EXHIBIT 4.1


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







                         CONTINENTAL HOMES HOLDING CORP.

                                       AND

                    MANUFACTURERS AND TRADERS TRUST COMPANY,
                                       as
                                     Trustee





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

                                    Indenture

                          Dated as of November 1, 1995

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


                                   $86,250,000

                 6 7/8% CONVERTIBLE SUBORDINATED NOTES DUE 2002







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

                                       17
<PAGE>

                           CROSS-REFERENCE TABLE

  TIA                                           Indenture
Section                                          Section

310(a)(1)....................................... 7.10
   (a)(2)...................................... 7.10
   (a)(3)...................................... N.A.
   (a)(4)...................................... N.A.
   (b)   ...................................... 7.08; 7.10; 12.02
   (c)   ...................................... N.A.
311(a)   ....................................... 7.11
   (b)   ...................................... 7.11
   (c)   ...................................... N.A.
312(a)   ....................................... 2.05
   (b)   ...................................... 12.03
   (c)   ...................................... 12.03
313(a)   ....................................... 7.06
   (b)(1)...................................... N.A.
   (b)(2)...................................... N.A.
   (c)   ...................................... 7.06; 12.02
   (d)   ...................................... 7.06
314(a)   ....................................... 4.03; 12.02
   (b)   ...................................... N.A.
   (c)(1)...................................... 12.04
   (c)(2)...................................... 12.04
   (c)(3)...................................... N.A.
   (d)   ...................................... N.A.
   (e)   ...................................... 12.05
   (f)   ...................................... N.A.
315(a)   ....................................... 7.01(b)
   (b)   ...................................... 7.05; 12.02
   (c)   ...................................... 7.01(a)
   (d)   ...................................... 7.01(c)
   (e)   ...................................... 6.11
316(a)(last sentence)........................... 2.09
   (a)(1)(A)................................... 6.05
   (a)(1)(B)................................... 6.04
   (a)(2)...................................... N.A.
   (b)   ...................................... 6.07
   (c)   ...................................... N.A.
317(a)(1)....................................... 6.08
   (a)(2)...................................... 6.09
   (b)   ...................................... 2.04
318(a)   ....................................... 12.01
-------------

N.A. means Not Applicable.

This cross-reference table does not constitute a part of the Indenture.


                             TABLE OF CONTENTS

Section
   Page

                                       18

<PAGE>

                                    ARTICLE 1

                   DEFINITIONS AND INCORPORATION BY REFERENCE

1.01.       Definitions
 ............................................................................   1
1.02.       Other Definitions
 ............................................................................   3
1.03.       Incorporation by Reference of Trust
              Indenture
Act.........................................................................   4
1.04.       Rules of Construction
 ............................................................................   5

                                    ARTICLE 2

                                 THE SECURITIES

2.01.       Form and Dating
 ............................................................................   5
2.02.       Execution and Authentication
 ............................................................................   6
2.03.       Registrar, Paying Agent and Conversion
              Agent
 ............................................................................   7
2.04.       Paying Agent to Hold Money in
              Trust
 ............................................................................   7
2.05.       Securityholder Lists
 ............................................................................   8
2.06.       Transfer and Exchange
 ............................................................................   8
2.07.       Replacement Securities
 ............................................................................   8
2.08.       Outstanding Securities
 ............................................................................   9
2.09.       Securities Held by the Company or an
              Affiliate
 ............................................................................   9
2.10.       Temporary Securities
 ............................................................................  10
2.11.       Cancellation
 ............................................................................  10
2.12.       Defaulted Interest
 ............................................................................  10

                                    ARTICLE 3

                                   REDEMPTION

3.01.       Notices to Trustee and DTC
 ............................................................................  11
3.02.       Selection of Securities to be Redeemed
 ............................................................................  11
3.03.       Notice of Redemption
 ............................................................................  11
3.04.       Effect of Notice of Redemption
 ............................................................................  12
3.05.       Deposit of Redemption Price

                                       19

<PAGE>



 ............................................................................  12
3.06.       Securities Redeemed in Part
 ............................................................................  13

                                    ARTICLE 4

                                    COVENANTS

4.01.       Payment of Securities
 ............................................................................  13
4.02.       Maintenance of Office or Agency
 ............................................................................  13
4.03.       SEC Reports
 ............................................................................  14
4.04.       Compliance Certificate
 ............................................................................  14
4.05.       Stay, Extension and Usury Laws
 ............................................................................  15
4.06.       Corporate Existence
 ............................................................................  15
4.07.       Notice of Default
 ............................................................................  15
4.08.       Change in Control
 ............................................................................  15

                                    ARTICLE 5

                                   SUCCESSORS

5.01.       When Company May Merge, etc.
 ............................................................................  19
5.02.       Successor Substituted
 ............................................................................  20

                                    ARTICLE 6

                              DEFAULTS AND REMEDIES

6.01.       Events of Default
 ............................................................................  20
6.02.       Acceleration
 ............................................................................  22
6.03.       Other Remedies
 ............................................................................  23
6.04.       Waiver of Past Defaults
 ............................................................................  23
6.05.       Control by Majority
 ............................................................................  23
6.06.       Limitation on Suits
 ............................................................................  23
6.07.       Rights of Holders to Receive Payment
 ............................................................................  24
6.08.       Collection Suit by Trustee
 ............................................................................  24
6.09.       Trustee May File Proofs of Claim
 ............................................................................  24
6.10.       Priorities
 ............................................................................  25

                                       20

<PAGE>



6.11.       Undertaking for Costs
 ............................................................................  25

                                    ARTICLE 7

                                     TRUSTEE

7.01.       Duties of Trustee
 ............................................................................  26
7.02.       Rights of Trustee
 ............................................................................  27
7.03.       Individual Rights of Trustee
 ............................................................................  27
7.04.       Trustee's Disclaimer
 ............................................................................  28
7.05.       Notice of Defaults
 ............................................................................  28
7.06.       Reports by Trustee to Holders
 ............................................................................  28
7.07.       Compensation and Indemnity
 ............................................................................  28
7.08.       Replacement of Trustee
 ............................................................................  29
7.09.       Successor Trustee by Merger, etc.
 ............................................................................  30
7.10.       Eligibility; Disqualification
 ............................................................................  30
7.11.       Preferential Collection of Claims
              Against Company
 ............................................................................  31

                                    ARTICLE 8

                             DISCHARGE OF INDENTURE

8.01.       Termination of Company's
              Obligations
 ............................................................................  31
8.02.       Application of Trust Money
 ............................................................................  32
8.03.       Repayment to Company
 ............................................................................  32
8.04.       Reinstatement
 ............................................................................  33

                                    ARTICLE 9

                                   AMENDMENTS

9.01.       Without Consent of Holders
 ............................................................................  33
9.02.       With Consent of Holders
 ............................................................................  34
9.03.       Compliance with Trust Indenture Act
 ............................................................................  35
9.04.       Revocation and Effect of Consents
 ............................................................................  35
9.05.       Notation on or Exchange of Securities
 ............................................................................  35

                                       21

<PAGE>



9.06.       Trustee Protected
 ............................................................................  36

                                   ARTICLE 10

                                   CONVERSION

10.01.      Conversion Privilege
 ............................................................................  36
10.02.      Conversion Procedure
 ............................................................................  36
10.03.      Fractional Shares
 ............................................................................  37
10.04.      Taxes on Conversion
 ............................................................................  38
10.05.      Company to Provide Stock
 ............................................................................  38
10.06.      Adjustment for Change in Capital Stock
 ............................................................................  38
10.07.      Adjustment for Shares Issued Below
              Market Price
 ............................................................................  39
10.08.      Adjustment for Other Distributions
 ............................................................................  42
10.09.      Adjustment for Cash Distributions
 ............................................................................  43
10.10.      Adjustment for Tender
              Offers
 ............................................................................  44
10.11.      Voluntary Adjustment
 ............................................................................  45
10.12.      Current Market Price
 ............................................................................  45
10.13.      When Adjustment May be Deferred
 ............................................................................  45
10.14.      When No Adjustment Required
 ............................................................................  45
10.15.      Notice of Adjustment
 ............................................................................  46
10.16.      Notice of Certain Transactions
 ............................................................................  46
10.17.      Reorganization of the Company
 ............................................................................  47
10.18.      Rights and Warrants
 ............................................................................  47
10.19.      Company Determination Final
 ............................................................................  48
10.20.      Trustee's Disclaimer
 ............................................................................  48

                                   ARTICLE 11

                                  SUBORDINATION

11.01.      Agreement to Subordinate
 ............................................................................  48
11.02.      Certain Definitions
 ............................................................................  49

                                       22

<PAGE>



11.03.      Liquidation; Dissolution; Bankruptcy
 ............................................................................  49
11.04.      Company Not to Make Payments with
              Respect to Securities in Certain
              Circumstances
 ............................................................................  50
11.05.      Acceleration of Securities
 ............................................................................  51
11.06.      When Distribution Must be Paid Over
 ............................................................................  51
11.07.      Notice by Company
 ............................................................................  51
11.08.      Subrogation
 ............................................................................  52
11.09.      Subordination May Not be Impaired by
              Company
 ............................................................................  52
11.10.      Distribution or Notice to
              Representative
 ............................................................................  52
11.11.      Rights of Trustee and Paying Agent
 ............................................................................  52
11.12.      Officers' Certificate
 ............................................................................  53
11.13.      Obligation of Company Unconditional
 ............................................................................  53

                                   ARTICLE 12

                                  MISCELLANEOUS

12.01.      Trust Indenture Act Controls
 ............................................................................  54
12.02.      Notices
 ............................................................................  54
12.03.      Communication by Holders with Other
              Holders
 ............................................................................  55
12.04.      Certificate and Opinion as to Conditions
              Precedent
 ............................................................................  56
12.05.      Statements Required in Certificate or
              Opinion
 ............................................................................  56
12.06.      Rules by Trustee and Agents
 ............................................................................  57
12.07.      Legal Holidays
 ............................................................................  57
12.08.      No Recourse Against Others
 ............................................................................  57
12.09.      Duplicate Originals
 ............................................................................  57
12.10.      Governing Law
 ............................................................................  57
12.11.      No Adverse Interpretation of Other
              Agreements
 ............................................................................  57
12.12.      Successors

                                       23

<PAGE>



 ............................................................................  58
12.13.      Separability
 ............................................................................  58
12.14.      Table of Contents, Headings, etc.
 ............................................................................  58

SIGNATURES
 ............................................................................  59
EXHIBIT A-FORM OF SECURITY
 ............................................................................ A-1

                                       24

<PAGE>


            INDENTURE dated as of November 1, 1995,  between  CONTINENTAL  HOMES
HOLDING CORP., a Delaware  corporation (the "Company"),  and  MANUFACTURERS  AND
TRADERS  TRUST  COMPANY,  a duly  organized  and  existing  banking  corporation
organized under the laws of the State of New York, as trustee (the "Trustee").

            Each party  agrees as follows for the benefit of the other party and
for the equal  and  ratable  benefit  of the  Holders  of the  Company's  6 7/8%
Convertible Subordinated Notes
due 2002 (the "Securities").

                                    ARTICLE 1

                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.  Definitions.

            "Affiliate"  means any person directly or indirectly  controlling or
controlled by or under direct or indirect  common control with the Company.  For
this  purpose,  "control"  shall  mean the power to direct  the  management  and
policies  of a person  through  the  ownership  of  securities,  by  contract or
otherwise.

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

            "Board of Directors"  means the Board of Directors of the Company or
any committee of the Board authorized to act for it hereunder.

            "Capital Stock" means any and all shares, interests,  participations
or other  equivalents  (however  designated) of capital stock of the Company and
all warrants or options to acquire such capital stock.

            "Common Stock" means the Common Stock,  par value $.01 per share, of
the Company or any security into which the Common Stock may be converted.

            "Company"  means the party named as such above and any other obligor
until a successor  replaces it pursuant to the applicable  provision  hereof and
thereafter means such successor.

            "Corporate  Trust Office of the Trustee"  shall be at the address of
the Trustee  specified in Section 12.02 or such other address as the Trustee may
give notice of to the Company.

            "DTC" means The Depositary Trust Company.

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

            "High and Low Sale  Prices" of the Common  Stock on any  trading day
means the average of the high and low sale price of the Common Stock as reported
on the  Composite  Tape for New York  Stock  Exchange-Listed  Stocks  (or if not
listed or  admitted  to  trading  on the New York  Stock  Exchange,  then on the
principal  national  securities  exchange on which the Common Stock is listed or
admitted  to trading,  or, if not listed or admitted to trading on any  national
securities exchange,  then as reported by the National Association of Securities
Dealers,  Inc., through NASDAQ or a similar  organization if NASDAQ is no longer
reporting  information)  on such  trading  day or if no such sale takes place on
such day, the average of the highest bid and lowest asked prices  regular way on
the New York Stock  Exchange  (or if not listed or  admitted  to trading on such
Exchange,  on the  principal  national  securities  exchange on which the Common
Stock is listed or admitted to trading,  or if not listed or admitted to trading
on any national securities  exchange,  the average of the highest bid and lowest
asked  prices as reported by the National  Association  of  Securities  Dealers,
Inc., through NASDAQ or a similar  organization if NASDAQ is no longer reporting
information) on such trading day. If on such trading day the Common Stock is not
quoted by any such  organization,  the fair market value of such Common Stock on
such day, as determined by the Board of Directors, shall be used.

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

            "Indenture" means this Indenture as amended from time
to time.

            "Officer" means the Chief Executive Officer, the
President, the Chief Operating Officer, any Vice President, the
Treasurer or the Secretary of the Company.

            "Officers'  Certificate"  means a certificate signed by two Officers
or by an Officer and an Assistant  Treasurer  or an  Assistant  Secretary of the
Company.

            "Opinion of Counsel" means a written  opinion from legal counsel who
may be an employee of or counsel  for the  Company or other  counsel  reasonably
acceptable to the Trustee.

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

            "principal"  of a debt security  means the principal of the security
plus the premium, if any, on the security.

            "SEC" means the Securities and Exchange Commission.

            "Securities" means the Securities described above
issued under this Indenture.

            "subsidiary"  means (i) a  corporation  a majority of whose  capital
stock with voting power, under ordinary circumstances,  to elect directors is at
the  time,  directly  or  indirectly,  owned  by the  Company,  by  one or  more
subsidiaries  of the  Company  or by the  Company  and one or more  subsidiaries
thereof  or (ii) any  other  person  (other  than a  corporation)  in which  the
Company,  one or  more  subsidiaries  thereof  or the  Company  and  one or more
subsidiaries  thereof,  directly  or  indirectly,  at the date of  determination
thereof have at least majority ownership interest.

