<PAGE>

                                                                     Exhibit 4.1



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                             THE THAXTON GROUP, INC.


                                       and


                              THE BANK OF NEW YORK,
                                   as Trustee


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

                                    INDENTURE

                          Dated as of February 17, 1998

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


                                   $50,000,000

                        Subordinated Term and Daily Notes








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<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                     <C>
Article I - Definitions and Other Provisions of General Application......................................1
         Section 101 - Definitions.......................................................................1
         Section 102 - Compliance Certificates and Opinions..............................................6
         Section 103 - Form of Documents Delivered to Trustee............................................7
         Section 104 - Acts of Holders...................................................................8
         Section 105 - Notices, Etc. to Trustee and Company..............................................9
         Section 106 - Notice to Holders; Waiver.........................................................9
         Section 107 - Conflict with Trust Indenture Act................................................10
         Section 108 - Effect of Headings and Table of Contents.........................................10
         Section 109 - Successors and Assigns...........................................................10
         Section 110 - Separability Clause..............................................................10
         Section 111 - Benefits of Indenture............................................................10
         Section 112 - Governing Law....................................................................10
         Section 113 - Legal Holidays...................................................................10

Article II - Security Forms.............................................................................11
         Section 201 - Forms Generally..................................................................11
         Section 202 - Securities in Global Form........................................................11

Article III - The Securities............................................................................12
         Section 301 - Amount Unlimited; Issuanble in Series............................................12
         Section 302 - Denoninations....................................................................14
         Section 303 - Execution, Authentication, Delivery and Dating...................................14
         Section 304 - Temporary Securities.............................................................16
         Section 305 - Registration, Registration of Transfer and Exchange..............................16
         Section 306 - Mutilated, Destroyed, Lost and Stolen Securities.................................18
         Section 307 - Payment of Interest; Interest Rights Preserved...................................19
         Section 308 - Persons Deemed Owners............................................................20
         Section 309 - Cancellation.....................................................................20
         Section 310 - Computation of Interest..........................................................20

Article IV - Satisfaction and Discharge.................................................................21
         Section 401 - Satisfaction and Discharge of Securities of Any Series...........................21
         Section 402 - Application of Trust Money.......................................................22

Article V - Remedies....................................................................................22
         Section 501 - Events of Default................................................................22
         Section 502 - Acceleration of Maturity; Rescission and Annulment...............................23
         Section 503 - Collection of Indebtedness and Suits for Enforcement by Trustee..................24
         Section 504 - Trustee May File Proofs of Claim.................................................25
         Section 505 - Trustee May Enforce Claims Without Possession of Securities......................26
         Section 506 - Application of Money Collected...................................................26
</TABLE>


                                       i
<PAGE>

<TABLE>
<S>                                                                                                     <C>
         Section 507 - Limitation on Suits..............................................................26
         Section 508 - Unconditional Right of Holders to Receive Principal (and
                         Premium, if any) and Interest, if any..........................................27
         Section 509 - Restoration of Rights and Remedies...............................................27
         Section 510 - Rights and Remedies Cumulative...................................................27
         Section 511 - Delay or Omission Not Waiver.....................................................28
         Section 512 - Control by Holders...............................................................28
         Section 513 - Waiver of Past Defaults..........................................................28
         Section 514 - Undertaking for Costs............................................................28

Article VI - The Trustee ...............................................................................29
         Section 601 - Certain Duties and Responsibilities..............................................29
         Section 602 - Notice of Defaults...............................................................30
         Section 603 - Certain Rights of Trustee........................................................31
         Section 604 - Not Responsible for Recitals or Issuance of Securities...........................32
         Section 605 - May Hold Securities..............................................................32
         Section 606 - Money Held in Trust..............................................................32
         Section 607 - Compensation and Reimbursement...................................................32
         Section 608 - Corporate Trustee Required; Eligibility..........................................33
         Section 609 - Resignation and Removal; Appointment of Successor................................33
         Section 610 - Acceptance of Appointment by Successor...........................................34
         Section 611 - Merger, Conversion, Consolidation or Succession to Business......................35
         Section 612 - Appointment of Authenticating Agent .............................................36

Article VII - List of Holders and Reports by Trustee and Company........................................37
         Section 701 - Company to Furnish Trustee Names and Addresses of Holders........................37
         Section 702 - Preservation of Information; Communications to Holders...........................38
         Section 703 - Reports by Trustee...............................................................39
         Section 704 - Reports by Company...............................................................39

Article VIII - Consolidation, Merger, Conveyance, Transfer or Lease.....................................40
         Section 801 - Company May Consolidate, Etc., Only on Certain Terms.............................40
         Section 802 - Successor Corporation Substituted................................................41

Article IX - Supplemental Indentures....................................................................41
         Section 901 - Supplemental Indentures Without Consent of Holders...............................41
         Section 902 - Supplemental Indentures With Consent of Holders..................................42
         Section 903 - Execution of Supplemental Indentures.............................................43
         Section 904 - Effect of Supplemental Indentures................................................43
         Section 905 - Conformity with Trust Indenture Act..............................................43
         Section 906 - References in Securities to Supplemental Indentures..............................43

Article X - Covenants ..................................................................................44
         Section 1001 - Payment of Principal and Interest, if any.......................................44
         Section 1002 - Maintenance of Office or Agency.................................................44
</TABLE>


                                       ii
<PAGE>

<TABLE>
<S>                                                                                                     <C>
         Section 1003 - Money for Securities Payments to Be Held In Trust...............................44
         Section 1004 - Corporate Existence.............................................................46
         Section 1005 - Maintenance of Properties.......................................................46
         Section 1006 - Payment of Taxes and Other Claims...............................................46
         Section 1007 - Statement as to Compliance......................................................46
         Section 1008 - Waiver of Certain Covenants.....................................................47

Article XI - Redemption of Securities...................................................................48
         Section 1101 - Applicability of Article........................................................48
         Section 1102 - Election to Redeem; Notice to Trustee...........................................48
         Section 1103 - Selection by Trustee of Securities to be Redeemed...............................48
         Section 1104 - Notice of Redemption............................................................49
         Section 1105 - Deposit of Redemption Price.....................................................49
         Section 1106 - Securities Payable on Redemption Date...........................................49
         Section 1107 - Securities Redeemed in Part.....................................................50

Article XII - Meetings of Holders of Securities.........................................................50
         Section 1201 - Purposes for Which Meetings May Be Called.......................................50
         Section 1202 - Manner of Calling Meetings......................................................51
         Section 1203 - Call of Meetings by Company or Holders..........................................51
         Section 1204 - Who May Attend and Vote at Meetings.............................................51
         Section 1205 - Regulations May be Made by Trustee..............................................51
         Section 1206 - Evidence of Actions by Holders..................................................52
         Section 1207 - Exercise of Rights of Trustee and Holders Not to be
                          Hindered or Delayed...........................................................52

Article XIII - Subordination of Securities..............................................................52
         Section 1301 - Securities Subordinate to Senior Indebted.......................................52
         Section 1302 - Trustees and Holders of Securities May Rely on Certificate
                          of Liquidating Agent; Trustee May Require Further
                          Evidence as to Ownership of Senior Indebtedness; Trustee
                          Not Fiduciary to Holders of Senior Indebtedness...............................55
         Section 1301 - Payment Permitted if No Default.................................................55
         Section 1304 - Trustee Not Charged With Knowledge of Prohibition...............................56
         Section 1305 - Trustee to Effectuate Subordination.............................................56
         Section 1306 - Rights of Trustee as Holder of Senior Indebtedness..............................57
         Section 1307 - Article Applicable to Paying Agents.............................................57
         Section 1308 - Subordination Rights Not Impaired by Acts or Omissions
                          of the Company or Holders of Senior Indebtedness..............................57
         Section 1309 - Trustee's Relation to Senior Indebtedness.......................................57
</TABLE>


                                      iii
<PAGE>

                                    INDENTURE

     INDENTURE,  dated as of February  17,  1998,  between THE THAXTON  GROUP,
INC., a corporation  duly  organized and existing under the laws of the State of
South  Carolina  (herein called the  "Company"),  having its main office at 1524
Pageland  Highway,  Lancaster,  South  Carolina  29721,  THE BANK OF NEW YORK, a
banking  corporation  organized and existing  under the laws of the State of New
York, as trustee (herein called the "Trustee"),  having its principal  office in
New York, New York.

                             RECITALS OF THE COMPANY

     The  Company  has  duly  authorized  the  execution  and  delivery  of this
Indenture  to  provide  for the  issuance  from  time to time of its  unsecured,
subordinted notes (herein called the "Securities"),  to be issued in one or more
series as in this Indenture provided.

     All  things  necessary  to make this  Indenture  and the  Securities,  when
executed  and  issued by the  Company,  valid  and  binding  obligations  of the
Company, in accordance with their terms, have been done.

     NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

                                    ARTICLE I
             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

     SECTION 101. Definitions.

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

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

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

          3. all accounting terms not otherwise defined herein have the meanings
     assigned  to  them  in  accordance  with  generally   accepted   accounting
     principles,  and, except as otherwise herein expressly  provided,  the term
     "generally accepted accounting  principles" with respect to any computation
     required or permitted  hereunder shall mean
<PAGE>

     such accounting principles as are generally accepted at the date or time of
     such computation; and

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

     Certain terms, used principally in Article Six, are defined in that Article
     Six, are defined in that Article.

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

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

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

     "Bank"  means (i) any  institution  organized  under the laws of the United
States, any State of the United States, the District of Columbia,  any territory
of the United States,  Puerto Rico, Guam,  American Samoa, or the Virgin islands
which (a) accepts  deposits  that the depositor has a legal right to withdraw on
demand and (b) engages in the business of making  commercial loans, and (ii) any
trust company organized under any of the foregoing laws.

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

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

     "Business Day" when used with respect to any  particular  Place of Payment,
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking  institutions  in that Place of Payment or New York,  New York are
authorized or obligated by law to close.

     "Commission" means the Securities and Exchange Commission,  as from time to
time constituted,  created under the Securities  Exchange Act of 1934, or, if at
any time after the execution of this  instrument such commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.



                                       2
<PAGE>

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

     "Company  Request"  or  "Company  Order"  means a written  request or order
signed in the name of the Company by its Chairman of the Board of Directors, its
President,  a Vice  President,  and by its  Treasurer,  an Assistant  Treasurer,
Controller,  an Assistant Controller,  Secretary or an Assistant Secretary,  and
delivered to the Trustee.

     "Corporate  Trust  Office"  means the office of the Trustee at which at any
particular time its corporate trust business shall be principally  administered,
which office at the date of execution of this  Indenture is located in New York,
New York, Attention: Corporate Trust Department.

     "Corporation" includes corporations,  associations,  companies and business
trusts.

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

     "Depositary"  means,  with respect to the Securities of any series issuable
or issued in the form of a global Security,  the Person designated as Depositary
by the Company  pursuant to Section 301 until a successor  Depositary shall have
become  such  pursuant  to  the  applicable  provisions  of the  Indenture,  and
thereafter  "Depositary"  shall  mean  or  include  each  Person  who is  then a
Depositary  hereunder,  and if at any time  there is more than one such  Person,
"Depositary"  as used  with  respect  to these  Securities  shall  mean any such
Depositary with respect to the Securities of that series.

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

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

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

     "Indebtedness"  means  (1) the  principal  of,  and  premium,  if any,  and
interest on any debt of the Company for borrowed  money whether or not evidenced
by a  note,  debenture,  bond  or  similar  instrument  (including  indebtedness
represented  by a  purchase  money  obligation  given  in  connection  with  the
acquisition  of any property or assets)  including  securities;  (2) any debt of
others described in the preceding clause which the Company has guaranteed or for
which it is  otherwise  liable;  and (3) any  amendment,  renewal,  extension or
refunding of any such debt.

     "Indenture" means this instrument as originally  executed or as it may from
time to time be supplemented  or amended by one or more indentures  supplemental
hereto  entered  into  pursuant to the  applicable  provisions  hereof and shall
include the terms of particular series of Securities established as contemplated
by Section 301.



                                       3
<PAGE>

     "Interest Payment Date", when used with respect to any Security,  means the
Stated Maturity of an installment of interest on such Security.

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

     "Officers'  Certificate"  means a certificate signed by the Chairman of the
Board of Directors,  the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Controller or an Assistant Controller, the Secretary or
an Assistant Secretary of the Company, and delivered to the Trustee.

     "Opinion  of  Counsel"  means a  written  opinion  of  counsel,  who may be
in-house counsel to the Company, and who shall be satisfactory to the Trustee.

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

          (i) Securities theretofore canceled by the Trustee or delivered to the
     Trustee for cancellation

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

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

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



                                       4
<PAGE>

Trustee the pledgee's  right so to act with respect to such  Securities and that
the pledgee is not the Company or any other  obligor upon the  Securities or any
Affiliate of the Company or of such other obligor.  Upon request of the Trustee,
the Company  shall  furnish to the Trustee  promptly  an  Officers'  Certificate
listing and identifying all Securities, if any, known by the Company to be owned
by or held  for the  account  of the  Company  or any  other  obligor  upon  the
Securities,  or any  Affiliate of the Company or of such obligor and the Trustee
shall be entitled to accept such Officers' Certificate as conclusive evidence of
the facts  therein  set forth and of the fact  that all  Securities  not  listed
therein and not otherwise  excluded from the provisions  hereof are  Outstanding
for the purposes of any such determination.

     "Paying  Agent"  means any  Person  authorized  by the  Company  to pay the
principal of or interest on any Securities on behalf of the Company.

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

     "Place of Payment", when used with respect to the Securities of any series,
means the place or places where the principal of and interest on the  Securities
of that series are payable as contemplated by Section 301.

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

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

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

     "Regular Record Date" for the interest payable on any Interest Payment Date
on the  Securities  of any series means the date  specified  for that purpose as
contemplated by Section 301.

     "Responsible  Officer",  when used with respect to the  Trustee,  means the
chairman of the board of  directors,  the  chairman or any vice  chairman of the
executive  committee  of the  board of  directors,  the  chairman  of the  trust
committee,  the president,  any vice  president,  the  secretary,  any assistant
secretary,  the treasurer,  any assistant treasurer,  the cashier, any assistant
cashier,  any trust officer or assistant  trust  officer,  the controller or any
assistant controller or any other officer of the Trustee customarily  performing
functions similar to those performed by any of the above designated officers.



                                       5
<PAGE>

     "Securities"  has the meaning stated in the first recital of this Indenture
and more  particularly  means any Securities  authenticated  and delivered under
this Indenture.

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

     "Senior  Indebtedness" means Indebtedness of the Company outstanding at any
time other than  Indebtedness  of the Company to a Subsidiary for money borrowed
by the Company  from,  or advanced  to the  Company by, any such  Subsidiary  or
Indebtedness  which by its  terms is not  superior  in right of  payment  to the
Securities.

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

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

     "Subsidiary"   means  any  corporation  of  which  more  than  50%  of  the
outstanding Voting Stock is owned, directly or indirectly,  by the Company or by
one or more of its other Subsidiaries,  or by the Company and one or more of its
other Subsidiaries.  For purposes of this definition,  "Voting Stock means stock
of the class or classes having general voting power under ordinary circumstances
to elect at least a majority of the board of directors,  managers or trustees of
the subject Subsidiary  (irrespective of whether or not at the time stock of any
other class or classes  shall have or might have  voting  power by reason of the
happening of any contingency).

     "Trustee"  means the Person named as  "Trustee"  in the first  paragraph of
this instrument until a successor Trustee shall have become such with respect to
one or more series of Securities  pursuant to the applicable  provisions of this
Indenture,  and  thereafter  "Trustee"  shall mean or include each Person who is
then a Trustee hereunder, and if at any time there is more than one such Person,
"Trustee" as used with respect to the  Securities  or any series  thereof  shall
mean the Trustee with respect to Securities of that series.

     "Trust  Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed, except as provided in Section
905.

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

     SECTION 102. Compliance Certificates and Opinions.

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



                                       6
<PAGE>

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

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

          (a) a statement  that each  individual  signing  such  certificate  or
     opinion has read such  condition  or covenant  and the  definitions  herein
     relating thereto;

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

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

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

SECTION 103. Form of Documents Delivered to Trustee.

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

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

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



                                       7
<PAGE>

SECTION 104. Acts of Holders.

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

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

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

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

     (e) Without  limiting the  generality  of the  forgoing,  unless  otherwise
specified  pursuant  to  Section  301 or  pursuant  to one  or  more  indentures
supplemental  hereto,  a Holder,  including a Depositary that is the Holder of a
global Security, may make, give or take, by a proxy or proxies duly appointed in
writing, any request, demand, authorization,  direction, notice, consent, waiver
or  other  action  provided  in this  Indenture  to be  made,  given or taken by
Holders,  and a Depositary  that is the Holder of a global  Security may provide
its proxy or proxies to the  beneficial  owners of  interests in any such global
Security  through the  standing  instructions  and  customary  practices of such
Depositary.

     (f) The Trustee shall fix a record date for the purpose of determining  the
Persons who are beneficial  owners of interests in any global Security held by a
Depositary  entitled  under the procedures of such  Depositary to make,  give or
take, by a proxy or proxies,  duly  appointed in writing,  any request,  demand,
authorization, direction, notice, consent, waiver or other action



                                       8
<PAGE>

provided in this  Indenture  to be made,  given or taken by  Holders.  If such a
record date is fixed,  the  Holders on such record date or their duly  appointed
proxy or proxies and only such Persons,  shall be entitled to make, give or take
such request, demand, authorization, direction, notice, consent, waiver or other
action,  whether or not such Holders  remain  Holders after such record date. No
such request, demand, authorization, direction, notice, consent, waiver or other
action  shall be valid or  effective  if made,  given or taken more than 90 days
after such record date.

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

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

          (1) the  Trustee by any Holder or by the Company  shall be  sufficient
     for every purpose hereunder if made,  given,  furnished or filed in writing
     to or with a  Responsible  Officer of the  Trustee at its  Corporate  Trust
     Office, or

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

SECTION 106. Notice to Holders; Waiver.

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

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


                                       9
<PAGE>

SECTION 107. Conflict With Trust Indenture Act.

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

SECTION 108. Effect of Headings and Table of Contents.

     The Article and Section  headings  herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

SECTION 109. Successors and Assigns.

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

SECTION 110. Separability Clause.

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

SECTION 111. Benefits of Indenture.

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

SECTION 112. Governing Law.

     This  Indenture  shall be governed by and construed in accordance  with the
laws of the State of South Carolina and, unless the laws of another jurisdiction
are specified  pursuant to Section 301, the Securities  shall be governed by and
construed  in  accordance  with  the  laws  of  the  State  of  South  Carolina.
Notwithstanding the foregoing, the parties hereto acknowledge and agree that the
situs of the trust  created  hereunder and the  administration  thereof shall be
deemed to be the Corporate Trust Office.

SECTION 113. Legal Holidays.

     In any case where any  Interest  Payment  Date,  Redemption  Date or Stated
Maturity of any  Security  shall not be a Business  Day at any Place of Payment,
then   (notwithstanding  any  other  provision  of  this  Indenture  or  of  the
Securities) payment of principal of (and premium, if any) and interest,  if any,
need not be made at such Place of  Payment on such date,  but may be made on the
next  succeeding  Business  Day at such Place of Payment with the same force and
effect as



                                       10
<PAGE>

if made on the  Interest  Payment  Date or  Redemption  Date,  or at the  Stated
Maturity,  provided that no interest  shall accrue for the period from and after
such Interest Payment Date,  Redemption Date or Stated Maturity, as the case may
be.

