02.         Selection of Securities to Be Redeemed...........................................17

         Section 3.03.         Notice of Redemption.............................................................18

         Section 3.04.         Effect of Notice of Redemption...................................................19

         Section 3.05.         Deposit of Redemption or Purchase Price..........................................19

         Section 3.06.         Securities Redeemed or Purchased in Part.........................................19

         Section 3.07.         Mandatory Redemption; Sinking Fund...............................................19

ARTICLE 4.        COVENANTS.....................................................................................21

         Section 4.01.         Payment of Securities............................................................21
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<S>              <C>                                                                                           <C>
         Section 4.02.         Maintenance of Office or Agency..................................................21

         Section 4.03.         Reports..........................................................................22

         Section 4.04.         Compliance Certificate...........................................................22

         Section 4.05.         Continued Existence..............................................................23

         Section 4.06.         Stay, Extension and Usury Laws...................................................23

ARTICLE 5.        SUCCESSORS....................................................................................23

         Section 5.01.         Merger, Consolidation, or Sale of Assets.........................................23

         Section 5.02.         Successor Person Substituted.....................................................24

ARTICLE 6.        DEFAULTS AND REMEDIES.........................................................................24

         Section 6.01.         Events of Default................................................................24

         Section 6.02.         Acceleration.....................................................................25

         Section 6.03.         Other Remedies...................................................................26

         Section 6.04.         Waiver of Past Defaults; Rescission of Acceleration..............................26

         Section 6.05.         Control by Majority..............................................................26

         Section 6.06.         Limitation on Suits..............................................................27

         Section 6.07.         Rights of Holders of Securities to Receive Payment...............................27

         Section 6.08.         Collection Suit by Trustee.......................................................27

         Section 6.09.         Trustee May File Proofs of Claim.................................................27

         Section 6.10.         Priorities.......................................................................28

         Section 6.11.         Undertaking for Costs............................................................28

ARTICLE 7.        TRUSTEE.......................................................................................29

         Section 7.01.         Duties of Trustee................................................................29

         Section 7.02.         Rights of Trustee................................................................30

         Section 7.03.         Individual Rights of Trustee.....................................................30

         Section 7.04.         Trustee's Disclaimer.............................................................31

         Section 7.05.         Notice of Defaults...............................................................31

         Section 7.06.         Reports by Trustee to Holders of the Securities..................................31

         Section 7.07.         Compensation and Indemnity.......................................................31

         Section 7.08.         Replacement of Trustee...........................................................32

         Section 7.09.         Successor Trustee by Merger, etc.................................................33

         Section 7.10.         Eligibility; Disqualification....................................................33

         Section 7.11.         Preferential Collection of Claims Against Company................................34
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<S>     <C>                                                                                                    <C>
ARTICLE 8.        LEGAL DEFEASANCE AND COVENANT DEFEASANCE......................................................34

         Section 8.01.         Option to Effect Legal Defeasance or Covenant Defeasance.........................34

         Section 8.02.         Legal Defeasance and Discharge...................................................35

         Section 8.03.         Covenant Defeasance..............................................................36

         Section 8.04.         Conditions to Legal or Covenant Defeasance.......................................36

         Section 8.05.         Deposited Money and U.S. Government Obligations to be Held in Trust;
                               Other Miscellaneous Provisions...................................................37

         Section 8.06.         Repayment to Company.............................................................38

         Section 8.07.         Reinstatement....................................................................38

ARTICLE 9.        AMENDMENT, SUPPLEMENT AND WAIVER..............................................................39

         Section 9.01.         Without Consent of Holders of Securities.........................................39

         Section 9.02.         With Consent of Holders of Securities............................................40

         Section 9.03.         Compliance with Trust Indenture Act..............................................41

         Section 9.04.         Revocation and Effect of Consents................................................41

         Section 9.05.         Notation on or Exchange of Securities............................................42

         Section 9.06.         Trustee to Sign Amendments, etc..................................................42

ARTICLE 10.       MEETINGS OF HOLDERS...........................................................................42

         Section 10.01.        Purposes for Which Meeting  May Be Called........................................42

         Section 10.02.        Call, Notice and Place of Meetings...............................................42

         Section 10.03.        Persons Entitled to Vote at Meetings.............................................43

         Section 10.04.        Quorum; Action...................................................................43

         Section 10.05.        Determination of Voting  Rights; Conduct and Adjournment of Meetings.............44

         Section 10.06.        Counting Votes and Recording Action of Meetings..................................44

         Section 10.07.        Article Subject to Other Provisions..............................................45

ARTICLE 11.       MISCELLANEOUS.................................................................................45

         Section 11.01.        Trust Indenture Act Controls.....................................................45

         Section 11.02.        Notices..........................................................................45

         Section 11.03.        Communication by Holders of Securities with Other Holders of Securities..........46

         Section 11.04.        Certificate and Opinion as to Conditions Precedent...............................46

         Section 11.05.        Statements Required in Certificate or Opinion....................................47

         Section 11.06.        Rules by Trustee and Agents......................................................47

         Section 11.07.        No Personal Liability of Directors, Officers, Employees and Stockholders.........47

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<S>              <C>                                                                                           <C>
         Section 11.08.        Governing Law....................................................................47

         Section 11.09.        No Adverse Interpretation of Other Agreements....................................48

         Section 11.10.        Successors.......................................................................48

         Section 11.11.        Severability.....................................................................48

         Section 11.12.        Counterpart Originals............................................................48

         Section 11.13.        Table of Contents, Headings, etc.................................................48
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Reconciliation  and Tie Between the Trust  Indenture  Act of 1939 and  Indenture
dated as of  ________________,  between  Harleysville Group Inc. and J.P. Morgan
Trust Company, National Association, as Trustee


ACT SECTION                      INDENTURE SECTION
-----------                      -----------------

310(a)(1)                        7.10
310(a)(2)                        7.10
310(a)(3)                        N/A
310(a)(4)                        N/A
310(a)(5)                        7.10
310(b)                           7.03, 7.08, 7.10
310(c)                           N/A
311(a)                           7.11
311(b)                           7.11
311(c)                           N/A
312(a)                           2.07
312(b)                           11.03
312(c)                           11.03
313(a)                           7.06
313(b)                           7.06
313(c)                           7.06, 11.02
313(d)                           7.06
314(a)                           4.03
314(b)                           N/A
314(c)                           4.04, 11.05
314(d)                           N/A
314(e)                           11.05
314(f)                           N/A
315(a)                           7.01
315(b)                           7.05
315(c)                           7.01
315(d)                           7.01
315(e)                           6.11
316(a)(1)                        6.04, 6.05
316(a)(2)                        N/A
316(a) last sentence             2.11
316(b)                           6.07
317(a)                           6.08, 6.09
317(b)                           2.06
318                              11.01


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

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                  INDENTURE   dated   as   of    ____________________    between
Harleysville Group Inc., a Delaware corporation,  and J.P. Morgan Trust Company,
National Association, as Trustee.

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

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

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

                                   Article 1.
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

SECTION 1.01      DEFINITIONS.


                  "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"  (including,  with  correlative  meanings,  the  terms  "controlling,"
"controlled  by" and "under common control  with"),  as used with respect to any
Person,  shall mean the  possession,  directly  or  indirectly,  of the power to
direct or cause the  direction  of the  management  or policies of such  Person,
whether through the ownership of voting  securities,  by agreement or otherwise;
PROVIDED,  HOWEVER,  that  beneficial  ownership  of 10% or more  of the  voting
securities of a Person shall be deemed to be control.

                  "AGENT" means any Registrar or Paying Agent.

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

                  "BOARD" or "BOARD OF  DIRECTORS"  means the Board of Directors
of the Company or any authorized committee of the Board of Directors.

                  "BOARD   RESOLUTION"  means  a  resolution  of  the  Board  of
Directors.

                  "BUSINESS DAY" means any day other than a Legal Holiday.

                  "CODE" means the Internal Revenue Code of 1986, as amended.

                  "COMPANY"   means   Harleysville   Group   Inc.,   a  Delaware
corporation, and any and all successors thereto.

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                  "CORPORATE  TRUST OFFICE OF THE TRUSTEE"  shall be the address
of the Trustee  specified in Section  11.02  hereof or such other  address as to
which the Trustee may give notice to the Company.


                  "CUSTODIAN"  means the Trustee,  as custodian  with respect to
Securities in global form, or any successor entity
thereto.


                  "DEFAULT" means any event that is, or with the passage of time
or the giving of notice or both would be, an Event of Default.


                  "DEPOSITARY"  means,  with respect to any series of Securities
issuable or issued in whole or in part in global form,  the Person  specified in
Section 2.05 hereof as the Depositary  with respect to the Global  Securities of
that series,  and any and all successors thereto registered and in good standing
as a clearing agency under the Exchange Act,  appointed as depositary  hereunder
and having become such pursuant to the applicable provision of this Indenture.


                  "EXCHANGE ACT" means the  Securities  Exchange Act of 1934, as
amended.


                  "GLOBAL SECURITIES" means, individually and collectively,  the
Securities  issued in global form issued in  accordance  with  Sections 2.01 and
2.08 hereof.


                  "HOLDER" means a Person in whose name a Security is
registered.


                  "INDENTURE"  means this  Indenture,  as amended  and  restated
hereby or as amended, waived or supplemented from time to time and shall include
and  incorporate  by  reference  the  forms and  terms of  particular  series of
Securities established as contemplated hereunder.


                  "INDIRECT  PARTICIPANT"  means a Person who holds a beneficial
interest in a Global Security through a Participant.


                  "INTEREST   PAYMENT  DATE"  when  used  with  respect  to  any
Security,  means the Stated  Maturity  of an  installment  of  interest  on such
Security.


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


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


                  "OFFICERS'  CERTIFICATE"  means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the principal
executive  officer,  the  principal  financial  officer,  the  treasurer  or the
principal  accounting  officer of the Company,  that meets the  requirements  of
Section 11.05 hereof.

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                  "OPINION OF COUNSEL"  means an opinion from legal counsel that
meets the  requirements of Section 11.05 hereof.  The counsel may be an employee
of or counsel to the Company, any Subsidiary of the Company or the Trustee.


                  "PARTICIPANT" means, with respect to the Depositary,  a Person
who has an account with the Depositary.


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


                  "RESPONSIBLE  OFFICER"  when used with respect to the Trustee,
means any officer  within the  Institutional  Trust  Services  department of the
Trustee (or any  successor  group of the  Trustee)  or any other  officer of the
Trustee  customarily  performing  functions similar to those performed by any of
the above designated  officers,  in each case who is the officer responsible for
the  administration  of this  Indenture,  and  also  means,  with  respect  to a
particular  corporate  trust  matter,  any other  officer to whom such matter is
referred  because  of his  knowledge  of and  familiarity  with  the  particular
subject.


                  "SEC" means the Securities and Exchange Commission.


                  "SECURITIES" has the meaning assigned to it in the preamble to
this Indenture.


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


                  "SIGNIFICANT  SUBSIDIARY" means any Subsidiary that would be a
"significant  subsidiary" as defined in Article 1, Rule 1-02 of Regulation  S-X,
promulgated  pursuant to the Securities  Act, as such Regulation is in effect on
the date of this Indenture.


                  "STATED  MATURITY"  means,  with  respect to any  interest  or
principal  on any  series  of  Securities,  the date on which  such  payment  of
interest or  principal is scheduled to be paid thereon by its terms as in effect
from time to time,  and does not include  any  contingent  obligation  to repay,
redeem or repurchase any such interest or principal  prior to the date scheduled
for the payment thereof.


                  "SUBSIDIARY"  means,  with  respect  to any  Person,  (i)  any
corporation,  association or other business entity of which more than 50% of the
total voting power of shares of capital stock or other equity interests entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors,  managers  or  trustees  thereof is at the time owned or  controlled,
directly or indirectly,  by such Person or one or more of the other Subsidiaries
(of such Person or a combination  thereof) and (ii) any partnership (a) the sole
general  partner or the managing  general partner of which is such a Person or a
Subsidiary  of such  Person or (b) the only  general  partners of which are such
Person or one or more Subsidiaries of such Person (or any combination thereof.)


                  "TIA" means the Trust  Indenture Act of 1939 (15  U.S.C.ss.ss.
77aaa-77bbbb  as  amended) as in effect on the date on which this  Indenture  is
qualified under the TIA.

                                       3

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                  "TRUSTEE"  means  the  party  named  as  such  above  until  a
successor  replaces it in  accordance  with the  applicable  provisions  of this
Indenture and thereafter means the successor serving hereunder.


                  "U.S.  GOVERNMENT  OBLIGATIONS"  means securities that are (i)
direct  obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii)  obligations of a Person  controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is  unconditionally  guaranteed as a full faith and
credit  obligation by the United States of America,  which, in either case under
clauses (i) or (ii),  are not callable or redeemable at the option of the issuer
thereof,  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 or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.

SECTION 1.02.     OTHER DEFINITIONS

                                                                      Defined in
Term                                                                   Section

"Act"..................................................................1.05
"Authentication Order".................................................2.04
"Covenant Defeasance"..................................................8.03
"custodian"............................................................6.01
"Event of Default".....................................................6.01
"Legal Defeasance".....................................................8.02
"mandatory sinking fund payment".......................................3.07
"Notice of Default"....................................................6.01
"optional sinking fund payment"........................................3.07
"outstanding"..........................................................8.02
"Paying Agent".........................................................2.05
"Registrar"............................................................2.05
"sinking fund payment date"............................................3.07

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:


                  "INDENTURE SECURITY HOLDER" means a Holder of a Security;

                  "INDENTURE TO BE QUALIFIED" means this Indenture;

                                       4

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                  "INDENTURE  TRUSTEE"  or  "INSTITUTIONAL  TRUSTEE"  means  the
Trustee;


                  "OBLIGOR"  on  the  Securities   means  the  Company  and  any
successor obligor upon the Securities.


                  All other terms used in this Indenture that are defined by the
TIA,  defined by TIA  reference to another  statute or defined by SEC rule under
the TIA and not otherwise defined herein have the meanings so assigned to them.

SECTION 1.04.     RULES OF CONSTRUCTION.


                  For  the  purposes  of  this  Indenture,  unless  the  context
otherwise requires:


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


                  (2) an accounting  term not otherwise  defined has the meaning
assigned to it in accordance with United States  generally  accepted  accounting
principles;


                  (3) "or" is not exclusive;


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


                  (5) provisions  apply to successive  events and  transactions;
and


                  (6)  references  to sections of or rules under the  Securities
Act shall be deemed to include substitute,  replacement of successor sections or
rules adopted by the SEC from time to time.

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 an agent duly appointed in writing
or may be embodied  in and  evidenced  by the record of Holders  voting in favor
thereof,  either in person or by  proxies  duly  appointed  in  writing,  at any
meeting of Holders duly called and held in  accordance  with the  provisions  of
Article 10, or a combination of such instruments or record and, except as herein
otherwise  expressly  provided,  such action  shall become  effective  when such
instrument  or  instruments  or record or both are delivered to the Trustee and,
where it is hereby  expressly  required,  to the  Company.  Such  instrument  or
instruments and any such record (and the action  embodied  therein and evidenced
thereby) are herein  sometimes  referred to as the "Act" of Holders signing such
instrument or instruments and so voting at any such meeting.  Proof of execution
of any such instrument or of a writing  appointing any such agent or proxy shall
be sufficient  for any purpose of this  Indenture and conclusive in favor of the
Trustee and the  Company,  if made in the manner  provided  in this  Section and
Section  10.06.  The record of any  meeting  of  Holders  shall be proved in the
manner provided in Section 10.06.

                                       5

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      (b) Without  limiting the  generality  of this Section,  unless  otherwise
provided in or pursuant to this Indenture, a Holder, including a Depositary that
is a Holder  of a Global  Security,  may  make,  give or  take,  by a proxy,  or
proxies,  duly  appointed  in  writing,  any  request,  demand,   authorization,
direction,  notice,  consent,  waiver or other action provided in or pursuant to
this Indenture to be made, given or taken by Holders, and a Depositary that is a
Holder of a Global  Security may provide its proxy or proxies to the  beneficial
owners of  interests  in any such  Global  Security  through  such  Depositary's
standing instructions and customary practices.

      (c)  The  fact  and  date  of the  execution  by any  Person  of any  such
instrument  or  writing  may be proved in any  manner  which the  Trustee  deems
sufficient.

      (d) The ownership of Securities shall be proved by the Register.

                                   Article 2.
                                 THE SECURITIES

SECTION 2.01.     FORM AND DATING.