            "TIA"  means the Trust  Indenture  Act of 1939,  as amended (15 U.S.
Code {{  77aaa-77bbbb),  as in effect on the date of this  Indenture,  except as
provided in Section 9.03.

            "Trustee"  means the party named as such in this  Indenture  until a
successor replaces it and thereafter means the successor.

            "Trust  Officer"  means any officer of the  Trustee  assigned by the
Trustee to administer its corporate trust matters.

SECTION 1.02.  Other Definitions.

            Term                    Defined in Section

      "Bankruptcy Law" .........................     6.01
      "business day" ...........................    12.07
      "Change in Control" ......................     4.08
      "Conversion Agent" .......................     2.03
      "Conversion Price ........................     4.08
      "Conversion Shares" ......................    10.18
      "Custodian" ..............................     6.01
      "Distribution Date" ......................    10.18
      "Event of Default" .......................     6.01
      "Exchange Act" ...........................     4.03
      "Expiration Time" ........................    10.10
      "Legal Holiday ...........................    12.07
      "Management Group" .......................     4.08
      "NASDAQ" .................................    10.03
      "NMS" ....................................    10.03
      "Offer" ..................................    10.10
      "Paying Agent" ...........................     2.03
      "Purchased Shares" .......................    10.10
      "Registrar ...............................     2.03
      "Representative" .........................    11.02
      "Repurchase Date" ........................     4.08
      "Repurchase Price" .......................     4.08
      "Repurchase Right" .......................     4.08
      "Repurchase Right Notice" ................     4.08
      "Senior Indebtedness" ....................    11.02
      "U.S. Government Obligations" ............     8.01

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 securities" means the Securities.

            "indenture security holder" means a Securityholder.

            "indenture to be qualified" means this Indenture.

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

            "obligor" on the indenture securities means the
            Company.

            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
have the meanings so assigned to them.

SECTION 1.04.  Rules of Construction.

            Unless the context otherwise requires:

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

            (2) an  accounting  term  not  otherwise  defined  has  the  meaning
      assigned to it in accordance with generally accepted accounting principles
      in effect on the date hereof;

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

                                    ARTICLE 2

                                 THE SECURITIES

SECTION 2.01.  Form and Dating.

            The Securities and the Trustee's certificate of authentication shall
be  substantially  in the form set forth in Exhibit A, which is  incorporated in
and forms a part of this Indenture.  The Securities may have notations,  legends
or  endorsements  required by law, stock  exchange rule or usage.  Each Security
shall be dated the date of its authentication.

SECTION 2.02.  Execution and Authentication.

            Two Officers shall sign the Securities for the
Company by manual or facsimile signature.  The Company's seal
shall be reproduced on the Securities.

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

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

            The Trustee shall authenticate  Securities for original issue in the
aggregate  principal  amount of up to  $75,000,000,  upon a written order of the
Company  signed by two Officers or by an Officer and an  Assistant  Treasurer or
Assistant  Secretary of the  Company;  provided  that if such order  directs the
issuance of $75,000,000 in aggregate principal amount of Securities, the Trustee
shall,  upon a second  written  order  dated not later  than  December  6, 1995,
authenticate  additional Securities for original issue not to exceed $11,250,000
in  aggregate  principal  amount  as  specified  in the  second  order  to cover
over-allotments, if any. Each order shall specify the amount of Securities to be
authenticated  and the date on which the original  issue of  Securities is to be
authenticated.  The aggregate principal amount of Securities  outstanding at any
time may not exceed the amount of Securities  issued  pursuant to this paragraph
except as provided in Section 2.07.

            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 the Company or
an Affiliate.

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

SECTION 2.03.  Registrar, Paying Agent and
                  Conversion Agent.__________

            The Company shall maintain in the Borough of Manhattan,  The City of
New York, an office or agency where Securities may be presented for registration
of transfer or for exchange ("Registrar"),  an office or agency where Securities
may be  presented  for payment  ("Paying  Agent") and an office or agency  where
Securities may be presented for conversion  ("Conversion  Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange.  The
Company may appoint or change one or more co-registrars,  one or more additional
paying agents and one or more  additional  conversion  agents without notice and
may act in any such capacity on its own behalf. The term "Paying Agent" includes
any additional paying agent; the term "Conversion Agent" includes any additional
conversion agent.

            The Company shall enter into an  appropriate  agency  agreement with
any Agent not a party to this  Indenture.  The  agreement  shall  implement  the
provisions of this Indenture that relate to such Agent. The Company shall notify
the Trustee of the name and address of any Agent not a party to this  Indenture.
If the Company fails to maintain a Registrar,  Paying Agent or Conversion Agent,
the Trustee shall act as such.

            The  Company  initially   appoints  the  Trustee  as  Paying  Agent,
Registrar and Conversion Agent.

SECTION 2.04.  Paying Agent to Hold Money in
                  Trust._______________________

            Each  Paying  Agent  shall  hold in  trust  for the  benefit  of the
Securityholders  or the Trustee  all moneys  held by such  Paying  Agent for the
payment of  principal  of or interest on the  Securities,  and shall  notify the
Trustee of any default by the Company in making any such payment. 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,  such
Paying Agent shall have no further  liability for the money. If the Company acts
as Paying Agent,  it shall segregate and hold as a separate trust fund all money
held by it as Paying Agent.

SECTION 2.05.  Securityholder 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
Securityholders.  If the Trustee is not the Registrar, the Company shall furnish
to the Trustee on or 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
Securityholders.

SECTION 2.06.  Transfer and Exchange.

            Where  Securities  are presented to the Registrar or a  co-Registrar
with a  request  to  register  the  transfer  or to  exchange  them for an equal
principal amount of Securities of other authorized denominations,  the Registrar
shall register the transfer or make the exchange if the  requirements of Section
8-401(1)  of  the  New  York  Uniform   Commercial   Code  are  met.  To  permit
registrations  of  transfer  and  exchanges,   the  Trustee  shall  authenticate
Securities at the Registrar's  request.  The Company or the Trustee, as the case
may be, shall not be required (a) to issue, authenticate,  register the transfer
of or exchange any Security during a period beginning at the opening of business
15 days before the mailing of a notice of redemption of the Securities  selected
for redemption under Section 3.02 and ending at the close of business on the day
of such mailing,  or (b) to register the transfer of or exchange any Security so
selected for redemption,  in whole or in part, except the unredeemed  portion of
Securities being redeemed in part.

            No service charge shall be made for any  registration of transfer or
exchange of Securities,  but the Company may require payment of a sum sufficient
to cover any tax or other governmental  charge that may be imposed in connection
with any transfer,  registration  of transfer or exchange of  Securities,  other
than exchanges  pursuant to Section 2.10,  3.06, 9.05 or 10.02 not involving any
transfer.

SECTION 2.07.  Replacement Securities.

            If the  Holder  of a  Security  claims  that the  Security  has been
mutilated,  lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security if the requirements of Section
8-405  of the New York  Uniform  Commercial  Code are met and,  in the case of a
mutilated  Security,  such mutilated Security is surrendered to the Trustee.  If
required by the Trustee or the Company,  an indemnity bond must be sufficient in
the judgment of both to protect the Company,  the Trustee, or any Agent from any
loss which any of them may suffer if a Security is replaced.  The Company or the
Trustee may charge for its expenses in replacing a Security.

            In case any such mutilated,  destroyed or wrongfully  taken Security
has become or is about to become due and payable,  the Company in its discretion
may, instead of issuing a new Security, pay such Security when due.

            Every  replacement  Security  is an  additional  obligation  of  the
Company.

SECTION 2.08.  Outstanding Securities.

            Securities   outstanding   at  any  time  are  all  the   Securities
authenticated by the Trustee except for those converted,  those cancelled by it,
those  delivered to it for  cancellation  and those described in this Section as
not outstanding. A Security does not cease to be outstanding because the Company
or one of its subsidiaries or Affiliates holds the Security.

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

            If the Paying Agent  (other than the Company)  holds on a redemption
date,  repurchase  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 interest on them shall cease to accrue.

SECTION 2.09.  Securities Held by the Company or an Affiliate.

            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 a  subsidiary  or an  Affiliate  shall be  disregarded,
except  that for the  purposes  of  determining  whether  the  Trustee  shall be
protected in relying on any such direction,  waiver or consent,  only Securities
which the Trustee actually knows are so owned shall be so disregarded.

SECTION 2.10.  Temporary Securities.

            Until definitive Securities are ready for delivery,  the Company may
prepare and the  Trustee  shall  authenticate  temporary  Securities.  Temporary
Securities shall be  substantially in the form of definitive  Securities but may
have variations that the Company considers appropriate for temporary Securities.
Without  unreasonable  delay,  the Company  shall  prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities.

SECTION 2.11.  Cancellation.

            The  Company at any time may deliver  Securities  to the Trustee for
cancellation.  The Registrar, Paying Agent and Conversion Agent shall forward to
the Trustee any  Securities  surrendered to them for  registration  of transfer,
exchange,  payment or  conversion.  The  Trustee  shall  cancel  all  Securities
surrendered  for  registration  of transfer,  exchange,  payment,  conversion or
cancellation and may destroy  cancelled  Securities and deliver a certificate of
any such destruction to the Company. The Company may not issue new Securities to
replace Securities that it has paid or delivered to the Trustee for cancellation
or that any Securityholder has converted pursuant to Article 10.

SECTION 2.12.  Defaulted Interest.

            If and to the extent 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 not prohibited by applicable  statute or case law,  interest
payable on the  defaulted  interest.  It may pay the  defaulted  interest to the
persons who are Securityholders on a subsequent special record date. The Company
shall fix such record date and payment  date. At least 15 days before the record
date, the Company shall mail to  Securityholders a notice that states the record
date, payment date and amount of interest to be paid.

                                    ARTICLE 3

                                   REDEMPTION

SECTION 3.01.  Notices to Trustee and DTC.

            If the Company wants to redeem Securities pursuant to paragraph 5 of
the  Securities,  it shall  notify  the  Trustee  at least 20 days  prior to the
redemption  date (unless a shorter  notice period shall be  satisfactory  to the
Trustee) of the  redemption  date and the  principal  amount of Securities to be
redeemed.

            If the Company wants to redeem Securities pursuant to paragraph 5 of
the  Securities  and DTC is a  Securityholder,  the Company  shall notify DTC at
least 30 days prior to the redemption  date if the  operational  arrangements of
DTC in effect at the time of any such redemption require such notice period.

SECTION 3.02.  Selection of Securities to Be Redeemed.

            If less than all the  Securities  are to be  redeemed,  the  Trustee
shall select the  Securities to be redeemed on either a pro rata basis or by lot
or such other method as the Trustee  shall deem fair and  equitable,  but in any
event,  in such  manner as complies  with  applicable  legal and stock  exchange
requirements.  The Trustee shall make the selection from Securities  outstanding
not  previously  called for  redemption.  The Trustee may select for  redemption
portions of the  principal of  Securities  that have  denominations  larger than
$1,000. Securities and portions of them it selects shall be in amounts of $1,000
or whole  multiples  of  $1,000.  Provisions  of this  Indenture  that  apply to
Securities called for redemption also apply to portions of Securities called for
redemption.

SECTION 3.03.  Notice of Redemption.

            At least 15 days but not more than 60 days before a redemption date,
the Company shall mail by first-class mail a notice of redemption to each Holder
whose Securities are to be redeemed.

            The notice shall identify the  Securities  and the principal  amount
thereof to be redeemed and shall state:

            (1) the redemption date;

            (2) the redemption price (including the amount of accrued and unpaid
      interest to be paid on the Securities called for redemption);

            (3) the then current conversion rate;

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

            (5) that the right to convert Securities called for redemption shall
      terminate  at the close of business on the second  business day before the
      redemption date;

            (6) that  Holders who want to convert  Securities  must  satisfy the
      requirements in paragraph 8 of the Securities;

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

            (8) that  interest on  Securities  called for  redemption  ceases to
      accrue on and after the redemption date; and

            (9) the CUSIP number of 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.

SECTION 3.04.  Effect of Notice of Redemption.

            Once a  notice  of  redemption  is  mailed,  Securities  called  for
redemption become due and payable on the redemption date at the redemption price
and, on and after such date (unless the Company  shall default in the payment of
the  redemption  price),  such  Securities  shall cease to bear  interest.  Upon
surrender to the Paying Agent,  such Securities  shall be paid at the redemption
price plus accrued interest to the redemption date.

SECTION 3.05.  Deposit of Redemption Price.

            On or before 10:00 a.m. on the  redemption  date,  the Company shall
deposit  with the  Paying  Agent  money in funds  immediately  available  on the
redemption date sufficient to pay the redemption  price of and accrued  interest
on all  Securities to be redeemed on that date. The Paying Agent shall return to
the  Company,  as soon as  practicable,  any money not required for that purpose
because of conversion of Securities.

SECTION 3.06.  Securities Redeemed in Part.

            Upon  surrender of a Security that is redeemed in part,  the Trustee
shall  authenticate  for the Holder a new Security equal in principal  amount to
the unredeemed portion of the Security surrendered.

            If any  Security  selected  for partial  redemption  is converted in
part, the converted  portion of such Security shall be deemed (so far as may be)
to be the portion selected for redemption.

                                    ARTICLE 4

                                    COVENANTS

SECTION 4.01.  Payment of Securities.

            The  Company  shall  pay  the  principal  of  and  interest  on  the
Securities on the dates and in the manner provided in the Securities.  Principal
and interest shall be considered  paid on the date due if the Paying Agent holds
on that date money sufficient to pay all principal and interest then due.

            The  Company  shall pay  interest on overdue  principal  at the rate
borne by the Securities.  The Company shall pay interest on overdue installments
of interest at the same rate to the extent not prohibited by applicable  statute
or case law.

SECTION 4.02.  Maintenance of Office or Agency.

            The Company will maintain in the Borough of  Manhattan,  The City of
New  York,  an  office  or  agency  where  Securities  may  be  surrendered  for
registration of transfer or exchange or conversion and where notices and demands
to or upon the Company in respect of the  Securities  and this  Indenture may be
served.  The  Company  will give  prompt  written  notice to the  Trustee of 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  Corporate  Trust
Office of the Trustee.