                                   ARTICLE II
                                 SECURITY FORMS

SECTION 201. Forms Generally.

     The  Securities of each series and the  certificate  of the  Authenticating
Agent shall be in substantially the form of Exhibit A, B and C, or in such other
form  (including  global form) as shall be established by or pursuant to a Board
Resolution or in one or more indentures  supplemental  hereto, in each case with
such appropriate  insertions,  omissions,  substitutions and other variations as
are required or permitted by this Indenture,  and may have such letters, numbers
or other  marks  of  identification  and such  legends  or  endorsements  placed
thereon, as may be required to comply with the rules of any securities exchange,
or as may,  consistently  herewith, be determined by the officers executing such
Securities,  as evidenced by their execution of the  Securities.  If the form of
Securities  of any series is  established  by action  taken  pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified by
the  Secretary  or an Assistant  Secretary  of the Company and  delivered to the
Trustee at or prior to the delivery of the Company Order contemplated by Section
303 for the authentication and delivery of such Securities.

     The  definitive  Securities,  if any,  shall be  printed,  lithographed  or
engraved  on steel  engraved  borders or may be  produced  in any other  manner,
subject to the rules of any securities exchange upon which the Securities may be
listed,  all as  determined  by  the  officers  executing  such  Securities,  as
evidenced by their execution of such Securities.

SECTION 202. Securities in Global Form.

     If any Security of a series is issuable in global form,  such  Security may
provide that it shall represent the aggregate  amount of Outstanding  Securities
from time to time  endorsed  thereon  and may also  provide  that the  aggregate
amount of Outstanding  Securities  represented  thereby may from time to time be
reduced to reflect  exchanges.  Any  endorsement of a Security in global form to
reflect the amount,  or any increase or decrease in the amount,  of  Outstanding
Securities  represented  thereby shall be made by the Trustee and in such manner
as shall be specified in such  Security.  Any  instructions  by the Company with
respect to a Security in global form,  after its initial  issuance,  shall be in
writing but need not comply with Section 102.


                                       11
<PAGE>

                                   ARTICLE III
                                 THE SECURITIES

SECTION 301. Amount Unlimited; Issuable in Series.

     The aggregate principal amount of Securities which may be authenticated and
delivered and Outstanding under this indenture is unlimited.  The Securities may
be issued up to the aggregate  principal  amount of Securities from time to time
authorized by or pursuant to a Board Resolution.

     The Securities may be issued in one or more series.  All Securities of each
series issued under this Indenture  shall in all respects be equally and ratably
entitled to the benefits hereof with respect to such series without  preference,
priority or distinction on account of the actual time of the  authentication and
delivery  or  Maturity  of  the  Securities  of  such  series.  There  shall  be
established  in or pursuant to a Board  Resolution,  and subject to Section 303,
set forth or determined in the manner provided, in an Officers' Certificate,  or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series:

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

          2. any limit upon the aggregate  principal amount of the Securities of
     the series which may be  authenticated  and delivered  under this Indenture
     (except for Securities  authenticated  and delivered upon  registration  of
     transfer  of, or in exchange  for, or in lieu of, other  Securities  of the
     series pursuant to Section 304, 305, 306, 906, or 1107);

          3. the date or dates (or manner of determining  the same) on which the
     principal of the Securities of the series is payable;

          4. the rate or rates (or the manner of  calculation  thereof) at which
     the  Securities  of the series shall bear  interest  (if any),  the date or
     dates from which such interest shall accrue;  the Interest Payment Dates on
     which such interest  shall be payable (or manner of  determining  the same)
     and the Regular  Record Date for the interest  payable on any securities on
     an Interest Payment Date;

          5. the place or places, if any, in addition to the principal office of
     the Company in  Lancaster,  South  Carolina,  where the  principal  of (and
     premium, if any) and interest on Securities of the series shall be payable,
     any  Securities  of that  series may be  surrendered  for  registration  of
     transfer,  and where any Securities of that series may be  surrendered  for
     exchange;



                                       12
<PAGE>

          6. the period or periods  within which,  the price or prices at which,
     and the terms and  conditions  upon which  Securities  of the series may be
     redeemed, in whole or in part, at the option of the Company;

          7. the  obligation,  if any,  of the  Company  to redeem  or  purchase
     Securities of the series  pursuant at the option of a Holder  thereof,  and
     the period or periods within which,  the price or prices at which,  and the
     terms and conditions upon which  Securities of the series shall be redeemed
     or purchased, in whole or in part, pursuant to such obligation;

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

          9. if the amount of payments of principal of (and premium, if any), or
     interest on the  Securities of the series may be determined  with reference
     to an index, the manner in which such amounts shall be determined;

          10. if other than the  principal  amount  thereof,  the portion of the
     principal  amount of  Securities  of the series which shall be payable upon
     declaration of  acceleration  of the Maturity  thereof  pursuant to Section
     502;

          11.  whether the  Securities of the series shall be issued in whole or
     in part in the form of a global  Security or Securities  and, in such case,
     the Depositary for such global Security or Securities;

          12.  whether the  Securities of the series will be  subordinate to any
     other series of Security or other debt of the Company and the terms of such
     subordination;

          13.  if other  than the law of the  State of South  Carolina,  the law
     which will govern the terms of the Securities; and

          14.  any  other  terms  of  the  series  (which  terms  shall  not  be
     inconsistent with the provisions of this Indenture).

     All Securities of any particular  series shall be  substantially  identical
except as to denomination and except as may otherwise be provided in or pursuant
to such Board  Resolution and set forth in such Officers'  Certificate or in any
such Indenture supplemental hereto.

     At the option of the Company,  interest on the Securities of any series may
be paid by mailing a check to the address of the person entitled thereto as such
address shall appear in the Securities Register.

     If any of the terms of the series are  established by action taken pursuant
to a Board Resolution,  a copy of an appropriate  record of such action shall be
certified  by  the  Secretary  or



                                       13
<PAGE>

an Assistant  Secretary of the Company and  delivered to the Trustee at or prior
to the  delivery of the  Officers'  Certificate  setting  forth the terms of the
series.

SECTION 302. Denominations.

     The Securities of each series shall be issuable in registered  form without
coupons in such  denominations  as shall be specified as contemplated by section
301. In the absence of any such provisions with respect to the Securities of any
series,  the  Securities  of such series shall be issuable in  denominations  of
$1,000 and any integral multiple thereof.

SECTION 303. Execution, Authentication, Delivery and Dating.

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

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

     At any time and from time to time after the  execution and delivery of this
Indenture,  the  Company may deliver  Securities  of any series  executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication  and delivery of such  Securities,  and the Trustee in accordance
with the Company Order and subject to the provisions  hereof shall  authenticate
and deliver such  Securities.  If any Security  shall be represented by a global
Security,  then,  for  purposes of this section and Section 304, the notation of
the record  owner's  interest  therein upon  original  issuance of such Security
shall be deemed to be delivery in connection with the original  issuance of each
beneficial owner's interest in such global Security if all the securities of any
one series are not to be originally issued at one time and if a Board Resolution
relating to such  Securities  shall so permit,  such Company order may set forth
procedures acceptable to the Trustee for the issuance and authentication of such
Securities.  If the form or terms of the  Securities  of the  series  have  been
established  in or pursuant to one or more Board  Resolutions  as  permitted  by
Sections 201 and 301, in  authenticating  such  Securities,  and  accepting  the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive,  and (subject to Section 601) shall be
fully protected in relying upon, an Opinion of Counsel stating:

          (a) if the form of such Securities has been established by or pursuant
     to Board  Resolution  as permitted by Section 201,  that such form has been
     established in conformity with the provisions of this Indenture;



                                       14
<PAGE>

          (b) if the  terms  of such  Securities  have  been  established  by or
     pursuant to Board  Resolution  as permitted by Section 301, that such terms
     have been  established in conformity with the provisions of this Indenture;
     and

          (c) that all conditions  precedent to the  authentication and delivery
     of  such  Securities  have  been  met  and  that  such   securities,   when
     authenticated and delivered by the Trustee and issued by the Company in the
     manner and subject to any conditions  specified in such Opinion of Counsel,
     will  constitute  valid and legally  binding  obligations  of the  Company,
     enforceable  in  accordance  with  their  terms,  subject.  to  bankruptcy,
     insolvency, reorganization and other laws of general applicability relating
     to or affecting the enforcement of creditors'  rights and to general equity
     principles.

     If such form or terms have been so  established,  the Trustee  shall not be
required  to  authenticate  such  Securities  if the  issue  of such  Securities
pursuant  to this  Indenture  will  affect the  Trustee's  own  rights,  duties,
liabilities,  protections,  indemnities  or immunities  under the Securities and
this  Indenture or otherwise in a manner which is not  reasonably  acceptable to
the Trustee.

     Each Security shall be dated the date of its authentication.

     No Security  shall be entitled to any benefit  under this  Indenture  or be
valid or  obligatory  for any purpose  unless there  appears on such  Security a
certificate  of  authentication  substantially  in the form  provided for herein
executed  by the  Trustee by manual  signature,  and such  certificate  upon any
security shall be conclusive evidence, and the only evidence, that such Security
has been duly  authenticated  and  delivered  hereunder  and is  entitled to the
benefits of this Indenture.

     If the Company shall establish  pursuant to Section 301 that the Securities
of a series are to be issued in the form of one or more global Securities,  then
the Company shall execute and the Trustee shall, in accordance with this Section
and the Company Order with respect to such series,  authenticate and deliver one
or more global  Securities  that (i) shall represent and shall be denominated in
an amount equal to the aggregate  principal  amount of all of the  Securities of
such series issued and not yet  cancelled,  (ii) shall be registered in the name
of the Depositary for such global  Security or Securities or the nominee of such
Depositary,  (iii)  shall be  delivered  by the  Trustee to such  Depositary  or
pursuant  to  such  Depositary's  instructions  and  (iv)  shall  bear a  legend
substantially  to the  following  effect:  "Unless and until it is  exchanged in
whole or in part for Securities in definitive registered form, this Security may
not be  transferred  except as a whole by the  Depositary  to the nominee of the
Depositary  or by a nominee  of the  Depositary  to the  Depositary  or  another
nominee  of  the  Depositary  or by the  Depositary  or any  such  nominee  to a
successor Depositary or a nominee of such successor Depositary."

     Each  Depositary  designated  pursuant to Section 301 for a global Security
must,  at the  time of its  designation  and at all  times  while it  serves  as
Depositary, be a clearing agency registered under the Exchange Act and any other
applicable statute or regulation.


                                       15
<PAGE>

SECTION 304. Temporary Securities.

     Pending the preparation of definitive Securities of any series, the Company
may execute,  and upon Company Order the Trustee shall authenticate and deliver,
in the manner specified in Section 303, temporary  securities which are printed,
lithographed,  typewritten,  mimeographed, photocopied or otherwise produced, in
any  authorized  denomination,  substantially  of the  tenor  of the  definitive
Securities  in  lieu  of  which  they  are  issued  and  with  such  appropriate
insertions,  omissions,  substitutions  and  other  variations  as the  officers
executing such securities may determine, as evidenced by their execution of such
Securities.

     If temporary  Securities  of any series are issued,  the Company will cause
definitive  Securities of that series to be prepared without unreasonable delay.
After the  preparation  of definitive  Securities of such series,  the temporary
Securities of such series shall be  exchangeable  for  definitive  Securities of
such series upon  surrender of the  temporary  Securities  of such series at the
office or agency of the Company in a Place of Payment for that  series,  without
charge  to the  Holder.  Upon  surrender  for  cancellation  of any  one or more
temporary  Securities  of any series,  the Company shall execute and the Trustee
shall  authenticate and deliver in exchange  therefor a like principal amount of
definitive securities of the same series of authorized  denominations.  Until so
exchanged,  the  temporary  Securities  of any series  shall in all  respects be
entitled to the same benefits under this  Indenture as definitive  Securities of
such series.

SECTION 305. Registration, Registration of Transfer and Exchange.

     The Company  shall cause to be kept at the office of the Trustee a register
(the  register  maintained  in  such  office  being  herein  referred  to as the
"Security Register") in which, subject to such reasonable  regulations as it may
prescribe,  the Company shall provide for the registration of Securities and for
transfers of Securities.  The Trustee is hereby  initially  appointed  "Security
Registrar" for the purpose of registering Securities as herein provided.

     Upon surrender for  registration  of transfer of any Security of any series
at the office or agency in a Place of Payment for that series, the Company shall
execute,  and the Trustee  shall  authenticate  and deliver,  in the name of the
designated  transferee or  transferees,  one or more new  Securities of the same
series,  of any  authorized  denominations  and of a  like  aggregate  principal
amount.

     At the option of the Holder,  Securities of any series may be exchanged for
other Securities of the same series,  of any Authorized  denominations  and of a
like  aggregate  principal  amount,  upon  surrender  of  the  Securities  to be
exchanged at such office or agency.  Whenever any  securities are so surrendered
for exchange,  the Company shall execute, and the Trustee shall authenticate and
deliver,  the  Securities  which the Holder  making the  exchange is entitled to
receive.



                                       16
<PAGE>

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

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

     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 registration of transfer or exchange of Securities other than exchanges
pursuant to Section 304, 906 or 1107 not involving any transfer.

     Neither the Company nor the  Security  Registrar  shall be required  (i) to
issue,  register the transfer of or exchange  Securities  of any series during a
period  beginning  at the  opening  of  business  15 days  before the day of the
mailing of a notice of  redemption  of  Securities  of that series  selected for
redemption  under Section 1103 and ending at the close of business on the day of
such  mailing,  or (ii) to register  the transfer of or exchange any Security so
selected for redemption in whole or in part,  except the  unredeemed  portion of
any Security being redeemed in part.

     Notwithstanding  any other  provision of this Section 305, unless and until
it is  exchanged in whole or in part for  Securities  in  definitive  registered
form, a global  Security  representing  all or a portion of the  Securities of a
series  may not be  transferred  except  as a whole by the  Depositary  for such
series to a nominee of such  Depositary  or by a nominee of such  Depositary  or
another  nominee of such Depositary or by such Depositary or any such nominee to
a  successor  Depositary  for  such  series  or  a  nominee  of  such  successor
Depositary.

     The Company may at any time and in its sole  discretion  determine that the
Securities  of any series  issued in the form of one or more  global  Securities
shall no longer be represented by a global Security or Securities. In such event
the Company will execute,  and the Trustee,  upon receipt of a Company Order for
the  authentication and delivery of definitive  Securities of such series,  will
authenticate  and deliver,  Securities of such series in  definitive  registered
form without coupons, in any authorized denominations, in an aggregate principal
amount  equal to the  principal  amount of the  global  Security  or  Securities
representing such series, in exchange for such global Security or Securities.

     If  specified  by the Company  pursuant  to Section  301 with  respect to a
series of Securities, the Depositary for such series of Securities may surrender
a global  Security for such series of Securities in exchange in whole or in part
for Securities of such series in definitive registered form on such terms as are
acceptable  to the Company and such  Depositary.  Thereupon,  the Company  shall
execute, and the Trustee shall authenticate and deliver, without service charge,



                                       17
<PAGE>

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

          (ii) to such Depositary a new global Security in a denomination  equal
     to the difference,  if any, between the principal amount of the surrendered
     global   Security  and  the  aggregate   principal   amount  of  Securities
     authenticated and delivered pursuant to Clause (i) above.

     Upon the  exchange  of a  global  Security  for  securities  in  definitive
registered  form  without  coupons,  in  authorized  denominations,  such global
Security shall be canceled by the Trustee.  securities in definitive  registered
form without coupons issued in exchange for a global  Security  pursuant to this
Section  305  shall  be  registered  in  such  names  and  in  such   authorized
denominations  as  the  Depositary  for  such  global   Security,   pursuant  to
instructions  from its  direct or  indirect  participants  or  otherwise,  shall
instruct  the  Trustee.  The Trustee  shall  deliver  such  Securities  to or as
directed by the Persons in whose names such Securities are so registered.

SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.

     If any  mutilated  Security  is  surrendered  to the  Trustee  and there is
delivered  to the Company and the Trustee  such  security or indemnity as may be
required by them to save each of them and any agent of either of them  harmless,
then the  Company  shall  execute  and,  upon its  request,  the  Trustee  shall
authenticate and deliver in exchange  therefor a new Security of the same series
and  of  like   tenor  and   principal   amount   and   bearing  a  number   not
contemporaneously outstanding.

     If there shall be  delivered to the Company and the Trustee (i) evidence to
their  satisfaction of the  destruction,  loss or theft of any Security and (ii)
such  security or  indemnity as may be required by them to save each of them and
any agent of either of them harmless,  then, in the absence of written notice to
the Company or the Trustee that such  Security  has been  acquired by a bonafide
purchaser,  the Company  shall  execute  and upon its request the Trustee  shall
authenticate  and  deliver,  in  lieu of any  such  destroyed,  lost  or  stolen
Security,  a new  Security  of the same  series and of like tenor and  principal
amount and bearing a number not contemporaneously outstanding.

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

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



                                       18
<PAGE>

     Every new Security of any series issued pursuant to this Section in lieu of
any destroyed,  lost or stolen Security shall constitute an original  additional
contractual  obligation of the Company,  whether or not the  destroyed,  lost or
stolen  Security  shall be at any  time  enforceable  by  anyone,  and  shall be
entitled to all the benefits of this Indenture equally and proportionately  with
any and all other Securities of that series duly issued hereunder.

     The  provisions of this Section are  exclusive  and shall  preclude (to the
extent lawful) all other rights and remedies with respect to the  replacement or
payment of mutilated, destroyed, lost or stolen Securities.

SECTION 307. Payment of Interest; Interest Rights Preserved.

     Interest on any Security which is payable,  and is punctually  paid or duly
provided for, on any Interest  Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor  securities) is registered at the
close of business on the Regular Record Date for such interest payment.

     Any  interest on any  Security of any series  which is payable,  but is not
punctually  paid or duly  provided  for, on any  Interest  Payment  Date (herein
called  "Defaulted  Interest") shall forthwith cease to be payable to the Holder
on the relevant  Regular  Record Date by virtue of having been such Holder,  and
such Defaulted Interest may be paid by the Company as provided below:

          The Company may elect to make payment of any Defaulted Interest to the
     Persons in whose names the  Securities of such series (or their  respective
     Predecessor  Securities)  are  registered  at the  close of  business  on a
     Special Record Date for the payment of such Defaulted  Interest which shall
     be fixed in the following  manner.  The Company shall notify the Trustee in
     writing of the amount of  Defaulted  Interest  proposed  to be paid on each
     Security of such series and the date of the  proposed  payment,  and at the
     same time the  Company  shall  deposit  with the Trustee an amount of money
     equal  to the  aggregate  amount  proposed  to be paid in  respect  of such
     Defaulted  Interest or shall make arrangements  satisfactory to the Trustee
     for such deposit prior to the date of the proposed payment, such money when
     deposited  to be held in trust for the benefit of the  Persons  entitled to
     such Defaulted  Interest as in this Clause provided.  Thereupon the Trustee
     shall fix a Special Record Date for the payment of such Defaulted  Interest
     which shall be not more than 15 days and not less than 10 days prior to the
     date of the proposed payment and not less than 10 days after the receipt by
     the  Trustee of the  notice of the  proposed  payment.  The  Trustee  shall
     promptly  notify the Company of such  Special  Record Date and, in the name
     and at the  expense of the  Company,  shall  cause  notice of the  proposed
     payment of such  Defaulted  Interest and the Special Record Date thereof to
     be mailed,  first-class  postage  prepaid,  to each Holder of Securities of
     such series at his address as it appears in the Security Register, not less
     than 10 days prior to such  Special  Record  Date.  Notice of the  proposed
     payment of such  Defaulted  Interest and the Special  Record Date  therefor
     having been so mailed, such Defaulted Interest shall be paid to the Persons
     in  whose  names  the  securities  of  such  series  (or  their  respective
     Predecessor Securities) are



                                       19
<PAGE>

     registered  at the close of business on such Special  Record Date and shall
     no longer be payable.