      (a) GENERAL.  The Securities of each series shall be in substantially such
form as shall be established  by or pursuant to a Board  Resolution or in one or
more  indentures  supplemental  hereto,  in  each  case  with  such  appropriate
insertions,  omissions,  substitutions  and other  variations as are required or
permitted by this Indenture,  and may have such letters,  numbers or other marks
of  identification  and such legends or  endorsements  placed  thereon as may be
required  to  comply  with the  rules  of any  applicable  securities  exchange,
organizational  document,  governing  instrument or law or as may,  consistently
herewith,  be determined by the officers  executing such Securities as evidenced
by their execution of the Securities.  If temporary Securities of any series are
issued as permitted by Section 2.12,  the form thereof also shall be established
as provided in the preceding sentence.  If the forms of Securities of any series
are established by, or by action taken pursuant to, a Board  Resolution,  a copy
of the Board Resolution, certified by the Secretary or an Assistant Secretary of
the  Company to have been duly  adopted by the Board of  Directors  and to be in
full  force  and  effect  on the  date  of the  certificate,  together  with  an
appropriate  record of any such action taken pursuant thereto,  including a copy
of the approved form of Securities shall be delivered to the Trustee at or prior
to the delivery of the Authentication Order contemplated by Section 2.04 for the
authentication  and delivery of such  Securities.  The Trustee's  certificate of
authentication shall be in substantially the following form:


                This is one of the  Securities  of the series  described  in the
within-mentioned Indenture.

                            J.P. Morgan Trust Company, National Association,
                            as Trustee

                            By:      ____________________________________
                                       Authorized Signatory

                                       6

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         (b) GLOBAL SECURITIES. If Securities of or within a series are issuable
in whole or in part in global form,  any such Security may provide that it shall
represent the aggregate or specified amount of outstanding  Securities from time
to time  endorsed  thereon and may also  provide  that the  aggregate  amount of
outstanding  Securities  represented thereby may from time to time be reduced or
increased to reflect exchanges.  Any endorsement of a Security in global form to
reflect the amount, or any increase or decrease in the amount, or changes in the
rights of Holders, of outstanding  Securities represented thereby, shall be made
in such  manner and by such Person or Persons as shall be  specified  therein or
upon the written  order of the Company  signed by an Officer to be  delivered to
the  Trustee  pursuant to Section  2.04 or 2.12.  Subject to the  provisions  of
Section 2.04,  Section 2.12, if applicable,  and Section 2.08, the Trustee shall
deliver and  redeliver  any Security in permanent  global form in the manner and
upon  instructions  given by the Person or Persons  specified  therein or in the
applicable  written order of the Company signed by an Officer.  Any instructions
by the Company  with  respect to  endorsement  or delivery  or  redelivery  of a
Security in global form shall be in writing.


         The provisions of the last paragraph of Section 2.04 shall apply to any
Security  in  global  form if such  Security  was never  issued  and sold by the
Company  and the Company  delivers  to the  Trustee the  Security in global form
together  with a  written  instructions  with  regard  to the  reduction  in the
principal amount of Securities  represented  thereby,  together with the written
statement contemplated by the last paragraph of Section 2.04.


         Notwithstanding  the provisions of this Section 2.01,  unless otherwise
specified as contemplated by Section 2.02, payment of principal of, premium,  if
any, and interest on any Security in permanent  global form shall be made to the
Holder thereof.

SECTION 2.02.     AMOUNT UNLIMITED; ISSUABLE IN SERIES.

         (a)  The  aggregate   principal  amount  of  Securities  which  may  be
authenticated  and delivered  under this Indenture is unlimited.  The Securities
may be issued from time to time in one or more series.

         (b) The  following  matters shall be  established  with respect to each
series of Securities issued hereunder (i) by a Board Resolution,  (ii) by action
taken pursuant to a Board  Resolution and set forth, or determined in the manner
provided,  in an  Officers'  Certificate  or  (iii)  in one or  more  indentures
supplemental hereto:

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

               (2)  any  limit  upon  the  aggregate  principal  amount  of  the
Securities of the series which may be  authenticated  and  delivered  under this
Indenture  (which  limit  shall not  pertain  to  Securities  authenticated  and
delivered upon  registration  of transfer of, or in exchange for, or in lieu of,
other  Securities of the series  pursuant to Section 2.08,  2.09,  2.12, 3.06 or
9.05 or any Securities that,  pursuant to Section 2.04, are deemed never to have
been authenticated and delivered hereunder);

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

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<page>

               (4) the rate or rates at which the Securities of the series shall
bear  interest,  if any,  or the method or methods of  calculating  such rate or
rates of interest,  the date or dates from which such  interest  shall accrue or
the  method or  methods by which  such date or dates  shall be  determined,  the
Interest  Payment Dates on which any such interest shall be payable,  the right,
if any, of the Company to defer or extend an Interest  Payment Date,  the record
date, if any, for the interest  payable on any Security on any Interest  Payment
Date,  and the basis upon which  interest shall be calculated if other than that
of a 360-day year of twelve 30-day months;

               (5) the place or places where the principal of, premium,  if any,
and  interest,  if any,  on  Securities  of the  series  shall be  payable,  any
Securities  of the series  may be  surrendered  for  registration  of  transfer,
Securities of the series may be surrendered for exchange and notices and demands
to or upon the  Company  in  respect  of the  Securities  of the series and this
Indenture may be served and notices to Holders pursuant to Section 10.02 will be
published;

               (6) the period or periods  within  which,  the price or prices at
which, the currency or currencies  (including  currency unit or units) in which,
and the other terms and conditions  upon which,  Securities of the series may be
redeemed,  in whole or in part,  at the option of the Company and, if other than
as provided in Section 3.03,  the manner in which the  particular  Securities of
such series (if less than all  Securities of such series are to be redeemed) are
to be selected for redemption;

               (7) the obligation,  if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous provisions or
upon the happening of a specified event or at the option of a Holder thereof and
the period or periods within which,  the price or prices at which,  the currency
or currencies  (including  currency unit or units) in which, and the other terms
and  conditions  upon  which,  Securities  of the series  shall be  redeemed  or
purchased, in whole or in part, pursuant to such obligation;

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

               (9) if other  than  U.S.  dollars,  the  currency  or  currencies
(including  currency unit or units) in which the principal of, premium,  if any,
and interest,  if any, on the  Securities of the series shall be payable,  or in
which the  Securities  of the series shall be  denominated,  and the  particular
provisions applicable;

               (10) if the  payments  of  principal  of,  premium,  if  any,  or
interest,  if any,  on the  Securities  of the  series  are to be  made,  at the
election of the  Company or a Holder,  in a currency  or  currencies  (including
currency unit or units) other than that in which such Securities are denominated
or designated to be payable, the currency or currencies (including currency unit
or units) in which such  payments are to be made,  the terms and  conditions  of
such  payments  and the manner in which the  exchange  rate with respect to such
payments shall be determined, and the particular provisions applicable thereto;

               (11) if the amount of payments of principal of, premium,  if any,
and interest,  if any, on the Securities of the series shall be determined  with
reference to an index,  formula or other method (which index,  formula or method

                                       8

<page>

may be  based,  without  limitation,  on a  currency  or  currencies  (including
currency  unit or units) other than that in which the  Securities  of the series
are denominated or designated to be payable), the index, formula or other method
by which such amounts shall be determined  and any special  voting or defeasance
provisions in connection therewith;

               (12) if other than the principal  amount thereof,  the portion of
the  principal  amount of such  Securities  of the series which shall be payable
upon declaration of acceleration  thereof pursuant to Section 6.02 or the method
by which such portion shall be determined;

               (13) the  Person  to whom any  interest  on any  Security  of the
series shall be payable;

               (14) provisions,  if any,  granting special rights to the Holders
of  Securities  of the  series  upon the  occurrence  of such  events  as may be
specified;

               (15) any  deletions  from,  modifications  of or additions to the
Events of Default  set forth in Section  6.01 or  covenants  of the  Company set
forth in Article 4
pertaining to the Securities of the series;

               (16) under what  circumstances,  if any, and with what procedures
and documentation  the Company will pay additional  amounts on the Securities of
that series held by a Person who is not a U.S. Person  (including any definition
of such term) in respect of taxes,  assessments or similar  charges  withheld or
deducted  and, if so,  whether  the Company  will have the option to redeem such
Securities  rather than pay such  additional  amounts (and the terms of any such
option);

               (17) the forms of the Securities of the series;

               (18) the  applicability,  if any, to the Securities of the series
of  Sections  8.02 and 8.03,  or such  other  means of  defeasance  or  covenant
defeasance as may be specified for the Securities of such series;

               (19) if other than the Trustee, the identity of the Registrar and
any Paying Agent;

               (20) if the  Securities of the series shall be issued in whole or
in part in global  form,  (A) the  Depositary  for such Global  Securities,  (B)
whether beneficial owners of interests in any Securities of the series in global
form may exchange such interests for certificated  Securities of such series, to
be registered in the names of or to be held by such  beneficial  owners or their
nominees and to be of like tenor of any authorized  form and  denomination,  and
(C) if other than as provided in Section 2.08, the circumstances under which any
such exchange may occur;

               (21) the designation of the Depositary;

               (22) any restrictions on the  registration,  transfer or exchange
of the Securities;

               (23) if the  Securities  of the series may be issued or delivered
(whether upon original issuance or upon exchange of a temporary Security of such

                                       9

<page>

series or  otherwise),  or any  installment of principal or interest is payable,
only upon receipt of certain  certificates or other documents or satisfaction of
other conditions in addition to those specified in this Indenture,  the form and
terms of such certificates, documents or conditions;

               (24) the terms and conditions of any right to convert or exchange
Securities  of the  series  into or for  other  securities  or  property  of the
Company;

               (25)  whether the  Securities  are secured or  unsecured,  and if
secured,  the security and related terms in connection therewith (which shall be
provided  for  in  a  separate  security   agreement  and/or  other  appropriate
documentation); and

               (26) any other  terms of the  series  (which  terms  shall not be
inconsistent  with the provisions of this  Indenture)  including any terms which
may be required by or  advisable  under  United  States laws or  regulations  or
advisable (as  determined  by the Company) in  connection  with the marketing of
Securities of the series.

         (c) All Securities of any one series shall be  substantially  identical
except as to denomination and except as may otherwise be provided (i) by a Board
Resolution,  (ii) by action taken pursuant to a Board  Resolution and set forth,
or determined in the manner provided,  in the related  Officers'  Certificate or
(iii) in an indenture supplemental hereto. All Securities of any one series need
not be issued at the same time and, unless otherwise  provided,  a series may be
reopened,  without the  consent of the  Holders,  for  issuances  of  additional
Securities of such series.

         (d) If any of the terms of the Securities of any series are established
by action taken pursuant to a Board Resolution,  a copy of such Board Resolution
shall be delivered  to the Trustee at or prior to the delivery of the  Officers'
Certificate setting forth, or providing the manner for determining, the terms of
the  Securities of such series,  and an  appropriate  record of any action taken
pursuant  thereto in  connection  with the  issuance of any  Securities  of such
series  shall  be  delivered  to the  Trustee  prior to the  authentication  and
delivery thereof.

SECTION 2.03.     DENOMINATIONS.


                  Unless  otherwise  provided as  contemplated  by Section 2.02,
Securities of a series denominated in Dollars shall be issuable in denominations
of U.S. $1,000 and any integral  multiple thereof.  Securities  denominated in a
foreign currency shall be issuable in such denominations as are established with
respect to such Securities in or pursuant to this Indenture.

SECTION 2.04.     EXECUTION AND AUTHENTICATION.


                  An Officer shall sign the Securities for the Company by manual
or facsimile signature.


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

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<page>

                  A  Security  shall  not be valid  until  authenticated  by the
manual signature of the Trustee. The signature shall be conclusive evidence that
the Security has been authenticated under this Indenture.


                  The Trustee shall,  upon a written order of the Company signed
by  an  Officer  (an  "AUTHENTICATION   ORDER"),   together  with  an  Officers'
Certificate  and an Opinion of Counsel,  authenticate  Securities  for  original
issue in the aggregate principal amount stated in the Authentication Order.


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


                  Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered  hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for  cancellation  as
provided in Section 2.13  together  with a written  statement  stating that such
Security has never been issued and sold by the Company, for all purposes of this
Indenture  such Security  shall be deemed never to have been  authenticated  and
delivered hereunder and shall not be entitled to the benefits of this Indenture.

SECTION 2.05.     REGISTRAR AND PAYING AGENT; APPOINTMENT OF DEPOSITARY.


                  The  Company   shall   maintain  an  office  or  agency  where
Securities  may be  presented  for  registration  of  transfer  or for  exchange
("REGISTRAR")  and an office or agency where  Securities  may be  presented  for
payment ("PAYING AGENT").  The Registrar shall keep a register of the Securities
and of  their  transfer  and  exchange.  The  Company  may  appoint  one or more
co-registrars  and one or more additional  paying agents.  The term  "REGISTRAR"
includes any  co-registrar  and the term "PAYING AGENT"  includes any additional
paying  agent.  The Company  may change any Paying  Agent or  Registrar  without
notice to any Holder.  The Company shall promptly  notify the Trustee in writing
of the name and  address  of any  Agent  not a party to this  Indenture.  If the
Company  fails to appoint or  maintain  another  entity as  Registrar  or Paying
Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar.


                  The Company initially appoints The Depository Trust Company to
act as Depositary with respect to the Global Securities.


                  The  Company  initially  appoints  the  Trustee  to act as the
Registrar  and  Paying  Agent  with  respect  to  the  Securities  and to act as
Custodian with respect to the Global Securities.

SECTION 2.06.     PAYING AGENT TO HOLD MONEY IN TRUST.


                  The Company  shall  require  each Paying  Agent other than the
Trustee  to agree in writing  that the  Paying  Agent will hold in trust for the
benefit  of Holders or the  Trustee  all money held by the Paying  Agent for the
payment of principal, premium or interest on the Securities or other payments in

                                       11

<page>

respect of the  Securities  or otherwise  held by it as Paying  Agent,  and will
notify the Trustee of any default by the Company in making any such payment when
due. While any such default continues, the Trustee may require a Paying Agent to
pay all money held by it to the  Trustee.  The Company at any time may require a
Paying  Agent to pay all money held by it to the  Trustee.  Upon payment over to
the Trustee,  the Paying Agent (if other than the Company or a Subsidiary) shall
have no further  liability for the money. If the Company or a Subsidiary acts as
Paying  Agent,  it shall  segregate  and hold in a  separate  trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy
or reorganization  proceedings  relating to the Company, the Trustee shall serve
as Paying Agent for the Securities.

SECTION 2.07.     HOLDER LISTS.


                  The  Trustee  shall  preserve  in  as  current  a  form  as is
reasonably  practicable  the most recent list  available  to it of the names and
addresses of all Holders and shall otherwise  comply with TIA ss.312(a).  If the
Trustee is not the Registrar,  the Company shall furnish to the Trustee at least
seven Business Days before each Interest Payment Date and at such other times as
the Trustee  may request in writing,  a list in such form and as of such date as
the Trustee may reasonably  require of the names and addresses of the Holders of
Securities, and the Company shall otherwise comply with TIA ss.312(a).

SECTION 2.08.     TRANSFER AND EXCHANGE.

         (a) Upon  surrender for  registration  of transfer of any  certificated
Security  of any series at the office or agency  maintained  pursuant to Section
4.02 in a place of payment for that series,  the Company shall execute,  and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees,  one or more new certificated  Securities of the same series, of
any authorized  denominations and of a same aggregate  principal amount and like
tenor and containing identical terms and provisions.

         (b) At the option of the  Holder,  Securities  of any series  (except a
Security  in global  form) may be  exchanged  for other  Securities  of the same
series, of any authorized  denominations,  of a same aggregate  principal amount
and like tenor and containing identical terms and provisions,  upon surrender of
the Securities to be exchanged at such office or agency. Whenever any Securities
are so  surrendered  for exchange,  the Company shall  execute,  and the Trustee
shall  authenticate  and deliver,  the  Securities  which the Holder  making the
exchange is entitled to receive.

         (c)  Notwithstanding  any other  provision of this Section,  unless and
until it is exchanged in whole or in part for Securities in certificated form, a
Security in global form  representing  all or a portion of the  Securities  of a
series  may not be  transferred  except  as a whole by the  Depositary  for such
series to a nominee of such  Depositary  or by a nominee of such  Depositary  to
such  Depositary or another  nominee of such Depositary or by such Depositary or
any such nominee to a successor  Depositary for such series or a nominee of such
successor Depositary.

         (d) If at any  time  the  Depositary  for the  Securities  of a  series
notifies the Company  that it is  unwilling or unable to continue as  Depositary
for the  Securities  of such  series  or if at any time the  Depositary  for the

                                       12

<page>

Securities of such series shall no longer be registered  and in good standing as
a clearing  agency under the Exchange Act, the Company shall appoint a successor
Depositary  with  respect  to the  Securities  of such  series.  If a  successor
Depositary  for the  Securities  of such series is not  appointed by the Company
prior to the  resignation  of the Depositary  and, in any event,  within 90 days
after the Company  receives such notice or becomes aware of such  ineligibility,
the Company's  designation  of the  Depositary  pursuant to Section  2.02(b)(21)
shall no longer be effective  with respect to the  Securities of such series and
the Company shall execute,  and the Trustee,  upon receipt of an  Authentication
Order for the  authentication  and delivery of  certificated  Securities of such
series of like tenor, shall authenticate and deliver,  Securities of such series
of like  tenor in  certificated  form,  in  authorized  denominations  and in an
aggregate  principal  amount  equal to the  principal  amount of the Security or
Securities  of such  series of like tenor in global  form in  exchange  for such
Security or Securities in global form.