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

            The Company  hereby  designates  the  Corporate  Trust Office of the
Trustee in the  Borough  of  Manhattan,  the City of New York,  an agency of the
Company in accordance with Section 2.03.

SECTION 4.03.  SEC Reports.

            The  Company  shall  file with the  Trustee  within 15 days after it
files  them with the SEC copies of the annual  reports  and of the  information,
documents  and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the Company is required
to file with the SEC pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934, as amended (the "Exchange Act"). The Company also shall comply with
the other provisions of TIA { 314(a).

            So long as the  Securities  remain  outstanding,  the Company  shall
cause  its  annual  reports  to  shareholders  and any other  financial  reports
furnished by it to  shareholders  generally to be mailed to the Holders at their
addresses appearing in the register of Securities maintained by the Registrar.

SECTION 4.04.  Compliance Certificate.

            The Company shall  deliver to the Trustee  within 120 days after the
end of each fiscal year of the Company an Officers'  Certificate stating whether
or not the  signatories  know of any Default by the Company in performing any of
its obligations  under this Indenture or the Securities.  If they do know of any
such Default, the certificate shall describe the Default and its status.

SECTION 4.05.  Stay, Extension and Usury Laws.

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

SECTION 4.06.  Corporate Existence.

            Subject to Article  5, the  Company  will do or cause to be done all
things  necessary  to preserve  and keep in full force and effect its  corporate
existence and the corporate  existence of each subsidiary in accordance with the
respective  organizational  documents of each subsidiary and the rights (charter
and  statutory),  licenses and  franchises to the Company and its  subsidiaries;
provided,  however,  that the Company shall not be required to preserve any such
right, license or franchise, or the corporate existence of any subsidiary, if in
the judgment of the Board of Directors of the Company,  (i) such preservation or
existence is not material to the conduct of business of the Company and (ii) the
loss of such right,  license or franchise or the  dissolution of such subsidiary
does not have a material adverse impact on the Holders.

SECTION 4.07.  Notice of Default.

            In the event that any Default under Section 6.01 hereof shall occur,
the Company will give prompt written notice of such Default to the Trustee.

SECTION 4.08.  Change in Control.

            (a) In the event that  there  shall  occur a Change in  Control  (as
defined  below) of the Company,  each Holder of a Security  shall have the right
(the  "Repurchase  Right") upon receipt of a Repurchase Right Notice (as defined
below),  at such  Holder's  option,  to require  the Company to  repurchase  any
Security of such Holder or any portion of the principal  amount thereof which is
$1,000 or an integral  multiple of $1,000,  on the date (the "Repurchase  Date")
that is 45 days after the date of the Repurchase Right Notice,  or, if such 45th
day is a Legal  Holiday,  the next  subsequent day which is not a Legal Holiday,
unless  otherwise  required by applicable law, at a purchase price equal to 100%
of the  principal  amount  thereof,  plus  accrued  and unpaid  interest  to the
Repurchase Date (the "Repurchase Price"). The right to require the repurchase of
Securities  shall  not  continue  after a  discharge  of the  Company  from  its
obligations with respect to the Securities in accordance with Article 8.

            (b) Within 30 days after the occurrence of a Change in Control,  the
Company,  or, at the request of the Company,  the Trustee,  shall give notice of
the  occurrence of the Change in Control and of the  Repurchase  Right set forth
herein to each Holder (the  "Repurchase  Right Notice").  The Company shall also
deliver a copy of the  Repurchase  Right Notice to the Trustee.  Any such notice
shall contain all instructions and materials necessary to enable such Holders to
deliver  Securities   pursuant  to  the  Repurchase  Right  including,   without
limitation, the following:

            (1) the Repurchase Date;

            (2) the date by which the Repurchase Right must be exercised;

            (3) the Repurchase Price;

            (4)  that  Securities  are  to be  surrendered  for  payment  of the
      Repurchase Price;

            (5) that the exercise of the Repurchase Right is irrevocable, except
      that  Holders who elect to exercise the  Repurchase  Right will retain the
      right to convert  Securities  submitted for repurchase  until the close of
      business on the second business day before the Repurchase Date; and

            (6) the then existing  Conversion Rate for conversion of Securities,
      the date on which the right to convert the principal of the  Securities to
      be  repurchased  will  terminate  and  the  place  or  places  where  such
      Securities may be surrendered for conversion.

            (c) To exercise a Repurchase  Right,  a Holder shall  deliver to the
Company  (if  it is  acting  as its  own  Paying  Agent)  or to a  Paying  Agent
designated by the Company for such purpose in the notice referred to above on or
before the 30th day after the date of the Repurchase  Right Notice,  or, if such
day is a Legal  Holiday,  the next  subsequent day which is not a Legal Holiday,
(i) written  notice of the Holder's  exercise of such right,  which notice shall
set  forth the name of the  Holder,  the  principal  amount  of  Securities  (or
portions  thereof) to be  repurchased,  a statement that an election to exercise
the Repurchase  Right is being made thereby and (ii) the Securities with respect
to which the Repurchase Right is being exercised,  duly endorsed for transfer to
the Company, and the Holder of such Securities shall be entitled to receive from
the  Company (if it is acting as its own Paying  Agent) or such  Paying  Agent a
nontransferable  receipt of deposit evidencing such deposit. Such written notice
shall be  irrevocable,  except as  provided  in Section  4.08(b)  above.  If the
Repurchase Date is between a regular record date for the payment of interest and
the next succeeding  interest  payment date, any Security to be repurchased must
be  accompanied  by  funds  equal to the  interest  payable  on such  succeeding
interest  payment date on the principal  amount to be  repurchased  (unless such
Security  shall have been called for  redemption,  in which case no such payment
shall be  required),  and the interest on the  principal  amount of the Security
being repurchased will be paid on such next succeeding  interest payment date to
the registered holder of such Security on the immediately preceding record date.
A Security  repurchased  on an interest  payment date need not be accompanied by
any payment,  and the  interest on the  principal  amount of the Security  being
repurchased will be paid on such interest payment date to the registered  holder
of such Security on the immediately preceding record date.

            (d) In the event a Repurchase Right shall be exercised in accordance
with the terms hereof,  the Company shall pay or cause to be paid the applicable
Repurchase Price with respect to the Securities as to which the Repurchase Right
shall have been exercised to the Holder on the Repurchase Date.

            (e) Prior to a Repurchase  Date,  the Company shall deposit with the
Trustee or with a Paying  Agent (or,  if the Company is acting as its own Paying
Agent, segregate and hold in trust in accordance with Section 2.04) an amount of
money  sufficient to pay the  Repurchase  Price payable in respect of all of the
Securities  which are to be repurchased on that date. If any Security  submitted
for repurchase is converted prior to the repurchase thereof, any money deposited
with the Trustee or with any Paying Agent or so segregated and held in trust for
the redemption of such Security shall be paid to the Company on its request, or,
if then held by the Company, shall be discharged from such trust.

            (f) Both the  notice of the  Company  and the  notice of the  Holder
having been given as specified in this Section  4.08,  the  Securities  so to be
repurchased  shall,  on the  Repurchase  Date,  become  due and  payable  at the
Repurchase  Price  applicable  thereto and from and after such date  (unless the
Company shall default in the payment of the  Repurchase  Price) such  Securities
shall cease to bear interest. Upon surrender of any such Security for repurchase
in accordance  with said notice,  such Security  shall be paid by the Company at
the Repurchase  Price. If any Security shall not be paid upon surrender  thereof
for  repurchase,  the principal and premium,  if any,  shall,  until paid,  bear
interest from the Repurchase Date at the rate borne by such Security.

            (g) Any Security  which is to be submitted  for  repurchase  only in
part shall be delivered  pursuant to this Section 4.08 (with,  if the Company or
the Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his  attorney  duly  authorized  in writing),  and the Company  shall
execute,  and the Trustee shall  authenticate and make available for delivery to
the Holder of such  Security  without  any  service  charge,  a new  Security or
Securities,  of any authorized  denomination as requested by such Holder, of the
same tenor and in  aggregate  principal  amount equal to and in exchange for the
portion of the principal of such Security not submitted for repurchase.

            (h)  If  any  repurchase   pursuant  to  the  foregoing   provisions
constitutes an "issuer tender offer" as defined in Rule 13e-4 under the Exchange
Act, the Company will comply with the requirements of Rule 13e-4, Rule 14e-1 and
any  other  tender  offer  rules  under  the  Exchange  Act  which  then  may be
applicable, including the filing of an Issuer Tender Offer Statement on Schedule
13E-4 with the SEC and the furnishing of certain  information  contained therein
to the Holders.

            (i)  As used in this Section 4.08:

            A  "Change  in  Control"  of the  Company  shall be  deemed  to have
occurred at such time as any person, together with its affiliates or associates,
other than the Management  Group (as defined below) is or becomes the beneficial
owner, directly or indirectly,  through a purchase,  merger or other acquisition
transaction,  of shares of capital stock of the Company entitling such person to
exercise 50% or more of the total voting power of all shares of capital stock of
the Company  entitled to vote in elections of directors;  provided that a Change
in  Control  shall not be deemed to have  occurred  if either  (i) the last sale
price of the Common  Stock for any five trading days during the ten trading days
immediately  preceding  the Change in  Control is at least  equal to 105% of the
Conversion  Price in effect on the day of the  Change in  Control or (ii) all of
the  consideration  (excluding  cash  payments  for  fractional  shares)  in the
transaction  or  transactions  constituting  the Change in Control  consists  of
shares of common  stock  traded on a  national  securities  exchange  or through
NASDAQ or another  comparable  quotation  system.  "Beneficial  owner"  shall be
determined  in  accordance  with  Rule  13d-3,  as in  effect on the date of the
execution  of  this  Indenture,  promulgated  by  the  Securities  and  Exchange
Commission  under the Exchange Act. The "Management  Group" shall consist of the
executive  officers  of the  Company  as of the date  hereof,  members  of their
immediate families,  certain trusts for their benefit, and legal representatives
of, or heirs,  beneficiaries or legatees  receiving Common Stock under, any such
person's estate.

            "Conversion  Price" shall be deemed to equal  $1,000  divided by the
conversion rate on the date of calculation.

                                    ARTICLE 5

                                   SUCCESSORS

SECTION 5.01.  When Company May Merge, etc.

            The Company shall not consolidate with or merge into, or directly or
indirectly  transfer  or lease all or  substantially  all of its  assets to, any
person unless:

            (1) the person  formed by or  surviving  any such  consolidation  or
      merger (if other than the  Company),  or to which such sale or  conveyance
      shall have been made, is a person organized and existing under the laws of
      the United States, any State thereof or the District of Columbia;

            (2) the person  formed by or  surviving  any such  consolidation  or
      merger (if other than the  Company),  or to which such sale or  conveyance
      shall  have  been  made,   assumes  by  supplemental   indenture  all  the
      obligations of the Company under the Securities and this Indenture; and

            (3) immediately  after giving effect to such  transaction no Default
      or Event of Default exists.

            The Company shall  deliver to the Trustee prior to the  consummation
of the proposed transaction an Officers' Certificate to the foregoing effect and
an  Opinion  of  Counsel   stating  that  the  proposed   transaction  and  such
supplemental indenture comply with this Indenture.

SECTION 5.02.  Successor Substituted.

            Upon any  consolidation  or  merger or  transfer  or lease of all or
substantially  all of the assets of the Company in accordance with Section 5.01,
the successor  person formed by such  consolidation or into which the Company is
merged or to which  such  transfer  or lease is made  shall  succeed  to, and be
substituted  for,  and may  exercise  every right and power of, and shall assume
every duty and  obligation  of, the Company under this  Indenture  with the same
effect as if such successor  corporation  had been named as the Company  herein.
When the successor corporation assumes all obligations of the Company hereunder,
all obligations of the predecessor corporation shall terminate.

                                    ARTICLE 6

                              DEFAULTS AND REMEDIES

SECTION 6.01.  Events of Default.

            An "Event of Default" occurs if:

            (1) the Company  defaults in the payment of interest on any Security
      when the same  becomes due and payable  and the  default  continues  for a
      period of 30 days,  whether or not such payment shall be prohibited by the
      provisions of Article 11 hereof;

            (2) the  Company  defaults in the  payment of the  principal  of any
      Security  when  the  same  becomes  due  and  payable  at  maturity,  upon
      acceleration or otherwise, whether or not such payment shall be prohibited
      by the provisions of Article 11 hereof;

            (3) the Company fails to comply with any of its other  agreements in
      the Securities or this Indenture and the default  continues for the period
      and after the notice specified below;

            (4) an event of default shall have occurred and be continuing  under
      any security or other  evidence of  indebtedness  of the Company or any of
      its subsidiaries  whether such indebtedness now exists or shall be created
      hereafter,  which  event  of  default  results  in  an  acceleration  of a
      principal amount of such indebtedness which,  together with any such other
      indebtedness so accelerated,  aggregates more than  $10,000,000,  and such
      acceleration  is not waived or  rescinded  or such  indebtedness,  paid or
      discharged within a period and after the notice specified below;

            (5) a final judgment or judgments for the payment of money in excess
      of $10,000,000 in the aggregate are rendered  against the Company and such
      judgment or judgments remain unstayed, unsatisfied or undischarged for the
      period and after the notice specified below;

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

                  (A) commences a voluntary case,

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

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

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



<PAGE>



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

                  (A) is for relief against the Company in an involuntary case,

                  (B)   appoints  a   Custodian   of  the  Company  for  all  or
            substantially all of its property, or

                  (C) orders the  liquidation  of the Company,  and the order or
            decree remains unstayed and in effect for 90 days.

            The term  "Bankruptcy  Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors.  The term "Custodian"  means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.

            A default  under  clause (3),  (4) or (5) is not an Event of Default
until the  Trustee  or the  Holders of at least 25% in  principal  amount of the
Securities  notify the Company of the default and the Company  does not cure the
default  within 60 days with  respect to clause  (3) or (5),  and within 30 days
with respect to clause (4), 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".  If the  Holders  of 25% in  principal  amount of the  outstanding
Securities  request the Trustee to give such notice on their behalf, the Trustee
shall do so.

            The  Trustee  shall  not be deemed  to have  notice  of any  Default
hereunder unless it shall have actual knowledge of such Default or it shall have
received  written notice thereof making specific  reference to such Default as a
Default.

SECTION 6.02.  Acceleration.