     Subject to the  foregoing  provisions of this Section and Section 305, each
Security  delivered under this Indenture upon  registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.

SECTION 308. Persons Deemed Owners.

     Prior to due presentment of a Security for  registration  of transfer,  the
Company,  the  Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such  Security is  registered as the owner of such Security
for the purpose of receiving  payment of principal of (and premium,  if any) and
(subject to Section 307)  interest on such  Security and for all other  purposes
whatsoever,  whether or not such  Security be overdue,  and neither the Company,
the Trustee  nor any agent of the  Company or the  Trustee  shall be affected by
notice to the contrary.

     None  of the  Company,  the  Trustee,  any  Paying  Agent  or the  Security
Registrar  will  have any  responsibility  or  liability  for any  aspect of the
records  relating  to any  payments  made on  account  of  beneficial  ownership
interests of a global Security or for maintaining,  supervising or reviewing any
records relating to such beneficial ownership interests.

SECTION 309. Cancellation.

     All  Securities  surrendered  for  payment,  redemption,   registration  of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be  delivered  to the Trustee and shall be promptly  canceled by it. The Company
may at  any  time  deliver  to  the  Trustee  for  cancellation  any  Securities
previously  authenticated  and  delivered  hereunder  which the Company may have
acquired in any manner  whatsoever,  and all  Securities  so delivered  shall be
promptly  canceled by the Trustee.  No Securities shall be authenticated in lieu
of or in exchange  for any  Securities  canceled  as  provided in this  Section,
except as expressly permitted by this Indenture. All canceled Securities held by
the Trustee shall be disposed of as directed by a Company Order.

SECTION 310. Computation of Interest.

     Except as  otherwise  contemplated  by Section  301 for  securities  of any
series, interest on the Securities of each series shall be computed on the basis
of a 365-day year and the actual number of days elapsed.


                                       20
<PAGE>

                                   ARTICLE IV
                           SATISFACTION AND DISCHARGE


SECTION 401. Satisfaction and Discharge of Securities of Any Series.

     (a) The Company shall be deemed to have satisfied and discharged the entire
indebtedness  an all the Securities of any particular  series and, so long as no
Event of Default  shall be  continuing,  the Trustee for the  Securities of such
series,  upon Company  Request and at the expense of the Company,  shall execute
proper   instruments   acknowledging   satisfaction   and   discharge   of  such
indebtedness, when

          (1) either

               (A) all Securities of such series  theretofore  authenticated and
          delivered  (other than (i)  Securities  of such series which have been
          destroyed,  lost or stolen  and which  have been  replaced  or paid as
          provided  in Section  306 and (ii)  Securities  of such series for the
          payment of which  money has  theretofore  been  deposited  in trust or
          segregated and held in trust by the Company and  thereafter  repaid to
          the  Company or  discharged  from such  trust,  as provided in Section
          1003) have been delivered to the Trustee for cancellation; or

               (B) all  Outstanding  Securities  of such series not described in
          Subclause (A) of this Subsection (a) (1) and not theretofore delivered
          to the Trustee for  cancellation  (i) have become due and payable,  or
          (ii) will become due and payable at their Stated  Maturity  within one
          year, or (iii) are to be called for  redemption  within one year under
          arrangements  satisfactory  to the Trustee for the giving of notice of
          redemption  by the  Trustee in the name,  and at the  expense,  of the
          Company;  and the Company,  in the case of (i),  (ii), or (iii) above,
          has  deposited  or caused to be  deposited  with the  Trustee as trust
          funds in trust an amount  sufficient  to pay and  discharge the entire
          indebtedness on such Outstanding  Securities not theretofore delivered
          to the Trustee for cancellation;

          (2) the Company  has paid or caused to be paid all other sums  payable
     hereunder by the Company with respect to the Outstanding Securities of such
     series, including,  without limitation,  the fees and estimated expenses of
     the  Trustee  through  and  including  the  latest  date of payment of such
     Securities to the Holders thereof; and

          (3) the Company has delivered to the Trustee an Officers'  Certificate
     and an Opinion of  Counsel,  each  stating  that all  conditions  precedent
     herein  provided  for  relating to the  satisfaction  and  discharge of the
     entire  indebtedness  of all  Securities  of such series have been complied
     with.



                                       21
<PAGE>

     Notwithstanding  the  satisfaction  and  discharge of this  Indenture,  the
obligations of the Company to the Trustee under Section 607, the  obligations of
the Trustee to any  Authenticating  Agent under  Section 614 and, if money shall
have been deposited with the Trustee  pursuant to subclause (B) of Clause (1) of
this  Section,  the  obligations  of the Trustee  under Section 402 and the last
paragraph of Section 1003 shall survive.

SECT10N 402. Application of Trust Money.

     Subject to the  provisions of the last paragraph of Section 1003, all money
deposited  with the  Trustee  pursuant to Section 401 shall be held in trust and
applied by it, in  accordance  with the  provisions of the  Securities  and this
Indenture, to the payment either directly or through any Paying Agent (including
the Company acting as its own Paying Agent) as the Trustee may determine, to the
Persons entitled  thereto,  of the principal (and premium,  if any) and interest
for the payment of which such money has been deposited with the Trustee.

                                    ARTICLE V
                                    REMEDIES

SECTION 501. Events of Default.

     "Event of Default",  wherever used herein with respect to Securities of any
series,  means any one of the  following  events  (whatever  the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law  pursuant to any  judgment,  decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

          (1) default in the payment of any  interest  upon any Security of that
     series when it becomes due and payable, and continuance of such default for
     a period of 30 days; or

          (2) default in the payment of the  principal of (or  premium,  if any,
     on) any Security of that series at its Maturity; or

          (3) default in the performance, or breach, of any covenant or warranty
     of the  Company in this  Indenture  (other  than a covenant  or  warranty a
     default in the  performance of which or the breach of which is elsewhere in
     this Section  specifically  dealt with or which has expressly been included
     in this Indenture solely for the benefit of series of Securities other than
     that series),  and continuance of such default or breach for a period of 60
     days after there has been given,  by registered  or certified  mail, to the
     Company by the  Trustee or to the Company and the Trustee by the Holders of
     at least 25% in  principal  amount of the  Outstanding  Securities  of that
     series a written notice  specifying such default or breach and requiring it
     to be  remedied  and  stating  that such  notice is a "Notice  of  Default"
     hereunder, or



                                       22
<PAGE>

          (4) the entry by a court having  jurisdiction of (A) a decree or order
     for relief in respect of the Company in an  involuntary  case or proceeding
     under   any   applicable   Federal   or   State   bankruptcy,   insolvency,
     reorganization  or other similar law or (B) a decree or order adjudging the
     Company a bankrupt or insolvent,  or approving as properly filed a petition
     seeking  reorganization,  arrangement,  adjustment or  composition of or in
     respect of the  Company  under any  applicable  Federal  or state  law,  or
     appointing   a  custodian,   receiver,   liquidator,   assignee,   trustee,
     sequestrator or other similar official of the Company or of any substantial
     part  of the  property  of the  Company,  or  ordering  the  winding  up or
     liquidation of the affairs of the Company,  and the continuance of any such
     decree or order for relief or any such other  decree or order  unstayed and
     in effect for a period of 60 consecutive days; or

          (5) the  commencement by the Company of a voluntary case or proceeding
     under   any   applicable   Federal   or   State   bankruptcy,   insolvency,
     reorganization  or other  similar law or of any other case or proceeding to
     be  adjudicated a bankrupt or  insolvent,  or the consent by the Company to
     the entry of a decree or order for relief in  respect of the  Company in an
     involuntary  case or  proceeding  under  any  applicable  Federal  or State
     bankruptcy,  insolvency,  reorganization  or  other  similar  law or to the
     commencement  against the Company of any  bankruptcy or insolvency  case or
     proceeding, or the filing by the Company of a petition or answer or consent
     seeking reorganization or relief under any applicable Federal or State law,
     or the  consent by the  Company to the  filing of such  petition  or to the
     appointment of or taking possession by a custodian,  receiver,  liquidator,
     assignee,  trustee,  sequestrator or similar  official of the Company or of
     any substantial  part of the property of the Company,  or the making by the
     Company of an assignment for the benefit of creditors,  or the admission by
     the Company in writing of its inability to pay its debts  generally as they
     become due, or the taking of corporate action by the company in furtherance
     of any such action; or

     8. any  other  Event of  Default  provided  in the  Security  or the  Board
Resolution with respect to Securities of that series.

SECTION 502. Acceleration of Maturity; Rescission and Annulment.

     If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal  amount of the outstanding  Securities
of that series may declare the  principal  amount of all the  Securities of that
series to be due and payable immediately,  by a notice in writing to the Company
(and to the Trustee if given by  Holders),  and upon any such  declaration  such
principal amount shall become  immediately due and payable without  presentment,
demand, protest or notice of any kind, all of which are expressly waived.

     At any time  after  such a  declaration  of  acceleration  with  respect to
Securities  of any  series  has been made and  before a  judgment  or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article  provided,  the  Holders  of a  majority  in  principal



                                       23
<PAGE>

amount of the  Outstanding  Securities of that series,  by written notice to the
Company  and the  Trustee,  may  rescind  and  annul  such  declaration  and its
consequences if:

          (1)  the  Company  has  paid  or  deposited  with  the  Trustee  a sum
     sufficient to pay:

               (a) all overdue interest on all Securities of that series,

               (b) the  principal  of any  Securities  of that series  which has
          become due otherwise  than by such  declaration  of  acceleration  and
          interest  thereon  at the rate or rates  prescribed  therefor  in such
          securities,

               (c) to the  extent  that  payment  of such  interest  is  lawful,
          interest  upon  overdue  interest  at the  rate  or  rates  prescribed
          therefor in such Securities, and

               (d) all sums paid or advanced by the  Trustee  hereunder  and the
          reasonable compensation,  expenses,  disbursements and advances of the
          Trustee, its agents and counsel; and

          (2) all Events of Default with respect to  Securities  of that series,
     other than the  non-payment  of the  principal of Securities of that series
     which have become due solely by such declaration of acceleration, have been
     curved or waived as provided in Section 513.

No such  rescission  shall  affect  any  subsequent  default or impair any right
consequent thereon.

SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.

     The Company covenants that if:

          (1) default is made in the payment of any  interest on any Security of
     any series when such  interest  becomes  due and  payable and such  default
     continues for a period of 30 days, or

          (2) default is made in the payment of the principal of any Security at
     the Maturity thereof,

the Company will, upon demand of the Trustee,  pay to it, for the benefit of the
Holders  of such  Securities,  the whole  amount  then due and  payable  on such
Securities  for  principal  and interest and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal and, to
the extent that payment of such interest shall be legally enforceable,  upon any
overdue  installments of interest,  at the rate or rates prescribed  therefor in
such  Securities,  and, in addition  thereto,  such  further  amount as shall be
sufficient  to cover  the  costs  and  expenses  of  collection,  including  the
reasonable  compensation,  expenses,  disbursements and advances of the Trustee,
its agents and counsel.



                                       24
<PAGE>

     If the Company fails to pay such amounts  forthwith  upon such demand,  the
Trustee,  in its own name and as trustee of an express  trust,  may  institute a
judicial  proceeding  for the  collection  of the  sums so due and  unpaid,  may
prosecute  such  proceeding to judgment or final decree and may enforce the same
against the Company or any other  obligor upon such  securities  and collect the
moneys  adjudged  or decreed to be payable in the manner  provided by law out of
the property of the Company or any other obligor upon such securities,  wherever
situated.

     If an Event of Default with respect to  Securities of any series occurs and
is continuing,  the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the  Holders of  Securities  of such series by such
appropriate  judicial  proceedings  as the Trustee shall deem most  effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement  in this  Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.

SECTION 504. Trustee May File Proofs of Claim.

     In case  of the  pendency  of any  receivership,  insolvency,  liquidation,
bankruptcy,  reorganization,   arrangement,  adjustment,  composition  or  other
judicial  proceeding  relative  to the  Company  or any other  obligor  upon the
Securities  or the  property  of the  Company or of such other  obligor or their
creditors,  the Trustee (irrespective of whether the principal of the Securities
shall  then be due  and  payable  as  therein  expressed  or by  declaration  or
otherwise and  irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue  principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,

          (1) to file and prove a claim for the whole  amount of  principal  and
     interest, if any, owing and unpaid in respect of the Securities and to file
     such other papers or documents as may be necessary or advisable in order to
     have the  claims of the  Trustee  (including  any claim for the  reasonable
     compensation,  expenses,  disbursements  and advances of the  Trustee,  its
     agents and counsel) and of the Holders allowed in such judicial proceeding,
     and

          (2) to collect  and receive  any moneys or other  property  payable or
     deliverable  on any  such  claims  and to  distribute  the  same,  and  any
     custodian,  receiver, assignee, trustee, liquidator,  sequestrator or other
     similar  official in any such judicial  proceeding is hereby  authorized by
     each Holder to make such payments to the Trustee and, in the event that the
     Trustee  shall  consent  to the  making of such  payments  directly  to the
     Holders,  to  pay to the  Trustee  any  amount  due it for  the  reasonable
     compensation,  expenses,  disbursements  and advances of the  Trustee,  its
     agents and counsel,  and any other  amounts due the Trustee  under  Section
     607.

     Nothing  herein  contained  shall be deemed to  authorize  the  Trustee  to
authorize  or  consent to or accept or adopt on behalf of any Holder 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 the Holder in any such proceeding.



                                       25
<PAGE>

SECTION 505. Trustee May Enforce Claims Without Possession of Securities.

     All rights of action and claims under this  Indenture or the Securities may
be prosecuted  and enforced by the Trustee  without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such  proceeding  instituted  by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the  reasonable  compensation,  expenses,  disbursements  and
advances of the Trustee,  its agents and counsel,  be for the ratable benefit of
the  Holders  of the  Securities  in respect  of which  such  judgment  has been
recovered.

SECTION 506. Application of Money Collected.

     Any money  collected  by the  Trustee  pursuant  to this  Article  shall be
applied in the following  order,  at the date or dates fixed by the Trustee and,
in case of the  distribution  of such money on account of principal or interest,
upon  presentation of the Securities and the notation  thereon of the payment if
only partially paid and upon surrender thereof if fully paid:

          FIRST:  To the payment of all amounts  due the Trustee  under  Section
     607;

          SECOND:  To the  payment  of the  amounts  then  due  and  unpaid  for
     principal of and interest on the  Securities in respect of which or for the
     benefit of which such money has been collected. ratably, without preference
     or priority of any kind,  according  to the amounts due and payable on such
     Securities for principal and interest, respectively; and

          THIRD: The balance, if any, to the Person or Persons entitled thereto.

SECTION 507. Limitation on Suits.

     No Holder of any  Security of any series  shall have any right to institute
any proceeding,  judicial or otherwise,  with respect to this Indenture,  or for
the  appointment  of a receiver or trustee,  or for any other remedy  hereunder,
unless:

          (1) an Event  of  Default  with  respect  to that  series  shall  have
     occurred  and be  continuing  and such Holder shall have  previously  given
     written notice to the Trustee of such default and the continuance thereof;

          (2) the  Holders  of not less  than  25% in  principal  amount  of the
     Outstanding  Securities  of that series shall have made written  request to
     the Trustee to institute proceedings in respect of such Event of Default in
     its own name as Trustee hereunder;

          (3) such  Holder or Holders  have  offered to the  Trustee  reasonable
     indemnity  against the costs,  expenses and  liabilities  to be incurred in
     compliance with such request;



                                       26
<PAGE>

          (4) the Trustee for 60 days after its receipt of such notice,  request
     and offer of indemnity has failed to institute any such proceeding; and

          (5) no direction inconsistent with such written request has been given
     to the Trustee  during  such 60-day  period by the Holders of a majority in
     principal amount of the Outstanding Securities of that series;

it being  understood and intended that no one or more of such Holders shall have
any right in any manner  whatever by virtue of, or by availing of, any provision
of this  Indenture to affect,  disturb or  prejudice  the rights of any other of
such Holders,  or to obtain or to seek to obtain priority or preference over any
other of such Holders,  or to enforce any right under this Indenture,  except in
the manner herein  provided and for the equal and ratable benefit of all of such
Holders.

SECTION 508.  Unconditional  Right of Holders to Receive Principal (and Premium,
              if any) and Interest, if any.

     Notwithstanding  any other provision in this  Indenture,  the Holder of any
Security shall have the right, which is absolute and  unconditional,  to receive
payment of the principal of (and  premium,  if any) and (subject to Section 307)
interest on such Security on the Stated Maturity or Maturities expressed in such
Security  (or,  in the  case  of  redemption,  on the  Redemption  Date)  and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.

SECTION 509. Restoration of Rights and Remedies.

     If the Trustee or any Holder has  instituted  any proceeding to enforce any
right or remedy under this Indenture and such  proceeding has been  discontinued
or abandoned for any reason, or has been determined  adversely to the Trustee or
to such Holder,  then and in every such case,  subject to any  determination  in
such  proceeding,  the Company,  the Trustee,  and the Holders shall be restored
severally and  respectively to their former  positions  hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall  continue as though
no such proceeding had been instituted.

SECTION 510. Rights and Remedies Cumulative.

     Except as otherwise  provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen securities in the last paragraph of Section
306, no right or remedy herein  conferred  upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy,  and every
right and remedy shall,  to the extent  permitted by law, be  cumulative  and in
addition to every other right and remedy  given  hereunder  or now or  hereafter
existing at law or in equity or  otherwise.  The  assertion or employment of any
right or remedy  hereunder,  or  otherwise,  shall not  prevent  the  concurrent
assertion or employment of any other appropriate right or remedy.


                                       27
<PAGE>

SECTION 511. Delay or Omission Not Waiver.

     No delay or omission of the Trustee or of any Holder of any  Securities  to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or  constitute  a waiver of any such Event of Default or an
acquiescence therein.  Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised  from time to time,  and as often
as may be deemed  expedient,  by the Trustee or by the Holders,  as the case may
be.

SECTION 512. Control by Holders.

     The Holders of a majority in principal amount of the Outstanding Securities
of any  series  shall  have the right to direct  the time,  method  and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power  conferred on the Trustee,  with respect to the Securities of
such series, provided, however, that:

          (1) such  direction  shall not be in conflict  with any rule of law or
     with this Indenture, and

          (2) the Trustee may take any other action deemed proper by the Trustee
     which is not inconsistent with such direction.

SECTION 513. Waiver of Past Defaults.