         (e) The Company may at any time in its sole  discretion  determine that
all (but not less than all)  Securities  of a series issued in global form shall
no longer be  represented  by such a Security or  Securities  in global form. In
such event the  Company  shall  execute,  and the  Trustee,  upon  receipt of an
Authentication  Order  for  the  authentication  and  delivery  of  certificated
Securities  of such  series  of like  tenor,  shall  authenticate  and  deliver,
Securities  of such series of like tenor in  certificated  form,  in  authorized
denominations and in an aggregate principal amount equal to the principal amount
of the  Security  or  Securities  of such series of like tenor in global form in
exchange for such Security or Securities in global form.

         (f) If specified  by the Company  pursuant to Section 2.02 with respect
to a series of  Securities,  the  Depositary  for such  series may  surrender  a
Security  in  global  form of such  series in  exchange  in whole or in part for
Securities of such series in  certificated  form on such terms as are acceptable
to the Company and such Depositary.  Thereupon,  the Company shall execute,  and
the Trustee shall authenticate and deliver, without service charge,

                  (i)   to  each  Person  specified  by  such  depositary  a new
                        certificated  Security or  Securities of the same series
                        of  like  tenor,  of  any  authorized   denomination  as
                        requested by such Person in aggregate  principal  amount
                        equal to and in exchange  for such  Person's  beneficial
                        interest in the Security in global form;


                        and

                  (ii)  to such Depositary a new Security in global form of like
                        tenor in a denomination equal to the difference, if any,
                        between the principal amount of the surrendered Security
                        in global  form and the  aggregate  principal  amount of
                        certificated Securities delivered to Holders thereof.

         (g) Upon the  exchange of a Security in global form for  Securities  in
certificated  form,  such  Security  in global  form  shall be  canceled  by the
Trustee.  Securities in  certificated  form issued in exchange for a Security in
global form  pursuant to this Section  shall be  registered in such names and in
such  authorized  denominations  as the  Depositary  for such Security in global
form,  pursuant  to  instructions  from its direct or Indirect  Participants  or
otherwise, shall instruct the Trustee in writing. The Trustee shall deliver such
Securities to the Persons in whose names such Securities are so registered.

                                       13

<page>

         (h) Whenever any Securities are surrendered  for exchange,  the Company
shall execute,  and the Trustee shall  authenticate and deliver,  the Securities
which the Holder making the exchange is entitled to receive.

         (i) All Securities issued upon any registration of transfer or upon any
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt,  and entitled to the same benefits under this  Indenture,  as the
Securities surrendered upon such registration of transfer or exchange.

         (j)  Every  Security  presented  or  surrendered  for  registration  of
transfer or for exchange shall (if so required by the Company,  the Registrar or
the Trustee) be duly  endorsed,  or be  accompanied  by a written  instrument of
transfer in form satisfactory to the Company, the Registrar and the Trustee duly
executed by the Holder thereof or his attorney duly authorized in writing.

         (k) No service charge shall be made for any registration of transfer or
for any  exchange of  Securities,  but the Company may require  payment of a sum
sufficient to cover any tax or other governmental  charge that may be imposed in
connection with any  registration  or transfer or exchange of Securities,  other
than exchanges pursuant to Section 2.12 or 3.06 not involving any transfer.

         (l) The  Company  shall  not be  required  (i) to issue,  register  the
transfer of, or exchange any Securities for a period beginning at the opening of
business 15 days before any selection for redemption of Securities of like tenor
and of the  series of which such  Security  is a part and ending at the close of
business on the earliest  date on which the  relevant  notice of  redemption  is
deemed to have been given to all Holders of Securities of like tenor and of such
series to be  redeemed;  or (ii) to register  the  transfer  of or exchange  any
Security so selected for redemption,  in whole or in part, except the unredeemed
portion of any Security being redeemed in part.

         (m) The foregoing  provisions  relating to  registration,  transfer and
exchange may be modified,  supplemented or superseded with respect to any series
of Securities by a Board  Resolution or in one or more  indentures  supplemental
hereto.

         (n) The  following  legend  shall  appear  on the  face  of all  Global
Securities unless specifically  stated otherwise in the applicable  provision of
this Indenture:

         "THIS  GLOBAL  SECURITY  IS HELD BY THE  DEPOSITARY  (AS DEFINED IN THE
         INDENTURE  GOVERNING  THIS  SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE
         BENEFIT OF THE BENEFICIAL  OWNERS HEREOF,  AND,  UNLESS AND UNTIL IT IS
         EXCHANGED  FOR  SECURITIES IN  DEFINITIVE  FORM IN ACCORDANCE  WITH THE
         INDENTURE,  (I) IS NOT TRANSFERABLE EXCEPT AS A WHOLE BY THE DEPOSITARY
         TO A NOMINEE OF THE  DEPOSITARY,  OR BY A NOMINEE OF THE  DEPOSITARY TO
         THE  DEPOSITARY  OR  ANOTHER  NOMINEE  OF  THE  DEPOSITARY,  OR BY  THE
         DEPOSITARY  OR ANY SUCH NOMINEE TO A SUCCESSOR  DEPOSITARY OR SUCCESSOR
         NOMINEE,  AND (II) MAY NOT BE  EXCHANGED  OR  CANCELLED  EXCEPT  IN THE
         LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE."

                                       14

<page>

         (o) At such time as all  beneficial  interests in a  particular  Global
Security have been  exchanged for definitive  Securities or a particular  Global
Security has been  redeemed,  repurchased  or canceled in whole and not in part,
each such Global  Security  shall be returned to or retained and canceled by the
Trustee  in  accordance  with  Section  2.13  hereof.  At any time prior to such
cancellation,  if any beneficial  interest in a Global Security is exchanged for
or  transferred  to a Person  who will take  delivery  thereof  in the form of a
beneficial interest in another Global Security or for definitive Securities, the
principal  amount of Securities  represented  by such Global  Security  shall be
reduced  accordingly and an endorsement shall be made on such Global Security by
the Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction;  and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial  interest
in another  Global  Security,  such other  Global  Security  shall be  increased
accordingly  and an  endorsement  shall be made on such  Global  Security by the
Trustee or by the  Depositary  at the  direction  of the Trustee to reflect such
increase.

         (p) Prior to due presentment for the  registration of a transfer of any
Security,  the Trustee,  any Agent and the Company may deem and treat the Person
in whose name any Security is registered as the absolute  owner of such Security
for the  purpose of  receiving  payment of  principal  of and  interest  on such
Securities and for all other  purposes,  and neither the Trustee,  any Agent nor
the Company  shall be affected by notice to the  contrary.  Notwithstanding  the
foregoing, with respect to any Global Security, 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
any Depositary,  as a Holder, with respect to such Global Security or impair, as
between  such  Depositary  and owners of  beneficial  interests  in such  Global
Security,  the  operation of customary  practices  governing the exercise of the
rights of such Depositary (or its nominee) as Holder of such Global Security.

SECTION 2.09.     REPLACEMENT SECURITIES.


                  If any mutilated Security is surrendered to the Trustee or the
Company  and  the  Trustee   receives   evidence  to  its  satisfaction  of  the
destruction,  loss or theft of any  Security,  the  Company  shall issue and the
Trustee,   upon  receipt  of  an  Authentication  Order,  shall  authenticate  a
replacement  Security if the Trustee's  requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient  in the  judgment  of the  Trustee  and the  Company to  protect  the
Company,  the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Security is replaced. The Company may charge for its
expenses in replacing a Security.


                  Every replacement Security is an additional  obligation of the
Company and shall be entitled to all of the benefits of this  Indenture  equally
and proportionately with all other Securities duly issued hereunder.

SECTION 2.10.     OUTSTANDING SECURITIES.


                  The Securities  outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for  cancellation,  those  reductions  in the  interest in a Global  Security

                                       15

<page>

effected by the Trustee in  accordance  with the  provisions  hereof,  and those
described  in this  Section as not  outstanding.  Except as set forth in Section
2.11 hereof, a Security does not cease to be outstanding  because the Company or
an Affiliate of the Company holds the Security.


                  If a Security is replaced  pursuant to Section 2.09 hereof, it
ceases to be outstanding  unless the Trustee  receives proof  satisfactory to it
that the  replaced  Security  is held by a  "protected  purchaser"  (within  the
meaning of Article 8 of the Uniform Commercial Code) or a Person with comparable
status under other applicable law.


                  If the  principal  amount of any Security is  considered  paid
under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases
to accrue.


                  If the Paying Agent (other than the Company,  a Subsidiary  or
an Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Securities  payable on that date,  then on and after that date
such Securities  shall be deemed to be no longer  outstanding and shall cease to
accrue interest.

SECTION 2.11.     TREASURY SECURITIES.


                  In determining  whether the Holders of the required  principal
amount of  Securities  have  concurred  in any  direction,  waiver  or  consent,
Securities  owned  by the  Company,  or by any  Person  directly  or  indirectly
controlling or controlled by or under direct or indirect common control with the
Company,  shall be  considered  as though not  outstanding,  except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Securities that the Trustee knows are so
owned shall be so disregarded.

SECTION 2.12.     TEMPORARY SECURITIES.


                  Until  certificates  representing  Securities  are  ready  for
delivery,  the  Company  may  prepare  and  the  Trustee,  upon  receipt  of  an
Authentication  Order,  shall  authenticate   temporary  Securities.   Temporary
Securities shall be substantially in the form of certificated Securities but may
have variations that the Company considers  appropriate for temporary Securities
and as shall be  reasonably  acceptable  to the  Trustee.  Without  unreasonable
delay, the Company shall prepare and the Trustee shall  authenticate  definitive
Securities in exchange for temporary Securities.


                  Holders of  temporary  Securities  shall be entitled to all of
the benefits of this Indenture.

SECTION 2.13.     CANCELLATION.


                  The Company at any time may deliver  Securities to the Trustee
for  cancellation.  The  Registrar and Paying Agent shall forward to the Trustee
any Securities  surrendered to them for  registration  of transfer,  exchange or
payment. The Trustee and no one else shall cancel all Securities surrendered for
registration of transfer,  exchange,  payment,  replacement or cancellation  and
shall destroy canceled Securities  (subject to the record retention  requirement
of  the  Exchange  Act).  Certification  of  the  destruction  of  all  canceled
Securities  shall be  delivered  to the  Company.  The Company may not issue new

                                       16

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Securities to replace Securities that it has paid or that have been delivered to
the Trustee for cancellation.

SECTION 2.14.     DEFAULTED INTEREST.


                  If the  Company  defaults  in a  payment  of  interest  on the
Securities,  it shall pay the  defaulted  interest in any lawful manner plus, to
the extent lawful,  interest payable on the defaulted  interest,  to the Persons
who are Holders on a subsequent  special  record date,  in each case at the rate
provided in the  Securities.  The Company shall notify the Trustee in writing of
the amount of defaulted  interest  proposed to be paid on each  Security and the
date of the proposed  payment.  The Company  shall fix or cause to be fixed each
such special record date and payment date,  PROVIDED that no such special record
date  shall be less  than 10 days  prior to the  related  payment  date for such
defaulted interest. At least 15 days before the special record date, the Company
(or, upon the written request of the Company, the Trustee in the name and at the
expense  of the  Company)  shall  mail or cause to be mailed to Holders a notice
that states the special record date, the related  payment date and the amount of
such interest to be paid.  Subject to the foregoing  provisions of this Section,
each Security delivered under this Indenture upon registration of transfer of or
in  exchange  for or in lieu of any other  Security  shall  carry the  rights to
interest  accrued and unpaid,  and to accrue,  which were  carried by such other
Security.

                                   ARTICLE 3.
                            REDEMPTION AND PREPAYMENT

SECTION 3.01.     APPLICABILITY OF ARTICLE.


                  The  provisions  of this Article  shall be  applicable  to the
Securities of any series which are  redeemable  before their  maturity or to any
sinking fund for the  retirement  of  Securities of a series except as otherwise
specified as contemplated by Section 2.02 for Securities of such series.

SECTION 3.02.     SELECTION OF SECURITIES TO BE REDEEMED.


                  If less than all of the  Securities  of any  series  are to be
redeemed at any time,  the Trustee shall select the Securities of such series to
be redeemed  among the Holders of the  Securities  of such series in  compliance
with the requirements of the principal national securities exchange,  if any, on
which the  Securities  of such series are listed or, if the  Securities  of such
series are not so listed, to be redeemed among the Holders of Securities of such
series on a PRO RATA basis,  by lot or by such method as the Trustee  deems fair
and appropriate; PROVIDED that no Securities of $1,000 or less shall be redeemed
in part. In the event of partial redemption by lot, the particular Securities of
such series to be redeemed shall be selected,  unless otherwise provided herein,
not less  than 30 nor more  than 60 days  prior  to the  redemption  date by the
Trustee from the outstanding  Securities of the series not previously called for
redemption.


                  The Trustee  shall  promptly  notify the Company in writing of
the Securities selected for redemption and, in the case of any Security selected
for partial redemption, the principal amount thereof to be redeemed.  Securities
and  portions  of  Securities  selected  shall be in  amounts of $1,000 or whole
multiples  of  $1,000;  except  that if all of the  Securities  of a series of a

                                       17

<page>

Holder are to be redeemed,  the entire  outstanding amount of Securities of such
series held by such Holder, even if not a multiple of $1,000, shall be redeemed.
A new  Security of the same series in principal  amount equal to the  unredeemed
portion  thereof  will  be  issued  in the  name  of  the  Holder  thereof  upon
cancellation of the original  Security.  Securities  called for redemption shall
become due on the redemption  date. On and after the redemption  date,  interest
will  cease  to  accrue  on the  Securities  or  portions  of  them  called  for
redemption.  Except  as  provided  in  this  Section  3.02,  provisions  of this
Indenture  that apply to Securities  called for  redemption  shall also apply to
portions of Securities called for redemption.

SECTION 3.03.     NOTICE OF REDEMPTION.


                  At least 30 days but not more than 60 days before a redemption
date,  the Company  shall mail or cause to be mailed,  by first  class  mail,  a
notice of redemption to each Holder whose  Securities  are to be redeemed at its
registered address.


                  The notice  shall  identify  the  Securities  to be  redeemed,
including the series thereof, and shall state:

         (a) the redemption date;

         (b) the redemption price;

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

         (d) that  Securities  called for redemption  must be surrendered to the
Paying Agent to collect the redemption price;

         (e)  that,  unless  the  Company  defaults  in making  such  redemption
payment,  interest on Securities  called for redemption  will cease to accrue on
and after the redemption date;

         (f) that any  Security  being  redeemed  in part,  the  portion  of the
principal  amount of such Security to be redeemed and that, after the redemption
date upon surrender of such  Security,  a new Security or Securities of the same
series in principal amount equal to the unredeemed  portion shall be issued upon
cancellation of the original;

         (g) the paragraph of the  Securities  and/or  Section of this Indenture
pursuant to which the Securities called for redemption are being redeemed; and

         (h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Securities.


                  At the Company's request, the Trustee shall give the notice of
redemption  in  the  Company's  name  and at the  Company's  expense;  PROVIDED,
HOWEVER,  that the Company shall have delivered to the Trustee, at least 30 days
prior to the  redemption  date,  an Officers'  Certificate  requesting  that the
Trustee give such notice and setting forth the  information to be stated in such
notice as provided in the preceding paragraph.

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<page>

SECTION 3.04.     EFFECT OF NOTICE OF REDEMPTION.


                  Once notice of redemption is mailed in accordance with Section
3.03 hereof, Securities called for redemption become irrevocably due and payable
on the redemption  date at the redemption  price. A notice of redemption may not
be conditional.

SECTION 3.05.     DEPOSIT OF REDEMPTION OR PURCHASE PRICE.


                  One Business  Day prior to 10:00 a.m.,  Eastern  Time,  on any
redemption  date,  the Company shall deposit with the Trustee or with the Paying
Agent money in immediately  available funds  sufficient to pay the redemption or
purchase price of and accrued interest, if any, on all Securities to be redeemed
or purchased on that date. The Trustee or the Paying Agent shall promptly return
to the Company any money  deposited  with the Trustee or the Paying Agent by the
Company in excess of the amounts  necessary  to pay the  redemption  or purchase
price of, and accrued interest on, all Securities to be redeemed or purchased.

SECTION 3.06.     SECURITIES REDEEMED OR PURCHASED IN PART.


                  Upon  surrender of a Security that is redeemed or purchased in
part,  the Company  shall issue and,  upon the Company's  written  request,  the
Trustee  shall  authenticate  for the Holder at the expense of the Company a new
Security of the same  series  equal in  principal  amount to the  unredeemed  or
unpurchased portion of the Security surrendered.

SECTION 3.07.     MANDATORY REDEMPTION; SINKING FUND.