            If an Event of Default (other than an Event of Default  specified in
Section  6.01(6) or (7)) occurs and is continuing,  the Trustee by notice to the
Company, or the Holders of at least 25% in principal amount of the Securities by
notice to the Company and the Trustee,  may declare the principal of and accrued
interest on all the Securities to be due and payable. Upon such declaration such
principal  and  interest  shall be due and payable  immediately.  If an Event of
Default  specified in Section  6.01(6) or (7) occurs,  all unpaid  principal and
accrued interest on the Securities then outstanding  shall ipso facto become and
be immediately  due and payable without any declaration or other act on the part
of the Trustee or any  Securityholder.  The  Holders of a majority in  principal
amount of the  Securities  by notice to the Trustee may rescind an  acceleration
and its  consequences if the rescission  would not conflict with any judgment or
decree and if all existing  Events of Default  have been cured or waived  except
nonpayment  of principal or interest  that has become due solely  because of the
acceleration.

SECTION 6.03.  Other Remedies.

            Notwithstanding  any other provision of this Indenture,  if an Event
of Default occurs and is continuing, the Trustee may pursue any available remedy
by  proceeding  at law or in equity to collect  the payment of  principal  of or
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  Securityholder  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.

SECTION 6.04.  Waiver of Past Defaults.

            Subject to  Sections  6.07 and 9.02,  the  Holders of a majority  in
principal  amount  of the  Securities  by  notice  to the  Trustee  may waive an
existing Default and its consequences. When a Default is waived, it is cured and
ceases.

SECTION 6.05.  Control by Majority.

            The Holders of a majority in principal  amount of the Securities may
direct the time,  method and place of conducting  any  proceeding for any remedy
available  to the  Trustee or  exercising  any trust or power  conferred  on it.
However,  the Trustee may refuse to follow any direction that conflicts with law
or this Indenture,  is unduly prejudicial to the rights of other Securityholders
or would involve the Trustee in personal  liability and the Trustee may take any
other action deemed proper by the Trustee  which is not  inconsistent  with such
direction.

SECTION 6.06.  Limitation on Suits.

            Except as provided in Section  6.07, a  Securityholder  may pursue a
remedy with respect to this Indenture or the Securities only if:

            (1) the Holder gives to the Trustee  written  notice of a continuing
      Event of Default;

            (2)  the  Holders  of at  least  25%  in  principal  amount  of  the
      Securities make a written request to the Trustee to institute  proceedings
      in respect of such Event of Default;

            (3) such Holder or Holders offer to the Trustee reasonable indemnity
      against any loss, liability or expense;

            (4) the  Trustee  does not comply  with the  request  within 60 days
      after receipt of the request and the offer of indemnity; and

            (5) during such 60-day period the Holders of a majority in principal
      amount of the Securities do not give the Trustee a direction  inconsistent
      with the request.

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

SECTION 6.07.  Rights of Holders to Receive Payment.

            Notwithstanding any other provision of this Indenture,  the right of
any Holder of a Security to receive  payment of principal of and interest on the
Security,  on or after the respective due dates expressed in the Security, 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 the Holder.

            Notwithstanding any other provision of this Indenture,  the right of
any  Holder of a  Security  to bring  suit for the  enforcement  of the right to
convert the  Security  shall not be impaired or affected  without the consent of
the Holder.

SECTION 6.08.  Collection Suit by Trustee.

            If an Event of Default  specified  in Section  6.01(1) or (2) occurs
and is  continuing,  the  Trustee  may  recover  judgment in its own name and as
trustee  of an  express  trust  against  the  Company  for the  whole  amount of
principal and interest remaining unpaid.

SECTION 6.09.  Trustee May File Proofs of Claim.

            The  Trustee  may file such  proofs  of claim  and  other  papers or
documents  as may be  necessary  or advisable in order to have the claims of the
Trustee, any predecessor Trustee and the Securityholders allowed in any judicial
proceedings relative to the Company, its creditors or its property.

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

SECTION 6.10.  Priorities.

            If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:

            First: to the Trustee for amounts due under Section 7.07;

            Second: to holders of Senior  Indebtedness to the extent required by
      Article 11;

            Third:  to  Securityholders  for  amounts  due  and  unpaid  on  the
      Securities  for  principal and interest,  ratably,  without  preference or
      priority  of any kind,  according  to the  amounts  due and payable on the
      Securities for principal and interest, respectively; and

            Fourth: to the Company.

            The Trustee  may fix a record date and payment  date for any payment
by it to Securityholders pursuant to this Section.

SECTION 6.11.  Undertaking for Costs.

            In any suit for the  enforcement  of any right or remedy  under this
Indenture  or in any suit against the Trustee for any action taken or omitted by
it as  Trustee,  a court in its  discretion  may require the filing by any party
litigant in the suit other than the Trustee of an  undertaking  to pay the costs
of the suit,  and the  court in its  discretion  may  assess  reasonable  costs,
including  reasonable  attorneys' fees,  against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder  pursuant  to Section  6.07 or a suit by Holders of more than 10% in
principal amount of the Securities.

                                    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,  and use the same  degree of care and skill in their  exercise,  as a
prudent person would exercise or use under the  circumstances  in the conduct of
his own affairs.

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

            (1) The Trustee need perform only those duties that are specifically
      set forth in this Indenture and no others.

            (2) In the  absence  of bad  faith  on its  part,  the  Trustee  may
      conclusively  rely, as to the truth of the statements and the  correctness
      of the opinions expressed therein, upon certificates or opinions furnished
      to the Trustee  and  conforming  to the  requirements  of this  Indenture.
      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  liability  for its own
negligent  action,  its  own  negligent  failure  to  act  or  its  own  willful
misconduct, except that:

            (1) This  paragraph  does not limit the effect of  paragraph  (b) of
      this Section 7.01.

            (2) The Trustee shall not be liable for any error ofjudgment made in
      good faith by a Trust  Officer,  unless it is proved  that the Trustee was
      negligent in ascertaining the pertinent facts.

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

            (d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.

            (e) The Trustee may refuse to perform any duty or exercise any right
or power  unless it  receives  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 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  rely  on 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 and/or an Opinion of Counsel. The Trustee shall not be
liable  for any action it takes or omits to take in good  faith in  reliance  on
such Certificate or Opinion.

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

            (d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers.

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 an
Affiliate thereof with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. The Trustee,  however,  must comply with
Sections 7.10 and 7.11.

SECTION 7.04.  Trustee's Disclaimer.

            The Trustee makes no  representation  as to the validity or adequacy
of this  Indenture  or the  Securities;  it  shall  not be  accountable  for the
Company's  use of  the  proceeds  from  the  Securities;  and  it  shall  not be
responsible  for any statement in the Securities  other than its  certificate of
authentication.

SECTION 7.05.  Notice of Defaults.

            If a Default occurs and is continuing and if it is actually known to
the Trustee or the Trustee has  received  written  notice  thereof,  the Trustee
shall mail to each  Securityholder  a notice of the Default within 90 days after
it  occurs.  Except in the case of a  Default  in  payment  of  principal  of or
interest on any Security,  the Trustee may withhold the notice if and so long as
it in good faith  determines that  withholding the notice is in the interests of
Securityholders.

SECTION 7.06.  Reports by Trustee to Holders.

            If  required  by TIA {  313(a),  within  60 days  after  each  May 1
beginning  with May 1, 1996,  the Trustee shall mail to each  Securityholder  as
required by TIA { 313(c) a brief report dated as of such date that complies with
TIA { 313(a). The Trustee also shall comply with TIA { 313(b).

            A copy of each report at the time of its mailing to  Securityholders
shall be filed by the Trustee with the SEC and each stock  exchange,  if any, on
which the Securities  are listed.  The Company shall 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 services as shall be agreed upon in writing.  The Trustee's
compensation  shall not be limited by any law on compensation of a trustee of an
express  trust.  The Company  shall  reimburse  the Trustee upon request for all
reasonable  out-of-pocket  expenses  incurred by it. Such expenses shall include
the reasonable  compensation and out-of-pocket  expenses of the Trustee's agents
and counsel.

            The  Company  shall  indemnify  the  Trustee  against  any  loss  or
liability  (including  the fees  and  expenses  of  counsel)  incurred  by it in
connection  with the  administration  of this trust and the  performance  of its
duties  hereunder.  The Company need not pay for any settlement made without its
consent. The Trustee shall notify the Company promptly of any claim for which it
may  seek  indemnification.  The  Company  need not  reimburse  any  expense  or
indemnify  against any loss or  liability  incurred  by the Trustee  through the
Trustee's negligence or bad faith.

            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  and
interest on particular Securities.

            When the Trustee incurs expenses or renders  services after an Event
of Default  specified  in Section  6.01(6) or (7) occurs,  the  expenses and the
compensation   for  the  services  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 by so notifying the Company. The Holders of a
majority  in  principal  amount of the  Securities  may remove the Trustee by so
notifying  the Trustee and the Company and may appoint a successor  Trustee with
the Company's consent. The Company may remove the Trustee if:

            (1) the Trustee fails to comply with Section 7.10;

            (2) the Trustee is adjudged a bankrupt or an insolvent;

            (3) a receiver or other public  officer  takes charge of the Trustee
      or its property; or

            (4) 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 Holders
of a majority  in  principal  amount of the  Securities  may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.

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

            If the Trustee  fails to comply with  Section  7.10,  any Holder may
petition any court of competent  jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

            A  successor  Trustee  shall  deliver  a written  acceptance  of its
appointment  to  the  retiring  Trustee  and  to  the  Company.   Thereupon  the
resignation or removal of the retiring Trustee shall become  effective,  and the
successor  Trustee  shall have all the rights,  powers and duties of the Trustee
under  this  Indenture.  The  successor  Trustee  shall  mail  a  notice  of its
succession to Securityholders.  The retiring Trustee shall promptly transfer all
property  held by it as Trustee to the  successor  Trustee,  subject to the lien
provided for in Section 7.07.

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.

            This  Indenture  shall  always  have a  Trustee  who  satisfies  the
requirements  of TIA {  310(a)(1).  The  Trustee  shall  always  have a combined
capital  and  surplus of at least  $50,000,000  as set forth in its most  recent
published  annual  report of  condition.  The  Trustee  shall  comply with TIA {
310(b).

SECTION 7.11.  Preferential Collection of Claims
                  Against Company.

            The Trustee  shall comply with TIA { 311(a),  excluding any creditor
relationship  listed in TIA { 311(b). A Trustee who has resigned or been removed
shall be subject to TIA { 311(a) to the extent indicated.

                                    ARTICLE 8

                             DISCHARGE OF INDENTURE

SECTION 8.01.  Termination of Company's Obligations.

            The  Company  may  terminate  all  of  its  obligations  under  this
Indenture if all Securities  previously  authenticated and delivered (other than
mutilated,  destroyed,  lost or stolen  Securities  which have been  replaced or
paid) have been delivered to the Trustee for cancellation or if:

            (1) the  Securities  mature within one year or all of them are to be
      called for redemption within one year under  arrangements  satisfactory to
      the Trustee for giving the notice of redemption;

            (2) the Company irrevocably deposits in trust with the Trustee money
      or U.S. Government Obligations sufficient to pay principal of and interest
      on the  Securities  to  maturity  or  redemption,  as  the  case  may  be.
      Immediately  after  making the deposit,  the Company  shall give notice of
      such event to the Securityholders;

            (3) the Company has paid or caused to be paid all sums then  payable
      by the Company to the Trustee  hereunder  as of the date of such  deposit;
      and

            (4)  the  Company  has   delivered   to  the  Trustee  an  Officers'
      Certificate  stating  that all  conditions  precedent  provided for herein
      relating to the  satisfaction  and discharge of this  Indenture  have been
      complied  with.  The Company may make the deposit only during the one-year
      period and only if Article 11 permits it.

However,  the Company's  obligations in Sections 2.03,  2.04,  2.05, 2.06, 2.07,
4.01, 7.07, 7.08 and 8.03, and in Article 10, shall survive until the Securities
are no longer outstanding. Thereafter the Company's obligations in Sections 7.07
and 8.03 shall survive.

            After a deposit  pursuant to this  Section  8.01,  the Trustee  upon
request shall acknowledge in writing the discharge of the Company's  obligations
under the Securities and this Indenture  except for those surviving  obligations
specified above.

            In order to have money  available on a payment date to pay principal
or interest on the Securities,  the U.S. Government Obligations shall be payable
as to  principal  or interest on or before such  payment date in such amounts as
will provide the necessary money.

            "U.S. Government Obligations" means direct non-
callable obligations of, or non-callable obligations guaranteed
by, the United States of America for the payment of which the
full faith and credit of the United States of America is
pledged.

SECTION 8.02.  Application of Trust Money.

            The Trustee shall hold in trust money or U.S. Government Obligations
deposited  with it pursuant to Section 8.01. It shall apply the deposited  money
and the money from U.S.  Government  Obligations through the Paying Agent and in
accordance  with this  Indenture  to the payment of principal of and interest on
the  Securities.  Money and  securities  so held in trust are not subject to the
subordination provisions of Article 11.

SECTION 8.03.  Repayment to Company.

            The Trustee and the Paying  Agent shall  promptly pay to the Company
upon  request  any  excess  money or  securities  held by them at any time.  The
Trustee and the Paying  Agent shall pay to the  Company  upon  request any money
held by them for the payment of principal or interest that remains unclaimed for
two years;  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 a newspaper of general  circulation in The City of
New York or cause to be mailed to each  Holder,  notice  stating that such money
remains and that, after a date specified  therein,  which shall not be less than
30 days form the date of such publication or mailing,  any unclaimed  balance of
such money then  remaining  will be repaid to the Company.  After payment to the
Company,  Securityholders  entitled  to the money must look to the  Company  for
payment  as  general  creditors  unless an  applicable  abandoned  property  law
designates another person.

SECTION 8.04.  Reinstatement.

            If the Trustee or Paying  Agent is unable to apply any money or U.S.
Government  Obligations  in accordance  with Section 8.01 by reason of any legal
proceeding  or by reason of any order or judgment  of any court or  governmental
authority enjoining,  restraining or otherwise prohibiting such application, the
Company's  obligations  under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred  pursuant to Section 8.01 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 8.01; provided,  however,
that if the Company has made any  payment of  interest  on or  principal  of any
Securities because of 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 or U.S.  Government  Obligations  held by the Trustee or
Paying Agent.