     The  Holders  of not  less  than a  majority  in  principal  amount  of the
Outstanding  Securities  of any series  may on behalf of the  Holders of all the
Securities of such series waive any past default  hereunder with respect to such
series and its consequences, except a default:

          (1) in the payment of the  principal  of or  interest,  if any, on any
     Security of such series, or

          (2) in respect of a covenant or provision  hereof which under  Article
     Nine  cannot be  modified  or amended  without the consent of the Holder of
     each Outstanding Security of such series affected.

     Upon any such waiver,  such default shall cease to exist,  and any Event of
Default arising  therefrom shall be deemed to have been cured, for every purpose
of this  Indenture;  but no such waiver shall extend to any  subsequent or other
default or impair any right consequent thereon.

SECTION 514. Undertaking for Costs.

     All parties to this Indenture agree, and each Holder of any Security by his
acceptance  thereof  shall be deemed to have  agreed,  that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee



                                       28
<PAGE>

for any action  taken,  suffered or omitted by it as Trustee,  the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit, and
that  such  court  may in its  discretion  assess  reasonable  costs,  including
reasonable  attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant;  but the  provisions  of this  Section  shall  not  apply  to any suit
instituted by the Company,  to any suit  instituted by the Trustee,  to any suit
instituted by any Holder,  or group of Holders,  holding in the  aggregate  more
than 10% in principal amount of the Outstanding  Securities of any series, or to
any suit  instituted  by any Holder for the  enforcement  of the  payment of the
principal  of or  interest,  if any,  on any  Security  on or after  the  Stated
Maturity  or  Maturities  expressed  in  such  Security  (or,  in  the  case  of
redemption, on or after the Redemption Date).

                                   ARTICLE VI
                                   THE TRUSTEE

SECTION 601. Certain Duties and Responsibilities.

     (a) Except during the  continuance of an Event of Default,  with respect to
Securities of any series:

          (1) the Trustee  undertakes to perform,  with respect to Securities of
     such  series,  only  such  duties  as are  specifically  set  forth in this
     Indenture,  and no implied covenants or obligations shall be read into this
     Indenture against the Trustee; and

          (2) in the  absence of bad faith on its part,  the Trustee  may,  with
     respect to Securities of such series, conclusively rely, as to the truth of
     the statements  and  correctness of the opinions  expressed  therein,  upon
     certificates  or opinions  furnished to the Trustee and  conforming  to the
     requirements of this Indenture; but in the case of any such certificates or
     opinions  which by any  provision  hereof are  specifically  required to be
     furnished to the Trustee,  the Trustee shall be under a duty to examine the
     same  to  determine  whether  they  conform  to the  requirements  of  this
     Indenture.

     (b) In case an Event of Default  with respect to  Securities  of any series
has occurred and is  continuing,  the Trustee  shall  exercise,  with respect to
Securities  of such series,  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 man would exercise or use under the  circumstances in the conduct of his
own affairs.

     (c) No  provision  of this  Indenture  shall be  construed  to relieve  the
Trustee from  liability for its own grossly  negligent  action,  its own grossly
negligent failure to act, or its own willful misconduct, except that:

          (1) this  Subsection  shall not be  construed  to limit the  effect of
     Subsection (a) of this Section;



                                       29
<PAGE>

          (2) the Trustee  shall not be liable for any error of judgment made in
     good faith by a  Responsible  officer,  unless it shall be proved  that the
     Trustee was grossly negligent in ascertaining the pertinent facts;

          (3) the Trustee  shall not be liable with  respect to any action taken
     or omitted to be taken by it in good faith in accordance with the direction
     of the  Holders  of a  majority  in  principal  amount  of the  Outstanding
     Securities of any series,  determined as provided in Section 512,  relating
     to the time,  method and place of conducting  any proceeding for any remedy
     available to the Trustee,  or exercising any trust or power  conferred upon
     the Trustee,  under this  Indenture  with respect to the Securities of such
     series; and

          (4) no provision of this Indenture shall require the Trustee to expend
     or risk its own funds or  otherwise  incur any  financial  liability in the
     performance  of any of its duties  hereunder,  or in the exercise of any of
     its rights or powers,  if it shall have  reasonable  grounds for  believing
     that  repayment  of such funds or adequate  indemnity  against such risk or
     liability is not reasonably assured to it.

     (d) Whether or not therein  expressly so provided,  every provision of this
Indenture  relating to the conduct or  affecting  the  liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.

SECTION 602. Notice of Defaults.

     Within 90 days after the  occurrence of any default  hereunder with respect
to the  Securities  of any  series,  the Trustee  shall  transmit by mail to all
Holders of  Securities  of such series,  in the manner set forth in Section 106,
notice of such default hereunder known to the Trustee, unless such default shall
have been  cured or waived;  provided,  however,  that,  except in the case of a
default in the payment of the  principal  of or interest on any Security of such
series, the Trustee shall be protected in withholding such notice if and so long
as the board of  directors,  the  executive  committee  or a trust  committee of
directors or Responsible  Officers of the Trustee in good faith  determines that
the  withholding  of such notice is in the interest of the Holders of Securities
of such series; and provided further,  however,  that in the case of any default
of the character  specified in Section  501(4) with respect to the Securities of
such  series,  no such  notice to Holders  shall be given until at least 60 days
after  the  occurrence  thereof.  For the  purpose  of this  Section,  the  term
"default"  means  any event  which is, or after  notice or lapse of time or both
would become, an Event of Default with respect to Securities of such series.

     The Trustee  shall not be deemed to have  knowledge of any Default or Event
of Default  except any  Default or Event of Default of which the  Trustee  shall
have received  written  notification  or a Responsible  Officer charged with the
administration of this Indenture shall have obtained actual knowledge,  and such
notification  shall not be deemed to include receipt of information  obtained in
any report or other  documents  furnished  under Section 704 of this  Indenture,
which reports and documents the Trustee shall have no duty to examine.



                                       30
<PAGE>

SECTION 603. Certain Rights of Trustee.

     Subject to the provisions of Section 601, and notwithstanding anything else
contained herein or in any Securities:

          (1) the  Trustee  may  rely  and  shall  be  protected  in  acting  or
     refraining  from  acting  upon  any  resolution,   certificate,  statement,
     instrument,  opinion, report, notice, request,  direction,  consent, order,
     bond,  debenture,  note,  other evidence of  indebtedness or other paper or
     document  believed by it to be genuine and to have been signed or presented
     by the proper party or parties;

          (2) any request or direction of the Company  mentioned herein shall be
     sufficiently  evidenced  by a  Company  Request  or  Company  Order and any
     resolution  of the Board of Directors  may be  sufficiently  evidenced by a
     Board Resolution;

          (3) whenever in the administration of this Indenture the Trustee shall
     deem it desirable that a matter be proved or  established  prior to taking,
     suffering  or omitting  any action  hereunder,  the Trustee  (unless  other
     evidence  be herein  specifically  prescribed)  may,  in the absence of bad
     faith an its part, rely upon an Officers' Certificate;

          (4) as a  condition  to the taking,  suffering  or omission of any act
     contemplated  hereunder,  the Trustee may, but is not required to,  consult
     with  counsel  and the  written  advice at such  counsel or any  Opinion of
     Counsel shall be full and complete  authorization and protection in respect
     of any action taken,  suffered or omitted by it hereunder in good faith and
     in reliance thereon;

          (5) the Trustee  shall be under no  obligation  to exercise any of the
     rights or powers vested in it by this Indenture at the request or direction
     of any of the Holders pursuant to this Indenture, unless such Holders shall
     have offered to the Trustee  reasonable  security or indemnity  against the
     costs, expenses and liabilities which might be incurred by it in compliance
     with such request or direction

          (6) the Trustee shall not be bound to make any investigation  into the
     facts  or  matters  stated  in  any  resolution,   certificate,  statement,
     instrument,  opinion, report, notice, request,  direction,  consent, order,
     bond,  debenture,  note,  other evidence of  indebtedness or other paper or
     document, but the Trustee, in its discretion, may make such further inquiry
     or investigation  into such facts or matters as it may see fit, and, if the
     Trustee shall determine to make such further inquiry or  investigation,  it
     shall be  entitled  to  examine  the books,  records  and  premises  of the
     Company, personally or by agent or attorney; and

          (7) the Trustee may execute any of the trusts or powers  hereunder  or
     perform any duties  hereunder  either  directly or by or through  agents or
     attorneys,  and the Trustee shall not be responsible  for any misconduct or
     negligence on the part of any agent or attorney  appointed with due care by
     it hereunder.



                                       31
<PAGE>

SECTION 604. Not Responsible for Recitals or Issuance of Securities.

     The recitals  contained herein and in the Securities,  except the Trustee's
certificates of authentication  thereof, shall be taken as the statements of the
Company,  and the Trustee or any Authenticating  Agent assumes no responsibility
for their  correctness.  The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the  Securities.  Neither the Trustee nor
any Authenticating  Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.

SECTION 605. May Hold Securities.

     The Trustee,  any  Authenticating  Agent,  any Paying  Agent,  any Security
Registrar or any other agent of the Company or the Trustee, in its individual or
any other capacity,  may become the owner or pledgee of securities and,  subject
to Section 608 and 613, may otherwise deal with the Company with the same rights
it would  have it if were  not  Trustee,  Authenticating  Agent,  Paying  Agent,
Security Registrar or such other agent.

SECTION 606. Money Held in Trust.

     Money held by the Trustee in trust  hereunder  need not be segregated  from
other funds except to the extent  required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.

SECTION 607. Compensation and Reimbursement.

     The Company agrees;

          (1) to pay to the Trustee  from time to time  reasonable  compensation
     for all services rendered by it hereunder (which  compensation shall not be
     limited by any provision of law in regard to the  compensation of a trustee
     of any express trust);

          (2) except as otherwise  expressly  provided herein,  to reimburse the
     Trustee upon its request for all  reasonable  expenses,  disbursements  and
     advances  incurred or made by the Trustee in accordance  with any provision
     of this Indenture  (including the reasonable  compensation and the expenses
     and  disbursements  of its agents and  counsel),  except any such  expense,
     disbursement or advance as may be  attributable to its gross  negligence or
     bad faith; and

          (3) to indemnify the Trustee for, and to hold it harmless against, any
     loss,  liability or expense  incurred without gross negligence or bad faith
     on its  part,  arising  out of or in  connection  with  the  acceptance  or
     administration  of the trust or trusts  hereunder,  including the costs and
     expenses of defending  itself  against any claim or liability in connection
     with the exercise or performance of any of its powers or duties hereunder.



                                       32
<PAGE>

     As security for the  performance  of the  obligations  of the Company under
this Section,  the Trustee shall have a first lien prior to the Securities  upon
all  property  and funds held or  collected  by the Trustee as such,  except for
funds specifically held in trust for the benefit of the Holders of Securities.

SECTION 608. Corporate Trustee Required; Eligibility.

     There shall at all times be a Trustee  hereunder for the Securities of each
series which shall be a corporation  organized and doing business under the laws
of the United States of America,  any State thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having a combined
capital  and  surplus  of at least  $150,000,  and  subject  to  supervision  or
examination by Federal or State Authority. If such corporation publishes reports
of condition at least  annually,  pursuant to law or to the  requirements of the
aforesaid  supervising  or  examining  authority,  then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its  combined  capital and surplus as set forth in its most recent  report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section,  it shall resign  immediately in
the manner and with the effect hereinafter specified in this Article.

SECTION 609. Resignation and Removal; Appointment of Successor.

     (a) No  resignation  or  removal of the  Trustee  and no  appointment  of a
successor  Trustee  pursuant to this Article  shall become  effective  until the
acceptance  of  appointment  by the  successor  Trustee in  accordance  with the
applicable requirements of Section 610.

     (b) The Trustee may resign at any time with  respect to the  securities  of
one or more  series by giving  written  notice  thereof to the  Company.  If the
instrument of acceptance  by a successor  Trustee  required by Section 610 shall
not have been  delivered to the Trustee  within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction  for the  appointment  of a successor  Trustee  with respect to the
securities of such series.

     (c) The Trustee may be removed at any time with  respect to the  Securities
of any series by Act of the  Holders of a majority  in  principal  amount of the
Oustanding  Securities  of such  series,  delivered  to the  Trustee  and to the
Company.

     (d) If at any time:

          1. the Trustee shall cease to be eligible  under Section 608 and shall
     fail to resign after written request therefor by the Company or by any such
     Holder, or

          2. the Trustee shall become incapable of acting or shall be adjudged a
     bankrupt or insolvent or a receiver of the Trustee or of its property shall
     be  appointed  or any public  officer  shall take  charge or control of the
     Trustee or of its  property or affairs  for the purpose of  rehabilitation,
     conservation or liquidation,



                                       33
<PAGE>

then,  in any such case,  (i) the Company by a Board  Resolution  may remove the
Trustee  with  respect to all  Securities,  or (ii)  subject to Section 514, any
Holder  who has been a bona fide  Holder of a  Security  for at least six months
may, on behalf on himself and all others similarly situated,  petition any court
of  competent  jurisdiction  for the removal of the Trustee  with respect to all
Securities and the appointment of a successor Trustee or Trustees.

     (e) If the Trustee shall resign,  be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with respect
to the  Securities of one or more series,  the Company,  by a Board  Resolution,
shall  promptly  appoint a  successor  Trustee or Trustees  with  respect to the
Securities of that or those series (it being  understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the  Securities of any  particular  series) and shall comply with the applicable
requirements  of Section  610.  If,  within  one year  after  such  resignation,
removal, or incapability, or the occurrence of such vacancy, a successor Trustee
with  respect to the  Securities  of any series shall be appointed by Act of the
Holders of a majority in principal  amount of the Oustanding  Securities of such
series delivered to the Company and the retiring Trustee,  the successor Trustee
so  appointed  shall,  forthwith  upon its  acceptance  of such  appointment  in
accordance with the applicable requirements of Section 610, become the successor
Trustee  with  respect  to the  Securities  of such  series  and to that  extent
supersede  the  successor  Trustee  appointed  by the  Company.  If no successor
Trustee  with  respect  to the  Securities  of any  series  shall  have  been so
appointed by the Company or the Holders and accepted  appointment  in the manner
required  by  Section  610,  any  Holder  who has been a bona  fide  Holder of a
Security  of such  series for at least six months  may, on behalf of himself and
all others similarly situated,  petition any court of competent jurisdiction for
the  appointment  of a successor  Trustee with respect to the Securities of such
series.

     (f) The Company shall give notice of each  resignation  and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor  Trustee with respect to the  Securities of any series in the manner
and to the extent provided in Section 106. Each notice shall include the name of
the  successor  Trustee  with respect to the  Securities  of such series and the
address of its Corporate Trust Office.

SECTION 610. Acceptance of Appointment by Successor.

     (a) In  case of the  appointment  hereunder  of a  successor  Trustee  with
respect to all  Securities,  every such  successor  Trustee so  appointed  shall
execute,  acknowledge and deliver to the Company and to the retiring  Trustee an
instrument accepting such appointment,  and thereupon the resignation or removal
of the retiring  Trustee  shall become  effective  and such  successor  Trustee,
without any further act,  deed or  conveyance,  shall become vested with all the
rights,  powers,  trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor  Trustee,  such  retiring  Trustee  shall,  upon
payment of its charges,  execute and deliver an instrument  transferring to such
successor Trustee all the rights, powers, and trusts of the retiring Trustee and
shall duly assign,  transfer and deliver to such successor  Trustee all property



                                       34
<PAGE>

and money held by such retiring Trustee hereunder,  subject  nevertheless to its
lien, if any, provided for in Section 607.

     (b) In  case of the  appointment  hereunder  of a  successor  Trustee  with
respect to the Securities of one or more (but not all) series, the Company,  the
retiring  Trustee and each  successor  Trustee with respect to the Securities of
one or more series shall  execute and deliver an indenture  supplemental  hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain  such  provisions  as shall be  necessary  or  desirable to transfer and
confirm to, and to vest in,  each  successor  Trustee  all the  rights,  powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates,  (2)
if the retiring  Trustee is not retiring with respect to all  Securities,  shall
contain  such  provisions  as shall be deemed  necessary or desirable to confirm
that all the rights,  powers,  trusts and duties of the  retiring  Trustee  with
respect  to the  Securities  of that or those  series as to which  the  retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the  provisions of this  Indenture as shall be
necessary  to  provide  for or  facilitate  the  administration  of  the  trusts
hereunder by more than one Trustee,  it being  understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same  trust,  that  each  such  Trustee  shall be  trustee  of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder  administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture  the  resignation  or removal of the  retiring  Trustee  shall  become
effective  to the  extent  provided  therein  and each such  successor  Trustee,
without any further act,  deed or  conveyance,  shall become vested with all the
rights,  powers,  trusts and duties of the retiring  Trustee with respect to the
Securities of that or those series to which the  appointment  of such  successor
Trustee relates;  but, on request of the Company or any successor Trustee,  such
retiring  Trustee  shall duly  assign,  transfer  and deliver to such  successor
Trustee, to the extent contemplated by such supplemental indenture, all property
and money held by such retiring Trustee hereunder with respect to the Securities
of that or those  series who which the  appointment  of such  successor  Trustee
relates.

     (c) Upon request of any such successor  Trustee,  the Company shall execute
any and all instruments  for more fully and certainly  vesting in and confirming
to such  successor  Trustee all such  rights,  powers and trusts  referred to in
paragraph (a) or (b) of this Section, as the case may be.

     (d) No successor Trustee shall accept its appointment unless at the time of
such  acceptance  such  successor  Trustee shall be qualified and eligible under
this Article.

SECTION 611. Merger, Conversion, Consolidation or Succession to Business.

     Any  corporation  into which the Trustee may be merged or converted or with
which it may be  consolidated,  or any  corporation  resulting  from any merger,
conversion  or  consolidation  to which  the  Trustee  shall be a party,  or any
corporation  succeeding to all or substantially all the corporate trust business
of the Trustee,  shall be the successor of the Trustee hereunder,  provided such
corporation  shall be  otherwise  qualified  and  eligible  under this  Article,
without the  execution  or filing of any paper or any further act on the part of
any of the parties hereto. In case



                                       35
<PAGE>

any Securities shall have been authenticated,  but not delivered, by the Trustee
or the  Authenticating  Agent, as the case may be, then in office, any successor
by  merger,  conversion  or  consolidation  to such  authenticating  Trustee  or
Authenticating  Agent,  as the case may be,  may adopt such  authentication  and
deliver  the  Securities  so  authenticated  with  the  same  effect  as if such
successor  Trustee or successor  Authenticating  Agent,  as the case may be, had
itself authenticated such Securities.

SECTION 612. Appointment of Authenticating Agent.

     At any time when any of the Securities remain Outstanding,  the Trustee may
appoint an Authenticating  Agent or Agents with respect to one or more series of
Securities  which  shall  be  authorized  to act on  behalf  of the  Trustee  to
authenticate  Securities  of such  series  issued  upon  original  issue or upon
exchange,  registration of transfer or partial redemption thereof and Securities
so  authenticated  shall be entitled to the benefits of this Indenture and shall
be valid and  obligatory  for all  purposes as if  authenticated  by the Trustee
hereunder.  Wherever  reference is made in this Indenture to the  authentication
and  delivery of  Securities  by the  Trustee or the  Trustee's  certificate  of
authentication,  such reference  shall be deemed to include  authentication  and
delivery on behalf of the Trustee by an  Authenticating  Agent and a certificate
of authentication  executed on behalf of the Trustee by an Authenticating Agent.
Each  Authenticating  Agent shall be  acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States of America,  any State  thereof or the District of  Columbia,  authorized
under such laws to exercise  corporate trust powers and to act as Authenticating
Agent,  having a combined  capital  and  surplus of not less than  $150,000  and
subject to supervision or  examination  by Federal or State  Authority.  If such
Authenticating Agent publishes reports of condition at least annually,  pursuant
to law or to the requirements of said supervising or examining  authority,  then
for the  purposes  of this  Section,  the  combined  capital and surplus of such
Authenticating  Agent shall be deemed to be its combined  capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating  Agent  shall  cease  to  be  eligible  in  accordance  with  the
provisions of this Section,  such Authenticating  Agent shall resign immediately
in the manner and with the effect specified in this Section.

