EXHIBIT 4.2



                              E*TRADE Group, Inc.

           $375,000,000 6.75% Convertible Subordinated Notes Due 2008

     Officers' Certificate Pursuant to Sections 2.01 and 2.03 of Indenture

     The undersigned officers of E*TRADE Group, Inc., a Delaware corporation
(the "Issuer"), pursuant to authority granted such officers pursuant to
resolutions duly adopted by the Board of Directors of the Issuer on May 18,
2001 and May 22, 2001 and resolutions duly adopted at a meeting of the Pricing
Committee of the Board of Directors of the Issuer on May 22, 2001
(collectively, the "Resolutions"), hereby establish a series of Securities
under that certain Indenture, dated as of May 29, 2001 (the "Indenture"),
between the Issuer and The Bank of New York, as trustee ("Trustee"), which
Securities are designated "6.75% Convertible Subordinated Notes due 2008" (the
"Notes"), and hereby certify, pursuant to Sections 2.01 and 2.03 of the
Indenture, as follows:

     1. Form of Note. Attached hereto as Exhibit A is a true and correct copy
of a specimen Note (the "Form of Note") representing the Notes.

     2. Terms of the Notes. The terms of the Notes are as follows:

          (a) The title of the Notes to be issued as a series of Securities (as
     defined in the Indenture) under the Indenture shall be the "6.75%
     Convertible Subordinated Notes due 2008";

          (b) The first $375, 000,000 of the Notes shall be issued at a price
     equal to 100% of the aggregate principal amount thereof;

          (c) The principal of the Notes shall be payable on May 15, 2008;

          (d) The Notes shall bear interest at a rate equal to 6.75% per annum;
     interest on the Notes shall accrue from May 29, 2001 or from the most
     recent interest payment date to which interest has been paid or provided
     for, as the case may be; interest on the Notes shall be payable
     semi-annually in arrears in cash on May 15 and November 15 of each year
     until maturity commencing on November 15, 2001; and interest on the Notes
     shall be payable to holders of record on the May 1 or November 1
     immediately preceding the applicable interest payment date;



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          (e) The place or places where the principal of and any interest in
     the Notes shall be payable shall be as set forth in the Notes, the form of
     which is attached hereto as Exhibit A;

          (f) The Notes shall be subject to redemption, in whole or in part, at
     the option of the Issuer at any time on or after May 20, 2004, at the
     redemption prices (expressed in percentages of principal amount) set forth
     below plus accrued and unpaid interest thereon to, but excluding, the
     redemption date:

Period                                                          Redemption Price
------                                                          ----------------
Beginning on May 20, 2004 and ending on May 14, 2005........       103.3750%
Beginning on May 15, 2005 and ending on May 14, 2006........       102.5313%
Beginning on May 15, 2006 and ending on May 14, 2007........       101.6875%
Beginning on May 15, 2007 and ending on May 14, 2008........       100.8438%


The Issuer may not so redeem Notes if the Issuer has failed to pay any interest
on the Notes when due and such failure to pay is continuing. If the redemption
date is an interest payment date, interest shall be paid to the record holder
on the relevant record date.

          (g) Except as set forth in Section 11.07, the Issuer shall not be
     obligated to redeem or purchase the Notes pursuant to any sinking fund or
     at the option of any holder thereof prior to maturity;

          (h) The Notes shall be convertible into shares of Common Stock, par
     value $.001 per share, of the Issuer at any time prior to maturity at an
     initial conversion price of $10.925 per share of Common Stock, subject to
     adjustment as described below;

          (i) The Notes shall be issued in denominations of $1,000 and any
     integral multiple thereof;

          (j) 100% of the principal amount thereof shall be payable upon
     declaration of acceleration of the maturity thereof pursuant to Section
     4.01 of the Indenture;

          (k) In addition to the definitions and provisions set forth in the
     Indenture, the Notes shall include the definitions and provisions set
     forth in Sections 3, 4, 5, 6, 7 and 8 of this Officers' Certificate and,
     in the case of conflict, the definitions and provisions set forth in this
     Officers' Certificate shall control;

          (l) The Trustee for the Notes shall be The Bank of New York;


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          (m) The Notes shall be issued initially in the form of a Global Note
     in definitive, fully registered form without interest coupons in
     substantially the form of Exhibit A, which shall be deposited on behalf of
     the purchasers of the Notes represented thereby with the Trustee, at its
     principal corporate trust office in New York City, as custodian for the
     Depositary (the Trustee or any successor custodian for the Depositary, the
     "Custodian"), and registered in the name of the Depositary or a nominee
     thereof, duly executed by the Issuer and authenticated by the Trustee
     where so provided. The aggregate principal amount of the Global Notes may
     from time to time be increased or decreased by adjustments made on the
     records of the Trustee and the Depositary or its nominee in accordance
     with the Depositary's procedures and as provided in Section 2.13 of the
     Indenture. Except as provided in Section 2.13 of the Indenture, owners of
     beneficial interests in Global Notes shall not be entitled to receive
     physical delivery of certificated Notes.

          (n) The Notes shall not be secured by any collateral;

          (o) The Notes shall not be guaranteed by any person; and

          (p) The Notes shall be general unsecured obligations of the Issuer
     and shall, to the extent provided in Article 12 of the Indenture, be
     subordinated in right of payment to the prior payment in full of the
     Issuer's Senior Indebtedness.