                  The Company shall not be required to make mandatory redemption
or sinking  fund  payments  with  respect to the  Securities,  unless  otherwise
specified in the terms of a particular  series of Securities.  If a mandatory or
optional  sinking  fund is  specified  in the  terms of a  particular  series of
Securities,  the  following  provisions  will apply  thereto  (unless  otherwise
specified):


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


                  In lieu of  making  all or any part of any  mandatory  sinking
fund payment with respect to any Securities of a series in cash, the Company may
at its option (a) deliver to the Trustee  Securities of that series  theretofore
purchased by the Company and (b) may apply as a credit Securities of that series
which have been redeemed  either at the election of the Company  pursuant to the
terms of such  Securities or through the  application  of optional  sinking fund
payments pursuant to the next succeeding paragraph, in each case in satisfaction
of all or any part of any  mandatory  sinking fund  payment,  provided that such
Securities have not been previously so credited. Each such Security so delivered
or applied as a credit  shall be credited at the sinking fund  redemption  price
for such  Securities  and the  amount of any  mandatory  sinking  fund  shall be

                                       19

<page>

reduced  accordingly.  If the  Company  intends  so to  deliver  or credit  such
Securities  with respect to any mandatory  sinking fund payment it shall deliver
to the  Trustee  at least 45 days  prior to the  next  succeeding  sinking  fund
payment date for such series (a) a certificate  signed by any Officer specifying
the portion of such sinking fund payment,  if any, to be satisfied by payment of
cash and the  portion  of such  sinking  fund  payment,  if any,  which is to be
satisfied by delivering and crediting such  Securities and (b) any Securities to
be so delivered.  All  Securities so delivered to the Trustee shall be cancelled
by the Trustee and no Securities shall be authenticated in lieu thereof.  If the
Company fails to deliver such  certificate  and Securities at or before the time
provided  above,  the Company  shall not be  permitted to satisfy any portion of
such mandatory sinking fund payment by delivery or credit of Securities.


                  At its option the Company  may pay into the  sinking  fund for
the retirement of Securities of any particular series, on or before each sinking
fund payment date for such series,  any  additional  sum in cash as specified by
the terms of such series of Securities.  If the Company  intends to exercise its
right to make any such optional  sinking fund  payment,  it shall deliver to the
Trustee at least 45 days prior to the next succeeding  sinking fund payment date
for such series of Securities a certificate  signed by any Officer  stating that
the Company  intends to exercise such optional  right and  specifying the amount
which the Company  intends to pay on such  sinking  fund  payment  date.  If the
Company fails to deliver such  certificate at or before the time provided above,
the Company  shall not be permitted  to make any  optional  sinking fund payment
with respect to such sinking fund payment date. To the extent that such right is
not exercised in any year it shall not be  cumulative or carried  forward to any
subsequent year.


                  If  the  sinking  fund  payment  or  payments   (mandatory  or
optional)  made in cash plus any unused  balance of any  preceding  sinking fund
payments made in cash shall exceed $50,000 (or a lesser sum if the Company shall
so request) with respect to the Securities of any particular series, it shall be
applied  by the  Trustee  or one or more  Paying  Agents on the next  succeeding
sinking fund payment date to the  redemption of Securities of such series at the
sinking fund redemption  price together with accrued  interest to the date fixed
for  redemption.  The Trustee  shall select,  in the manner  provided in Section
3.02,  for  redemption on such sinking fund payment date a sufficient  principal
amount of  Securities  of such series to exhaust said cash, as nearly as may be,
and the Trustee shall, at the expense and in the name of the Company,  thereupon
cause  notice  of  redemption  of  Securities  of such  series  to be  given  in
substantially  the manner and with the effect provided in Sections 3.02 and 3.03
for the  redemption  of  Securities  of that series in part at the option of the
Company,  except  that the  notice  of  redemption  shall  also  state  that the
Securities of such series are being  redeemed for the sinking fund.  Any sinking
fund moneys not so applied or  allocated  by the Trustee or any Paying  Agent to
the  redemption  of  Securities  of that series  shall be added to the next cash
sinking fund payment  received by the Trustee or the Paying Agent and,  together
with such payment,  shall be applied in accordance  with the  provisions of this
Section 3.07.  Any and all sinking fund moneys held by the Trustee or any Paying
Agent on the maturity date of the Securities of any particular  series,  and not
held for the payment or  redemption  of  particular  Securities  of such series,
shall be  applied by the  Trustee  or such  Paying  Agent,  together  with other
moneys, if necessary, to be deposited sufficient for the purpose, to the payment
of the principal of the Securities of that series at maturity. On or before each
sinking fund  payment  date,  the Company  shall pay to the Trustee or to one or
more Paying Agents in cash a sum equal to all interest accrued to the date fixed
for redemption on Securities to be redeemed on the next  following  sinking fund
payment date pursuant to this Section.  Neither the Trustee nor any Paying Agent
shall  redeem any  Securities  of a series with  sinking  fund  moneys,  and the
Trustee shall not mail any notice of redemption of Securities for such series by
operation of the sinking fund, during the continuance of a default in payment of

                                       20

<page>

interest on such  Securities or of any Event of Default  (other than an Event of
Default occurring as a consequence of this paragraph), except that if the notice
of redemption of any Securities shall theretofore have been mailed in accordance
with the  provisions  hereof,  the Trustee or any paying agent shall redeem such
Securities  if cash  sufficient  for that purpose  shall be  deposited  with the
Trustee or such paying  agent for that purpose in  accordance  with the terms of
this  Article 3. Except as  aforesaid,  any moneys in the sinking  fund for such
series at the time when any such default or Event of Default shall occur and any
moneys  thereafter  paid into the sinking fund shall,  during the continuance of
such  default or Event of Default,  be held as  security  for the payment of all
such  Securities;  provided,  however,  that in case such  Event of  Default  or
default  shall have been cured or waived as provided  herein,  such moneys shall
thereafter be applied on the next succeeding  sinking fund payment date on which
such moneys may be applied pursuant to the provisions of this Section 3.07.

                                   ARTICLE 4.
                                   COVENANTS

SECTION 4.01.     PAYMENT OF SECURITIES.


                  The Company  shall pay or cause to be paid the  principal  of,
premium,  if any, and interest on the  Securities on the dates and in the manner
provided in the Securities.  Principal,  premium,  if any, and interest shall be
considered  paid on the date due if the Paying Agent,  if other than the Company
or a Subsidiary  thereof,  holds as of 10:00 a.m., Eastern Time, on the due date
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due.

SECTION 4.02.     MAINTENANCE OF OFFICE OR AGENCY.


                  The Company shall  maintain in the Borough of  Manhattan,  the
City of New York,  an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee,  Registrar or co-Registrar) where Securities may be
surrendered  for  registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the  Securities  and this Indenture
may be served.  The Company shall give prompt  written  notice to the Trustee of
the location,  and any change in the location,  of such office or agency.  If at
any time the Company shall fail to maintain any such  required  office or agency
or  shall  fail  to  furnish  the  Trustee  with  the  address   thereof,   such
presentations,  surrenders,  notices  and  demands  may be made or served at the
Trustee's  principal  agency in the Borough of Manhattan,  the City of New York,
which currently is located at -----------------------------------------.


                  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. The Company
shall give  prompt  written  notice to the  Trustee of any such  designation  or
rescission and of any change in the location of any such other office or agency.

                                       21

<page>

SECTION 4.03.     REPORTS.

         (a) Whether or not the Company is subject to Section 13 or 15(d) of the
Exchange Act, the Company covenants and agrees to file with the Trustee,  and to
provide by mail to each Holder,  within 15 days after the Company is or would be
required to file the same with the SEC, copies of the annual reports,  quarterly
reports and the information, documents and other reports which the Company is or
would be required to file with the SEC  pursuant to Section 13 or Section  15(d)
of the Exchange Act.

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

         (c) The Company  covenants and agrees to furnish to the Trustee  within
120 days of the end of each fiscal year, the compliance  certificate required by
Section 314(a)(4) of the Trust Indenture Act.

         (d) Delivery of such reports,  information and documents to the Trustee
is for  informational  purposes only and the Trustee's receipt of such shall not
constitute   constructive  notice  of  any  information   contained  therein  or
determinable  from  information  contained  therein,   including  the  Company's
compliance  with any of its  covenants  hereunder  (as to which the  Trustee  is
entitled to rely exclusively on Officers' Certificates).

SECTION 4.04.     COMPLIANCE CERTIFICATE.

         (a) The Company shall deliver to the Trustee,  within 90 days after the
end of each fiscal year, an Officers'  Certificate  stating that a review of the
activities of the Company and its Subsidiaries  during the preceding fiscal year
has been made  under the  supervision  of the  signing  Officers  with a view to
determining whether the Company has kept, observed,  performed and fulfilled its
obligations under this Indenture,  and further stating,  as to each such Officer
signing such  certificate,  that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the  performance or observance of any of
the terms,  provisions and conditions of this Indenture (or, if a Default, Event
of Default or other  instance  of  non-compliance  with any of the terms of this
Indenture shall have occurred,  describing all such Defaults,  Events of Default
or instances of  non-compliance  of which he or she may have  knowledge and what
action the Company is taking or proposes to take with respect  thereto) and that
to the best of his or her  knowledge  no  event  has  occurred  and  remains  in
existence by reason of which  payments on account of the principal of,  premium,
if any,  or  interest  on the  Securities  is  prohibited  or if such  event has
occurred,  a  description  of the event and what action the Company is taking or
proposes to take with respect thereto.

         (b)  The  Company  shall,   so  long  as  any  of  the  Securities  are
outstanding,  deliver to the Trustee,  forthwith upon any Officer of the Company

                                       22

<page>

becoming  aware of any Default or Event of  Default,  an  Officers'  Certificate
specifying  such  Default or Event of  Default  and what  action the  Company is
taking or proposes to take with respect thereto.

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

SECTION 4.05.     CONTINUED EXISTENCE.


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

SECTION 4.06.     STAY, EXTENSION AND USURY LAWS.


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

                                   ARTICLE 5.
                                   SUCCESSORS

SECTION 5.01.     MERGER, CONSOLIDATION, OR SALE OF ASSETS.


                  The Company  may  consolidate  or merge with or into,  convert
itself into, or sell, assign,  transfer,  lease,  convey or otherwise dispose of
(including any such disposition that might be deemed to occur as a result of the
conversion   of  the  Company  into  another  form  of   organization)   all  or
substantially   all  of  its  properties  or  assets  in  one  or  more  related
transactions,  to another Person (other than an  individual,  a government or an
agency or political subdivision of a government), but only if (a) either (i) the
Company is the  surviving  entity or (ii) the Person  formed by or surviving any
such consolidation, merger or conversion (if other than the Company) or to which

                                       23

<page>

such sale, assignment,  transfer,  lease,  conveyance or other disposition shall
have been made is a Person  organized  or existing  under the laws of the United
States, any state thereof or the District of Columbia;  (b) the Person formed by
or surviving any such  consolidation,  merger or  conversion  (if other than the
Company)  or the  Person  to  which  such  sale,  assignment,  transfer,  lease,
conveyance or other disposition shall have been made assumes all the obligations
of  the  Company  under  the  Securities  and  this  Indenture   pursuant  to  a
supplemental indenture in a form reasonably satisfactory to the Trustee; and (c)
immediately after such transaction no Default or Event of Default exists. If the
Company  requests the Trustee to enter into any  supplemental  indenture,  or to
take  any  other  action,  as a  result  of such  consolidation,  merger,  sale,
assignment,  transfer, lease, conveyance or other disposition,  the Company will
also furnish to the Trustee an Officer's  Certificate and an Opinion of Counsel,
each to the effect that the conditions  precedent set forth in this Section 5.01
have been complied with.

SECTION 5.02.     SUCCESSOR PERSON SUBSTITUTED.


                  Upon any  consolidation,  merger or  conversion,  or any sale,
assignment,   transfer,  lease,  conveyance  or  other  disposition  of  all  or
substantially  all of the assets of the Company in accordance  with Section 5.01
hereof,  the successor Person formed by such consolidation or into or with which
the Company is merged or converted or to which such sale, assignment,  transfer,
lease,  conveyance  or  other  disposition  is made  shall  succeed  to,  and be
substituted for (so that from and after the date of such consolidation,  merger,
conversion, sale, lease, conveyance or other disposition, the provisions of this
Indenture referring to the "Company" shall refer instead to the successor Person
and not to the Company),  and may exercise  every right and power of the Company
under this Indenture  with the same effect as if such successor  Person had been
named as the Company herein;  PROVIDED,  HOWEVER,  that the predecessor  Company
shall not be relieved  from the  obligation to pay the principal of and interest
on the  Securities  except in the case of a sale of all of the Company's  assets
that meets the requirements of Section 5.01 hereof.

                                   ARTICLE 6.
                             DEFAULTS AND REMEDIES

SECTION 6.01.     EVENTS OF DEFAULT.


         An "Event of Default,"  with respect to  Securities of any series shall
have occurred if:

         (a) the Company  defaults in the payment  when due of interest on, with
respect to, any Security of that series and such default  continues for a period
of 5 days;

         (b) the Company  defaults in the payment  when due of  principal  of or
premium,  if any,  on, or sinking  fund payment with respect to, any Security of
that series when the same becomes due and payable at maturity,  upon  redemption
or otherwise;

         (c) the Company  fails to comply with any of the  provisions of section
5.01 hereof;

         (d) the  Company  fails to  observe  or  perform  any  other  covenant,
representation,  warranty or other agreement in this Indenture,  with respect to
any Security of that series for 30 days after notice to comply;

         (e) the  Company,  pursuant to or within the meaning of any  Bankruptcy
Law:

                                       24

<page>

               (i) commences a voluntary case;

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

               (iii) consents to the appointment of a custodian of it or for all
            or substantially all of its property;

               (iv) makes a general assignment for the benefit of its creditors;
            or

               (v) generally is not paying its debts as they become due;

         (f) a court of competent  jurisdiction  enters an order or decree under
any Bankruptcy Law that:

               (i) is for relief against the Company in an involuntary case;

               (ii) appoints a custodian of the Company for all or substantially
            all of the property of the Company; or

               (iii) orders the liquidation of the Company;


and the order or decree remains unstayed and in effect for 60 consecutive
days; or

         (g) any other event  provided with respect to Securities of that series
in the terms thereof as contemplated by Section 2.02 hereof shall occur.


                  The  term  "CUSTODIAN"  as used in this  Article  6 means  any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.


                  A Default  under clause (d) with respect to the  Securities of
any series is not an Event of Default until the Trustee notifies the Company, or
the  Holders  of at  least  25% in  principal  amount  of the  then  outstanding
Securities of all series affected by the Default  (treating all such series as a
single class) notify the Company and the Trustee, of the Default and the Company
does not cure the Default within 30 days after receipt of the notice. The notice
must specify the  Default,  demand that it be remedied and state that the notice
is a "NOTICE OF DEFAULT."

SECTION 6.02.     ACCELERATION.


                  If any Event of Default  with respect to one or more series of
Securities  (other  than an Event of Default  specified  in clause (e) or (f) of
Section 6.01 hereof) occurs and is continuing,  the Trustee or the Holders of at
least 25% in principal amount of the then  outstanding  Securities of all series
with respect to which an Event of Default  shall have occurred and be continuing
(treating all such series as a single  class) may declare all the  Securities of
all such series to be due and payable  immediately.  Upon any such  declaration,
the principal of, premium,  if any, and accrued and unpaid interest with respect
to the  Securities of all such series shall become due and payable  immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (e) or
(f) of Section 6.01 hereof occurs with respect to the Company,  all  outstanding
Securities of all series shall be due and payable  immediately  without  further
action or notice.

                                       25

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SECTION 6.03.     OTHER REMEDIES.


                  If an Event of Default occurs and is  continuing,  the Trustee
may pursue any available remedy to collect the payment of principal, premium, if
any,  and  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 it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder of a Security in exercising any
right or remedy  accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or  acquiescence  in the Event of Default.  All
remedies are cumulative to the extent permitted by law.

SECTION 6.04.     WAIVER OF PAST DEFAULTS; RESCISSION OF ACCELERATION.


                  Holders of a majority  in  aggregate  principal  amount of the
then outstanding  Securities of all series affected (treating all such series as
a single  class) may, by notice to the Trustee,  on behalf of the Holders of all
of the  Securities  of all such  series,  waive an existing  Default or Event of
Default and its consequences hereunder (including in connection with an offer to
purchase or  exchange),  except a continuing  Default or Event of Default in the
payment of the principal of, premium,  if any,  interest on, or any sinking fund
payment with respect to, the Securities of such series,  and except a continuing
Default or Event of Default under any provision of this  Indenture  that,  under
Section  9.02,  cannot be  modified  or waived  without the consent of a greater
number of Holders or of each Holder affected. Upon any such waiver, such Default
or Event of Default shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
Event of  Default  or impair  any right  consequent  thereon.  The  Holders of a
majority in aggregate principal amount of the then outstanding Securities of all
series affected (treating all such series as a single class) may also rescind an
acceleration and its consequences with respect to all such series, including any
related payment default that resulted from such acceleration,  but not including
any other payment default.

SECTION 6.05.     CONTROL BY MAJORITY.