                                    ARTICLE 9

                                   AMENDMENTS

SECTION 9.01.  Without Consent of Holders.

            The  Company,  with  the  consent  of  the  Trustee,  may  amend  or
supplement this Indenture or the Securities  without notice to or the consent of
any Securityholder:

            (1) to cure any ambiguity, omission, defect or inconsistency;

            (2) to comply with Sections 5.01 and 10.17;

            (3)  to  provide  for  uncertificated   Securities  in  addition  to
      certificated Securities; or

            (4) to make any change that does not materially adversely affect the
      rights of any Securityholder.

SECTION 9.02.  With Consent of Holders.

            The  Company,  with  the  consent  of  the  Trustee,  may  amend  or
supplement this Indenture or the Securities without notice to any Securityholder
but with the written  consent of the Holders of at least a majority in principal
amount of the Securities then outstanding.  Subject to Section 6.07, the Holders
of a majority in principal  amount of the Securities then  outstanding may waive
compliance by the Company with any provision of this Indenture or the Securities
without  notice to any  Securityholder.  However,  without  the  consent of each
Securityholder affected, an amendment,  supplement or waiver, including a waiver
pursuant to Section 6.04, may not:

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

            (2) reduce the rate of or change the time for payment of interest on
      any Security;

            (3) reduce the  principal  of or change  the fixed  maturity  of any
      Security   (including,   without   limitation,   the  optional  redemption
      provisions, but excluding Section 4.08);

            (4) waive a default in the  payment of  principal  of or interest on
      any Security;

            (5) make any Security payable in money other than that stated in the
      Security;

            (6) make any change in Section  6.04,  Section 6.07 or Section 9.02;
      or

            (7) make any change that adversely  affects the right to convert any
      Security, including decreasing the conversion rate of any Security (except
      as such rate may be decreased  pursuant to the  provisions  of Article Ten
      hereof).

            Promptly after an amendment  under this Section  becomes  effective,
the  Company  shall mail to  Securityholders  a notice  briefly  describing  the
amendment.

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

SECTION 9.03.  Compliance with Trust Indenture Act.

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

            After an amendment,  supplement  or waiver  becomes  effective  with
respect to the Securities,  it shall bind every Securityholder unless it makes a
change described in any of clauses (1) through (7) of Section 9.02. In that case
the amendment, supplement or waiver shall bind each Holder of a Security who has
consented  to it and,  provided  that notice of such  amendment,  supplement  or
waiver is reflected on a Security that evidences the same debt as the consenting
Holder's  Security,  every  subsequent  Holder of a  Security  or  portion  of a
Security that evidences the same debt as the consenting Holder's Security.

SECTION 9.05.  Notation on or Exchange of Securities.

            If an  amendment,  supplement  or  waiver  changes  the  terms  of a
Security,  the Trustee  may require the Holder of the  Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively,  if the Company or
the Trustee so determines,  the Company in exchange for the Security shall issue
and the Trustee  shall  authenticate  a new Security  that  reflects the changed
terms.

SECTION 9.06.  Trustee Protected.

            The  Trustee  need not  sign any  amendment,  supplement  or  waiver
authorized pursuant to this Article that adversely affects the Trustee's rights.
The Trustee shall be entitled to receive and rely upon an Opinion of Counsel and
an Officers'  Certificate  that any  supplemental  indenture  complies  with the
Indenture.

                                   ARTICLE 10

                                   CONVERSION

SECTION 10.01.  Conversion Privilege.

            A Holder of a Security  may convert it into Common Stock at any time
during the period stated in paragraph 8 of the Securities.

            The  initial  conversion  rate  is  stated  in  paragraph  8 of  the
Securities.  The  conversion  rate is subject to adjustment  in accordance  with
Sections 10.06 through 10.14.

            A Holder  may  convert a portion  of a  Security  if the  portion is
$1,000 or integral multiples thereof. Provisions of this Indenture that apply to
conversion of all of a Security also apply to conversion of a portion of it.

SECTION 10.02.  Conversion Procedure.

            To convert a Security a Holder  must  satisfy  the  requirements  in
paragraph 8 of the Securities.  The date on which the Holder satisfies all those
requirements is the conversion  date. As soon as practicable,  the Company shall
deliver to the Holder through the Conversion  Agent a certificate for the number
of full shares of Common Stock  issuable upon the conversion and a check in lieu
of any fractional  share. The person in whose name the certificate is registered
shall be treated as a stockholder of record on and after the conversion date.

            If any Security is converted between the record date for the payment
of interest and the next succeeding interest payment date, such Security must be
accompanied by funds equal to the interest  payable on such succeeding  interest
payment date on the principal  amount so converted  (unless such Security  shall
have  been  called  for  redemption,  in  which  case no such  payment  shall be
required).  A  Security  converted  on an  interest  payment  date  need  not be
accompanied  by any  payment,  and the interest on the  principal  amount of the
Security  being  converted  will be paid on such  interest  payment  date to the
registered  Holder of such Security on the  immediately  preceding  record date.
Subject to the aforesaid right of the registered Holder to receive interest,  no
payment or  adjustment  will be made on conversion  for interest  accrued on the
converted Security or for dividends on the Common Stock issued upon conversion.

            If a Holder  converts  more than one Security at the same time,  the
number of full shares  issuable upon the conversion  shall be based on the total
principal amount of the Securities converted.

            Upon  surrender of a Security  that is converted in part the Trustee
shall  authenticate  for the Holder a new Security equal in principal  amount to
the unconverted portion of the Security surrendered.

            If the last  day on which a  Security  may be  converted  is a Legal
Holiday in a place where a  Conversion  Agent is located,  the  Security  may be
surrendered to that  Conversion  Agent on the next  succeeding day that is not a
Legal Holiday.

SECTION 10.03.  Fractional Shares.

            The Company will not issue a  fractional  share of Common Stock upon
conversion  of a Security.  Instead the Company  will  deliver its check for the
market value of a fractional share. The market value of a fraction of a share is
determined as follows: Multiply the market price of a full share by the fraction
and round the result to the nearest cent.

            The  market  price of a share of Common  Stock for the  purposes  of
Section  10.03 is the last reported sale price of a share of Common Stock on the
principal national  securities  exchange on which the shares of Common Stock are
listed or  admitted  to trading or on the  National  Association  of  Securities
Dealers  National  Market System  ("NMS") on the business day next preceding the
date of  conversion,  or, if the Common Stock is not then listed on an exchange,
the closing sale price (or the quoted  closing bid price if there were no sales)
as  reported  by  the  National  Association  of  Securities  Dealers  Automated
Quotation  System  ("NASDAQ")  on the  business day next  preceding  the date of
conversion.  In the  absence  of one or  more  such  quotations,  the  Board  of
Directors  shall  determine  the  current  market  price  on the  basis  of such
quotations as it considers appropriate.

SECTION 10.04.  Taxes on Conversion.

            If a Holder of a Security  converts  it, the  Company  shall pay any
documentary,  stamp or similar  issue or transfer tax due on the issue of shares
of Common Stock upon the conversion.  However, the Holder shall pay any such tax
which is due  because  the shares  are issued in a name other than the  Holder's
name.

SECTION 10.05.  Company to Provide Stock.

            The Company shall reserve out of its authorized but unissued  Common
Stock or its Common  Stock held in  treasury  enough  shares of Common  Stock to
permit the conversion of all of the Securities.

            All shares of Common  Stock which may be issued upon  conversion  of
the Securities shall be validly issued, fully paid and non-assessable.

            The  Company  will  endeavor  to  comply  with all  securities  laws
regulating  the offer and delivery of shares of Common Stock upon  conversion of
Securities  and will  endeavor to list such shares on each  national  securities
exchange on which the Common Stock is listed.

SECTION 10.06.  Adjustment for Change in
                   Capital Stock.

            If the Company:

            (1) pays a dividend or makes a distribution  on its Capital Stock in
      shares of its Common Stock;

            (2) subdivides its outstanding shares of Common Stock into a greater
      number of shares;

            (3) combines its  outstanding  shares of Common Stock into a smaller
      number of shares; or

            (4) issues by reclassification of its Common Stock any shares of its
      Capital Stock,

then the  conversion  privilege and the  conversion  rate in effect  immediately
prior  to such  action  shall  be  adjusted  so that the  Holder  of a  Security
thereafter  converted  may receive the number of shares of Capital  Stock of the
Company which he would have owned  immediately  following  such action if he had
converted the Security immediately prior to such action.

            The adjustment shall become effective  immediately  after the record
date in the  case of a  dividend  or  distribution  and  immediately  after  the
effective date in the case of a subdivision, combination or reclassification.

            If after an adjustment a Holder of a Security may, upon  conversion,
receive shares of two or more classes of Capital Stock of the Company, the Board
of Directors  shall  determine the  allocation of the adjusted  conversion  rate
between or among the  classes  of Capital  Stock.  After  such  allocation,  the
conversion  privilege  and the  conversion  rate of each class of Capital  Stock
shall  thereafter  be  subject  to  adjustment  on  terms  comparable  to  those
applicable to Common Stock in this Article 10.

SECTION 10.07.  Adjustment for Shares Issued Below
                  Market Price.

            If the  Company  issues to all  holders  of Common  Stock  shares of
Common Stock or rights,  options or warrants to subscribe for or purchase shares
of Common Stock, or any securities  convertible  into or exchangeable for shares
of Common  Stock,  or rights,  options or warrants to subscribe  for or purchase
such convertible or exchangeable  securities  (excluding shares of Common Stock,
rights, options,  warrants therefor or convertible or exchangeable securities or
rights,  options,  or warrants  therefor  issued in  transactions  described  in
Section 10.06) at a Price Per Share (as defined and determined  according to the
formula given below) lower than the current  market price (see Section 10.12) on
the date of such issuance,  the conversion  rate shall be adjusted in accordance
with the following formula:

                        AC = CC x O + N______ 
                                 O + (N x R)           
                                            M

where:

AC = the adjusted conversion rate.

CC = the then current conversion rate.

O  =  the number of shares of Common Stock outstanding immediately prior to such
      issuance.

N  =  the "Number of Shares," which (i) in the case of shares of Common Stock is
      the  number of  shares  issued;  (ii) in the case of  rights,  options  or
      warrants  to  subscribe  for or  purchase  shares  of  Common  Stock or of
      securities convertible into or exchangeable for shares of Common Stock, is
      the  maximum  number of shares of Common  Stock  initially  issuable  upon
      exercise, conversion or exchange thereof; and (iii) in the case of rights,
      options  or  warrants  to  subscribe  for  or  purchase   convertible   or
      exchangeable  securities,  is the maximum number of shares of Common Stock
      initially  issuable upon the conversion or exchange of the  convertible or
      exchangeable securities issuable upon the exercise of such rights, options
      or warrants.

R  =  the proceeds received or receivable by the Company,  which (i) in the case
      of shares of Common Stock is the total amount  received or  receivable  by
      the Company in consideration for the sale and issuance of the shares; (ii)
      in the case of rights,  options or warrants to  subscribe  for or purchase
      shares of Common Stock or of securities  convertible  into or exchangeable
      for shares of Common Stock,  is the total amount received or receivable by
      the Company in  consideration  for the sale and  issuance of such  rights,
      options,  warrants or convertible  or  exchangeable  securities,  plus the
      minimum  aggregate  amount of  additional  consideration,  other  than the
      convertible  or  exchangeable  securities,  payable  to the  Company  upon
      exercise, conversion or exchange thereof; and (iii) in the case of rights,
      options  or  warrants  to  subscribe  for  or  purchase   convertible   or
      exchangeable securities, is the total amount received or receivable by the
      Company in consideration for the sale and issuance of such rights, options
      or  warrants,  plus the  minimum  aggregate  consideration  payable to the
      Company upon the exercise  thereof,  plus the minimum  aggregate amount of
      additional  consideration,  other  than the  convertible  or  exchangeable
      securities,  payable upon the conversion or exchange of the convertible or
      exchangeable securities;  provided that in each case the proceeds received
      or  receivable  by the  Company  shall be deemed to be the amount of gross
      cash  proceeds  without  deducting  therefrom  any  compensation  paid  or
      discount  allowed  in  the  sale,  underwriting  or  purchase  thereof  by
      underwriters  or  dealers or others  performing  similar  services  or any
      expenses incurred in connection therewith.

M  =  the current  market price per share of Common Stock (see Section 10.12) on
      the date of issue of the shares of Common Stock or the rights,  options or
      warrants  to  subscribe  for or  purchase  shares of  Common  Stock or the
      securities  convertible into or exchangeable for shares of Common Stock or
      the rights,  options or warrants to subscribe for or purchase  convertible
      or exchangeable securities.

      "Price  Per  Share"  shall be  defined  and  determined  according  to the
following formula:

            P =  R
                 N

where:

P  = Price Per Share.

R and N have the meanings assigned above.

            If the  Company  shall  issue  shares  of  Common  Stock or  rights,
options,  warrants or convertible or exchangeable securities for a consideration
consisting, in whole or in part, of property other than cash, the amount of such
consideration  shall be determined in good faith by the Board of Directors whose
determination  shall be conclusive and evidenced by a resolution of the Board of
Directors filed with the Trustee.

            The  adjustment  shall  be  made  successively   whenever  any  such
additional  shares  of  Common  Stock  or  such  rights,  options,  warrants  or
convertible or exchangeable  securities are issued,  and shall become  effective
immediately after the date of issue of such shares, rights, options, warrants or
convertible or  exchangeable  securities;  provided,  however,  that if any such
rights,  options or warrants  issued by the Company as described in this Section
10.07 are only  exercisable  upon the occurrence of certain  triggering  events,
then the conversion  rate will not be adjusted as provided in this Section 10.07
until such triggering events occur.

            To  the  extent  that  such  rights,   options  or  warrants  expire
unexercised  or to the extent any  convertible  or  exchangeable  securities are
redeemed by the Company or otherwise  cease to be  convertible  or  exchangeable
into shares of Common  Stock,  the  conversion  rate shall be  readjusted to the
conversion  rate which would be in effect had the adjustment  made upon the date
of issuance of such rights,  options,  warrants or convertible  or  exchangeable
securities  been made upon the  basis of the  issuance  of  rights,  options  or
warrants to subscribe  for or purchase only the number of shares of Common Stock
as to which such rights,  options or warrants  were  actually  exercised and the
number of shares of Common Stock that were actually  issued upon the  conversion
or exchange of the convertible or exchangeable securities.