     Any  corporation  into  which an  Authenticating  Agent  may be  merged  or
converted or with which it may be  consolidated,  or any  corporation  resulting
from any merger,  conversion or consolidation to which such Authenticating Agent
shall be a party,  or any  corporation  succeeding  to the  corporate  agency or
corporate trust business of an Authenticating  Agent,  shall be the successor of
such  Authenticating  Agent  hereunder,   provided  such  corporation  shall  be
otherwise  eligible  under this Section,  without the execution or filing of any
paper or any further act on the part of the parties hereto or the Authenticating
Agent or such successor operation.

     An Authenticating Agent for any series of Securities may resign at any time
by giving  written  notice  thereof to the  Trustee  for such  series and to the
Company.  The Trustee for any series of Securities may at any time terminate the
agency of an  Authenticating  Agent by giving  written  notice  thereof  to such
Authenticating  Agent and to the Company in the manner set forth in Section 105.
Upon receiving such notice of resignation or upon such  termination,  or in case
at



                                       36
<PAGE>

any time such Authenticating Agent shall cease to be eligible in accordance with
the  provisions of this Section,  the Trustee for such series of Securities  may
appoint a  successor  Authenticating  Agent  which  shall be  acceptable  to the
Company  and shall mail  written  notice of such  appointment  to all Holders of
Securities  of the series with respect to which such  Authenticating  Agent will
serve in the manner  set forth in  Section  106.  Any  successor  Authenticating
Agent,  upon acceptance of its appointment  hereunder,  shall become vested with
all the rights, powers and duties of its predecessor hereunder, with like effect
as if originally named as an Authenticating  Agent. No successor  Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.

     The  Trustee  for  the  Securities  of  each  series  agrees  to pay to the
Authenticating  Agent for such series from time to time reasonable  compensation
for its services  under this  Section,  and the Trustee  shall be entitled to be
reimbursed for such payments, subject to Section 607.

     The  provisions  of Sections  308, 604 and 605 shall be  applicable to each
Authenticating Agent.

     Pursuant to each  appointment  made under this Section,  the  Securities of
each series covered by such appointment may have endorsed  thereon,  in addition
to the Trustee's  certificate of authentication,  an alternative  certificate of
authentication in the following form:

     "This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.

                                           ____________________________________,
                                             as Trustee

                                           By:__________________________________
                                                    As Authenticating Agent

                                           By:__________________________________
                                                    Authorized Agent


                                  ARTICLE SEVEN

               LISTS OF HOLDERS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.

     The Company will furnish or cause to be furnished to the Trustee

          (a)  semi-annually,  not more than 15 days after each  Regular  Record
     Date in each  year,  a list,  in such form as the  Trustee  may  reasonably
     require,  of the names and  addresses  of the  Holders  as of such  Regular
     Record Date, and



                                       37
<PAGE>

          (b) at such other times as the Trustee may request in writing,  within
     30 days after the  receipt by the  Company of any such  request,  a list of
     similar  form and  conent as of a date more than 15 days  prior to the time
     such list is furnished;

excluding from any such list names and addresses  received by the Trustee in its
capacity as Security Registrar.

SECTION 702. Preservation of Information; Communications to Holders.

     (a) The  Trustee  shall  preserve,  in as  current a form as is  reasonably
practicable,  the names and  addresses  of Holders  contained in the most recent
list  furnished  to the  Trustee as  provided  in Section  701 and the names and
addresses  of Holders  received  by the  Trustee  in its  capacity  as  Security
Registrar.  The  Trustee may  destroy  any list  furnished  to it as provided in
Section 701 upon receipt of a new list so furnished.

     (b) If three or more Holders (herein referred to as "applicants")  apply in
writing to the Trustee,  and furnish to the Trustee  reasonable  proof that each
such  applicant  has  owned a  Security  for a  period  of at least  six  months
preceding the date of such  application,  and such  application  states that the
applicants desire to communicate with other Holders with respect to their rights
under this Indenture or under the Securities and is accompanied by a copy of the
form of proxy or other  communication which such applicants propose to transmit,
then the  Trustee  shall,  within five  business  days after the receipt of such
application, at its election, either:

          (i) afford such applicants access to the information  preserved at the
     time by Trustee in accordance with Section 702 (a), or

          (ii) inform such  applicant  as to the  approximate  number of Holders
     whose names and addresses  appear in the information  preserved at the time
     by the Trustee in accordance with Section 702(a), and as to the approximate
     cost of mailing to such  Holders the form of proxy or other  communication,
     if any, specified in such application.

     If the Trustee  shall elect not to afford  such  applicants  access to such
information,  the Trustee shall,  upon the written  request of such  applicants,
mail to each Holder whose name and address appears in the information  preserved
at the time by Trustee in accordance with Section 702(a),  a copy of the form of
proxy or other communication which is specified in such request, with reasonable
promptness  after a tender to the  Trustee of the  material  to be mailed and of
payment,  or provision for the payment,  of the reasonable  expenses of mailing,
unless  within  five days  after  such  tender  the  Trustee  shall mail to such
applicants and file with the Commission, together with a copy of the material to
be  mailed,  a written  statement  to the  effect  that,  in the  opinion of the
Trustee,  such mailing would be contrary to the best interests of the Holders or
would be in violation of applicable  law. Such written  statement  shall specify
the basis of such opinion.  If the Commission,  after  opportunity for a hearing
upon the objections  specified in the written statement so filed, shall enter an
order  refusing to sustain any of such  objections  or if, after the entry of an
order  sustaining one or more of such  objections,  the  Commission  shall find,




                                       38
<PAGE>

after notice and opportunity  for hearing,  that all the objections so sustained
have been met and shall  enter an order so  declaring,  the  Trustee  shall mail
copies of such material to all such Holders with reasonable promptness after the
entry of such order and the renewal of such tender; otherwise, the Trustee shall
be  relieved  of any  obligation  or duty to such  applicants  respecting  their
application.

     (c) Every Holder of Securities,  by receiving and holding the same,  agrees
with the Company and the  Trustee  that  neither the Company nor the Trustee nor
any  agent  of  either  of them  shall  be held  accountable  by  reason  of the
disclosure of any such  information as to the names and addresses of the Holders
in  accordance  with Section 702 (b),  regardless  of the source from which such
information was derived,  and that the Trustee shall not be held  accountable by
reason of mailing any material pursuant to a request made under Section 702(b).

SECTION 703. Reports by Trustee.

     (a)  Within  60 days  after May 15 of each  year  commencing  with the year
following the first issuance of  Securities,  the Trustee shall transmit by mail
to all Holders as provided in Section 313(c) of the Trust  Indenture Act a brief
report  dated as of such May 15,  if  required  by  Section  313(a) of the Trust
Indenture Act.

SECTION 704. Reports by Company.

     The Company shall;.

          (1) file  with the  Trustee,  within  15 days  after  the  Company  is
     required to file the same with the Commission, 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 Commission may from time to time by
     rules and regulations  prescribe) which the Company may be required to file
     with the Commission pursuant to Section 13 or Section 15(d) of the Exchange
     Act; or, if the Company is not required to file  information,  documents or
     reports  pursuant to either of said  Sections,  then it shall file with the
     Trustee  and the  Commission,  in  accordance  with  rules and  regulations
     prescribed from time to time by the Commission,  such of the  supplementary
     and  periodic  information,  documents  and  reports  which may be required
     pursuant to Section 13 of the Exchange Act in respect of a security  listed
     and registered on a national  securities exchange as may be prescribed from
     time to time in such rules and regulations;

          (2) file with the Trustee and the Commission, in accordance with rules
     and  regulations  prescribed  from  time to time  by the  Commission,  such
     additional information, documents and reports with respect to compliance by
     the Company with the  conditions  and covenants of this Indenture as may be
     required from time to time by such rules and regulations; and

          (3)  transmit  by mail to all  Holders,  in the  manner  set  forth in
     Section 106, within 30 days after the filing thereof with the Trustee, such
     summaries of any



                                       39
<PAGE>

     information,  documents  and  reports  required  to be filed by the Company
     pursuant to  paragraphs  (1) and (2) of this  Section as may be required by
     rules and regulations prescribed from time to time by the Commission.


                                  ARTICLE EIGHT

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.

     The Company shall not consolidate with or merge into any other corporation,
or  sell,  convey,  exchange,  transfer  or  lease  its  properties  and  assets
substantially  as an entirety  to any Person  other than a  Subsidiary,  and the
Company shall not permit any Person other than a Subsidiary, to consolidate with
or merge  into the  Company or sell,  convey,  exchange,  transfer  or lease its
properties and assets substantially as an entirety to the Company, unless:

          (1) in case the Company shall  consolidate  with or merge into another
     corporation,  or sell, convey,  exchange,  transfer or lease its properties
     and  assets  substantially  as an  entirety  to  any  Person  other  than a
     Subsidiary,  the corporation formed by such consolidation or into which the
     Company is merged or the Person which  acquires by  conveyance or transfer,
     or which leases, the properties and assets of the Company  substantially as
     an entirety shall be a corporation organized and existing under the laws of
     the United States of America, any State thereof or the District of Columbia
     and shall expressly assume, by an indenture  supplemental hereto,  executed
     and delivered to the Trustee, in form satisfactory to the Trustee,  the due
     and punctual payment of the principal of and interest on all the Securities
     and the  performance of every covenant of this Indenture on the part of the
     Company to be performed or observed;

          (2)  immediately  after giving effect to such  transaction no Event of
     Default,  and no event which,  after notice or lapse of time or both, would
     become an Event of Default, shall have happened and be continuing;

          (3) if, as a result of any such  consolidation or merger or such sale,
     conveyance,  exchange,  transfer  or  lease,  properties  or  assets of the
     Company or any Subsidiary would become subject to a mortgage, pledge, lien,
     security interest or other encumbrance which would not be permitted by this
     Indenture, the Company or any such Subsidiary or such successor corporation
     or Person,  as the case may be, shall take such steps as shall be necessary
     effectively to secure the Securities equally and ratably with (or prior to)
     all indebtedness secured thereby; and

          (4) the Company or any such Subsidiary has delivered to the Trustee an
     Officers'  Certificate  and an Opinion of Counsel,  each  stating that such
     consolidation,  merger, sale, conveyance,  exchange,  transfer or lease and
     supplemental indenture comply



                                       40
<PAGE>

     with this Article and that all  conditions  precedent  herein  provided for
     relating to such transaction have been complied with.

SECTION 802. Successor Corporation Substituted.

     Upon any  consolidation  by the Company  with or merger by the Company into
any other corporation or any sale,  conveyance,  exchange,  transfer or lease of
the  properties  and  assets of the  Company  substantially  as an  entirety  in
accordance  with  Section  801,  the  successor   corporation   formed  by  such
consolidation  or into  which  the  Company  is merged  or to which  such  sale,
conveyance,  exchange,  transfer  or  lease is made  shall  succeed  to,  and be
substituted  for, and may exercise  every right and power of, the Company  under
this Indenture with the same effect as if such  successor  corporation  had been
named as the Company herein, and thereafter,  except in the case of a lease, the
predecessor corporation shall be relieved of all obligations and covenants under
this Indenture and the Securities.


                                  ARTICLE NINE

                             SUPPLEMENTAL INDENTURES

SECTION 901. Supplemental indentures Without Consent of Holders.

     Without the consent of any Holders, the Company, when authorized by a Board
Resolution,  and the Trustee,  at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:

          (1) to evidence the  succession of another  corporation to the Company
     and the  assumption  by any such  successor of the covenants of the Company
     herein and in the Securities; or

          (2) to add to the  covenants  of the  Company  for the  benefit of the
     Holders of all or any series of Securities (and if such covenants are to be
     for the benefit of less than all series of  Securities,  stating  that such
     covenants  are  expressly  being  included  solely for the  benefit of such
     series)  or to  surrender  any  right or power  herein  conferred  upon the
     Company; or

          (3) to add any additional Events of Default; or

          (4) to add to or change any of the  provisions  of this  Indenture  to
     such extent as shall be necessary to permit or  facilitate  the issuance of
     Securities in bearer form,  registrable or not registrable as to principal,
     and with or without interest coupons; or

          (5) to change or eliminate any of the  provisions  of this  Indenture,
     provided,  however,  that any  such  change  or  elimination  shall  become
     effective only when there is



                                       41
<PAGE>

     no Security  Outstanding  of any series  created  prior to the execution of
     such  supplemental  indenture  which is  entitled  to the  benefit  of such
     provision; or

          (6) to secure the Securities; or

          (7) to  establish  the form or terms of  Securities  of any  series as
     permitted by Sections 201 and 301; or

          (8)  to  evidence  and  provide  for  the  acceptance  of  appointment
     hereunder by a successor  Trustee with respect to the  Securities of one or
     more series and to add to or change any of the provisions of this Indenture
     as shall be necessary to provide for or facilitate  the  administration  of
     the trusts hereunder by more than one Trustee, pursuant to the requirements
     of Section 610(b); or

          (9) to cure any  ambiguity,  to correct or  supplement  any  provision
     herein which may be  inconsistent  with any other provision  herein,  or to
     make any other  provisions  with  respect to matters or  questions  arising
     under  this  Indenture,  provided,  however,  that  such  action  shall not
     adversely  affect the  interests of the Holders of Securities of any series
     in any material respect.

SECTION 902. Supplemental Indentures with Consent of Holders.

     With the consent of the Holders of not less than 50% in principal amount of
the  Oustanding   Securities  of  each  series  affected  by  such  supplemental
indenture,  by Act of said Holders delivered to the Company and the Trustee, the
Company,  when authorized by a Board Resolution,  and the Trustee may enter into
an indenture  or  indentures  supplemental  hereto for the purpose of adding any
provisions to or changing in any manner or eliminating  any of the provisions of
this  Indenture  or of  modifying  in any manner  the  rights of the  Holders of
Securities of such series under this Indenture;  provided, however, that no such
supplemental  indenture  shall,  without  the  consent  of the  Holder  of  each
Outstanding Security affected thereby;

          (1) change the Stated Maturity of the principal of, or any installment
     of  principal  of or interest  on, any  Security,  or reduce the  principal
     amount thereof or the rate of interest  thereon or any premium payable upon
     the redemption  thereof,  or change any Place of Payment where, or the coin
     or currency in which,  any  Security or any  principal  of or the  interest
     thereon  is  payable,  or  impair  the  right  to  institute  suit  for the
     enforcement  of any such  payment on or after the Stated  Maturity  thereof
     (or, in the case of redemption, on or after the Redemption Date), or

          (2)  reduce  the  percentage  in  principal  amount of the  Oustanding
     Securities of any series,  the consent of whose Holders is required for any
     such  supplemental  indenture,  or the consent of whose Holders is required
     for any waiver (of compliance with certain  provisions of this Indenture or
     certain  defaults  hereunder and their  consequences)  provided for in this
     Indenture, or



                                       42
<PAGE>

          (3) modify  any of the  provisions  of this  Section,  Section  513 or
     Section  1010,  except to increase any such  percentage  or to provide that
     certain  other  provisions of this  Indenture  cannot be modified or waived
     without the  consent of the Holder of each  Outstanding  Security  affected
     thereby; provided, however, that this clause shall not be deemed to require
     the consent of any Holder with respect to changes in the references to "the
     Trustee"  and  concomitant  changes in this Section and Section 1010 or the
     deletion of this proviso,  in accordance  with the  requirements of section
     610(b) and 901(8).

A  supplemental  indenture  which  changes or  eliminates  any covenant or other
provision of this  Indenture  which has expressly  been included  solely for the
benefit of one or more  particular  series of Securities,  or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other  provision,  shall be  deemed  not to  affect  the  rights  under  this
Indenture of the Holders of Securities of any other series.

     It shall not be  necessary  for any Act of Holders  under  this  Section to
approve the particular form of any proposed supplemental  indenture but it shall
be sufficient if such Act shall approve the substance thereof.

SECTION 903. Execution of Supplemental Indentures.

     In  executing,   or  accepting  the  additional   trusts  created  by,  any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture,  the Trustee shall be entitled to receive,
and  (subject  to Section  601) shall be fully  protected  in relying  upon,  an
Opinion of Counsel stating that the execution of such supplemental  indenture is
authorized  or  permitted by this  Indenture.  The Trustee may, but shall not be
obligated  to,  enter into any such  supplemental  indenture  which  affects the
Trustee's  own  rights,  duties,   protections,   indemnities,   liabilities  or
immunities under this Indenture or otherwise.

SECTION 904. Effect of Supplemental Indentures.

     Upon the execution of any supplemental  indenture under this Article,  this
Indenture  shall be  modified in  accordance  therewith,  and such  supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities  theretofore or thereafter  authenticated and delivered  hereunder
shall be bound thereby.

SECTION 905. Conformity with Trust Indenture Act.

     Every  supplemental  indenture  executed  pursuant  to this  Article  shall
conform to the requirements of the Trust Indenture Act as then in affect.

SECTION 906. References in Securities to Supplemental Indentures.

     Securities of any series authenticated and delivered after the execution of
any supplemental  indenture  pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental



                                       43
<PAGE>

indenture.  If the Company shall so determine,  new  Securities of any series so
modified as to conform,  in the opinion of the Trustee and the  Company,  to any
such  supplemental  indenture  may be prepared  and  executed by the Company and
authenticated and delivered by the Trustee in exchange for Oustanding Securities
of such series.


                                   ARTICLE TEN

                                    COVENANTS

SECTION 1001. Payment of Principal and Interest, if any.

     The  Company  covenants  and  agrees  for the  benefit  of each  series  of
Securities  that it will  duly  and  punctually  pay  the  principal  of and the
interest,  if any, on the Securities of that series in accordance with the terms
of the Securities and this Indenture.

SECTION 1002. Maintenance of Office or Agency.

     The  Company  will  maintain  in each  Place of  Payment  for any series of
Securities an office or agency where  Securities of that series may be presented
or surrendered for payment,  an office or agency where Securities of that series
may be surrendered  for  registration  of transfer or exchange and where notices
and demands to or upon the Company in respect of the  Securities  of that series
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,  and the Company  hereby  appoints the
Trustee as its agent to receive all such presentations,  surrenders, notices and
demands.

     The Company may also from time to time  designate one or more other offices
or  agencies  where the  Securities  of one or more series 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 each Place of Payment for  Securities  of any series 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.

SECTION 1003. Money for Securities Payments To Be Held in Trust.

     If the Company  shall at any time act as its own Paying  Agent with respect
to any  series  of  Securities,  it  will,  on or  before  each  due date of the
principal  of or  interest,  if any, on any of the  Securities  of that  series,
segregate  and hold in trust for the benefit of the Persons  entitled  thereto a
sum  sufficient to pay the principal or interest so becoming due until such sums
shall be paid to such  Persons or otherwise  disposed of as herein  provided and
will promptly notify the Trustee of its action or failure so to act.