                  Holders  of  a  majority  in  principal  amount  of  the  then
outstanding  Securities  of all series with respect to which an Event of Default
shall have  occurred  and be  continuing  (treating  all such series as a single
class) may direct the time,  method and place of conducting  any  proceeding for
exercising any remedy  available to the Trustee or exercising any trust or power
conferred on it;  provided that

                  (i)   such direction shall not be in conflict with any law  or
               rule or with this Indenture;

                  (ii)  the Trustee may take any other  action  deemed proper by
               the Trustee which is not inconsistent with such direction; and

                  (iii) the Trustee need not take any action which might involve
               it in personal  liability or be unduly prejudicial to the Holders
               of Securities of such series not joining therein.

                                       26

<page>

SECTION 6.06.     LIMITATION ON SUITS.


                  A Holder of a Security  of any series may pursue a remedy with
respect to this Indenture or the Securities of such series only if:

             (a) the Holder of a Security of any or all series affected gives to
the Trustee written notice of a continuing Event of Default;

             (b) the  Holders  of at least 25% in  principal  amount of the then
outstanding  Securities  of all affected  series  (treating all such series as a
single class) make a written request to the Trustee to pursue the remedy;

             (c) such Holder or Holders offer and, if requested,  provide to the
Trustee  indemnity  satisfactory to the Trustee  against any loss,  liability or
expense;

             (d) the Trustee  does not comply  with the  request  within 30 days
after receipt of the request and the offer and, if  requested,  the provision of
indemnity; and

             (e)  during  such  30-day  period  the  Holders  of a  majority  in
principal amount of the then outstanding Securities of all such series (treating
all  such  series  as a  single  class)  do not give  the  Trustee  a  direction
inconsistent with the request.


                  A Holder of a Security may not use this Indenture to prejudice
the rights of another Holder of a Security or to obtain a preference or priority
over another Holder of a Security.

SECTION 6.07.     RIGHTS OF HOLDERS OF SECURITIES TO RECEIVE PAYMENT.


                  Notwithstanding  any other  provision of this  Indenture,  the
right of any Holder of a Security of any series to receive payment of principal,
premium,  if any, and interest on such Security,  on or after the respective due
dates  expressed in such  Security  (including  in  connection  with an offer to
purchase),  or to bring suit for the enforcement of any such payment on or after
such respective dates,  shall not be impaired or affected without the consent of
such Holder.

SECTION 6.08.     COLLECTION SUIT BY TRUSTEE.


                  If an Event of Default  specified  in  Section  6.01(a) or (b)
occurs and is continuing  with respect to any series of Securities,  the Trustee
is authorized  to recover  judgment in its own name and as Trustee of an express
trust against the Company for the whole amount of principal of, premium, if any,
and  interest  remaining  unpaid on such  Securities  and  interest  on  overdue
principal and, to the extent  lawful,  interest and such further amount as shall
be  sufficient  to cover the costs and  expenses of  collection,  including  the
reasonable  compensation,  expenses,  disbursements and advances of the Trustee,
its agents and counsel.

SECTION 6.09.     TRUSTEE MAY FILE PROOFS OF CLAIM.


                  The  Trustee is  authorized  to file such  proofs of claim and
other  papers or documents as may be necessary or advisable in order to have the

                                       27

<page>

claims of the  Trustee  (including  any claim for the  reasonable  compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders of the Securities of any series allowed in any judicial  proceedings
relative  to the  Company  (or any  other  obligor  upon  the  Securities),  its
creditors  or its  property  and shall be  entitled  and  empowered  to collect,
receive and distribute any money or other property payable or deliverable on any
such  claims  and any  custodian  in any  such  judicial  proceeding  is  hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall  consent to the making of such  payments  directly to the
Holders,  to  pay to the  Trustee  any  amount  due  to it  for  the  reasonable
compensation,  expenses,  disbursements and advances of the Trustee,  its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To
the extent that the payment of any such  compensation,  expenses,  disbursements
and advances of the Trustee,  its agents and counsel,  and any other amounts due
the Trustee under Section 7.07 hereof out of the estate in any such  proceeding,
shall be denied for any  reason,  payment of the same shall be secured by a lien
on,  and  shall be paid out of,  any and all  distributions,  dividends,  money,
securities and other  properties  that the Holders may be entitled to receive in
such proceeding  whether in liquidation or under any plan of  reorganization  or
arrangement or otherwise.  Nothing herein contained shall be deemed to authorize
the  Trustee  to  authorize  or  consent  to or accept or adopt on behalf of any
Holder  any  plan of  reorganization,  arrangement,  adjustment  or  composition
affecting  the  Securities  of any  series or the  rights of any  Holder,  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 or other property  pursuant
to this Article,  it shall pay out the money or other  property in the following
order:


                  FIRST:  to the Trustee,  its agents and  attorneys for amounts
due under Section 7.07 hereof,  including payment of all  compensation,  expense
and  liabilities  incurred,  and all advances made, by the Trustee and the costs
and expenses of collection;


                  SECOND: to Holders of Securities for amounts due and unpaid on
the Securities for principal,  premium,  if any, interest and any other amounts,
ratably,  without  preference or priority of any kind,  according to the amounts
due and payable on the Securities for principal,  premium,  if any, interest and
other amounts, respectively; and


                  THIRD: to the Company or to such party as a court of competent
jurisdiction shall direct.


                  The Trustee  may fix a record  date and  payment  date for any
payment to Holders of Securities pursuant to this Section 6.10.

SECTION 6.11.     UNDERTAKING FOR COSTS.


                  In any suit for the  enforcement  of any right or remedy under
this  Indenture  or in any suit  against  the  Trustee  for any action  taken or
omitted by it as a Trustee,  a court in its discretion may require the filing by
any party  litigant in the suit of an  undertaking to pay the costs of the suit,
and  the  court  in  its  discretion  may  assess  reasonable  costs,  including
reasonable  attorneys' fees,  against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses  made by the party
litigant.  This  Section  does not apply to a suit by the  Trustee,  a suit by a

                                       28

<page>

Holder of a Security  pursuant to Section 6.07  hereof,  or a suit by Holders of
more than 10% in  principal  amount of the then  outstanding  Securities  of any
series.

                                   ARTICLE 7.
                                    TRUSTEE

SECTION 7.01.     DUTIES OF TRUSTEE.

             (a) If an Event of Default  has  occurred  and is  continuing,  the
Trustee  shall  exercise  such of the  rights  and  powers  vested in it by this
Indenture or an indenture  supplemental  hereto, 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 its own affairs.

             (b) Except during the continuance of an Event of Default:

                  (i) the duties of the Trustee  shall be  determined  solely by
             the  express   provisions   of  this   Indenture  or  an  indenture
             supplemental hereto, and the Trustee need perform only those duties
             that are  specifically  set forth in this Indenture or an indenture
             supplemental  hereto and no others,  and no  implied  covenants  or
             obligations  shall be read  into  this  Indenture  or an  indenture
             supplemental hereto against the Trustee; and

                  (ii) in the absence of bad faith on its part,  the Trustee may
             conclusively  rely,  as to the  truth  of the  statements  and  the
             correctness of the opinions expressed therein, upon certificates or
             opinions   furnished   to  the  Trustee  and   conforming   to  the
             requirements of this Indenture.  However, the Trustee shall examine
             the  certificates  and  opinions to  determine  whether or not they
             conform to the requirements of this Indenture.

             (c) The Trustee may not be relieved  from  liabilities  for its own
negligent  action,  its  own  negligent  failure  to  act,  or its  own  willful
misconduct, except that:

                  (i) this  paragraph does not limit the effect of paragraph (b)
             of this Section;

                  (ii) the Trustee shall not be liable for any error of judgment
             made in good faith by a  Responsible  Officer,  unless it is proven
             that the Trustee was negligent in ascertaining the pertinent facts;
             and

                  (iii) the  Trustee  shall not be liable  with  respect  to any
             action it takes or omits to take in good faith in accordance with a
             direction received by it pursuant to Section 6.05 hereof.

             (d) Whether or not therein  expressly so provided,  every provision
of  this  Indenture  that  in any way  relates  to the  Trustee  is  subject  to
paragraphs (a), (b), and (c) of this Section.

             (e) No provision  of this  Indenture  shall  require the Trustee to
expend or risk its own funds or incur any liability.  The Trustee shall be under
no obligation  to exercise any of its rights and powers under this  Indenture at

                                       29

<page>

the  request of any  Holders,  unless  such  Holders  shall have  offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.

             (f) The  Trustee  shall not be  liable  for  interest  on any money
received  by it except as the  Trustee  may agree in writing  with the  Company.
Money held in trust by the  Trustee  need not be  segregated  from  other  funds
except to the extent required by law.

SECTION 7.02.     RIGHTS OF TRUSTEE.

             (a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person.  The
Trustee need not investigate any fact or matter stated in the document.

             (b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in  reliance on
such Officers'  Certificate or Opinion of Counsel.  The Trustee may consult with
counsel,  and the written advice of such counsel or any Opinion of Counsel shall
be full and complete  authorization  and protection from liability in respect of
any action  taken,  suffered  or omitted  by it  hereunder  in good faith and in
reliance thereon.

             (c) The Trustee may act through its  attorneys and agents and shall
not be responsible  for the misconduct or negligence of any agent appointed with
due care.

             (d) The  Trustee  shall  not be liable  for any  action it takes or
omits to take in good  faith that it  believes  to be  authorized  or within the
rights or powers conferred upon it by this Indenture.

             (e) Unless otherwise  specifically provided in this Indenture,  any
demand,  request,  direction or notice from the Company  shall be  sufficient if
signed by an Officer of the Company.

             (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 or direction of
any of the  Holders  unless  such  Holders  shall have  offered  to the  Trustee
reasonable security or indemnity  satisfactory to it against the costs, expenses
and liabilities  that might be incurred by it in compliance with such request or
direction.

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
any  Affiliate  of the Company with the same rights it would have if it were not
Trustee.  However,  in the  event  that the  Trustee  acquires  any  conflicting
interest  (within  the  meaning  of TIA  ss.  310(b))  it  must  eliminate  such
conflicting  interest  within  90  days  after  Default,  apply  to the  SEC for
permission  to continue as  trustee,  or resign.  Any Agent may do the same with
like rights and duties.

                                       30

<page>

SECTION 7.04.     TRUSTEE'S DISCLAIMER.


                  The  Trustee  shall  not  be  responsible  for  and  makes  no
representation  as to  the  validity  or  adequacy  of  this  Indenture  or  the
Securities;  it shall not be  accountable  for the Company's use of the proceeds
from the  Securities  or any money  paid to the  Company  or upon the  Company's
direction under any provision of this Indenture; it shall not be responsible for
the use or  application of any money received by any Paying Agent other than the
Trustee;  and it shall not be responsible for any statement or recital herein or
any  statement in the  Securities or any other  document in connection  with the
sale of the Securities or pursuant to this Indenture  other than its certificate
of authentication.

SECTION 7.05.     NOTICE OF DEFAULTS.


                  If a Default or Event of Default  occurs and is continuing and
if a Responsible  Officer of the Trustee has actual knowledge of such Default or
Event of Default,  the Trustee  shall mail to Holders of  Securities a notice of
the  Default or Event of Default  within 90 days after it occurs.  Except in the
case of a Default or Event of Default in payment of  principal  of, or  interest
on,  any  Security,  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 interests of the Holders of the Securities.

SECTION 7.06.     REPORTS BY TRUSTEE TO HOLDERS OF THE SECURITIES.


                  On or before July 31 of each year,  beginning with the July 31
following the date on which  Securities  are first issued under this  Indenture,
and for so long as Securities remain outstanding,  the Trustee shall mail to the
Holders of the  Securities a brief report dated as of such  reporting  date that
complies  with TIA ss.  313(a) (but if no event  described in TIA ss. 313(a) has
occurred  within the twelve months  preceding the reporting date, no report need
be  transmitted).  The Trustee  also shall  comply with TIA ss.  313(b)(2).  The
Trustee shall also transmit by mail all reports as required by TIA ss. 313(c). A
copy of each  report at the time of its  mailing to the  Holders  of  Securities
shall be mailed to the Company and filed with the SEC and each stock exchange on
which the Securities are listed in accordance  with TIA ss. 313(d).  The Company
shall  promptly  notify the Trustee when the  Securities are listed on any stock
exchange.

SECTION 7.07.     COMPENSATION AND INDEMNITY.


                  The Company  shall pay to the  Trustee  from time to time such
compensation for its acceptance of this Indenture and services  hereunder as the
Company and Trustee have separately agreed. The Trustee's compensation shall not
be limited by any law on  compensation  of a trustee  of an express  trust.  The

                                       31

<page>

Company  shall  reimburse the Trustee  promptly upon request for all  reasonable
disbursements,  advances and expenses  incurred or made by it in addition to the
compensation  for its  services.  Such  expenses  shall  include the  reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.


                  The Company shall  indemnify  the Trustee  against any and all
losses,  liabilities or expenses  incurred by it arising out of or in connection
with the  acceptance  or  administration  of its duties  under  this  Indenture,
including the costs and expenses of enforcing this Indenture against the Company
(including  this Section 7.07) and 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,  except to the  extent  any such loss,  liability  or expense  may be
attributable to its negligence or willful  misconduct.  The Trustee shall notify
the Company  promptly of any claim for which it may seek  indemnity.  Failure by
the  Trustee to so notify  the  Company  shall not  relieve  the  Company of its
obligations hereunder. The Company shall defend the claim, and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel, and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any  settlement  made without its consent,  which  consent  shall not be
unreasonably withheld.


                  The  obligations  of the Company under this Section 7.07 shall
survive the  satisfaction  and discharge of this  Indenture,  and the removal or
resignation of the Trustee.


                  To secure the Company's  payment  obligations in this Section,
the Trustee  shall have a lien prior to the  Securities on all money or property
held or collected by the Trustee, except that held in trust to pay principal of,
premium, if any, and interest on particular Securities.  Such lien shall survive
the satisfaction and discharge of this Indenture.


                  When the Trustee incurs expenses or renders  services after an
Event of Default specified in Section 6.01(e) or (f) hereof occurs, the expenses
and the  compensation  for the services  (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration  under
any Bankruptcy Law.

SECTION 7.08.     REPLACEMENT OF TRUSTEE.


                  A resignation  or removal of the Trustee and  appointment of a
successor  Trustee  shall become  effective  only upon the  successor  Trustee's
acceptance of appointment as provided in this Section.


                  The  Trustee  may  resign  with  respect to one or more or all
series of Securities at any time and be discharged from the trust hereby created
by so notifying  the Company in writing.  The Holders of a majority in principal
amount of the then  outstanding  Securities of any series may remove the Trustee
with  respect to such  series by so  notifying  the  Trustee  and the Company in
writing. The Company may remove the Trustee if:

         (a) the Trustee  ceases to be eligible in accordance  with Section 7.10
hereof;

         (b) the  Trustee is  adjudged  bankrupt  or  insolvent  or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;

         (c) a custodian  or public  officer  takes charge of the Trustee or its
property; or

         (d) the Trustee becomes incapable of acting.


                  If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee  for any  reason,  the Company  shall  promptly  appoint a
successor Trustee. Within one year after the successor Trustee takes office, the

                                       32

<page>

Holders of a majority in principal amount of the then outstanding  Securities of
a series  may  appoint a  successor  Trustee to replace  the  successor  Trustee
appointed by the Company with respect to that series of Securities.


                  If a successor  Trustee  does not take  office  within 60 days
after the retiring  Trustee  resigns or is removed,  the retiring  Trustee,  the
Company,  or the  Holders  of at  least  10% in  principal  amount  of the  then
outstanding  Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.


                  If the  Trustee,  after  written  request  by any  Holder of a
Security who has been a Holder of a Security for at least six months,  ceases to
be eligible in  accordance  with  Section  7.10,  such Holder of a Security  may
petition any court of competent  jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.


                  A successor Trustee shall deliver a written  acceptance of its
appointment  to  the  retiring  Trustee  and  to  the  Company.  Thereupon,  the
resignation or removal of the retiring Trustee shall become  effective,  and the
successor  Trustee  shall have all the rights,  powers and duties of the Trustee
under  this  Indenture.  The  successor  Trustee  shall  mail  a  notice  of its
succession to Holders of the  Securities.  The retiring  Trustee shall  promptly
transfer all property held by it as Trustee to the successor  Trustee,  PROVIDED
all sums owing to the Trustee  hereunder  have been paid and subject to the lien
provided for in Section 7.07 hereof.  Notwithstanding replacement of the Trustee
pursuant to this Section  7.08,  the  Company's  obligations  under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.


                  If a  successor  Trustee  is  appointed  with  respect  to the
Securities  of one or more  (but not all)  series,  the  Company,  the  retiring
Trustee  and each  successor  Trustee  with  respect  to the  Securities  of any
applicable  series shall  execute and deliver an indenture  supplemental  hereto
which shall contain such provisions as shall be deemed necessary or desirable to
confirm that all the rights,  powers,  trusts and duties of the retiring Trustee
with respect to the Securities of any series as to which the predecessor Trustee
is not retiring  shall  continue to be vested in the  predecessor  Trustee,  and
shall add to or  change  any of the  provisions  of this  Indenture  as shall be
necessary  to  provide  for or  facilitate  the  administration  of  the  trusts
hereunder by more than one Trustee,  it being  understood that nothing herein or
in such supplemental  indenture shall constitute such Trustees as co-trustees of
the same trust and that each such Trustee  shall be Trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder  administered by
any other such Trustee.