SECTION 10.08.  Adjustment for Other Distributions.

            If the Company  distributes to all holders of Common Stock evidences
of indebtedness,  shares of Capital Stock other than Common Stock, cash or other
assets  (including  securities,  but other than (x)  dividends or  distributions
exclusively in cash or (y) any dividend or distribution  for which an adjustment
is  required  to be made  in  accordance  with  Section  10.06  or  10.07),  the
conversion rate shall be adjusted in accordance with the following formula:

                        AC = CC x __(O x M)__
                                    (O x M) - F

where:

AC  = the adjusted conversion rate.

CC  = the then current conversion rate.

O   = the  number of  shares of Common  Stock  outstanding  on the  record  date
      mentioned below.

M  =  the current  market price per share of Common Stock (see Section 10.12) on
      the record date mentioned below.

F  =  the fair market value on the record date mentioned  below of the evidences
      of  indebtedness,  assets,  securities or cash  distributed.  The Board of
      Directors shall determine the fair market value.

            The adjustment shall become effective  immediately  after the record
date for the determination of stockholders entitled to receive the distribution.

SECTION 10.09.  Adjustment for Cash Distributions.

            If the  Company  distributes  to all  holders  of Common  Stock cash
(excluding any cash portion of distributions for which an adjustment is required
to be made in  accordance  with  Section  10.08) in an  aggregate  amount  that,
combined together with (i) all other such all-cash distributions made within the
preceding 12 months for which no adjustment  has been made and (ii) any cash and
the fair market value of other  consideration  paid or payable in respect of any
tender offer (as defined in Rule 13e-4 under the Exchange Act) by the Company or
any of its  Subsidiaries  for Common  Stock  concluded  within the  preceding 12
months for which no  adjustment  has been  made,  exceeds  20% of the  Company's
market capitalization (the product of the then current market price per share of
the Common Stock (see Section  10.12) times the number of shares of Common Stock
then  outstanding) on the record date mentioned below, the conversion rate shall
be adjusted in accordance with the following formula:

                        AC = CC x   M
                                    M - C

where:

AC  = the adjusted conversion rate.

CC  = the then current conversion rate.

M   = the current  market price per share of Common Stock (see Section 10.12) on
      the record date mentioned below.

C   = the amount of cash distributed applicable to one share
      of Common Stock.

            Notwithstanding  the  foregoing,  in the  event  that  the  cash  so
distributed  applicable  to one share of Common  Stock  equals or  exceeds  such
current market price per share of Common Stock, or such current market price per
share exceeds such amount of cash by less than $0.10 per share,  the  conversion
rate shall not be adjusted pursuant to this Section 10.09.

            The adjustment shall become effective  immediately  after the record
date  for  the  determination  of the  stockholders  entitled  to  receive  such
distribution.

SECTION 10.10.  Adjustment for Tender Offers.

            If the Company or any of its  Subsidiaries  completes a tender offer
(as defined in Rule 13e-4 under the Exchange  Act) for all or any portion of the
Common  Stock (any such  tender  offer being  referred  to as an  "Offer")  that
involves  an  aggregate  consideration  having  a fair  market  value  as of the
expiration  of such Offer (the  "Expiration  Time") that,  together with (i) any
cash and the fair market value of any other consideration  payable in respect of
any other Offer which  expired  within the 12 months  preceding  the  Expiration
Time,  for which no  conversion  rate  adjustment  has been  made,  and (ii) the
aggregate amount of any all-cash  distributions  referred to in Section 10.09 to
all holders of Common Stock within the 12 months  preceding  the  expiration  of
such Offer for which no  conversion  rate  adjustment  pursuant to such  Section
10.09 has been made,  exceeds 20% of the Company's  market  capitalization  (the
product of the then current  market  price per share (see Section  10.12) of the
Common Stock at the  Expiration  Time times the number of shares of Common Stock
outstanding  (including  any  tendered  shares)  at the  Expiration  Time),  the
conversion rate shall be increased in accordance with the following formula:

                        AC = CC x M x (O - P)
                                  (M x O) - F

where:

AC =  the adjusted conversion rate.

CC =  the then current conversion rate.

M  =  the current  market price per share of Common Stock (see Section 10.12) at
      the Expiration Time.

O  =  the number of shares of Common Stock  outstanding  (including any tendered
      shares) at the Expiration Time.

F  =  the  fair  market  value  of  the  aggregate   consideration   payable  to
      stockholders  based on the acceptance (up to any maximum  specified in the
      terms of the Offer) of all shares validly tendered and not withdrawn as of
      the  Expiration  Time (the shares deemed so accepted  being referred to as
      the "Purchased  Shares").  The Board of Directors shall determine the fair
      market value.

P  =  Purchased Shares.

            The  adjustment  shall  become  effective  immediately  prior to the
opening of business on the day following the Expiration Time.

SECTION 10.11.  Voluntary Adjustment.

            The  Company  at  any  time  may  increase  the   conversion   rate,
temporarily  or otherwise,  by any amount but in no event shall such  conversion
rate result in the  issuance of Common  Stock at a price less than the par value
of the Common Stock at the time such increase is made.

SECTION 10.12.  Current Market Price.

            In Sections 10.07,  10.08, 10.09 and 10.10, the current market price
per share of Common Stock on any date is the average of the last  reported  sale
prices of a share of Common Stock on the principal national  securities exchange
on which the shares of Common  Stock are listed or admitted to trading or on the
NMS,  or, if the Common  Stock is not then  listed on an exchange or on the NMS,
the  closing  sale  prices  (or the quoted  closing  bid prices if there were no
sales) as reported  by NASDAQ for 30  consecutive  trading  days  commencing  45
trading  days  before the date in  question.  In the absence of one or more such
quotations,  the Board of Directors  shall determine the current market price on
the basis of such quotations as it considers appropriate.

SECTION 10.13.  When Adjustment May be Deferred.

            No  adjustment  in the  conversion  rate  need  be made  unless  the
adjustment  would require a change of at least 1% in the  conversion  rate.  Any
adjustments that are not made due to the immediately preceding sentence shall be
carried forward and taken into account in any subsequent adjustment.

            All  calculations  under this  Article  shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.

SECTION 10.14.  When No Adjustment Required.

            Except  as  set  forth  in  Section  10.07,  no  adjustment  in  the
conversion rate shall be made because the Company issues,  in exchange for cash,
property or services, shares of Common Stock, or any securities convertible into
shares of Common Stock,  or securities  carrying the right to purchase shares of
Common Stock or such convertible securities.

            No  adjustment  in the  conversion  rate need be made for  rights to
purchase or the sale of Common Stock  pursuant to a Company plan  providing  for
reinvestment of dividends or interest.

            No  adjustment in the  conversion  rate need be made for a change in
the par value of the Common Stock.

            No adjustment need be made for a transaction  referred to in Section
10.06,  10.07,  10.08, 10.09 or 10.10 if Security- holders are to participate in
the  transaction  on a basis  and  with  notice  that  the  Board  of  Directors
determines to be fair and  appropriate in light of the basis and notice on which
holders of Common Stock participate in such transaction.

SECTION 10.15.  Notice of Adjustment.

            Whenever the conversion rate is adjusted, the Company shall promptly
mail to Securityholders a notice of the adjustment.  The Company shall file with
the  Trustee  an  Officers'  Certificate  or a  certificate  from the  Company's
independent  public   accountants   briefly  stating  the  facts  requiring  the
adjustment and the manner of computing it. The  certificate  shall be conclusive
evidence that the adjustment is correct, absent manifest error.

SECTION 10.16.  Notice of Certain Transactions.

            If:

            (1) the Company  proposes  to take any action that would  require an
      adjustment in the conversion rate,

            (2) the Company  proposes  to take any action  that would  require a
      supplemental indenture pursuant to Section 10.17, or

            (3) there is a proposed liquidation or dissolution of the Company,

the Company shall mail to  Securityholders  a notice stating the proposed record
date  for a  dividend  or  distribution  or the  proposed  effective  date  of a
subdivision,  combination,  reclassification,  consolidation,  merger, transfer,
lease, liquidation or dissolution. The Company shall mail the notice at least 15
days before such date.  Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.

SECTION 10.17.  Reorganization of the Company.

            If the Company is a party to a  transaction  subject to Section 5.01
or a merger which  reclassifies  or changes its  outstanding  Common Stock,  the
successor  corporation  shall enter into a  supplemental  indenture  which shall
provide that the Holder of a Security may convert it into the kind and amount of
securities, cash or other assets which he would have owned immediately after the
consolidation,  merger,  transfer  or lease  if he had  converted  the  Security
immediately  before the  effective  date of the  transaction.  The  supplemental
indenture shall provide for adjustments  which shall be as nearly  equivalent as
may be  practical  to the  adjustments  provided  for in this  Article  10.  The
successor Company shall mail to  Securityholders a notice briefly describing the
supplemental indenture.

            If this Section applies,  Sections 10.06,  10.07,  10.08,  10.09 and
10.10 do not apply.

SECTION 10.18.  Rights and Warrants.

            If the Company  distributes  pro rata to all holders of Common Stock
rights or warrants  (other than those  referred to in Section 10.07  above),  so
long as any such  rights or warrants  have not  expired or been  redeemed by the
Company,  the  Company  shall make  proper  provision  so that the Holder of any
Security  surrendered  for  conversion  will be  entitled  to receive  upon such
conversion,  in  addition  to the  shares of  Common  Stock  issuable  upon such
conversion  (the  "Conversion  Shares"),  a number of rights or  warrants  to be
determined as follows: (i) if such conversion occurs on or prior to the date for
the  distribution  to the  holders  of Common  Stock of rights  or  warrants  of
separate  certificates  evidencing  such rights or warrants  (the  "Distribution
Date"),  the same  number of rights or warrants to which a holder of a number of
shares of Common Stock equal to the number of  Conversion  Shares is entitled at
the time of such  conversion in accordance  with the terms and provisions of and
applicable to the rights or warrants,  and (ii) if such conversion  occurs after
such Distribution  Date, the same number of rights or warrants to which a holder
of the number of shares of Common Stock into which the principal  amount of such
Security so converted was  convertible  immediately  prior to such  Distribution
Date would have been entitled on such  Distribution  Date in accordance with the
terms and provisions of and applicable to the rights or warrants.

SECTION 10.19.  Company Determination Final.

            Any determination  that the Board of Directors must make pursuant to
this Article 10 is conclusive, absent manifest error.

SECTION 10.20.  Trustee's Disclaimer.

            The Trustee has no duty to determine  when an adjustment  under this
Article 10 or under the terms of the Securities should be made, how it should be
made or what it should be. The  Trustee  has no duty to  determine  whether  any
provisions of a  supplemental  indenture  under  Section 10.17 are correct.  The
Trustee makes no representation as to the validity or value of any securities or
assets  issued  upon  conversion  of  Securities.   The  Trustee  shall  not  be
responsible  for the  Company's  failure to comply  with this  Article  10. Each
Conversion  Agent other than the Company  shall have the same  protection  under
this Section 10.20 as the Trustee.

                                   ARTICLE 11

                                  SUBORDINATION

SECTION 11.01.  Agreement to Subordinate.

            The Company agrees, and each  Securityholder by accepting a Security
agrees,  that the  indebtedness  evidenced by the  Securities and the payment of
principal thereof and interest thereon are subordinated in right of payment,  to
the extent and in the manner  provided in this Article 11, to the prior  payment
in full of all Senior Indebtedness and that the subordination is for the benefit
of the holders of Senior Indebtedness.

            Money and  securities  held in trust  pursuant  to Article 8 are not
subject to the subordination provisions of this Article 11.

SECTION 11.02.  Certain Definitions.

            "Representative" means the indenture trustee or other trustee, agent
or representative for an issue of Senior Indebtedness.

            "Senior  Indebtedness"  means the principal of (and premium, if any)
and  interest on (a) any and all  indebtedness  and  obligations  of the Company
(including  indebtedness  of others  guaranteed  by the Company)  other than the
Securities,  whether or not  contingent  and whether  outstanding on the date of
this  Indenture or  thereafter  created,  incurred or assumed,  which (i) is for
money  borrowed;  (ii) is  evidenced  by any bond,  note,  debenture  or similar
instrument;  (iii)  represents  the unpaid  balance on the purchase price of any
property, business or asset of any kind; (iv) is an obligation of the Company as
lessee under any and all leases of property,  equipment or other assets required
to be  capitalized on the balance sheet of the lessee under  generally  accepted
accounting  principles;  (v) is a  reimbursement  obligation of the Company with
respect to letters of credit;  (vi) are  obligations of the Company with respect
to interest  swap  obligations  and foreign  exchange  agreements;  or (vii) are
obligations of others secured by a lien to which any of the properties or assets
(including,  without  limitation,  leasehold interests and any other tangible or
intangible  property  rights) of the  Company  are  subject,  whether or not the
obligations  secured  thereby  shall have been  assumed by the  Company or shall
otherwise be the Company's  legal  liability and (b) any deferrals,  amendments,
renewals,  extensions,  modifications  and  refundings  of any  indebtedness  or
obligations  of the types referred to above;  provided that Senior  Indebtedness
shall not  include (i) the  Securities;  (ii) the  Company's 6 7/8%  Convertible
Subordinated Notes due 2002; (iii) any indebtedness or obligation of the Company
which, by its terms or the terms of the instrument creating or evidencing it, is
not superior in right of payment to the  Securities;  (iv) any  indebtedness  or
obligation of the Company to any of its subsidiaries and (v) any indebtedness or
obligation  incurred by the Company in  connection  with the purchase of assets,
materials or services in the ordinary course of business and which constitutes a
trade payable.

SECTION 11.03.  Liquidation; Dissolution; Bankruptcy.

            Upon any  distribution  to creditors of the Company in a liquidation
or  dissolution of the Company or in a bankruptcy,  reorganization,  insolvency,
receivership or similar proceeding relating to the Company or its property:

            (1)  holders of Senior  Indebtedness  shall be  entitled  to receive
      payment in full of the principal of and interest to the date of payment on
      the  Senior  Indebtedness  before  Securityholders  shall be  entitled  to
      receive any payment of principal of or interest on Securities; and

            (2) until the Senior  Indebtedness is paid in full, any distribution
      to which  Securityholders  would be entitled but for this Article 11 shall
      be made to holders of Senior  Indebtedness  as their interests may appear,
      except the Securityholders may receive securities that are subordinated to
      Senior Indebtedness to at least the same extent as the Securities.