                                       44
<PAGE>

     Whenever the Company shall have one or more Paying Agents for any series of
Securities,  it will,  prior to each due date of the principal of or interest on
any  Securities of that series,  deposit with a Paying Agent a sum sufficient to
pay the principal or interest becoming due, such sum to be held in trust for the
benefit of the Persons entitled to such principal or interest,  and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of its
action or failure so to act.

     The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and  deliver to the Trustee an  instrument  in which
such Paying Agent shall agree with the  Trustee,  subject to the  provisions  of
this Section, that such Paying Agent will.

          (1) hold all sums held by it for the  payment of the  principal  of or
     interest  on  Securities  of that  series in trust for the  benefit  of the
     Persons  entitled  thereto until such sums shall be paid to such Persons or
     otherwise disposed of as herein provided;

          (2) give the  Trustee  notice of any  default by the  Company  (or any
     other  obligor  upon the  Securities  of that  series) in the making of any
     payment of principal or interest on the Securities of that series; and

          (3) at any time during the  continuance of any such default,  upon the
     written  request of the Trustee,  forthwith  pay to the Trustee all sums so
     held in trust by such Paying Agent.

     The Company may at any time, for the purpose of obtaining the  satisfaction
and  discharge of this  Indenture or for any other  purpose,  pay, or by Company
Order  direct any Paying  Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying  Agent,  such sums to be held by the Trustee upon the
same  trusts as those  upon  which  such sums were held by the  Company  or such
Paying Agent;  and,  upon such payment by any Paying Agent to the Trustee,  such
Paying Agent shall be released from all further  liability  with respect to such
money.

     Any money  deposited with the Trustee or any Paying Agent,  or then held by
the Company,  in trust for the payment of the principal of (and premium, if any)
or interest  on any  Security of any series and  remaining  unclaimed  for three
years after such principal (and premium, if any) or interest, if any, has become
due and  payable  shall be paid to the Company on Company  Request,  or (if then
held by the Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter,  as an unsecured  general creditor,  look only to the
Company for payment  thereof,  and all  liability  of the Trustee or such Paying
Agent with  respect to such trust  money,  and all  liability  of the Company as
trustee thereof, shall thereupon cease;  provided.  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  published in
the English language,  customarily published on each Business Day and of general
circulation in the Borough of Manhattan,  The City of New York and in each Place
of Payment  for  Securities  of that  series,  notice  that such  money  remains
unclaimed and that, after a date



                                       45
<PAGE>

specified  therein,  which  shall not be less than 30 days from the date of such
publication,  any unclaimed  balance of such money then remaining will be repaid
to the Company,  unless otherwise required by mandatory  provision of applicable
escheat, or abandoned or unclaimed property law.

SECTION 1004. Corporate Existence.

     Subject to Article Eight and to Section 1007,  the Company will do or cause
to be done all things  necessary  to preserve  and keep in full force and effect
its corporate  existence,  rights (charter and statutory) and franchises as well
as the corporate  existence,  rights  (charter and  statutory) and franchises of
each Subsidiary;  provided,  however,  that the Company shall not be required to
preserve  any such right or franchise if the Company  shall  determine  that the
preservation  thereof is no longer  desirable  in the conduct of the business of
the Company and its Subsidiaries considered as a whole and that the loss thereof
is not disadvantageous in any material respect to the Holders.

SECTION 1005. Maintenance of Properties.

     The Company will cause all properties  used or useful in the conduct of its
business or the business of any  Subsidiary  to be  maintained  and kept in good
condition,  repair and working order and supplied  with all necessary  equipment
and  will  cause  to be made  all  necessary  repairs,  renewals,  replacements,
betterments and improvements  thereof, all as in the judgment of the Company may
be necessary  so that the business  carried on in  connection  therewith  may be
properly and  advantageously  conducted at all times;  provided,  however,  that
nothing in this  Section  shall  prevent  the  Company  from  discontinuing  the
operation or maintenance of any such  properties if such  discontinuance  is, in
the  judgment of the  Company,  desirable  in the conduct of its business or the
business of any Subsidiary and not  disadvantageous  in any material  respect to
the Holders.

SECTION 1006. Payment of Taxes and Other Claims.

     The Company will pay or discharge or cause to be paid or discharged, before
the same shall become  delinquent,  (1) all taxes,  assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary,  and (2) all lawful claims
for labor,  materials and supplies which, if unpaid,  might by law become a lien
upon the property of the Company or any Subsidiary;  provided however,  that the
Company  shall  not be  required  to pay or  discharge  or  cause  to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.

SECTION 1007. Statements as to Compliance.

     (a) The Company will  deliver to the Trustee,  within 90 days after the end
of each fiscal  year,  a written  statement,  which need not comply with Section
102,  signed by the  Chairman of the Board of  Directors,  the  President,  Vice
Chairman or a Vice President and by the



                                       46
<PAGE>

Treasurer, an Assistant Treasurer,  the Controller or an Assistant Controller of
the Company, stating, as to each signer thereof, that:

          (1) a review of the  activities of the Company during such year and of
     performance under this Indenture has been made under his supervision, and

          (2) to the  best  of his  knowledge,  based  on such  review,  (a) the
     Company has fulfilled all its obligations  under this Indenture  throughout
     such year,  or, if there has been a default in the  fulfillment of any such
     obligation,  specifying  each such default  known to him and the nature and
     status thereof,  and (b) no event has occurred and is continuing  which is,
     or after notice or lapse of time or both would become, an Event of Default,
     or, if such an event has occurred and is continuing,  specifying  each such
     event known to him and the nature and status thereof.

     (b)  Accountants'  Certificate.  The Company  shall deliver to the Trustee,
within 90 days after the end of the Company's fiscal year, a certificate  signed
by the Company's independent certified public accountants stating (i) that their
audit  examination  has included a review of the terms of this Indenture and the
Securities  as they relate to accounting  matters,  (ii) that they have read the
most  recent  Officers'  Certificates  delivered  to  the  Trustee  pursuant  to
paragraph (a) of this Section and (iii) whether,  in connection with their audit
examination,  anything came to their  attention that caused them to believe that
the Company was not in compliance with any of the terms,  covenants,  provisions
or  conditions of this  Indenture as they pertain to accounting  matters and, if
any  Default or Event of Default  has come to their  attention,  specifying  the
nature and period of existence thereof; provided that such independent certified
public accountants shall not be liable in respect of such statement by reason of
any failure to obtain  knowledge  of any such  Default or Event of Default  that
would not be  disclosed  in the  course  of an audit  examination  conducted  in
accordance with generally  accepted auditing  standards in effect at the date of
such examination.

SECTION 1008. Waiver of Certain Covenants.

     The  Company may omit in any  particular  instance to comply with any term,
provision  or  condition  set forth in sections  1004 to 1006,  inclusive,  with
respect  to the  Securities  of  any  series,  if,  before  the  time  for  such
compliance,  the Holders of at least 50% in principal  amount of the  Oustanding
Securities  of such series  shall,  by Act of such  Holders,  either  waive such
compliance  in such  instance  or  generally  waive  compliance  with such term,
provision or condition,  but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective,  the obligations of the Company and the duties of
the Trustee in respect of any such term,  provision or condition shall remain in
full force and effect.



                                       47
<PAGE>

                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

SECTION 1101. Applicability of Article.

     Securities of any series which are redeemable  before their Stated Maturity
shall be  redeemable  in  accordance  with their terms and (except as  otherwise
specified  as  contemplated  by Section  301 for  Securities  of any  series) in
accordance with this Article,  subject to any requisite  regulatory approvals of
any nature whatsoever.

SECTION 1102. Election to Redeem; Notice to Trustee.

     The election of the Company to redeem any Securities  shall be evidenced by
a Board Resolution.  In case of any redemption at the election of the Company of
less than all the Securities of any series,  the Company shall, at least 45 days
prior to the Redemption Date fixed by the Company (unless a shorter notice shall
be satisfactory to the Trustee),  notify the Trustee of such Redemption Date and
of the principal amount of Securities of such series to be redeemed. In the case
of any redemption of securities  prior to the  expiration of any  restriction on
such  redemption  provided in the terms of such  Securities or elsewhere in this
Indenture,  the Company shall furnish the Trustee with an Officers'  Certificate
evidencing compliance with such restriction.

SECTION 1103. Selection by Trustee Of Securities to be Redeemed.

     If less than all the  Securities  of any  series  are to be  redeemed,  the
particular  Securities  to be redeemed  shall be selected  not more then 45 days
prior to the Redemption Date by the Trustee,  from the Oustanding  Securities of
such series not previously called for redemption, by lot or such other method as
the  Trustee  shall  deem fair and  appropriate  and which may  provide  for the
selection  for  redemption  of  portions   (equal  to  the  minimum   authorized
denomination for Securities of that series or any integral  multiple thereof) of
the principal amount of Securities of such series of a denomination  larger than
the minimum authorized denomination for Securities of that series.

     The Trustee shall promptly  notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities  selected for partial
redemption, the principal amount thereof to be redeemed.

     For all purposes of this Indenture,  unless the context otherwise requires,
all  provisions  relating to the redemption of Securities  shall relate,  in the
case of any  Securities  redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.



                                       48
<PAGE>

SECTION 1104. Notice Of Redemption.

     Notice of redemption shall be given by first-class  mail,  postage prepaid,
mailed no less than 30 nor more than 60 days prior to the  Redemption  Date,  to
each  Holder of  Securities  to be  redeemed,  at his address  appearing  in the
Security Register. All notices of redemption shall state:

          (1) the Redemption Date,

          (2) the Redemption Price,

          (3) if less than all the Oustanding Securities of any series are to be
     redeemed,  the identification (and, in the case of partial redemption,  the
     respective principal amounts) of the particular Securities to be redeemed,

          (4) that on the Redemption  Date the Redemption  Price will become due
     and payable upon each such  Security,  or portion  thereof,  to be redeemed
     and, if applicable, that interest thereon will cease to accrue on and after
     said date, and

          (5) the place or places where such  Securities  are to be  surrendered
     for payment of the Redemption Price.

     Notice of  redemption  of  Securities to be redeemed at the election of the
Company  shall be given by the  Company  or, at the  Company's  request,  by the
Trustee in the name and at the expense of the Company.

SECTION 1105. Deposit Of Redemption Price.

     Prior to any Redemption Date, the Company shall deposit with the Trustee or
with a Paying  Agent (or,  if the  Company  is acting as its own  Paying  Agent,
segregate  and hold in trust as  provided  in  Section  1003) an amount of money
sufficient to pay the Redemption  Price of, and (except if the  Redemption  Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date.

SECTION 1106. Securities Payable on Redemption Date.

     Notice of redemption  having been given as aforesaid,  the Securities so to
be  redeemed  shall,  on the  Redemption  Date,  become  due and  payable at the
Redemption  Price  therein  specified,  and from and after such date (unless the
Company  shall  default  in the  payment  of the  Redemption  Price and  accrued
interest) such  Securities  shall cease to bear interest.  Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption  Price,  together with accrued interest
to the Redemption  Date;  provided  however,  that  installments of interest the
Stated  Maturity of which is on or prior to the Redemption Date shall be payable
to the Holders of such Securities, or one or



                                       49
<PAGE>

more Predecessor Securities,  registered as such at the close of business on the
relevant  Record Dates  according to their terms and the  provisions  of Section
307.

     If any Security  called for redemption  shall not be so paid upon surrender
therefor for redemption, the principal shall, until paid, bear interest from the
Redemption Date at the rate prescribed therefor in the Security.

SECTION 1107. Securities Redeemed in Part.

     Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires,  due
endorsement by, or a written  instrument of transfer in form satisfactory to the
Company and the Trustee  duly  executed  by, the Holder  thereof or his attorney
duly authorized in writing) and the Company shall execute, and the Trustee shall
authenticate  and deliver to the Holder of such Security without service charge,
a new Security or Securities of the same series, of any authorized  denomination
as  requested  by such Holder,  in  aggregate  principal  amount equal to and in
exchange  for  the  unredeemed  portion  of the  principal  of the  Security  so
surrendered,  except that if a global  Security is so  surrendered,  the Company
shall execute,  and the Trustee shall authenticate and deliver to the Depositary
for such global  Security,  without  service  charge,  a new global  Security or
Securities in a denomination equal to and in exchange for the unredeemed portion
of the principal of the global Security so surrendered.


                                 ARTICLE TWELVE

                        MEETINGS OF HOLDERS OF SECURITIES

SECTION 1201. Purposes for Which Meetings May be Called.

     A  meeting  of  Holders  may be  called  at any time and from  time to time
pursuant to the provisions of this Article for any of the following purposes:

          (1) to give any notice to the  Company or to the  Trustee,  or to give
     any direction to the Trustee,  or to waive or consent to the waiving of any
     Event of  Default  hereunder  and its  consequences,  or to take any  other
     action  authorized to be taken by Holders pursuant to any of the provisions
     of Article Five;

          (2) to remove the Trustee or appoint a successor Trustee,  pursuant to
     the provisions of Article Six;

          (3)  to  consent  to  the  execution  of an  indenture  or  indentures
     supplemental hereto pursuant to the provisions of Sections 901 and 902; or



                                       50
<PAGE>

          (4) to take any other action authorized to be taken by or on behalf of
     the Holders of any specified  aggregate  principal amount of the securities
     under any other provision of this Indenture or under applicable law.

SECTION 1202. Manner of Calling Meetings.

     The  Trustee  may at any time call a meeting  of Holders to take any action
specified in Section 1201. Notice of every meeting of the Holders, setting forth
the time and the place of such meeting and in general terms the action  proposed
to be taken at such  meeting,  shall be mailed by the Trustee to the Company and
to the  Holders  not less than 20 nor more than 60 days  prior to the date fixed
for the meeting. Any meeting shall be valid without notice if the Holders of all
the  Oustanding  Securities  are present in person or by proxy,  or if notice is
waived  before of after the  meeting  by the  Holders  of all of the  Oustanding
Securities,  and if the  Company  and the  Trustee  are either  present or have,
before or after the meeting, waived notice.

SECTION 1203. Call of Meetings by Company or Holders.

     In case at any time the Company,  pursuant to a resolution  of its Board of
Directors,  or the Holders of not less than 25% in aggregate principal amount of
the Oustanding Securities, shall have requested the Trustee to call a meeting of
Holders to take any action authorized in Section 1201 by written request setting
forth in reasonable  detail the action proposed to be taken at the meeting,  and
the Trustee  shall not have mailed  notice of such meeting  within 20 days after
receipt of such  request,  then the Company or such  Holders in the amount above
specified may determine the time and the place in Lancaster,  South Carolina for
such meeting and may call such meeting to take any action  authorized in Section
1201, by mailing notice thereof as provided in Section 1202.

SECTION 1204. Who May Attend and Vote at Meetings.

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

SECTION 1205. Regulations May be Made by Trustee.

     Notwithstanding  any other  provisions of this  Indenture,  the Trustee may
make such  reasonable  regulations  as it may deem  advisable for any meeting of
Holders,  in regard to proof of the holding of Securities and of the appointment
of proxies,  and in regard to the appointment and duties of inspectors of votes,
the submission and  examination of proxies,  certificates  and other evidence of
the right to vote, and such other matters  concerning the conduct of the meeting
as it shall deem appropriate.



                                       51
<PAGE>

     At any meeting  each Holder or proxy shall be entitled to one vote for each
$1,000 principal amount of Oustanding Securities held or represented by him.

SECTION 1206. Evidence Of Actions by Holders.

     Whenever  the  Holders of a specified  percentage  in  aggregate  principal
amount of the Securities may take any action,  the fact that the Holders of such
percentage  have acted may be  evidenced  by (a)  instruments  of similar  tenor
executed  by  Holders in Person or by  attorney  or  written  proxy,  or (b) the
Holders  voting in favor  thereof at any  meeting of Holders  called and held in
accordance with the provisions of the rules for meetings of Holders, or (c) by a
combination  thereof. The Trustee may require proof of any matter concerning the
execution  of any  instrument  by a Holder or his  attorney or proxy as it shall
deem necessary.

SECTION  1207.  Exercise  of Rights of Trustee and Holders Not to be Hindered or
Delayed.

     Nothing in this Article contained shall be deemed or construed to authorize
or permit, by reason of any call of a meeting of Holders or any rights expressly
or impliedly  conferred  hereunder to make such call,  any hindrance or delay in
the exercise of any right or rights conferred upon or reserved to the Trustee or
to  the  Holders  under  any of  the  provisions  of  this  Indenture  or of the
Securities.


                                ARTICLE THIRTEEN

                           SUBORDINATION OF SECURITIES

SECTION 1301. Securities Subordinate to Senior Indebtedness.

     The Company  covenants  and agrees that  anything in this  Indenture or the
Securities  of any  series to the  contrary  notwithstanding,  the  indebtedness
evidenced by the Securities of each series is subordinate and junior in right of
payment  to all Senior  Indebtedness  to the extent  provided  herein,  and each
Holder  of  Securities  of each  series,  by his  acceptance  thereof,  likewise
covenants and agrees to the subordination  herein provided and shall be bound by
the  provisions  hereof.   Senior  Indebtedness  shall  continue  to  be  Senior
Indebtedness  and  entitled to the  benefits of these  subordination  provisions
irrespective of any amendment,  modification or waiver of any term of the Senior
Indebtedness or extension or renewal of the Senior Indebtedness.

     In the event that the Company shall default in the payment of any principal
of (or  premium,  if any) or interest on any Senior  Indebtedness  when the same
becomes due and payable,  whether at maturity or at a date fixed for  prepayment
or by declaration of  acceleration  or otherwise,  then,  upon written notice of
such default to the Company by the holders of Senior Indebtedness or any trustee
therefor, unless and until such default shall have been cured or waived or shall
have  ceased  to  exist,  no  direct or  indirect  payment  (in cash,  property,
securities,  by  set-off  or  otherwise)  shall be made or  agreed to be made on
account of the principal of or



                                       52
<PAGE>

interest on any of the Securities, or in respect of any redemption,  retirement,
purchase or other acquisition of any of the Securities.

     In the event of:

          (a)   any   insolvency,   bankruptcy,    receivership,    liquidation,
     reorganization,  readjustment,  composition  or  other  similar  proceeding
     relating to the Company, its creditors or its property,

          (b) any proceeding for the  liquidation,  dissolution or other winding
     up of the  Company,  voluntary  or  involuntary,  whether or not  involving
     insolvency or bankruptcy proceedings,

          (c) any assignment by the Company for the benefit of creditors, or

          (d) any other marshalling of the assets of the Company,

all Senior  Indebtedness  (including  any interest  thereon  accruing  after the
commencement  of any such  proceedings)  shall  first be paid in full before any
payment or distribution, whether in cash, securities or other property, shall be
made to any Holder of any of the Securities on account  thereof.  Any payment or
distribution,  whether  in  cash,  securities  or  other  property  (other  than
securities  of the Company or any other  corporation  provided  for by a plan of
reorganization or readjustment the payment of which is subordinate,  at least to
the  extent  provided  in these  subordination  provisions  with  respect to the
indebtedness  evidenced  by  the  Securities,  to  the  payment  of  all  Senior
Indebtedness  at the time  outstanding  and to any securities  issued in respect
thereof  under any such plan of  reorganization  or  readjustment),  which would
otherwise (but for these subordination  provisions) be payable or deliverable in
respect of the  Securities of any series shall be paid or delivered  directly to
the  holders of Senior  Indebtedness  in  accordance  with the  priorities  then
existing  among  such  holders  until all  Senior  Indebtedness  (including  any
interest thereon accruing after the commencement of any such proceedings)  shall
have been paid in full.  In the event of any such  proceeding,  after payment in
full of all sums owing with respect to Senior  Indebtedness,  the Holders of the
Securities,  together with the holders of any obligations of the Company ranking
on a parity with the Securities, shall be entitled to be paid from the remaining
assets of the Company the amounts at the time due and owing on account of unpaid
principal of (and premium, if any) and interest on the Securities and such other
obligations before any payment or other distribution,  whether in cash, property
or otherwise,  shall be made on account of any capital stock or any  obligations
of the Company ranking junior to the Securities and such other obligations.