SECTION 7.09.     SUCCESSOR TRUSTEE BY MERGER, ETC.


                  If the  Trustee  consolidates,  merges or  converts  into,  or
transfers all or  substantially  all of its corporate trust business to, another
corporation,  the  successor  corporation  without  any further act shall be the
successor Trustee.

SECTION 7.10.     ELIGIBILITY; DISQUALIFICATION.


                  There  shall at all  times be a  Trustee  hereunder  that is a
corporation  organized and doing business under the laws of the United States of
America or of any state thereof that is  authorized  under such laws to exercise

                                       33

<page>

corporate trust powers, that is subject to supervision or examination by federal
or state  authorities  and that has a combined  capital  and surplus of at least
$50,000,000  as  set  forth  in its  most  recent  published  annual  report  of
condition.


                  This  Indenture  shall always have a Trustee who satisfies the
requirements of TIAss. 310(a)(1),  (2) and (5). The Trustee is subject to TIAss.
310(b).

SECTION 7.11.     PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.


                  The  Trustee  is  subject  to TIA ss.  311(a),  excluding  any
creditor relationship described in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated therein.

                                   ARTICLE 8.
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

SECTION 8.01.     OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.

         (a) The Company may, at the option of its Board of Directors  evidenced
by a resolution  set forth in an Officers'  Certificate,  at any time,  elect to
have either Section 8.02 or 8.03 hereof, with such modifications  thereto as may
be specified in the Board  Resolution or supplemental  indenture  establishing a
particular series of Securities, be applied to all outstanding Securities of one
or more  series  upon  compliance  with the  conditions  set forth below in this
Article 8.

         (b) As an  alternative to having Section 8.02 or 8.03 be applied to all
outstanding  Securities  of one or more series,  the Company may  terminate  its
obligations under the Securities of one or more series and its obligations under
this Indenture in respect of such series of Securities (except those obligations
referred  to in the  penultimate  paragraph  of this  Section  8.01(b),  and any
obligation  of the Company to convert or exchange  Securities  of such series as
expressly provided for in the Board Resolution or indenture  supplemental hereto
establishing  such Series) (1) if (i) all Securities of such series  theretofore
authenticated and delivered  (except lost,  stolen or destroyed  Securities that
have been  replaced  or paid and  Securities  for whose  payment  cash in United
States dollars has theretofore been deposited in trust or segregated and held in
trust by the Company and  thereafter  repaid to the Company or  discharged  from
such trust as provided in Section  8.06) have been  delivered to the Trustee for
cancellation;  (ii) the Company  has paid all sums  payable by it  hereunder  or
under the  applicable  Board  Resolution  or  indenture  supplemental  hereto in
respect of such series of Securities; and (iii) the Company shall have delivered
to the Trustee an Officer's  Certificate and an Opinion of Counsel, each stating
that all conditions precedent relating to the satisfaction and discharge of this
Indenture  have been  complied  with;  or (2) if (i) either (A) in the case of a
series of Securities redeemable prior to its stated maturity, the Company shall,
pursuant  to Article 3, have given  notice to the Trustee and mailed a notice of
redemption to each Holder of Securities of such series of the  redemption of all
of such Securities under arrangements satisfactory to the Trustee for the giving
of such notice or (B) all  Securities of such series have  otherwise  become due
and payable  hereunder or will become due and payable within one year;  (ii) the
Company  shall have  irrevocably  deposited or caused to be  deposited  with the
Trustee  (or a  trustee  satisfactory  to the  Trustee,  under  the  terms of an
irrevocable trust agreement in form and substance  satisfactory to the Trustee),
as trust funds in trust solely for the benefit of the Holders of  Securities  of
such series for that purpose, cash in United States dollars in such amount as is
sufficient  without  consideration of reinvestment of interest or other earnings

                                       35

<page>

on such cash, to pay the entire  indebtedness on such Securities not theretofore
delivered to the Trustee for  cancellation,  for the principal of,  premium,  if
any, and interest on the  outstanding  Securities  of such series to the date of
such deposit (in the case of Securities which have become due and payable) or to
the stated maturity or redemption  date, as the case may be; (iii) no Default or
Event of Default with respect to this  Indenture  or the  Securities  shall have
occurred  and be  continuing  on the date of such  deposit  or shall  occur as a
result of such deposit and such deposit will not result in a breach or violation
of, or constitute a default under,  any other instrument to which the Company is
bound;  (iv) the Company  shall have paid all other sums payable by it hereunder
in  respect  of  Securities  of such  series;  and (v) the  Company  shall  have
delivered  to the Trustee an  Officers'  Certificate  and an Opinion of Counsel,
each stating that all  conditions  precedent  relating to the  satisfaction  and
discharge of this Indenture have been complied with.

                  Notwithstanding   the  foregoing   paragraph,   the  Company's
obligations in Sections 2.07, 2.08, 2.09, 2.10, 4.01, including any provision of
the applicable Board Resolution or indenture supplemental hereto relating to the
payment of  principal,  premium or  interest,  4.02,  7.07,  8.06 and 8.07 shall
survive with respect to the Securities of the  applicable  series until they are
no longer outstanding  pursuant to the last paragraph of Section 2.10. After the
Securities  of the  applicable  series are no longer  outstanding,  the Issuer's
obligations  in  Sections  7.07,  8.06 and 8.07  shall  survive  in  respect  of
Securities of the applicable series.

                  After such delivery or irrevocable  deposit,  the Trustee upon
request shall acknowledge in writing the discharge of the Company's  obligations
under the  Securities of the  applicable  series and the  Company's  obligations
under this Indenture  with respect to the Securities of such series,  except for
those surviving obligations specified above.

SECTION 8.02.     LEGAL DEFEASANCE AND DISCHARGE.


                  Upon the Company's  exercise  under Section 8.01 hereof of the
option  applicable  to this  Section  8.02  relating  to one or more  series  of
Securities, the Company shall, upon the satisfaction of the conditions set forth
in Section 8.04 hereof,  be deemed to have been  discharged from its obligations
with  respect  to all  outstanding  Securities  of such  series  on the date the
conditions set forth below are satisfied (hereinafter,  "LEGAL DEFEASANCE"). For
this purpose,  Legal  Defeasance  means that the Company shall be deemed to have
paid and  discharged  the entire  indebtedness  represented  by the  outstanding
Securities  of the  applicable  series,  which shall  thereafter be deemed to be
"OUTSTANDING"  only for the  purposes  of  Section  8.05  hereof  and the  other
Sections  of  this  Indenture  referred  to in (a) and  (b)  below,  and to have
satisfied all of its other  obligations  under the  Securities of the applicable
series and under the provisions of this Indenture applicable to such series (and
the  Trustee,  on demand of and at the  expense of the  Company,  shall  execute
proper instruments  acknowledging the same), except for the following provisions
which shall survive until otherwise terminated or discharged hereunder:  (a) the
rights of Holders of outstanding  Securities of the applicable series to receive
solely from the trust fund  described in Section 8.04 hereof,  and as more fully
set forth in such Section,  payments in respect of the principal of, premium, if
any,  and  interest,  on such  Securities  when such  payments  are due, (b) the
Company's  obligations  with  respect  to such  Securities  under  Article 2 and
Section 4.02 hereof, (c) the rights,  powers,  trusts,  duties and immunities of
the Trustee hereunder, and the Company's obligations in connection therewith and
(d) this Article 8. Subject to  compliance  with this Article 8, the Company may

                                       35

<page>

exercise its option under this Section 8.02  notwithstanding  the prior exercise
of its option under Section 8.03 hereof.

SECTION 8.03.     COVENANT DEFEASANCE.


                  Upon the Company's  exercise  under Section 8.01 hereof of the
option  applicable  to this  Section  8.03  relating  to one or more  series  of
Securities, the Company shall, upon the satisfaction of the conditions set forth
in Section 8.04 hereof,  be released  from its  obligations  under the covenants
contained  in Sections  4.03,  4.04,  4.05 and 4.06  hereof with  respect to the
outstanding  Securities of the applicable  series, and under any other covenants
specified in the supplemental  indenture or other terms of the applicable series
as  covenants  to which  this  Section  8.03  apply,  on and  after the date the
conditions set forth below are satisfied  (hereinafter,  "COVENANT DEFEASANCE"),
and the  Securities  of the  applicable  series shall  thereafter  be deemed not
"OUTSTANDING" for the purposes of any direction,  waiver, consent or declaration
or act of Holders (and the  consequences of any thereof) in connection with such
covenants,  but shall continue to be deemed "OUTSTANDING" for all other purposes
hereunder (it being  understood  that the  Securities of the  applicable  series
shall not be deemed  outstanding  for  accounting  purposes).  For this purpose,
Covenant Defeasance means that, with respect to the "OUTSTANDING"  Securities of
the  applicable  series,  the  Company may omit to comply with and shall have no
liability in respect of any term,  condition or limitation set forth in any such
covenant,  whether directly or indirectly,  by reason of any reference elsewhere
herein to any such  covenant or by reason of any  reference in any such covenant
to any other  provision  herein or in any other  document  and such  omission to
comply shall not  constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby.

SECTION 8.04.     CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.


                  The following  shall be the  conditions to the  application of
either Section 8.02 or 8.03 hereof to the outstanding  Securities of one or more
series:


                  In order to  exercise  either  Legal  Defeasance  or  Covenant
Defeasance:

         (a) the Company must irrevocably deposit with the Trustee,  (or another
trustee  satisfying the  requirements of Section 7.10, who shall agree to comply
with the  provisions  of this  Article 8  applicable  to it) in  trust,  for the
benefit of the Holders of the Securities of the applicable series, (i) an amount
of cash in United States dollars, (ii) non-callable U.S. Government  Obligations
which, through scheduled payment of principal and interest in respect thereof in
accordance  with their  terms,  will  provide,  not later than one  Business Day
before the due date of any payment of principal of, premium, if any, or interest
on the  Securities  of such series,  cash in an amount,  or (iii) a  combination
thereof,  sufficient,  in  the  opinion  of  a  nationally  recognized  firm  of
independent public  accountants,  to pay the principal of, interest and premium,
if any, on the  outstanding  Securities of the  applicable  series on the Stated
Maturity  or on the  applicable  redemption  date,  as the case may be,  and any
mandatory  sinking fund payments  applicable to the Securities of such series on
the day on which such payments are due, and the Company must specify whether the
Securities  of the  applicable  series are being  defeased  to  maturity or to a
particular redemption date;

                                       36

<page>

         (b) in the case of an election  under Section 8.02 hereof,  the Company
shall have  delivered to the Trustee an Opinion of Counsel in the United  States
reasonably  acceptable  to the  Trustee  confirming  that  (i) the  Company  has
received  from, or there has been published by, the Internal  Revenue  Service a
ruling or (ii) since the date of this Indenture,  there has been a change in the
applicable  federal income tax law, in either case to the effect that, and based
thereon  such  Opinion  of  Counsel  shall  confirm  that,  the  Holders  of the
outstanding  Securities of the applicable series will not recognize income, gain
or loss for federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal  income tax on the same  amounts,  in the same manner
and at the same times as would have been the case if such Legal  Defeasance  had
not occurred;

         (c) in the case of an election  under Section 8.03 hereof,  the Company
shall have  delivered to the Trustee an Opinion of Counsel in the United  States
reasonably  acceptable  to  the  Trustee  confirming  that  the  Holders  of the
outstanding  Securities of the applicable series will not recognize income, gain
or loss for federal income tax purposes as a result of such Covenant  Defeasance
and will be  subject  to federal  income  tax on the same  amounts,  in the same
manner  and at the  same  times  as would  have  been the case if such  Covenant
Defeasance had not occurred;

         (d)  no  Default  or  Event  of  Default  shall  have  occurred  and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting  from the borrowing of funds to be applied to such deposit) or insofar
as  Sections  6.01(e)  or (f) hereof  are  concerned,  at any time in the period
ending on the 91st day after the date of deposit (or  greater  period of time in
which any such  deposit of trust  funds may  remain  subject  to  bankruptcy  or
insolvency laws insofar as those apply to the deposit by the Company);

         (e) the  Company  shall have  delivered  to the  Trustee  an  Officers'
Certificate  and an  Opinion  of  Counsel,  each  stating  that  all  conditions
precedent  provided  for or relating  to the Legal  Defeasance  or the  Covenant
Defeasance have been complied with.

SECTION 8.05.     DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN
                  TRUST; OTHER MISCELLANEOUS PROVISIONS.


                  Subject to Section  8.06  hereof,  all money and  non-callable
U.S. Government  Obligations (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee,  collectively for purposes of this Section
8.05,  the  "TRUSTEE")  pursuant  to  Section  8.04  hereof  in  respect  of the
outstanding  Securities  of the  applicable  series  shall be held in trust  and
applied by the Trustee, in accordance with the provisions of such Securities and
this  Indenture,  to the  payment,  either  directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine,  to
the  Holders of such  Securities  of all sums due and to become  due  thereon in
respect of principal,  premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.


                  The Company shall pay and  indemnify  the Trustee  against any
tax, fee or other charge imposed on or assessed against the cash or non-callable
U.S.  Government  Obligations  deposited  pursuant to Section 8.04 hereof or the

                                       37

<page>

principal and interest  received in respect thereof other than any such tax, fee
or  other  charge  which  by law is  for  the  account  of  the  Holders  of the
outstanding Securities of the applicable series.


                  Anything in this  Article 8 to the  contrary  notwithstanding,
the  Trustee  shall  deliver  or pay to the  Company  from time to time upon the
request of the Company any money or  non-callable  U.S.  Government  Obligations
held by it as  provided  in  Section  8.04  hereof  which,  in the  opinion of a
nationally  recognized  firm of independent  public  accountants  expressed in a
written certification thereof delivered to the Trustee (which may be the opinion
delivered  under Section  8.04(a)  hereof),  are in excess of the amount thereof
that  would then be  required  to be  deposited  to effect an  equivalent  Legal
Defeasance or Covenant Defeasance of the applicable series.

SECTION 8.06.     REPAYMENT TO COMPANY.


                  Any money and U.S. Government  Obligations  deposited with the
Trustee  or any  Paying  Agent,  or then held by the  Company,  in trust for the
payment of the principal  of,  premium or interest on any Security and remaining
unclaimed for two years after such principal,  and premium,  if any, or interest
has become due and  payable  shall be paid to the  Company on its request or (if
then held by the Company) shall be discharged from such trust; and the Holder of
such Security shall thereafter look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such money and
U.S.  Government  Obligations,  and all  liability  of the  Company  as  trustee
thereof,  shall thereupon  cease;  PROVIDED,  HOWEVER,  that the Trustee or such
Paying  Agent,  before  being  required to make any such  repayment,  may at the
expense of the Company cause to be published once, in the NEW YORK TIMES and THE
WALL STREET JOURNAL (national edition), notice that such money remains unclaimed
and that, after a date specified  therein,  which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.

SECTION 8.07.     REINSTATEMENT.


                  If the  Trustee or Paying  Agent is unable to apply any United
States dollars or non-callable U.S. Government Obligations deposited pursuant to
Section  8.02 or 8.03  hereof,  as the case may be,  by  reason  of any order or
judgment  of any  court or  governmental  authority  enjoining,  restraining  or
otherwise  prohibiting  such  application,  then the  obligations of the Company
under this  Indenture  and the  Securities  shall be revived and  reinstated  as
though no deposit had  occurred  pursuant to Section  8.02 or 8.03 hereof  until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance  with  Section  8.02 or 8.03  hereof,  as the case may be;  PROVIDED,
HOWEVER,  that,  if the Company  makes any payment of principal  of,  premium or
interest on any Security  following the  reinstatement of its  obligations,  the
Company shall be  subrogated to the rights of the Holders of such  Securities to
receive such payment from the money held by the Trustee or Paying Agent.

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<page>

                                   ARTICLE 9.
                        AMENDMENT, SUPPLEMENT AND WAIVER

SECTION 9.01.     WITHOUT CONSENT OF HOLDERS OF SECURITIES.

                  Notwithstanding  Section 9.02 of this  Indenture,  the Company
and the Trustee may amend or supplement this Indenture or the Securities without
the consent of any Holder of a Security:

         (a) to evidence the  succession  of another  Person to the Company,  or
successive  successions,  and the  assumption  by the  successor  Person  of the
covenants,  agreements  and  obligations  of the  Company  pursuant to Article 5
hereof;

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

         (c) to provide for the issuance  under this  Indenture of Securities in
coupon form  (including  Securities  registrable  as to  principal  only) and to
provide  for  exchangeability  of such  Securities  with the  Securities  issued
hereunder in fully registered form and to make all appropriate  changes for such
purpose;

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

         (e) to evidence and provide for the acceptance of appointment hereunder
by a successor  trustee with respect to the Securities of one or more series and
to add to or  change  any of the  provisions  of  this  Indenture  as  shall  be
necessary  to  provide  for or  facilitate  the  administration  of  the  trusts
hereunder  by more than one  trustee,  pursuant to the  requirements  of Section
7.08;

         (f) to make any change that does not adversely affect the rights of any
Holder; or

         (g) to provide for the issuance of and establish the form and terms and
conditions  of the  Securities  of any  series,  to  establish  the  form of any
certifications  required to be furnished pursuant to the terms of this Indenture
or any  series of  Securities,  or to add to the  rights of the  Holders  of any
series of Securities.