SECTION 11.04.  Company Not to Make Payments
                   with Respect to Securities
                   in Certain Circumstances.

            Except  for  payment  in or  distribution  of  securities  that  are
subordinated  to  Senior  Indebtedness  to at  least  the  same  extent  as  the
Securities, the Company shall not make any payment with respect to the principal
of or interest on any of the Securities,  or make any other payment with respect
to the purchase or other acquisition of any of the Securities:

            (a) if there  shall have  occurred  a default in the  payment of the
      principal of or interest on any Senior Indebtedness; or

            (b) if  there  shall  exist  at the  time of such  payment,  or such
      payment  would  create,  an event of default (or an event which,  with the
      giving of notice or the passage of time or both,  would become an event of
      default)  with respect to any Senior  Indebtedness  which would permit the
      holders  (or any  specified  proportion  of such  holders)  of such Senior
      Indebtedness  to accelerate the maturity  thereof,  and if notification of
      such default or event of default has been given to the Company by a holder
      of such Senior  Indebtedness or by a trustee,  agent or Representative for
      an issue of Senior Indebtedness;

unless and until, in each case,  whether  described in clause (a) or clause (b),
such  default or event of default  shall have been cured or waived in the manner
required  by the  instrument  relating  to such  Senior  Indebtedness  or  shall
otherwise have ceased to exist.

            Regardless of anything to the contrary herein, nothing shall prevent
(a) any payment by the Trustee to the  Securityholders of amounts deposited with
it  pursuant  to Article  Eight or (b) any  payment by the Trustee or the Paying
Agent as permitted by Section 11.11.

SECTION 11.05.  Acceleration of Securities.

            If payment of the Securities is  accelerated  because of an Event of
Default, the Company shall promptly notify holders of Senior Indebtedness of the
acceleration.

SECTION 11.06.  When Distribution Must be Paid Over.

            In the event that the Company  shall make any payment to the Trustee
of the principal of or interest on the Securities at a time when such payment is
prohibited by Section 11.03 or 11.04, such payment shall be held by the Trustee,
in trust for the benefit of, and shall be paid  forthwith over and delivered to,
the holders of Senior  Indebtedness  (pro rata as to each of such holders on the
basis of the respective  amounts of Senior  Indebtedness  held by them) or their
Representative  or the trustee under the  indenture or other  agreement (if any)
pursuant to which Senior  Indebtedness may have been issued, as their respective
interests may appear, for application to the payment of all Senior  Indebtedness
remaining unpaid to the extent necessary to pay all Senior  Indebtedness in full
in accordance with its terms,  after giving effect to any concurrent  payment or
distribution to or for the holders of Senior Indebtedness.

            If a distribution  is made to  Securityholders  that because of this
Article 11 should not have been made to them,  the  Securityholders  who receive
the distribution  shall hold it in trust for holders of Senior  Indebtedness and
pay it over to them as their interests may appear.

SECTION 11.07.  Notice by Company.

            The Company shall  promptly  notify the Trustee and the Paying Agent
in  writing of any facts  known to the  Company  that  would  cause a payment of
principal of or interest on Securities to violate this Article 11.

SECTION 11.08.  Subrogation.

            After  all  Senior  Indebtedness  is  paid  in full  and  until  the
Securities are paid in full,  Securityholders  shall be subrogated to the rights
of holders of Senior Indebtedness to receive distributions  applicable to Senior
Indebtedness  to  the  extent  that  distributions   otherwise  payable  to  the
Security-holders  have been  applied to the  payment of Senior  Indebtedness.  A
distribution made under this Article 11 to holders of Senior  Indebtedness which
otherwise would have been made to Securityholders is not, as between the Company
and Securityholders, a payment by the Company on Senior Indebtedness.

SECTION 11.09.  Subordination May Not be
                   Impaired by Company.

            No right  of any  holder  of  Senior  Indebtedness  to  enforce  the
subordination of the indebtedness  evidenced by the Securities shall be impaired
by any act or failure to act by the  Company  or by its  failure to comply  with
this Indenture.

SECTION 11.10.  Distribution or Notice
                   to Representative.

            Whenever a  distribution  is to be made or a notice given to holders
of Senior  Indebtedness,  the  distribution  may be made and the notice given to
their Representative.

SECTION 11.11.  Rights of Trustee and Paying Agent.

            The Trustee or Paying  Agent may  continue  to make  payments on the
Securities  until it receives written notice of facts that would cause a payment
of principal of or interest on the  Securities  to violate this Article 11. Only
the Company,  a  Representative  or a holder of an issue of Senior  Indebtedness
that has no Representative may give the notice.

            The Trustee  shall be  entitled  to rely on the  delivery to it of a
written  notice  by a  person  representing  himself  to be a holder  of  Senior
Indebtedness  (or a  Representative  on behalf of such holder) to establish that
such  notice  has  been  given  by  a  holder  of  Senior   Indebtedness   or  a
Representative  on behalf of any such  holder.  In the  event  that the  Trustee
determines  in good faith that further  evidence is required with respect to the
right of any person who is a holder of Senior Indebtedness to participate in any
payment or  distribution  pursuant  to this  Article 11, the Trustee may request
such person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior  Indebtedness  held by such person,  the extent to which
such person is entitled to participate in such payment or  distribution  and any
other facts pertinent to the rights of such person under this Article 11, and if
such  evidence is not furnished the Trustee may defer any payment to such person
pending  judicial  determination  as to the right of such person to receive such
payment or until such time as the Trustee shall be otherwise satisfied as to the
right of such person to receive such payment.

            The Trustee in its  individual or any other capacity may hold Senior
Indebtedness  with the same  rights it would  have if it were not  Trustee.  Any
Agent may do the same with like rights.

            The  Trustee  shall not be deemed to owe any  fiduciary  duty to the
holders of Senior  Indebtedness and shall not be liable to any such holder if it
shall mistakenly pay over or distribute to Securityholders or the Company or any
other person money or assets to which any holders of Senior  Indebtedness  shall
be entitled by virtue of this Article 11 or otherwise.

SECTION 11.12.  Officers' Certificate.

            If there occurs an event referred to in Section 11.03 or 11.04,  the
Company shall  promptly give to the Trustee an Officers'  Certificate  (on which
the  Trustee  may   conclusively   rely)   identifying  all  holders  of  Senior
Indebtedness  or  their  Representatives  and the  principal  amount  of  Senior
Indebtedness  then  outstanding held by each such holder and stating the reasons
why such Officers' Certificate is being delivered to the Trustee.

SECTION 11.13.  Obligation of Company Unconditional.

            Nothing  contained in this Article 11 or elsewhere in this Indenture
or in any Security is intended to or shall impair,  as between the Company,  its
creditors  other than  holders  of Senior  Indebtedness  and the  Holders of the
Securities,  the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the  Securities  the  principal  of and interest on the
Securities as and when the same shall become due and payable in accordance  with
their  terms,  or is  intended  to or shall  affect the  relative  rights of the
Holders of the Securities and creditors of the Company other than the holders of
the  Senior  Indebtedness,  nor shall  anything  herein or therein  prevent  the
Trustee or the Holder of any Security  from  exercising  all remedies  otherwise
permitted by applicable  law upon default under this  Indenture,  subject to the
rights,  if any, under this Article 11 of the holders of Senior  Indebtedness in
respect  of cash,  property  or  securities  of the  Company  received  upon the
exercise  of any such  remedy.  Upon any  distribution  of assets of the Company
referred  to in this  Article  11, the  Trustee,  subject to the  provisions  of
Sections 7.01 and 7.02, and the Holders of the  Securities  shall be entitled to
rely upon any order or decree by any court of  competent  jurisdiction  in which
such  dissolution,  winding up,  liquidation or  reorganization  proceedings are
pending,  or a certificate of the  liquidating  trustee or agent or other person
making any distribution to the Trustee or the Holders of the Securities, for the
purpose  of   ascertaining   the  persons   entitled  to   participate  in  such
distribution,  the holders of the Senior  Indebtedness and other indebtedness of
the Company,  the amount thereof or payable thereon,  the amount or amounts paid
or distributed  thereon and all other facts pertinent thereto or to this Article
11.  Nothing  contained in this Article 11 or elsewhere in this  Indenture or in
any  Security is intended to or shall  affect the  obligation  of the Company to
make, or prevent the Company from making,  at ay time except during the pendency
of any dissolution,  winding up, liquidation or reorganization  proceeding,  and
except  during the  continuance  of any default  specified in Section 11.04 (not
cured or waived),  payments at any time of the  principal  or of interest on the
Securities.

                                   ARTICLE 12

                                  MISCELLANEOUS

SECTION 12.01.  Trust Indenture Act Controls.

            If any provision of this  Indenture  limits,  qualifies or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.

SECTION 12.02.  Notices.

            Any notice or  communication  by the  Company or the  Trustee to the
other is duly given if in writing and delivered in person, mailed by first-class
mail or by express delivery to the other's address stated in this Section 12.02.
The Company or the Trustee by notice to the other may  designate  additional  or
different addresses for subsequent notices or communications.

            Any notice or communication  to a Securityholder  shall be mailed by
first-class  mail to his address  shown on the register  kept by the  Registrar.
Failure to mail a notice or communication  to a Securityholder  or any defect in
it shall not affect its sufficiency with respect to other Securityholders.

            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  Securityholders,
it shall mail a copy to the Trustee and each Agent at the same time.

            All notices or communications shall be in writing.

            The Company's address is:

                        Continental Homes Holding Corp.
                        7001 N. Scottsdale Road
                        Suite 2050
                        Scottsdale, Arizona  85252
                        Attention:  Corporate Secretary

            The Trustee's address is:

                        Manufacturers and Traders Trust Company
                        One M&T Plaza
                        Buffalo, New York  14203
                        Attention:  Corporate Trust Department

SECTION 12.03.  Communication by Holders with
                   Other Holders.

            Securityholders may communicate  pursuant to TIA { 312(b) with other
Securityholders  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 { 312(c).

SECTION 12.04.  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:

            (1) an Officers'  Certificate  stating  that,  in the opinion of the
      signers, all conditions precedent,  if any, provided for in this Indenture
      relating to the proposed action have been complied with; and

            (2) an Opinion  of  Counsel  stating  that,  in the  opinion of such
      counsel, all such conditions precedent have been complied with.

            Each signer of an Officers' Certificate or an Opinion of Counsel may
(if so stated) rely, effectively, upon an Opinion of Counsel as to legal matters
and an Officers' Certificate as to factual matters if such signer reasonably and
in good faith believes in the accuracy of the document relied upon.

SECTION 12.05.  Statements Required in Certificate
                   or Opinion.

            Each  certificate  or  opinion  with  respect to  compliance  with a
condition or covenant provided for in this Indenture shall include:

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

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

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

            (4) a statement as to whether or not, in the opinion of such person,
      such condition or covenant has been complied with.

SECTION 12.06.  Rules by Trustee and Agents.

            The Trustee may make reasonable  rules for action by or at a meeting
of  Securityholders.  The Registrar,  Paying Agent or Conversion  Agent may make
reasonable rules and set reasonable requirements for their respective functions.

SECTION 12.07.  Legal Holidays.

            A "Legal Holiday" is a Saturday,  a Sunday or a day on which banking
institutions  are not required to be open in The City of New York,  in the State
of New York or in the city in which the Trustee  administers its corporate trust
business.  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 that  payment  for the  intervening
period.

            A "business day" is a day other than a Legal Holiday.

SECTION 12.08.  No Recourse Against Others.

            All liability described in the Securities of any director,  officer,
employee or stockholder, as such, of the Company is waived and released.

SECTION 12.09.  Duplicate 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.

SECTION 12.10.  Governing Law.

            The laws of the State of New York,  without  regard to principles of
conflicts of law, shall govern this Indenture and the Securities.

SECTION 12.11.  No Adverse Interpretation
                   of Other Agreements.

            This Indenture may not be used to interpret another indenture,  loan
or debt agreement of the Company or a subsidiary.  Any such  indenture,  loan or
debt agreement may not be used to interpret this Indenture.

SECTION 12.12.  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 12.13.  Separability.

            In case any provision in this Indenture or in the  Securities  shall
be valid, illegal or unenforceable, the validity, legality and enforceability of
the remaining  provisions  shall not in any way be affected or impaired  thereby
and a Holder shall have no claim therefor against any party hereto.

SECTION 12.14.  Table of Contents, Headings, etc.

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

                                   SIGNATURES


            IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed,  and their  respective  corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.

                                CONTINENTAL HOMES HOLDING CORP.


                                By: /s/ Donald R. Loback
                                    -------------------------------------------
                                        Donald R. Loback
                                Title:  Chief Executive Officer


                                MANUFACTURERS AND TRADERS TRUST
                                  COMPANY, as Trustee


                                By: /s/ Russell T. Whitley
                                   --------------------------------------------
                                        Russell T. Whitley
                                Title:  Assistant Vice President

<PAGE>

  EXHIBIT A



REGISTERED                    [Face of Security]
REGISTERED
NUMBER
DOLLARS

                       CONTINENTAL HOMES HOLDING CORP.



                6 7/8% CONVERTIBLE SUBORDINATED NOTE DUE 2002


            CONTINENTAL  HOMES HOLDING  CORP.,  a Delaware  corporation  (herein
called  the  "Company"),  for  value  received,  hereby  promises  to  pay to or
registered assigns, the principal sum of Dollars on November 1, 2002, and to pay
interest  thereon as provided on the reverse hereof,  until the principal hereof
is paid or duly provided for.

Interest Payment Dates:       May 1 and November 1

            Record Dates:     April 15 and October 15

            The provisions on the back of this  certificate are  incorporated as
if set forth on the face hereof.

            IN WITNESS WHEREOF, CONTINENTAL HOMES HOLDING CORP. has
caused this instrument to be duly signed under its corporate
seal.

[SEAL]                              CONTINENTAL HOMES HOLDING CORP.


                                    By:

                                                [Title]


                                    By:

                                                [Title]

TRUSTEES'S CERTIFICATE OF AUTHENTICATION

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


Manufacturers and Traders Trust Company,
  as Trustee


By: ______________________________
            Signatory


Dated: ___________________


<PAGE>



                            [REVERSE OF SECURITY]

                       CONTINENTAL HOMES HOLDING CORP.