     In  the  event  that,   notwithstanding  the  foregoing,   any  payment  or
distribution  of any  character,  whether in cash,  securities or other property
(other than securities of the Company or any other corporation provided for by a
plan of reorganization  or readjustment the payment of which is subordinate,  at
least to the extent provided in these  subordination  provisions with respect to
the  indebtedness  evidenced  by the  Securities,  to the  payment of all Senior
Indebtedness  at the time  outstanding  and to any securities  issued in respect
thereof under any



                                       53
<PAGE>

such plan of reorganization or readjustment),  or any security shall be received
by the Trustee or any Holder in contravention  of any of the terms hereof,  such
payment or  distribution  or security shall be received in trust for the benefit
of, and shall be paid over or delivered and  transferred  to, the holders of the
Senior  Indebtedness  at the time  outstanding in accordance with the priorities
then existing  among such holders for  application  to the payment of all Senior
Indebtedness  remaining  unpaid,  to the extent necessary to pay all such Senior
Indebtedness  in full.  In the event of the failure of the Trustee or any Holder
to endorse or assign any such payment,  distribution or security, each holder of
Senior  Indebtedness is hereby  irrevocably  authorized to endorse or assign the
same.

     No present or future holder of any Senior  Indebtedness shall be prejudiced
in the right to  enforce  subordination  of the  indebtedness  evidenced  by the
Securities  by any act or  failure  to act on the part of the  Company.  Nothing
contained  herein  shall  impair,  as between  the  Company  and the  Holders of
Securities of each series,  the obligation of the Company to pay to such Holders
the  principal  of (and  premium,  if any) and  interest on such  Securities  or
prevent  the  Trustee or the  Holder  from  exercising  all  rights,  powers and
remedies  otherwise  permitted by applicable  law or hereunder  upon an Event of
Default  hereunder,  all  subject  to the  rights of the  holders  of the Senior
Indebtedness to receive cash,  securities or other property otherwise payable or
deliverable to the Holders.

     Senior  Indebtedness  shall not be deemed to have been paid in full  unless
the holders thereof shall have received cash, securities or other property equal
to the amount of such Senior Indebtedness then outstanding.  Upon the payment in
full of all Senior Indebtedness,  the Holders of Securities of each series shall
be subrogated to all rights of any holders of Senior Indebtedness to receive any
further payments or distributions  applicable to the Senior  Indebtedness  until
the indebtedness evidenced by the Securities of such series shall have been paid
in full, and such payments or distributions  received by such Holders, by reason
of such subrogation, of cash, securities or other property which otherwise would
be paid or distributed to the holders of Senior indebtedness,  shall, as between
the Company and its creditors other than the holders of Senior Indebtedness,  on
the one hand, and such Holders,  on the other hand, be deemed to be a payment by
the  Company  on  account  of Senior  Indebtedness,  and not on  account  of the
Securities of such series.

     The provisions of this Section 1301 shall not impair any rights, interests,
remedies  or powers of any  secured  creditor  of the  Company in respect of any
security  interest the creation of which is not  prohibited by the provisions of
this Indenture.

     The  securing of any  obligations  of the Company,  otherwise  ranking on a
parity with the  Securities or ranking  junior to the  Securities,  shall not be
deemed to prevent such obligations from constituting,  respectively, obligations
ranking on a parity with the Securities or ranking junior to the Securities.


                                       54
<PAGE>

SECTION 1302.  Trustees and Holders of  Securities  May Rely on  Certificate  of
               Liquidating  Agent;  Trustee May Require  Further  Evidence as to
               Ownership  of  Senior  Indebtedness;  Trustee  Not  Fiduciary  to
               Holders of Senior Indebtedness.

     Upon any payment or  distribution  of assets of the Company  referred to in
this  Article  Thirteen,  the Trustee and the Holders  shall be entitled to rely
upon an order or decree  made by any court of  competent  jurisdiction  in which
such dissolution or winding up or liquidation or  reorganization  or arrangement
proceedings  are pending or upon a  certificate  of the  trustee in  bankruptcy,
receiver,  assignee for the benefit of  creditors  or other  Person  making such
payment or  distribution  delivered  to the Trustee or to the  Holders,  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
Thirteen. In the absence of any such bankruptcy trustee,  receiver,  assignee or
other Person,  the Trustee shall be entitled to rely upon a written  notice by a
Person representing  himself to be a holder of Senior Indebtedness (or a trustee
or  representative  on behalf of such holder) as evidence  that such Person is a
holder of such Senior Indebtedness (or is such a trustee or representative).  In
the event that the Trustee  determines,  in good faith, that further evidence is
required  with  respect  to the  right  of any  Person  as a  holder  of  Senior
Indebtedness  to participate in any payments or  distributions  pursuant to this
Article Thirteen, 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,  as to the  extent to which  such  Person is  entitled  to
participate in such payment of distribution,  and as to other facts pertinent to
the rights of such Person under this Article  Thirteen,  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.  The
Trustee,  however,  shall not be deemed to owe any fiduciary duty to the holders
of Senior Indebtedness.

SECTION 1303. Payment Permitted if No Default.

     Nothing  contained in this Article Thirteen or elsewhere in this Indenture,
or in any of the Securities,  shall prevent (a) the Company at any time,  except
during  the   pendency  of  any   dissolution,   winding  up,   liquidation   or
reorganization proceedings referred to in, or under the conditions described in,
Section 1301, from making  payments of the principal of (or premium,  if any) or
interest on the Securities,  or (b) the application by the Trustee or any Paying
Agent of any moneys  deposited with it hereunder to payments of the principal of
(or  premium,  if any) or  interest on the  Securities,  if, at the time of such
deposit,  the Trustee or such Paying Agent, as the case may be, did not have the
written notice provided for in Section 1304 of any event  prohibiting the making
of such deposit or if, at the time of such deposit  (whether or not in trust) by
the Company  with the Trustee or Paying  Agent  (other than the  Company),  such
payment would not have been  prohibited by the  provisions of this Article,  and
neither the Trustee nor any Paying  Agent shall not be affected by any notice to
the contrary received by it on or after such date.



                                       55
<PAGE>

SECTION 1304. Trustee Not Charged With Knowledge of Prohibition.

     (a)  Anything in this  Article  Thirteen  or  elsewhere  in this  Indenture
contained to the contrary notwithstanding,  the Trustee shall not at any time be
charged with  knowledge of the  existence of any facts which would  prohibit the
making  of any  payment  of money to or by the  Trustee  and  shall be  entitled
conclusively  to assume that no such facts exist and that no event  specified in
Section 1301 has  happened,  until the Trustee  shall have received an Officers'
Certificate  to that effect or notice in writing to that effect  signed by or on
behalf  of  the  holder  or  holders,  or  their   representatives,   of  Senior
Indebtedness  or from any  trustee  under any  indenture  pursuant to which such
Senior Indebtedness shall be outstanding;  provided,  however, that, if prior to
the third  Business  Day  preceding  the date upon which by the terms hereof any
money  becomes  payable  for any purpose  (including,  without  limitation,  the
payment of either the principal of or interest on any Security), or in the event
of  the  execution  of an  instrument  pursuant  to  Section  401  acknowledging
satisfaction  and  discharge  of this  Indenture,  then if  prior  to the  third
Business Day preceding the date of such  execution,  the Trustee or Paying Agent
shall not have received with respect to such money the Officers'  Certificate or
notice provided for in this Section 1304, then anything herein  contained to the
contrary notwithstanding, the Trustee or such Paying Agent shall have full power
and authority to receive such money and apply it to the purpose for which it was
received  and shall not be affected by the notice to the  contrary  which may be
received  by it on or after such date.  The Company  shall give  prompt  written
notice to the Trustee and to the Paying Agent of any facts which would  prohibit
the payment of money to or by the Trustee and Paying Agent.

     (b) The  Trustee  shall  be  entitled  to rely on the  delivery  to it of a
written notice to the Trustee and the Company by a Person  representing  himself
to be a Senior  Representative or a holder of Senior Indebtedness (or a trustee,
fiduciary or agent  therefor) to establish  that such notice has been given by a
Senior  Representative  or a  holder  of  Senior  Indebtedness  (or  a  trustee,
fiduciary  or agent  therefor);  provided,  however,  that  failure to give such
notice to the Company  shall not affect in any way the ability of the Trustee to
rely on such notice. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of Senior Indebtedness to participate in any payment or distribution pursuant to
this  Article,  the Trustee may request  such person to furnish  evidence to the
reasonable  satisfaction of the Trustee as to the amount of Senior  Indebtedness
held by such Person,  the extent to which such Person is entitled to participate
in such payment or  distribution  and any other facts pertinent to the rights of
such Person  under this  Article,  and if such  evidence is not  furnished,  the
Trustee may defer any payment to such Person pending  judicial  determination as
to the right of such Person to receive such payment.

SECTION 1305. Trustee to Effectuate Subordination.

     Each Holder of Securities by his acceptance  thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to  effectuate  the  subordination  as between such Holder and holders of Senior
Indebtedness   as  provided  in  this  Article  and  appoints  the  Trustee  his
attorney-in-fact for any and all such purposes.



                                       56
<PAGE>

SECTION 1306. Rights of Trustee as Holder of Senior Indebtedness.

     The Trustee  shall be entitled to all the rights set forth in this  Article
with respect to any Senior  Indebtedness which may at the time be held by it, to
the same extent as any other holder of Senior Indebtedness;  provided,  however,
that nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder; and provided,  further, that nothing in this Article shall apply to
claims of, or payment to, the Trustee under or pursuant to Section 607.

SECTION 1307. Article Applicable to Paying Agents.

     In case at any time any Paying Agent other than the Trustee shall have been
appointed  by the Company and be then acting  hereunder,  the term  "Trustee" as
used in this  Article  shall in such case  (unless the context  shall  otherwise
require) be construed as extending to and including such Paying Agent within its
meaning as fully for all intents and  purposes as if the Paying Agent were named
in this  Article in addition to or in place of the Trustee;  provided,  however,
that  Sections  1304 and 1306 shall not apply to the Company or any Affiliate of
the Company if the Company or such Affiliate acts as Paying Agent.

SECTION  1308.  Subordination  Rights Not  Impaired by Acts or  Omissions of the
                Company or Holders of Senior Indebtedness.

     No right of any  present or future  holders of any Senior  Indebtedness  to
enforce  subordination  as  herein  provided  shall  at any  time  in any way be
prejudiced  or  impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith,  by any such  holder,  or by any
noncompliance  by the Company with the terms,  provisions  and covenants in this
Indenture, regardless of any knowledge thereof which any such holder may have or
be otherwise  charged with. The holders of Senior  Indebtedness may, at any time
or from time to time and in their absolute discretion,  change the manner, place
or terms of payment, change or extend the time of payment of, or renew or alter,
any such Senior Indebtedness,  or amend or supplement any instrument pursuant to
which any such Senior  Indebtedness is issued or by which it may be secured,  or
release any security therefor,  or exercise or refrain from exercising any other
of their rights under the Senior  Indebtedness,  including,  without limitation,
the waiver of  default  thereunder,  all  without  notice to or assent  from the
Holders of the Securities or the Trustee and without  affecting the  obligations
of the Company, the Trustee or the Holders of the Securities under this Article.

SECTION 1309. Trustee's Relation to Senior Indebtedness.

     With respect to the holders of Senior Indebtedness,  the Trustee undertakes
to perform or to  observe  only such of its  covenants  and  obligations  as are
specifically set forth in this Article,  and no implied covenants or obligations
with  respect  to the  holders  of Senior  Indebtedness  shall be read into this
Article  against  the  Trustee.  The  Trustee  shall  not be  deemed  to owe any
fiduciary duty to the holders of Senior  Indebtedness.  The Trustee shall not be
liable to any holder of Senior  Indebtedness if it shall  mistakenly pay over or
deliver to Holders,  the Company



                                       57
<PAGE>

or any other Person moneys or assets to which any holder of Senior  Indebtedness
shall be entitled by virtue of this Article or otherwise.


                                       58
<PAGE>

TESTIMONIUM

     This  instrument  may be  executed in any number of  counterparts,  each of
which so executed shall be deemed to be an original,  but all such  counterparts
shall together constitute but one and the same instrument.

     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.

                                           THE THAXTON GROUP, INC.


                                           By: /s/ Robert Wilson
                                               ---------------------------------

                                                Title: Executive Vice President
                                                       -------------------------
[Seal]
Attest:

Allan F. Ross, Secretary
------------------------

                                           THE BANK OF NEW YORK
                                           as Trustee


                                           By: /s/ illegible signature
                                               ---------------------------------

                                                    Title:
                                                          ----------------------
[Seal]
Attest:

/s/ Deborah J. Daly
-----------------------



                                       59
<PAGE>

                                                                       Exhibit A


                           [Front Side of Daily Note]

                             Subordinated Daily Note

                                    Series D

                             The Thaxton Group, Inc.
                              1524 Pageland Highway
                         Lancaster, South Carolina 29721

Date of Issue ____________, 19_____                 No._________________________


     FOR VALUE RECEIVED, The Thaxton Group, Inc. (the "Issuer") hereby promises
to pay on demand the principal amount of ___________________________ Dollars
($_________), together with accrued interest as provided herein, to

Name     _________________________

         _________________________        Social Security or     Stated Maturity
                                          Employer I.D. No.      ("Maturity")

Address  _________________________        _______________        ______________

         _________________________

(the "Holder"), or registered assigns, in the manner provided for on the reverse
side hereof.

     This Subordinated Daily Note (the "Daily Note") shall bear interest on the
unpaid principal amount at the initial rate of _______________________________%.
This rate may fluctuate as described on the reverse side hereof. Interest shall
accrue daily and be compounded quarterly.

     Issuance Under Indenture. This Daily Note is one of a series of a duly
authorized issue of securities of the Issuer (each a "Security") and, together,
the "Securities") issued and to be issued in one or more series under an
Indenture, dated as of __________, 1998 (herein called the "Indenture") between
the Issuer and The Bank of New York, New York, as Trustee (herein called the
"Trustee" which term includes any successor Trustee under the Indenture) to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations, duties and immunities
thereunder of the Issuer, the Trustee and the Holders of the Securities, and of
the terms upon which the Securities are, and are to be, authenticated and
delivered.

     Reference is made to the further provisions of this Daily Note set forth on
the reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.

     Unless the Certificate of Authentication hereon has been executed by the
Trustee referred to herein, either directly or through an Authenticating Agent,
by the manual or facsimile signature of an authorized signer, this Daily Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

     This Security is not a deposit, savings account or an obligation of an
insured depository institution and is not insured by the Federal Deposit
Insurance Corporation (FDIC) or any other governmental agency.
<PAGE>

                           [Front Side of Daily Note]


ATTEST:                                     THE THAXTON GROUP, INC.


By:____________________________             By:_________________________________
    Kenneth H. James, Secretary                James D. Thaxton
                                               Chairman of the Board, President
[SEAL]                                           and Chief Executive Officer

Authentication Certificate:

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

                                               The Bank of New York, as Trustee


                                               _________________________________
                                                        Authorized Agent


                                       2
<PAGE>

                    [Reverse Side of Subordinated Daily Note]

     Payment and Interest Accrual. Payment of the principal of and interest on
this Security shall be made on a Business Day in lawful money of the United
States at any office of The Thaxton Group, Inc., or at such other place as the
Issuer may designate to the Holder in writing (a "Place of Payment"); provided,
however, that any such payment may be made, at the option of the Issuer, by
check mailed to the registered address of the Holder. Upon payment or tender of
payment of the principal amount and accrued interest thereon, ON DEMAND, this
Security shall be surrendered to the Issuer for cancellation at the Place of
Payment. Unless otherwise agreed in writing by the Issuer, interest hereon shall
cease to accrue, and the Issuer shall have no further liability with respect
thereto, upon payment (or tender of payment in the aforesaid manner) of the
principal amount hereof, and accrued interest thereon, ON DEMAND.

     Interest Rate Adjustment. The interest rate will be determined by the
Issuer and may fluctuate on a monthly basis. Any adjustment to the interest rate
will be made on the first day of the month and shall remain in effect until next
adjusted by the Issuer. The interest rate will be no less than 3% below nor more
than 5% above the rate established for the most recent auction average of United
States Treasury Bills with maturities of 13 weeks. In no event will the rate of
interest payable be more than 12% per annum or less than 2% per annum. The
Issuer shall notify the Holder promptly by first class mail of any adjustment in
the interest rate.

     Optional Redemption by Issuer. This Daily Note is subject to redemption
upon not less than 30 days' notice by first class mail, at any time, as a whole
or in part, at the election of the Issuer, without premium, together with
accrued interest to the Redemption Date. Each partial redemption payment shall
be made as provided in the Indenture on the Outstanding Securities of this
series of the Securities called for redemption.

     Redemption by Holder. The Holder shall have the right at his option to
redeem this Daily Note, in whole or in part, on any Business Day. Holders shall
also have the right to make partial redemptions; provided, however, that upon a
partial redemption, a minimum outstanding principal amount of $50 must be
maintained. The Issuer retains the absolute right to require the Holder at any
time (including the time at which the Holder may otherwise request a full or
partial redemption of this Daily Note), to give the Issuer no less than 30 days'
prior written notice by first class mail of a redemption demanded by the Holder
and which notice shall specify the principal amount of the Daily Note to be
redeemed and the redemption date which shall be a Business Day.

     Recordations of Additions or Partial Redemptions. Upon presentation of this
Daily Note at a Place of Payment, the Issuer, or the Issuer's agent, will, for
the Holder's convenience, record on the register that is a part hereof any
adjustments to the original principal amount of this Daily Note, such as
additional purchases or partial redemptions.

     Assignment. As provided in the Indenture and subject to certain limitations
therein set forth, this Daily Note shall not be transferable to any person
except by endorsement and delivery by the Holder, or his duly authorized
representative at the Place of Payment referred to above, and upon surrender to
the Issuer with proper endorsement, a new instrument of like tenor shall be
issued in the name of the transferee. No service charge shall be made for any
such registration of transfer or exchange, but the Issuer may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. Unless and until transferred in the manner aforesaid, the
Issuer, the Trustee and any agent of either of them may treat the Holder whose
name or names appear on the face of this instrument as the absolute owner hereof
for all purposes and neither the Issuer, the Trustee nor any Paying Agent shall
be affected by notice to the contrary. If this Security is payable to two or
more persons, they shall be deemed to be joint tenants with right of
survivorship and any and all payments herein shall be made to either, or the
survivor of them.