                                       39

<page>

                  Upon the  request of the  Company  accompanied  by a copy of a
Board  Resolution,  certified by the Secretary or an Assistant  Secretary of the
Company to have been duly  adopted by the Board of  Directors  and to be in full
force and effect on the date of the  certificate,  authorizing  the execution of
any such amended or supplemental  indenture,  and upon receipt by the Trustee of
the documents  described in Section 7.02 hereof, the Trustee shall join with the
Company in the execution of any amended or supplemental  indenture authorized or
permitted  by the terms of this  Indenture  and to make any further  appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be  obligated  to enter into such  amended or  supplemental  indenture  that
affects its own rights, duties or immunities under this Indenture or otherwise.

SECTION 9.02.     WITH CONSENT OF HOLDERS OF SECURITIES.


                  Except as provided below in this Section 9.02, the Company and
the Trustee may amend or supplement  this  Indenture,  or the  Securities of any
series may be  amended or  supplemented,  with the  consent of the  Holders of a
majority in principal  amount of the Securities  then  outstanding of all series
affected by such supplemental  indenture (voting as a single class)  (including,
without  limitation,  consents  obtained in  connection  with a purchase  of, or
tender offer or exchange offer for,  Securities),  and, subject to Sections 6.04
and 6.07 hereof,  any existing Default or Event of Default (other than a Default
or Event of Default in the payment of the principal  of,  premium or interest on
the  Securities)  or  compliance  with any  provision  of this  Indenture or the
Securities  of such  series may be waived  with the  consent of the Holders of a
majority in principal  amount of the Securities  then  outstanding of all series
affected  by  such  waiver  (voting  as  a  single  class)  (including,  without
limitation,  consents obtained in connection with a purchase of, or tender offer
or exchange offer for the Securities).


                  Upon the  request of the  Company  accompanied  by a copy of a
Board  Resolution,  certified by the Secretary or an Assistant  Secretary of the
Company to have been duly  adopted by the Board of  Directors  and to be in full
force and effect on the date of the  certificate,  authorizing  the execution of
any such amended or supplemental indenture, and upon the filing with the Trustee
of  evidence  satisfactory  to the  Trustee  of the  consent  of the  Holders of
Securities of each such series as aforesaid,  and upon receipt by the Trustee of
the documents  described in Section 7.02(b) hereof,  the Trustee shall join with
the Company in the execution of such amended or  supplemental  indenture  unless
such amended or supplemental  indenture affects the Trustee's own rights, duties
or immunities  under this Indenture or otherwise,  in which case the Trustee may
in its  discretion,  but shall not be  obligated  to, enter into such amended or
supplemental indenture.


                  It shall not be  necessary  for the  consent of the Holders of
Securities  under  this  Section  9.02 to  approve  the  particular  form of any
proposed  amendment  or  waiver,  but it shall  be  sufficient  if such  consent
approves the substance thereof.


                  After an  amendment,  supplement  or waiver under this Section
9.02 becomes  effective,  the Company shall mail to the Holders of Securities of
such  series  affected  thereby  a  notice  briefly  describing  the  amendment,
supplement  or waiver.  Any failure of the Company to mail such  notice,  or any
defect therein,  shall not, however, in any way impair or affect the validity of
any such amended or supplemental indenture or waiver.

                                       40

<page>

                  However,  without  the  consent of each  Holder of  Securities
affected, an amendment or waiver may not (with respect to any Securities held by
a non-consenting Holder):

         (a) reduce the principal  amount of the  Securities  whose Holders must
consent to an amendment, supplement or waiver;

         (b)  reduce  the  principal  of or  change  the fixed  maturity  of the
principal of, premium,  if any, or mandatory  sinking fund  obligation,  if any,
with  respect  to any  Securities  of any  series or alter the  provisions  with
respect to the redemption of the Securities;

         (c)  reduce the rate of or change  the time for  payment  of  interest,
including default interest, on any Security of any series;

         (d) waive a Default or Event of Default in the payment of  principal of
or interest or premium on the  Securities of any series  (except a rescission of
acceleration  of the  Securities  by the  Holders  of a  majority  in  aggregate
principal  amount of the Securities of one or more affected  series and a waiver
of the payment default that resulted from such acceleration);

         (e) make any Security of any series payable in currency other than that
stated in the Securities of such series;

         (f) make any change in the  provisions  of this  Indenture  relating to
waivers of past  Defaults  or the rights of  Holders  of  Securities  to receive
payments of principal of or interest or premium on the Securities;

         (g) waive a redemption payment with respect to any Security; or

         (h) make any change in Section 6.04 or 6.07 hereof or in the  amendment
and waiver provisions of Section 9.01 or this Section 9.02.

SECTION 9.03.     COMPLIANCE WITH TRUST INDENTURE ACT.


                  Every  amendment  or  supplement  to  this  Indenture  or  the
Securities  shall be set forth in an  amended  or  supplemental  indenture  that
complies with the TIA as then in effect.

SECTION 9.04.     REVOCATION AND EFFECT OF CONSENTS.


                  Until an amendment,  supplement or waiver becomes effective, a
consent to it by a Holder of a Security is a continuing consent by the Holder of
a Security  and every  subsequent  Holder of a Security or portion of a Security
that  evidences the same debt as the  consenting  Holder's  Securities,  even if
notation of the consent is not made on any Securities.  However, any such Holder
of a Security or  subsequent  Holder of a Security  may revoke the consent as to
its Securities if the Trustee receives  written notice of revocation  before the
date the waiver,  supplement  or  amendment  becomes  effective.  An  amendment,
supplement  or  waiver  becomes  effective  in  accordance  with its  terms  and
thereafter binds every Holder.

                                       41

<page>

SECTION 9.05.     NOTATION ON OR EXCHANGE OF SECURITIES.


                  The  Trustee  may  place  an  appropriate  notation  about  an
amendment, supplement or waiver on any Securities thereafter authenticated.  The
Company  in  exchange  for  all  Securities  may  issue  and the  Trustee  shall
authenticate new Securities that reflect the amendment, supplement or waiver.


                  Failure  to make the  appropriate  notation  or to  issue  new
Securities  shall  not  affect  the  validity  and  effect  of  such  amendment,
supplement or waiver.

SECTION 9.06.     TRUSTEE TO SIGN AMENDMENTS, ETC.


                  The  Company  may  not  sign  an  amendment  or   supplemental
indenture  until its Board of Directors  approves it. The Trustee shall sign any
amendment or supplemental indenture authorized pursuant to this Article 9 if the
amendment  or  supplement  does  not  adversely   affect  the  rights,   duties,
liabilities or immunities of the Trustee.  If it does, the Trustee may, but need
not,  sign it. In signing or refusing  to sign such  amendment  or  supplemental
indenture, the Trustee shall be entitled to receive and shall be fully protected
in  relying  upon,  an  Officers'  Certificate  and an  Opinion  of  Counsel  as
conclusive evidence that such amendment or supplemental  indenture is authorized
or permitted by this Indenture,  that it is not inconsistent  herewith, and that
it will be valid and binding upon the Company in accordance with its terms.

                                  ARTICLE 10.
                              MEETINGS OF HOLDERS

SECTION 10.01.    PURPOSES FOR WHICH MEETING  MAY BE CALLED.

                  A meeting of Holders of Securities of any series may be called
at any time and from time to time  pursuant to this Article 10 to make,  give or
take any request, demand,  authorization,  direction, notice, consent, waiver or
other action provided by this Indenture to be made, given or taken by Holders of
Securities of such series.


SECTION 10.02. CALL, NOTICE AND PLACE OF MEETINGS.

         (a) The Trustee may at any time call a meeting of Holders of Securities
of any series for any purpose  specified  in Section  10.01,  to be held at such
time and at such place in the Borough of Manhattan,  The City of New York, or in
such other  place as the Trustee  shall  determine.  Notice of every  meeting of
Holders of  Securities  of any series,  setting  forth the time and the place of
such  meeting  and in  general  terms the  action  proposed  to be taken at such
meeting,  shall be given, in the manner provided in Section 11.02, not less than
20 nor more than 180 days prior to the date fixed for the meeting.

         (b) In  case  at any  time  the  Company,  by or  pursuant  to a  Board
Resolution,  or  the  Holders  of at  least  25%  in  principal  amount  of  the
outstanding  Securities of any series shall have requested the Trustee to call a
meeting of the Holders of Securities of such series for any purpose specified in
Section 10.01 by written request  setting forth in reasonable  detail the action
proposed  to be taken at the  meeting,  and the  Trustee  shall not have  mailed
notice of such meeting within 20 days after receipt of such request or shall not
thereafter proceed to cause the meeting to be held as provided herein,  then the
Company  or the  Holders  of  Securities  of such  series  in the  amount  above

                                       42

<page>

specified,  as the case may be,  may  determine  the time and the place for such
meeting and may call such meeting for such purposes by giving notice  thereof as
provided in clause (a) of this Section.

SECTION 10.03.    PERSONS ENTITLED TO VOTE AT MEETINGS.

                  To be entitled to vote at any meeting of Holders of Securities
of any  series,  a  Person  shall  be (a) a  Holder  of one or more  outstanding
Securities of such series, or (b) a Person appointed by an instrument in writing
as proxy for a Holder or Holders of one or more  outstanding  Securities of such
series by such Holder or Holders.  The only  Persons who shall be entitled to be
present or to speak at any meeting of Holders of  Securities of any series shall
be the  Persons  entitled  to  vote at  such  meeting  and  their  counsel,  any
representatives  of the Trustee and its counsel and any  representatives  of the
Company and its counsel.

SECTION 10.04.    QUORUM; ACTION.

                  The Persons entitled to vote a majority in principal amount of
the outstanding  Securities of a series shall  constitute a quorum for a meeting
of Holders of Securities of such series;  provided,  however, that if any action
is to be taken at such  meeting  with  respect to a consent or waiver which this
Indenture (or any Board Resolution or indenture supplemental hereto establishing
a series of Securities hereunder) expressly provides may be given by the Holders
of  more  or  less  than a  majority  in  principal  amount  of the  outstanding
Securities  of a  series,  the  Persons  entitled  to vote  such  percentage  in
principal amount of the outstanding Securities of such series shall constitute a
quorum.  In the absence of a quorum within 30 minutes  after the time  appointed
for any such meeting,  the meeting shall,  if convened at the request of Holders
of Securities of such series, be dissolved. In any other case the meeting may be
adjourned for a period of not less than 10 days as determined by the chairman of
the meeting prior to the adjournment of such meeting. In the absence of a quorum
at any such adjourned  meeting,  such adjourned meeting may be further adjourned
for a period  of not less  than 10 days as  determined  by the  chairman  of the
meeting  prior to the  adjournment  of such  adjourned  meeting.  Notice  of the
reconvening of any such adjourned  meeting shall be given as provided in Section
10.02(a),  except  that such  notice  need be given only once not less than five
days  prior to the date on which the  meeting  is  scheduled  to be  reconvened.
Notice of the  reconvening  of an adjourned  meeting  shall state  expressly the
percentage,  as  provided  above,  of the  principal  amount of the  outstanding
Securities of such series which shall constitute a quorum.

                  Except as  otherwise  provided in Section  6.02 or 9.02 (or in
any Board Resolution or indenture  supplemental  hereto establishing a series of
Securities  hereunder),  any  resolution  presented  to a meeting  or  adjourned
meeting duly reconvened at which a quorum is present as aforesaid may be adopted
only by the affirmative vote of the Holders of a majority in principal amount of
the outstanding  Securities of that series;  provided,  however, that, except as
otherwise  provided  in  Section  6.02 or 9.02 (or in any  Board  Resolution  or
indenture  supplemental hereto  establishing a series of Securities  hereunder),
any resolution with respect to any request,  demand,  authorization,  direction,
notice, consent, waiver or other action which this Indenture or any supplemental
indenture  expressly  provides  may be made,  given or taken by the Holders of a
specified  percentage  in principal  amount of the  outstanding  Securities of a
series may be adopted at a meeting or an adjourned  meeting duly  reconvened and
at which a quorum is present as aforesaid by the affirmative vote of the Holders

                                       43

<page>

of such specified  percentage in principal amount of the outstanding  Securities
of such series.

                  Any  resolution  passed or  decision  taken at any  meeting of
Holders of Securities  of any series duly held in  accordance  with this Section
shall be binding on all the Holders of Securities of such series, whether or not
such  Holders  were  present  or  represented  at the  meeting.  SECTION  10.05.
DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF MEETINGS.

         (a) Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders  of  Securities  of a  series  in  regard  to proof  of the  holding  of
Securities of such series and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies,  certificates  and other  evidence of the right to vote, and such other
matters  concerning  the  conduct of the  meeting as it shall deem  appropriate.
Except as otherwise  permitted or required by any such regulations,  the holding
of  Securities  shall be proved in the manner  specified in Section 1.05 and the
appointment  of any proxy  shall be proved in the  manner  specified  in Section
1.05. Such regulations may provide that written instruments  appointing proxies,
regular on their  face,  may be  presumed  valid and  genuine  without the proof
specified in Section 1.05 or other proof.

         (b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman  of the  meeting,  unless the  meeting  shall  have been  called by the
Company or by Holders of  Securities as provided in Section  10.02(b),  in which
case the Company or the Holders of Securities of the series calling the meeting,
as the case  may be,  shall in like  manner  appoint  a  temporary  chairman.  A
permanent chairman and a permanent  secretary of the meeting shall be elected by
vote of the Persons  entitled to vote at least a majority in principal amount of
the outstanding Securities of such series represented at the meeting.

         (c) At any  meeting  each  Holder of a Security of such series or proxy
shall be entitled to one vote for each $25 principal  amount of the  outstanding
Securities of such series held or represented by him; provided, however, that no
vote  shall  be cast or  counted  at any  meeting  in  respect  of any  Security
challenged as not outstanding and ruled by the chairman of the meeting to be not
outstanding.  The chairman of the meeting shall have no right to vote, except as
a Holder of a Security of such series or proxy.

         (d) Any  meeting of Holders of  Securities  of any series  duly  called
pursuant  to Section  10.02 at which a quorum is present may be  adjourned  from
time to time by Persons entitled to vote at least a majority in principal amount
of the outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.

SECTION 10.06.    COUNTING VOTES AND RECORDING ACTION OF MEETINGS.

         (a) The vote upon any resolution submitted to any meeting of Holders of
Securities  of any  series  shall  be by  written  ballots  on  which  shall  be
subscribed  the  signatures  of the Holders of  Securities  of such series or of
their  representatives  by proxy and the principal amounts and serial numbers of

                                       44

<page>

the  outstanding  Securities  of such series held or  represented  by them.  The
permanent  chairman of the meeting  shall  appoint two  inspectors  of votes who
shall count all votes cast at the meeting for or against any  resolution and who
shall make and file with the  secretary of the meeting  their  verified  written
reports in  duplicate of all votes cast at the  meeting.  A record,  at least in
duplicate,  of the  proceedings  of each meeting of Holders of Securities of any
series  shall be  prepared  by the  secretary  of the meeting and there shall be
attached to said record the original  reports of the  inspectors of votes on any
vote by ballot  taken  thereat  and  affidavits  by one or more  persons  having
knowledge  of the facts  setting  forth a copy of the notice of the  meeting and
showing  that said  notice  was given as  provided  in  Section  10.02  and,  if
applicable,  Section  10.04.  Each copy  shall be  signed  and  verified  by the
affidavits of the  permanent  chairman and secretary of the meeting and one such
copy  shall be  delivered  to the  Company,  and  another  to the  Trustee to be
preserved by the Trustee,  the latter to have attached thereto the ballots voted
at the meeting.  Any record so signed and verified shall be conclusive  evidence
of the matters therein stated.

SECTION 10.07.    ARTICLE SUBJECT TO OTHER PROVISIONS.

                  Each provision of this Article 10 (whether or not expressly so
stated)  is  subject  to any other  provision  of this  Indenture  (or any Board
Resolution  or  supplemental  indenture  establishing  a  series  of  Securities
hereunder) that provides that Securities of different series constitute a single
class.

                                  ARTICLE 11.
                                 MISCELLANEOUS

SECTION 11.01.    TRUST INDENTURE ACT CONTROLS.


                  This  Indenture is subject to the  provisions  of the TIA that
are required to be part of this Indenture and shall,  to the extent  applicable,
be governed by such provisions.

SECTION 11.02.    NOTICES.


                  Any notice or  communication  by the Company or the Trustee to
the other is duly given if in writing and delivered in person or mailed by first
class mail (registered or certified,  return receipt  requested),  telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:

                  If to the Company:
                           Harleysville Group Inc.
                           355 Maple Avenue
                           Harleysville, PA. 19438-2297
                           Facsimile No. (215) 256-5627
                           Attention:  Bruce J. Magee, Senior Vice President
                                            And Chief Financial Officer

                                       45

<page>
                  If to the Trustee:


                           J.P. Morgan Trust Company, National Association

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

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

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


                  The  Company  or the  Trustee,  by  notice to the  others  may
designate   additional  or  different   addresses  for  subsequent   notices  or
communications.