                6 7/8% CONVERTIBLE SUBORDINATED NOTE DUE 2002


            1. Interest. Continental Homes Holding Corp., a Delaware corporation
(the  "Company"),  promises  to pay  interest  on the  principal  amount of this
Security  at the rate per annum  shown  above.  The  Company  will pay  interest
semi-annually  on May 1 and  November  1 of each year,  commencing  May 1, 1996.
Interest  on the  Securities  will  accrue  from the most  recent  date to which
interest  has been  paid or,  if no  interest  has been  paid,  from the date of
original  issuance  of the  Securities  set forth on the face of this  Security.
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
Securities (except defaulted interest) to the persons who are registered Holders
of  Securities at the close of business on the record date set forth on the face
of this Security next preceding the applicable  interest  payment date.  Holders
must surrender  Securities to a Paying Agent to collect principal payments.  The
Company will pay principal, premium, if any, and interest in money of the United
States  that at the time of  payment is legal  tender for  payment of public and
private debts.  However,  the Company must pay principal,  premium,  if any, and
interest  by check  payable in such money.  It may mail an  interest  check to a
Holder's registered address.

            3.   Paying   Agent,   Registrar,   Conversion   Agent.   Initially,
Manufacturers  and Traders  Trust  Company  (the  "Trustee")  will act as Paying
Agent,  Registrar and Conversion Agent. The Company may change any Paying Agent,
Registrar,  Conversion Agent or co-registrar without notice. The Company may act
in any such capacity.

            4. Indenture.  The Company issued the Securities  under an Indenture
dated as of  November  1, 1995 (the  "Indenture")  between  the  Company and the
Trustee.  The terms of the Securities  include those stated in the Indenture and
those made part of the  Indenture  by reference  to the Trust  Indenture  Act of
1939, as amended (15 U.S. Code {{ 77aaa-77bbbb) (the "Act"), as in effect on the
date of the  Indenture.  The  Securities  are  subject  to all such  terms,  and
Securityholders  are  referred to the  Indenture  and the Act for a statement of
such terms. The Securities are general unsecured subordinated obligations of the
Company limited to $86,250,000 aggregate principal amount (except for Securities
issued in substitution  for destroyed,  mutilated,  lost or stolen  Securities).
Terms used herein which are defined in the Indenture have the meanings  assigned
to them in the Indenture.

            5. Optional  Redemption.  The Securities may be redeemed on at least
15 and not more than 60 days'  notice at the  option of the  Company on or after
November  1,  1998,  in whole at any time or in part from  time to time,  at the
redemption  prices  (expressed  as a percentage  of principal  amount) set forth
below for the 12-month period  beginning  November 1 of the following  years, in
each case together with accrued and unpaid interest to the redemption date:

                  Year                          Redemption Price

                  1998                          103.438 %
                  1999                          102.292 %
                  2000                          101.146 %
                  2001                          100.000 %
                  2002                          100.000 %

            6.  Notice of  Redemption.  Notice of  redemption  will be mailed at
least 15 days but not  more  than 60 days  before  the  redemption  date to each
Holder of Securities  to be redeemed at his  registered  address.  Securities in
denominations  larger  than  $1,000  may be  redeemed  in part but only in whole
multiples of $1,000. On and after the redemption date, interest ceases to accrue
on Securities or portions of them called for redemption.

            7.  Change  in  Control.  In the event of a Change  in  Control  (as
hereinafter  defined)  with  respect  to the  Company,  then each  Holder of the
Securities shall have the right, at the Holder's option,  to require the Company
to repurchase  such Holder's  Securities  including any portion thereof which is
$1,000 or any integral multiple thereof on the date (the "Repurchase Date") that
is 45 days after the date of the  Repurchase  Right  Notice at a purchase  price
equal to 100% of the principal amount thereof,  plus accrued and unpaid interest
to the Repurchase Date (the "Repurchase Price").

            On or  before  the 30th day  after  the  occurrence  of a Change  in
Control,  the  Company is  obligated  to give notice of the  occurrence  of such
Change in Control, and of the date before which a Holder must notify the Company
of such  Holder's  intention to exercise the  redemption  option,  the procedure
which such Holder must follow to exercise such right. To exercise the redemption
option,  the Holder of a Security  must  deliver on or before the 30th day after
the date of the  Repurchase  Right Notice,  written notice to the Company of the
Holder's  exercise of such option  together with the Security or Securities with
respect to which the option is being  exercised,  duly  endorsed  for  transfer.
Exercise  of  the  redemption  option  by  the  Holder  of a  Security  will  be
irrevocable,  except that a Holder who  submits  such  Security  will retain the
right to convert such  Security into Common Stock until the close of business on
the second  business day prior to the Repurchase  Date. If the  Repurchase  Date
falls between any interest payment record date and the next succeeding  interest
payment date,  Securities  must be  accompanied by payment of an amount equal to
the interest thereon which the registered  Holder is to receive on such interest
payment date.

            If any repurchase pursuant to the foregoing  provisions  constitutes
an "issuer  tender  offer" as defined in Rule 13e-4 under the Exchange  Act, the
Company  will comply  with the  requirements  of Rule 13e-4,  Rule 14e-1 and any
other tender  offer rules under the  Exchange Act which then may be  applicable,
including the filing of an Issuer Tender Offer  Statement on Schedule 13E-4 with
the SEC and the  furnishing  of  certain  information  contained  therein to the
Holders.

            A  "Change  in  Control"  of the  Company  shall be  deemed  to have
occurred at such time as any person, together with its affiliates or associates,
other than the Management  Group (as defined in the Indenture) is or becomes the
beneficial owner,  directly or indirectly,  through a purchase,  merger or other
acquisition  transaction,  of shares of capital  stock of the Company  entitling
such person to exercise  50% or more of the total  voting power of all shares of
capital  stock  of the  Company  entitled  to vote in  elections  of  directors,
provided that a Change in Control shall not be deemed to have occurred if either
(i) the last sale price of the Common Stock for any five trading days during the
ten trading days  immediately  preceding the Change in Control is at least equal
to 105% of the  Conversion  Price (as defined in the Indenture) in effect on the
day of the Change in Control or (ii) all of the  consideration  (excluding  cash
payments for fractional shares) in the transaction or transactions  constituting
the Change in Control  consists of shares of common  stock  traded on a national
securities exchange or through NASDAQ or another comparable quotation system.

            8.  Conversion.  A Holder of a Security  may  convert it into Common
Stock of the  Company at any time  before the close of  business  on November 1,
2002, or, if the Security is called for redemption, the Holder may convert it at
any time before the close of business on the second business day before the date
fixed for  redemption.  The initial  conversion  rate is 42.105 shares of Common
Stock per $1,000 principal amount of the Securities, subject to adjustment under
certain  circumstances.  The  Company  will  deliver  a  check  in  lieu  of any
fractional share. On conversion no payment or adjustment for interest accrued on
the  Securities  will be made nor for  dividends  on the Common  Stock issued on
conversion. If any Security is converted between the record date for the payment
of interest and the next succeeding interest payment date, such Security must be
accompanied by funds equal to the interest  payable on such succeeding  interest
payment date on the principal  amount so converted  (unless such Security  shall
have  been  called  for  redemption,  in  which  case no such  payment  shall be
required).  A  Security  converted  on an  interest  payment  date  need  not be
accompanied  by any  payment,  and the interest on the  principal  amount of the
Security  being  converted  will be paid on such  interest  payment  date to the
registered holder of such Security on the immediately preceding record date.

            To  convert  a  Security  a Holder  must (1)  complete  and sign the
conversion  notice on the back of the Security,  (2) surrender the Security to a
Conversion Agent, (3) furnish appropriate endorsements and transfer documents if
required  by the  Registrar  or  Conversion  Agent and (4) pay any  transfer  or
similar  tax if  required.  A Holder may  convert a portion of a Security if the
portion is $1,000 or a whole multiple of $1,000.

            9.  Subordination.  The  Securities  are  subordinated  in  right of
payment,  in the manner and to the  extent  set forth in the  Indenture,  to the
prior payment in full of all Senior  Indebtedness (as defined in the Indenture).
Each Holder by accepting a Security agrees to such  subordination and authorizes
the Trustee to give it effect.

            10.  Denominations,   Transfer,  Exchange.  The  Securities  are  in
registered form without coupons in  denominations  of $1,000 and whole multiples
of $1,000.  The transfer of Securities  may be registered  and Securities may be
exchanged  as provided in the  Indenture.  The  Registrar  may require a Holder,
among other things, to furnish appropriate  endorsements and transfer documents.
No  service  charge  shall be made  for any such  registration  or  transfer  or
exchange,  but the Company may require  payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.  The Registrar
need not  exchange  or  register  the  transfer  of any  Security  selected  for
redemption  in whole or in part.  Also,  it need not  exchange or  register  the
transfer  of any  Securities  for a  period  of 15 days  before a  selection  of
Securities to be redeemed.

            11. Persons Deemed Owners.  The registered  Holder of a Security may
be treated as its owner for all purposes.

            12. Merger or  Consolidation.  The Company may not consolidate with,
or merge into, or directly or indirectly  transfer or lease all or substantially
all of its assets to, another person unless:  the person is a corporation;  such
corporation assumes by supplemental indenture all the obligations of the Company
under the Securities and the Indenture; and giving effect to the transaction, no
Default or Event of Default (as defined in the Indenture) shall exist.

            13.  Amendments  and  Waivers.  Subject to certain  exceptions,  the
Indenture or the Securities may be amended with the consent of the Holders of at
least a majority in  principal  amount of the  Securities  outstanding;  and any
existing  default may be waived with the consent of the Holders of a majority in
principal amount of the Securities.  Without the consent of any  Securityholder,
the Indenture or the Securities may be amended to cure any ambiguity,  omission,
defect or inconsistency or to provide for uncertificated  Securities in addition
to  certificated  Securities,  to  comply  with  Sections  5.01 and 10.17 of the
Indenture or to make any change that does not  materially  adversely  affect the
rights of any Securityholder.

            14.  Defaults and Remedies.  An Event of Default is:  default for 30
days in payment of interest on the  Securities;  default in payment of principal
on the Securities  when due;  failure by the Company for 60 days after notice to
it to  comply  with  any  of  its  other  agreements  in  the  Indenture  or the
Securities; acceleration prior to maturity of other indebtedness in excess of an
aggregate of $10,000,000 which is not rescinded or annulled within 30 days after
notice;  the rendering of a final  judgment or judgments  against the Company in
excess of  $10,000,000,  which is not  discharged,  satisfied or stayed within a
period of 60 days after notice;  and certain events of bankruptcy or insolvency.
If any Event of Default occurs and is continuing,  the Trustee or the Holders of
at  least  25% in  principal  amount  of the  Securities  may  declare  all  the
Securities  to be due and  payable  immediately.  The  Holders of a majority  in
principal  amount of the Securities by notice to the Trustee may waive a Default
and its  consequences.  Securityholders  may not  enforce the  Indenture  or the
Securities  except  as  provided  in the  Indenture.  The  Trustee  may  require
indemnity satisfactory to it before it enforces the Indenture or the Securities.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities  may direct the Trustee in its  exercise  of any trust or power.  The
Trustee may  withhold  from  Securityholders  notice of any  continuing  default
(except a default in payment of principal or  interest)  if it  determines  that
withholding  notice is in their  interests.  The Company  must furnish an annual
compliance certificate to the Trustee.

            15. Trustee Dealings with Company.  Manufacturers  and Traders Trust
Company, the Trustee under the Indenture,  or any banking institution serving as
successor Trustee thereunder,  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 Trustee.

            16. No Recourse  Against Others.  A director,  officer,  employee or
stockholder,  as such,  of the  Company  shall  not have any  liability  for any
obligations  of the Company  under the  Securities  or the  Indenture or for any
claim  based  on,  in  respect  of or by  reason  of such  obligations  or their
creation.  Each  Securityholder  by accepting a Security waives and releases all
such liability.  The waiver and releases are part of the  consideration  for the
issue of the Securities.

            17.   Authentication.   This  Security  shall  not  be  valid  until
authenticated by the manual signature of the Trustee or an authenticating agent.

            18. Abbreviations.  Customary  abbreviations may be used in the name
of a Securityholder or an assignee,  such as: TEN COM (= tenants in common), TEN
ENT (=  tenant  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).

            THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER  UPON WRITTEN REQUEST
AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO: Continental
Homes Holding Corp.,  7001 N. Scottsdale Road, Suite 2050,  Scottsdale,  Arizona
85253, Attention: Corporate Secretary.



<PAGE>



      ASSIGNMENT FORM                           CONVERSION NOTICE

To assign this Security, fill             To convert this Security
in the form below:                        into Common Stock of the
                                          Company, check the box:

I or we assign and transfer                      _____
this Security to:                               /____/

      ------------------
                                          To convert only part of
                                          this Security, state the
  (Insert Assignee's Soc.                 amount (must be in
   Sec. or Tax I.D. No.)                  multiples of $1,000):

                                          $


__________________________                If you want the stock
                                          certificate made out in
__________________________                another person's name,
                                          fill in the form below:
__________________________

__________________________                (Insert other person's
(Print or type assignee's                 Soc. Sec. or Tax I.D.
name, address and zip code)               no.)

and irrevocably appoint ___
___________________ agent
to transfer this Security
on the books of the
Company.  The agent may
substitute another                         (Print or type other
to act for him.                            person's name, address
                                           and zip code)


Date: __________________ Signature(s):_________________________

                                           (Sign exactly as your
                                           name(s) appear(s) on
                                           the other side of this
                                           Security)







Signature(s) guaranteed by:

(All signatures must be guaranteed by a member of a national securities exchange
or of the National  Association of Securities  Dealers,  Inc. or by a commercial
bank or trust company located in the United States)


                    OPTION OF HOLDER TO ELECT PURCHASE


            If you want to elect to have this Security
repurchased by the Company pursuant to Section 4.08 of the
Indenture, check the box:
                   ____
                  /___/

            If you want to elect to have only part of this Security  repurchased
by the Company pursuant to Section 4.08 of the Indenture, state the amount:

$ -----------------------------------
  (in an integral multiple of $1,000)

Date: ______________________    Signature(s): _________________



-------------------------------
                                      (Sign exactly as your name(s)
                                     appear(s) on the other side of
                                    this Security)

Signature(s) guaranteed by:  __________________________________
                                  (All signatures must be
guaranteed
                              by a member of a national
                               securities exchange or of the
                               National Association of
                              Securities Dealers, Inc. or by a
                              commercial bank or trust company
                              located in the United States)