     SUBORDINATION. THE INDEBTEDNESS EVIDENCED BY THIS DAILY NOTE IS, TO THE
EXTENT AND IN THE MANNER PROVIDED IN THE INDENTURE, SUBORDINATE AND SUBJECT IN
RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN FULL OF ALL SENIOR INDEBTEDNESS (AS
DEFINED IN THE INDENTURE) OF THE ISSUER, WHETHER OUTSTANDING AT THE DATE OF THE
INDENTURE OR THEREAFTER INCURRED. EACH HOLDER OF THIS DAILY NOTE, BY HIS


                                       3
<PAGE>

                    [Reverse Side of Subordinated Daily Note]

ACCEPTANCE HEREOF, AGREES TO AND SHALL BE BOUND BY ALL THE PROVISIONS OF THE
INDENTURE RELATING TO SUCH SUBORDINATION.

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

     Issuable in Registered Form Only. This Daily Note is one of a series of
Securities issuable only in registered form without coupons.

     Defined Terms. All capitalized terms in this Daily Note which are defined
in the Indenture and not otherwise defined herein shall have the meanings
assigned to them in the Indenture.


                        Initial Purchase/Register Balance

     This Daily Note Register is provided for the convenience of the Holder.
Entries may be made only by an authorized agent of the Issuer to reflect
additional purchases or redemptions. The Issuer will not be liable for any
transaction unless an entry is made hereon by an authorized agent of the Issuer.
The Holder will receive statements on a quarterly basis which will include all
transactions for the period.


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

Transaction Date   Received/Paid
                        By              Redemptions           Purchases
--------------------------------------------------------------------------------



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

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

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

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

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

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

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

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                                       4
<PAGE>

                                                                       Exhibit B

                       [Front Side of One Month Term Note]


                                    One Month

                             Subordinated Term Note

                                    Series M

                             The Thaxton Group, Inc.
                              1524 Pageland Highway
                         Lancaster, South Carolina 29721

Date of Issue ______________________, 19__                No. __________________

     FOR VALUE RECEIVED, The Thaxton Group, Inc. (the "Issuer") hereby promises
to pay the principal amount of _________________________ Dollars ($
_______________) one calendar month after the date of issue to


Name ______________________

     ______________________
                                     Social Security or       Stated Maturity
                                     Employer I.D. No.        ("Maturity")

Address ______________________       _________________        _________________

        ______________________

(the "Holder"), or registered assigns, in the manner provided for on the reverse
side hereof. This Subordinated One Month Note (the "Term Note") shall bear
interest on the unpaid principal amount from the date of issue until paid at the
rate of _____________ percent (____%) per annum, such interest to be paid at
Maturity.

     Issuance and Indenture. This Term Note is one of a series of a duly
authorized issue of securities of the Issuer (each a "Security") and, together,
the "Securities") issued and to be issued in one or more series under an
Indenture, dated as of __________, 1998 (herein called the "Indenture") between
the Issuer and The Bank of New York, New York, New York, as Trustee (herein
called the "Trustee" which term includes any successor Trustee under the
Indenture) to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations, duties and
immunities thereunder of the Issuer, the Trustee and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.

     Reference is made to the further provisions of this Term Note set forth on
the reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.

     Unless the Certificate of Authentication hereon has been executed by the
Trustee, either directly or through an Authenticating Agent, by the manual or
facsimile signature of an authorized signer, this Term Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.

This Security is not a deposit, savings account or an obligation of an insured
depository institution and is not insured by The Federal Deposit Insurance
Corporation (FDIC) or any other governmental agency.
<PAGE>

                       [Front Side of One Month Term Note]


ATTEST:                                  THE THAXTON GROUP, INC.


By: ________________________________     By: __________________________________
    Kenneth H. James, Secretary              James D. Thaxton
                                             Chairman of the Board, President
[SEAL]                                       and Chief Executive Officer

Authentication Certificate:

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

                                            The Bank of New York, as Trustee


                                           __________________________________
                                                   Authorized Agent


                                       2
<PAGE>

               [Reverse Side of Subordinated One Month Term Note]


     Payment And Interest Accrual. Payment of the principal of and interest on
this Term Note shall be made in lawful money of the United States at any offices
of The Thaxton Group, Inc., or at such other place as the Issuer may designate
to the Holder in writing ("Place of Payment"); provided, however, that any such
payment may be made, at the option of the Issuer, by check mailed to the
registered address of the Holder. Upon payment or tender of payment hereof at
Maturity or earlier redemption (in whole), this Term Note shall be surrendered
to the Issuer for cancellation at the Place of Payment. Unless otherwise agreed
in writing by the Issuer, interest hereon shall cease to accrue, and the Issuer
shall have no further liability with respect thereto, upon payment (or tender of
payment in the aforesaid manner) of the outstanding principal amount hereof plus
all accrued but unpaid interest at Maturity or earlier redemption.

     Possible Automatic Extensions. No later than 15 days prior to Maturity, the
Company will give the Holder of this Term Note notice by first-class mail of the
Maturity and provide the Holder with a copy of the Company's most recent
quarterly report on Form 10-Q filed with the United States Securities and
Exchange Commission (the "Commission"), or, if the Holder has not previously
been provided with such, a copy of the Company's most recent annual report on
Form 10-K filed with the Commission . This Term Note (with any interest payable
at Maturity being added to the principal amount here) will be automatically
extended for successive terms, equal in duration to the original term hereof, at
the rate(s) of interest in effect for Term Notes of this series then being
offered by the Issuer unless, prior to Maturity, the Issuer receives written
notification of the Holder's intent to redeem the Term Note or receive the
interest payment due at Maturity. All of the terms and conditions applicable to
the Term Note when issued will also apply during each period of extension. Upon
any extension hereof, unless this Term Note is surrendered and cancelled and a
new Term Note is issued in its stead, the principal amount of this Term Note
shall be deemed amended to include any accrued but unpaid interest that is added
to the principal amount and the date of Maturity shall be deemed amended to be
the date of Maturity of the period of extension.

     Redemption Prior To Maturity By Holder. The Holder shall have the right at
its option to redeem this Term Note, in whole or in part, on any Business Day
prior to Maturity. Upon any such redemption, the Holder shall forfeit all
interest accrued since the date of issuance of this Term Note (or, in the case
of a renewal or extension of this Term Note, from the date of the most recent
renewal or extension); provided that the Issuer, in its sole discretion, may
waive all or any part of such forfeited interest. The Issuer retains the
absolute right, however, to require the Holder at any time (including the time
as which the Holder may otherwise request a partial or full redemption of this
Term Note) to give the Issuer up to 30 days' prior written notice by first class
mail of a redemption demanded by the Holder, which notice shall specify the
principal amount of the Term Note to be redeemed and the redemption date which
shall be a Business Day.

     Optional Redemption By Issuer. This Term Note is subject to redemption upon
not less than 30 days' notice by first class mail, at any time, as a whole or in
part, at the election of the Issuer, without premium, together with accrued
interest to the date fixed for redemption in such notice (the "Redemption
Date"), but any interest installment, which is due and payable on or prior to
such Redemption Date, will be payable to the Holder at the close of business on
the relevant interest payment date. Each partial redemption payment shall be
made as provided in the Indenture on the Outstanding Securities of this series
of the Securities called for redemption.

     In the event of redemption of this Term Note in part only, a new Term Note
or Term Notes for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.

     Recordations of Additions or Partial Redemptions. Upon presentation of this
Term Note at a Place of Payment, the Issuer, or the Issuer's agent, will, for
the Holder's convenience, record on the register that is a part hereof any
adjustments to the original principal amount of this Term Note, such as
additional purchases or partial redemptions.


                                       3
<PAGE>

                      [Reverse Side of One Month Term Note]


     Assignment. As provided in the Indenture and subject to certain limitations
therein set forth, this Term Note shall not be transferable to any person except
by endorsement and delivery by the Holder, or his duly authorized representative
at any Place of Payment referred to above and, upon surrender to the Issuer with
proper endorsement, a new instrument of like tenor shall be issued in the name
of the transferee. No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Unless and until transferred in the manner aforesaid, the Issuer, the Trustee
and any agent of either of them, may treat the Holder whose name or names appear
on the face of this instrument as the absolute owner hereof for all purposes and
neither the Issuer, the Trustee nor any Paying Agent shall be affected by notice
to the contrary. If this Term Note is payable to two or more persons, they shall
be deemed to be joint tenants with right of survivorship and any and all
payments herein shall be made to either, or the survivor of them.

     SUBORDINATION. THE INDEBTEDNESS EVIDENCED BY THIS TERM NOTE IS, TO THE
EXTENT AND IN THE MANNER PROVIDED IN THE INDENTURE, SUBORDINATE AND SUBJECT IN
RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN FULL OF ALL SENIOR INDEBTEDNESS (AS
DEFINED IN THE INDENTURE) OF THE ISSUER, WHETHER OUTSTANDING AT THE DATE OF THE
INDENTURE OR THEREAFTER INCURRED. EACH HOLDER OF THIS TERM NOTE, BY HIS
ACCEPTANCE HEREOF, AGREES TO AND SHALL BE BOUND BY ALL THE PROVISIONS OF THE
INDENTURE RELATING TO SUCH SUBORDINATION.

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

     When Payment Date is Not a Business Day. In any case where any interest
payment date, Redemption Date or the Maturity (as set forth above) of this Term
Note shall not be a Business Day at any Place of Payment, then (notwithstanding
any other provision of this Term Note) payment of principal and interest need
not be made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the interest payment date or redemption date, or at the stated
Maturity (as set forth above), provided that no interest shall accrue for the
period from and after such interest payment date, redemption date or stated
Maturity, as the case may be.

     Issuable in Registered Form Only. This Term Note is one of a series of
Securities issuable only in registered form without coupons.

     Defined Terms. All capitalized terms in this Term Note which are defined in
the Indenture and not otherwise defined herein shall have the meanings assigned
to them in the Indenture.


                                       4
<PAGE>

                      [Reverse Side of One Month Term Note]


                        Initial Purchase/Register Balance

     This Term Note Register is provided for the convenience of the Holder.
Entries may be made only by an authorized agent of the Issuer to reflect
additional purchases or redemptions. The Issuer will not be liable for any
transaction unless an entry is made hereon by an authorized agent of the Issuer.
The Holder will receive statements on a quarterly basis which will include all
transactions for the period.

--------------------------------------------------------------------------------
  Transaction Date    Received/Paid
                           By             Redemptions        Purchases
--------------------------------------------------------------------------------


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

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

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

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

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

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

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                                       5
<PAGE>

                                                                       Exhibit C

              [Front Side of Term Notes Other Than One Month Notes]


                                   ____ Month

                             Subordinated Term Note

                   Series [T-6, T-12, T-36 or T-60 with Series
                      Designation Based on Original Term at
                                Date of Issuance]

                             The Thaxton Group, Inc.
                              1524 Pageland Highway
                         Lancaster, South Carolina 29721


Date of Issue ______________________, 19__                No. __________________

     FOR VALUE RECEIVED, The Thaxton Group, Inc. (the "Issuer") hereby promises
to pay the principal amount of _________________________ Dollars
($_______________) _______________ calendar months after the date of issue to


Name ______________________

     ______________________
                                     Social Security or       Stated Maturity
                                     Employer I.D. No.        ("Maturity")

Address ______________________       _________________        _________________

        ______________________


(the "Holder"), or registered assigns, in the manner provided for on the reverse
side hereof. This Subordinated Term Note (the "Term Note") shall bear interest
on the unpaid principal amount from the date of issue until paid at the rate of
_____________ percent (____%) per annum, such interest to be payable as provided
on the reverse side of this Term Note.

     Issuance Under Indenture. This Term Note is one of a series of a duly
authorized issue of securities of the Issuer (each a "Security") and, together,
the "Securities") issued and to be issued under an Indenture, dated as of
__________, 1998 (herein called the "Indenture") between the Issuer and The Bank
of New York, New York, as Trustee (herein called the "Trustee" which term
includes any successor Trustee under the Indenture) to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations, duties and immunities thereunder of the Issuer,
the Trustee and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered.

     Reference is made to the further provisions of this Term Note set forth on
the reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.

     Unless the Certificate of Authentication hereon has been executed by the
Trustee, either directly or through an Authenticating Agent, by the manual or
facsimile signature of an authorized signer, this Term Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
<PAGE>

              [Front Side of Term Notes Other Than One Month Notes]

     Interest Payment Options

          Interest at the above rate will be paid
          ______ Monthly
          ______ Quarterly
          ______ At Maturity (compounded quarterly)

This Security is not a deposit, savings account or an obligation of an insured
depository institution and is not insured by The Federal Deposit Insurance
Corporation (FDIC) or any other governmental agency.


ATTEST:                                     THE THAXTON GROUP, INC.


By: ________________________________        By: ________________________________
    Kenneth H. James, Secretary                 James D. Thaxton
                                                Chairman of the Board, President
[SEAL]                                            and Chief Executive Officer

Authentication Certificate:

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


                                         The Bank of New York, as Trustee



                                         ___________________________________
                                                  Authorized Agent


                                       2
<PAGE>

             [Reverse Side of Term Notes Other Than One Month Notes]


     Payment and Interest Accrual. Payment of the principal of and interest on
this Term Note shall be made in lawful money of the United States at any office
of The Thaxton Group, Inc., or at such other place as the Issuer may designate
to the Holder in writing ("Place of Payment"); provided, however, that any such
payment may be made, at the option of the Issuer, by check mailed to the
registered address of the Holder. Upon payment or tender of payment hereof at
Maturity or earlier redemption (in whole), this Term Note shall be surrendered
to the Issuer for cancellation at the Place of Payment. Unless otherwise agreed
in writing by the Issuer, interest hereon shall cease to accrue, and the Issuer
shall have no further liability with respect thereto, upon payment (or tender of
payment in the aforesaid manner) of the outstanding principal amount hereof plus
all accrued but unpaid interest at Maturity or earlier redemption.


     Possible Automatic Extensions. No later than 15 days prior to Maturity, the
Company will give the Holder of this Term Note notice by first-class mail of the
Maturity and provide the Holder with a copy of the Company's most recent
quarterly report on Form 10-Q filed with the United States Securities and
Exchange Commission (the "Commission"), or, if the Holder has not previously
been provided with such, a copy of the Company's most recent annual report on
Form 10-K filed with the Commission . This Term Note (with any interest payable
at Maturity being added to the principal amount here) will be automatically
extended for successive terms, equal in duration to the original term hereof, at
the rate(s) of interest in effect for Term Notes of this series then being
offered by the Issuer unless, prior to Maturity, the Issuer receives written
notification of the Holder's intent to redeem the Term Note or receive the
interest payment due at Maturity. All of the terms and conditions applicable to
the Term Note when issued will also apply during each period of extension. Upon
any extension hereof, unless this Term Note is surrendered and cancelled and a
new Term Note is issued in its stead, the principal amount of this Term Note
shall be deemed amended to include any accrued but unpaid interest that is added
to the principal amount and the date of Maturity shall be deemed amended to be
the date of Maturity of the period of extension.


     Optional Redemption By Issuer. This Term Note is subject to redemption upon
not less than 30 days' notice by first class mail, at any time, as a whole or in
part, at the election of the Issuer, without premium, together with accrued
interest to the date fixed for redemption in such notice (the "Redemption
Date"), but any interest installment, which is due and payable on or prior to
such Redemption Date, will be payable to the Holder at the close of business on
the relevant interest payment date. Each partial redemption payment shall be
made as provided in the Indenture on the Outstanding Securities of this series
of the Securities called for redemption.

     Redemption Prior To Maturity By Holder. The Holder shall have the right at
its option to redeem this Term Note in whole or in part on any Business Day
prior to Maturity. Upon such redemption, the Holder shall forfeit an amount
equal to the difference between the amount of interest actually accrued on this
Term Note since the date of issuance (or, in the case of a renewal or extension
of this Term Note from the date of the most recent renewal or extension) and the
amount of interest that would have accrued on this Term Note had the rate of
interest been 3% less than the rate of interest actually accrued. When necessary
to comply with the requirements of this paragraph, any interest already paid to
or for the account of the Holder shall be deducted from the amount redeemed.
Holders shall also have the right to make partial redemptions prior to Maturity;
provided, however, that, in the case of a partial redemption, a minimum
outstanding principal amount of $1,000 is maintained. The above-mentioned
forfeitures shall be calculated only upon the amount so redeemed. This Term Note
may be redeemed before Maturity without forfeiture of any interest upon the
death of the Holder of this Term Note or when the Holder of this Term Note is
determined to be legally incompetent by a court or other administrative body of
competent jurisdiction. The Issuer retains the absolute right to require the
Holder at any time (including the time at which the Holder may otherwise request
a partial or full redemption of this Term Note) to give the Issuer no less than
30 days' prior written notice by first class mail of a redemption demanded by
the Holder, which notice shall specify the principal amount of the Term Note to
be redeemed and the redemption date which shall be a Business Day.

     In the event of redemption of this Term Note in part only, a new Term Note
or Term Notes for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.


                                       3
<PAGE>

             [Reverse Side of Term Notes Other Than One Month Notes]

     Assignment. As provided in the Indenture and subject to certain limitations
set forth therein, this Term Note shall not be transferable to any person except
by endorsement and delivery by the Holder, or his duly authorized representative
at any Place of Payment referred to above and, upon surrender to the Issuer with
proper endorsement, a new instrument of like tenor shall be issued in the name
of the transferee. No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Unless and until transferred in the manner aforesaid, the Issuer, the Trustee
and any agent of either of them, may treat the Holder whose name or names appear
on the face of this instrument as the absolute owner hereof for all purposes and
neither the Issuer, the Trustee nor any Paying Agent shall be affected by notice
to the contrary. If this Term Note is payable to two or more persons, they shall
be deemed to be joint tenants with right of survivorship and any and all
payments herein shall be made to either, or the survivor of them.

     SUBORDINATION. THE INDEBTEDNESS EVIDENCED BY THIS TERM NOTE IS, TO THE
EXTENT AND IN THE MANNER PROVIDED IN THE INDENTURE, SUBORDINATE AND SUBJECT IN
RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN FULL OF ALL SENIOR INDEBTEDNESS (AS
DEFINED IN THE INDENTURE) OF THE ISSUER, WHETHER OUTSTANDING AT THE DATE OF THE
INDENTURE OR THEREAFTER INCURRED. EACH HOLDER OF THIS TERM NOTE, BY HIS
ACCEPTANCE HEREOF, AGREES TO AND SHALL BE BOUND BY ALL THE PROVISIONS OF THE
INDENTURE RELATING TO SUCH SUBORDINATION.

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

     When Payment Date is Not a Business Day. In any case where any interest
payment date, Redemption Date or the stated Maturity (as set forth above) of
this Term Note shall not be a business day at any Place of Payment, then
(notwithstanding any other provision of this Term Note) payment of principal and
interest need not be made at such Place of Payment on such date, but may be made
on the next succeeding Business Day at such Place of Payment with the same force
and effect as if made on the interest payment date or Redemption Date, or at the
stated Maturity (as set forth above), provided that no interest shall accrue for
the period from and after such interest payment date, Redemption Date or stated
Maturity, as the case may be.

     Issuable in Registered Form Only. This Term Note is one of a series of
Securities issuable only in registered form without coupons.

     Defined Terms. All capitalized terms in this Term Note which are defined in
the Indenture and not otherwise defined herein shall have the meanings assigned
to them in the Indenture.