                  All  notices  and  communications  (other  than  those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally  delivered;  five Business Days after being deposited in the mail,
postage  prepaid,  if  mailed;  when  receipt  acknowledged  or  confirmed,   if
telecopied;  and the next Business Day after timely delivery to the courier,  if
sent by overnight air courier guaranteeing next day delivery.


                  Any  notice or  communication  to a Holder  shall be mailed by
first class mail or by overnight  courier  guaranteeing next day delivery to its
address shown on the register kept by the Registrar. Any notice or communication
shall also be so mailed to any Person described in TIA ss. 313(c), to the extent
required by the TIA.  Failure to mail a notice or  communication  to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.


                  If a notice or  communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.


                  If the Company mails a notice or communication to Holders,  it
shall mail a copy to the Trustee and each Agent at the same time.

SECTION 11.03.    COMMUNICATION BY HOLDERS OF SECURITIES WITH OTHER HOLDERS
                  OF SECURITIES.


                  Holders may communicate  pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Securities. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 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:

         (a)  an  Officers'   Certificate  in  form  and  substance   reasonably
satisfactory  to the Trustee  (which shall include the  statements  set forth in
Section  11.05  hereof)  stating  that,  in  the  opinion  of the  signers,  all
conditions  precedent  and  covenants,  if any,  provided for in this  Indenture
relating to the proposed action have been satisfied; and

                                       46

<page>

         (b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee  (which shall include the  statements  set forth in Section 11.05
hereof)  stating  that,  in the  opinion of such  counsel,  all such  conditions
precedent and covenants have been satisfied.

SECTION 11.05.    STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.


                  Each  certificate or opinion with respect to compliance with a
condition or covenant  provided for in this Indenture  (other than a certificate
provided  pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:

         (a) a statement that the Person making such  certificate or opinion has
read such covenant or condition;

         (b) a brief  statement as to the nature and scope of the examination or
investigation   upon  which  the  statements  or  opinions   contained  in  such
certificate or opinion are based;

         (c) a statement that, in the opinion of such Person, he or she has made
such  examination or  investigation  as is necessary to enable him to express an
informed  opinion as to  whether  or not such  covenant  or  condition  has been
satisfied; and

         (d) a statement  as to whether or not,  in the opinion of such  Person,
such condition or covenant has been satisfied.

SECTION 11.06.    RULES BY TRUSTEE AND AGENTS.


                  The  Trustee may make  reasonable  rules for action by or at a
meeting of Holders.  The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.

SECTION 11.07.    NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
                  STOCKHOLDERS.


                  No  past,  present  or  future  director,  officer,  employee,
incorporator  or stockholder of the Company,  as such,  shall have any liability
for any obligations of the Company under the  Securities,  this Indenture or for
any claim based on, in respect of, or by reason of,  such  obligations  or their
creation.  Each Holder of Securities by accepting a Security waives and releases
all such  liability.  The waiver and release are part of the  consideration  for
issuance of the Securities.

SECTION 11.08.    GOVERNING LAW.


                  THE  INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE AND ENFORCE THIS INDENTURE AND THE SECURITIES.

                                       47

<page>

SECTION 11.09.    NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.


                  This  Indenture  may  not  be  used  to  interpret  any  other
indenture,  loan or debt agreement of the Company or its  Subsidiaries or of any
other  Person.  Any such  indenture,  loan or debt  agreement may not be used to
interpret this Indenture.

SECTION 11.10.    SUCCESSORS.


                  All  agreements  of the  Company  in  this  Indenture  and the
Securities  shall bind its  successors.  All  agreements  of the Trustee in this
Indenture shall bind its successors.

SECTION 11.11.    SEVERABILITY.


                  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 11.12.    COUNTERPART 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.  This  Indenture  will be effective  when each party shall have
signed and delivered (including delivery by facsimile transmission), one or more
counterparts  to the other,  but it shall not be  necessary  for both parties to
sign the same counterpart.

SECTION 11.13.    TABLE OF CONTENTS, HEADINGS, ETC.


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


                            [Signature Page Follows]

                                       48

<PAGE>

                                   SIGNATURES



                  IN WITNESS  WHEREOF,  the parties have executed this Indenture
as of the date first written above.


                                       HARLEYSVILLE GROUP INC.


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


J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee


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

                                       49

<PAGE>




                                   EXHIBIT A-1
                                 (Face of Note)

                     __% [Series__] Senior Note due [_____]

[INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF  THE
INDENTURE]

CUSIP:
No:                                                              $______________

                             HARLEYSVILLE GROUP INC.

promises to pay to ______________ or registered assigns, the principal sum
of ______________

Dollars on _____________.
Interest Payment Dates: _____________.
Record Dates: _____________.



                                     HARLEYSVILLE GROUP INC.

                                     By:______________________________
                                     Name:
                                     Title:


This is one of the Notes referred to in the within-mentioned Indenture:


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

By: __________________________________
Authorized Officer

                                       50

<PAGE>



                                 (Back of Note)


                     __% [Series __] Senior Note due [____]

                  Capitalized  terms used herein have the  meanings  assigned to
them in the Indenture referred to below unless otherwise indicated.
                  1. INTEREST.  Harleysville Group Inc., a Delaware  corporation
(the  "Company"),  promises to pay interest on the principal amount of this Note
at __% per annum from [__________] until maturity. The Company will pay interest
[__________]  on _________ and _________ of each year, or if any such day is not
a Business Day, on the next succeeding  Business Day (each an "Interest  Payment
Date").  Interest  on the Notes will  accrue  from the most recent date to which
interest  has been  paid or,  if no  interest  has been  paid,  from the date of
issuance;  provided  that if there is no  existing  Default  in the  payment  of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding  Interest  Payment Date,  interest shall
accrue from such next succeeding Interest Payment Date; provided,  further, that
the first  Interest  Payment Date shall be  ___________.  The Company  shall pay
interest  (including   post-petition   interest  in  any  proceeding  under  any
Bankruptcy  Law) on overdue  installments  of  interest  (without  regard to any
applicable  grace  periods)  from time to time on demand at the same rate to the
extent  lawful.  Interest  will be  computed  on the basis of a 360-day  year of
twelve 30-day months.

                  2. METHOD OF PAYMENT.  The  Company  will pay  interest on the
Notes (except defaulted  interest) to the Persons who are registered  Holders of
Notes at the close of business on the ________ or ________  next  preceding  the
Interest  Payment Date,  even if such Notes are canceled  after such record date
and on or before such Interest Payment Date,  except as provided in Section 2.14
of the Indenture with respect to defaulted  interest.  The Notes will be payable
as to  principal,  premium  and  interest at the office or agency of the Company
maintained  for such  purpose  within or without the City and State of New York,
provided that payment by wire transfer of  immediately  available  funds will be
required  with  respect to  principal of and interest and premium on, all Global
Notes and all other Notes the Holders of which shall have provided wire transfer
instructions  to the Company or the Paying Agent.  Such payment shall be in such
coin or  currency  of the United  States of America as at the time of payment is
legal tender for payment of public and private debts.

                  3.     PAYING     AGENT     AND     REGISTRAR.      Initially,
____________________,  the Trustee under the Indenture, will act as Paying Agent
and  Registrar.  The Company may change any Paying  Agent or  Registrar  without
notice to any Holder. The Company may act in any such capacity.

                  4. INDENTURE.  The Company issued the Notes under an Indenture
dated as of _____________ (the "Indenture") between the Company and the Trustee.
The  terms  of  the  Notes  include  those  stated  in the  Indenture  and in [a
Supplemental  Indenture] [resolutions of [the [___] Committee of ] the Company's
Board of  Directors]  dated , and  those  terms  made part of the  Indenture  by
reference to the Trust  Indenture  Act of 1939,  as amended (15 U.S. Code ss.ss.
77aaa-77bbbb)  (the "TIA"). The Notes are subject to all such terms, and Holders
are referred to the  Indenture  and the TIA for a statement  of such terms.  The
Notes are general  obligations  of the Company.  "Notes" means this Note and all

                                       51

<page>

other  Notes  of the  series  of  which  this  Note is a  part.  The  Notes  are
"Securities"  within  the  meaning  of  the  Indenture,  and  references  in the
Indenture to "Securities"  (including terms such as "Global Securities") include
the Notes (and any "Global Notes" as used herein).

                  5.       OPTIONAL REDEMPTION.

                   [(a)]  The  Notes  will not be  redeemable  at the  Company's
option prior to _____________.  The Notes may be redeemed,  in whole or in part,
at the option of the Company on or after _____________, at the redemption prices
specified below (expressed as percentages of the principal  amount thereof),  in
each case,  together  with  accrued and unpaid  interest,  hereon to the date of
redemption,  upon not less than 30 nor more than 60 days'  notice,  if  redeemed
during the  twelve-month  period beginning on ___________ of the years indicated
below:


                                                                     REDEMPTION
YEAR                                                                    PRICE




                  [(b) Notwithstanding the foregoing, prior to ____________, the
Company may, on any one or more  occasions,  use the net proceeds of one or more
offerings of its capital  stock to redeem up to __% of the  aggregate  principal
amount of all notes that had been issued  under the  Indenture up to the time of
redemption  at a  redemption  price of __% the  principal  amount  of the  notes
redeemed, plus accrued and unpaid interest, to the date of redemption;  provided
that,  after any such  redemption,  the aggregate  principal amount of the Notes
outstanding  (excluding  Notes held by the  Company and its  Subsidiaries)  must
equal at least __% of the Notes that had been issued  under the  Indenture up to
the time of redemption;  and provided  further,  that any such redemption  shall
occur within 90 days of the date of closing of such offering of Capital Stock of
the Company.]

                 6. MANDATORY REDEMPTION.  [The Company shall not be required to
make  mandatory  redemption or sinking fund payments with respect to the Notes.]
or [Describe mandatory redemption or sinking fund provisions.]

                 7. NOTICE OF REDEMPTION. Notice of Redemption will be mailed at
least 30 days but not  more  than 60 days  before  the  redemption  date to each
Holder  whose  Notes are to be  redeemed  at its  registered  address.  Notes in
denominations  larger  than  $1,000  may be  redeemed  in part but only in whole
multiples  of  $1,000,  unless  all of the  Notes  held  by a  Holder  are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.

                                       52

<page>

                  8.  DENOMINATIONS,   TRANSFER,  EXCHANGE.  The  Notes  are  in
registered form without coupons in all appropriate  denominations.  The transfer
of Notes may be  registered  and  Notes  may be  exchanged  as  provided  in the
Indenture.  The  Registrar  and the Trustee  may  require a Holder,  among other
things,  to furnish  appropriate  endorsements  and transfer  documents  and the
Company  may  require  a Holder to pay any  taxes  and fees  required  by law or
permitted by the  Indenture.  The Company need not transfer or exchange any Note
selected for  redemption,  except for the  unredeemed  portion of any Note being
redeemed in part.  Also,  it need not transfer or exchange any Note for a period
of 15 days before a selection of Notes to be redeemed.

                  9. PERSONS DEEMED OWNERS.  The registered Holder of a Note may
be treated as its owner for all purposes.

                  10.  AMENDMENT,  SUPPLEMENT  AND  WAIVER.  Subject  to certain
exceptions,  the Indenture or the Notes may be amended or supplemented  with the
consent of the Holders of a majority in principal amount of the then outstanding
Notes and other series of Securities affected (treating the Notes and such other
series as a single  class),  and any  existing  default or  compliance  with any
provision  of the  Indenture,  the Notes may be waived  with the  consent of the
Holders of a majority  in  principal  amount of the then  outstanding  Notes and
other series of Securities affected (treating the Notes and such other series as
a single  class).  Without the consent of any Holder of a Note, the Indenture or
the  Notes may be  amended  or  supplemented  to cure any  ambiguity,  defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated  Notes, to provide for the assumption of the Company's  obligations
to Holders of the Notes in case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of the Notes
or that does not  adversely  affect the legal rights under the  Indenture of any
such Holder, or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the TIA.

                  11. DEFAULTS AND REMEDIES.  Each of the following  constitutes
an Event of  Default:  (i)  default by the Company in the payment of interest on
the Notes when the same  becomes due and payable  and  default  continues  for a
period of 30 days;  (ii) default by the Company in the payment of the  principal
of or  premium,  if any,  on the Notes when the same  becomes due and payable at
maturity,  upon redemption or otherwise;  (iii) failure by the Company to comply
with  Section  5.01 of the  Indenture;  (iv)  failure by the Company for 30 days
after notice to comply with any of its other  agreements in the Indenture or the
Notes and (v) certain  events of bankruptcy  or  insolvency  with respect to the
Company.  If any Event of Default occurs and is  continuing,  the Trustee or the
Holders of at least 25% in principal  amount of the then  outstanding  Notes and
other series of Securities affected (treating the Notes and such other series as
a single  class) may declare  all the Notes to be due and  payable  immediately.
Notwithstanding  the foregoing,  in the case of an Event of Default arising from
certain  events of  bankruptcy or  insolvency  with respect to the Company,  all
outstanding  Notes will become due and payable without further action or notice.
Holders  of the Notes  may not  enforce  the  Indenture  or the Notes  except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes and other series of Securities
affected (treating the Notes and such other series as a single class) may direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders  of the  Notes  notice of any  continuing  Default  or Event of  Default
(except a Default or Event of Default  relating to the payment of  principal  or
interest) if it determines that  withholding  notice is in their  interest.  The
Holders  of a  majority  in  aggregate  principal  amount of the Notes and other
series of  Securities  affected  (treating  the Notes and such other series as a

                                       53

<page>

single  class) and other series of Securities  affected  (treating the Notes and
such other series as a single class) then  outstanding  by notice to the Trustee
may on behalf of the Holders of all of the Notes waive any  existing  Default or
Event of Default and its  consequences  under the Indenture  except a continuing
Default or Event of Default in the payment of principal,  interest or premium on
the  Notes.  The  Company is  required  to  deliver  to the  Trustee  annually a
statement regarding  compliance with the Indenture,  and the Company is required
upon  becoming  aware of any  Default  or Event of  Default,  to  deliver to the
Trustee a statement specifying such Default or Event of Default.

                  12.  TRUSTEE  DEALINGS WITH THE COMPANY.  The Trustee,  in its
individual or any other  capacity,  may make loans to, accept deposits from, and
perform services for the Company or its Affiliates,  and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.

                  13.  NO  RECOURSE  AGAINST  OTHERS.   No  director,   officer,
employee,  incorporator  or  stockholder of the Company shall have any liability
for any  obligations  of the Company under the Notes or the Indenture or for any
claim  based on, in  respect  of, or by reason  of,  such  obligations  or their
creation.  Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.

                  14.  AUTHENTICATION.  This  Note  shall  not  be  valid  until
authenticated by the manual signature of the Trustee or an authenticating agent.

                  15. ABBREVIATIONS.  Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(=  tenants  by  the  entireties),  JT  TEN  (=  joint  tenants  with  right  of
survivorship and not as tenants in common),  CUST (= Custodian),  and U/G/M/A (=
Uniform Gifts to Minors Act).

                  16. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform  Security  Identification  Procedures,  the Company has
caused  CUSIP  numbers to be printed on the Notes and the  Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders.  No representation
is made as to the accuracy of such numbers  either as printed on the Notes or as
contained  in any notice of  redemption  and  reliance may be placed only on the
other identification numbers placed thereon.


          The  Company  will  furnish to any Holder  upon  written  request  and
without charge a copy of the Indenture. Requests may be made to:

                          Harleysville Group Inc.
                          355 Maple Avenue
                          Harleysville, PA. 19438-2297
                          Attention:  Bruce J. Magee, Senior Vice President
                                              and Chief Financial Officer

                                       54

<PAGE>


                                 ASSIGNMENT FORM

To  assign  this  Note, fill in the form below: (I) or (we) assign  and transfer
this Note to

--------------------------------------------------------------------------------
                  (Insert assignee's soc. sec. or tax I.D. no.)

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


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


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


--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)

and irrevocably  appoint  _____________________________________________________

to transfer this Note on the books of the Company.

The agent may substitute another to act for him.

________________________________________________________________________________

Date: ________________

                                             Your Signature:__________________
                                             (Sign exactly as your name
                                             appears on the face of this Note)

SIGNATURE GUARANTEE.

                                       55

<PAGE>


SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
         The  following  exchanges of a part of this Global Note for an interest
in another  Global Note or for a  Definitive  Note,  or  exchanges  of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:

<TABLE>
<CAPTION>

                                                                            Principal Amount of
                           Amount of decrease     Amount of increase in     this Global Note         Signature of
                           in Principal Amount          Principal            following such       authorized officer
                             of this Global       Amount of this Global         decrease            of Trustee or
    Date of Exchange              Note                   Note                (or increase)          Note Custodian
   -----------------       -------------------    ----------------------    -------------------   -------------------
       <S>                      <C>                       <C>                       <C>                     <C>


</TABLE>




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