     3. Global Notes. In addition to the provisions set forth in Article 2 of
the Indenture, the Indenture, with respect to the Notes only, shall include the
following additional provisions:

     SECTION 2.13. Global Notes. (a) So long as the Notes are eligible for
book-entry settlement with the Depositary, or unless otherwise required by law,
all Notes that, upon initial issuance are beneficially owned by QIBs or as a
result of a sale or transfer after initial issuance are beneficially owned by
QIBs, will be represented by one or more Notes in global form registered in the
name of the Depositary or the nominee of the Depositary (the "Global Note"),
except as otherwise specified below. The transfer and exchange of beneficial
interests in any such Global Note shall be effected through the Depositary in
accordance with this Indenture and the procedures of the Depositary. The
Trustee shall make appropriate endorsements to reflect increases or decreases
in the principal amounts of any such Global Note as set forth on the face of
the Note ("Principal Amount") to reflect any such transfers. Except as provided
below, beneficial owners of a Global Note shall not be entitled to have
certificates registered in their names, will not receive or be entitled to
receive physical delivery of certificates in definitive form and will not be
considered holders of such Global Note.


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     (b) So long as the Notes are eligible for book-entry settlement with the
Depositary, or unless otherwise required by law, upon any transfer of a
definitive Note to a QIB in accordance with Rule 144A, and upon receipt of the
definitive Note or Notes being so transferred, together with a certification,
substantially in the form on the reverse of the Note, from the transferor that
the transfer is being made in compliance with Rule 144A (or other evidence
satisfactory to the Trustee), the Trustee shall make an endorsement on the
Global Note to reflect an increase in the aggregate Principal Amount of the
Notes represented by such Global Note, and the Trustee shall cancel such
definitive Note or Notes in accordance with the standing instructions and
procedures of the Depositary, the aggregate Principal Amount of the Notes
represented by such Global Note to be increased accordingly; provided, however,
that no definitive Note, or portion thereof, in respect of which the Issuer or
an Affiliate of the Issuer held any beneficial interest shall be included in
such Global Note until such definitive Note is freely tradable in accordance
with Rule 144(k) under the Securities Act, provided further that the Trustee
shall issue Notes in definitive form upon any transfer of a beneficial interest
in the Global Note to the Issuer or any Affiliate of the Issuer.

     Any Note in global form may be endorsed with or have incorporated in the
text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Custodian, by the
Depositary or by the National Association of Securities Dealers, Inc. in order
for the Notes to be tradeable on the Portal Market or as may be required for
the Notes to be tradeable on any other market developed for trading of
securities pursuant to Rule 144A or required to comply with any applicable law
or any regulation thereunder or with the rules and regulations of any
securities exchange or automated quotation system upon which the Notes may be
listed or traded or to conform with any usage with respect thereto, or to
indicate any special limitations or restrictions to which any particular Notes
are subject.

     (c) Every Note that bears or is required under this Section 2.13(c) to
bear the legend set forth in this Section 2.13(c) (together with any Common
Stock issued upon conversion of the Notes and required to bear the legend set
forth in Section 2.13(d), collectively, the "Restricted Securities") shall be
subject to the restrictions on transfer set forth in this Section 2.13(c)
(including those set forth in the legend set forth below) unless such
restrictions on transfer shall be waived by written consent of the Issuer, and
the Holder of each such Restricted Security, by such Noteholder's acceptance
thereof, agrees to be bound by all such restrictions on transfer. As used in
Sections 2.13(c) and 2.13(d), the term "transfer" encompasses any sale, pledge,
loan, transfer or other disposition whatsoever of any Restricted Security.

     Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
certificate


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evidencing such Note (and all securities issued in exchange therefor or
substitution thereof, other than Common Stock, if any, issued upon conversion
thereof, which shall bear the legend set forth in Section 2.13(d), if
applicable) shall bear a legend in substantially the following form, unless
such Note has been sold pursuant to a registration statement that has been
declared effective under the Securities Act (and which continues to be
effective at the time of such transfer), or unless otherwise agreed by the
Issuer in writing, with written notice thereof to the Trustee:

          This security has not been registered under the U.S. Securities Act
     of 1933, as amended (the "Securities Act"), and, accordingly, may not be
     offered or sold within the United States or to, or for the account or
     benefit of, U.S. persons, except as set forth below. By its acquisition
     hereof, the holder (1) represents that (a) it is a "qualified
     institutional buyer" (as defined in Rule 144A under the Securities Act) or
     (b) it is not a U.S. person and is acquiring this security in an offshore
     transaction in compliance with Rule 904 under the Securities Act, (2)
     agrees that it will not within two years after the original issuance of
     this security resell or otherwise transfer this security except (a) to the
     Issuer or any subsidiary thereof, (b) inside the United States to a
     qualified institutional buyer in compliance with Rule 144A under the
     Securities Act, (c) outside the United States in an offshore transaction
     in compliance with Rule 904 under the Securities Act, (d) pursuant to the
     exemption from registration provided by Rule 144 under the Securities Act
     (if available), (e) pursuant to an effective registration statement under
     the Securities Act or (f) pursuant to another available exemption from the
     registration requirements of the Securities Act and (3) agrees that it
     will give to each person to whom this security is transferred a notice
     substantially to the effect of this legend in connection with any transfer
     of this security within two years after the original issuance of this
     security. As used herein, the terms "offshore transaction," "United
     States" and "U.S. person" have the meaning given to them by Regulation S
     under the Securities Act. The indenture contains a provision requiring the
     trustee to refuse to register any transfer of this security in violation
     of the foregoing restrictions.

     Any Note (or security issued in exchange or substitution therefor) as to
which such restrictions on transfer shall have expired in accordance with their
terms or as to conditions for removal of the foregoing legend set forth therein
have been satisfied may, upon surrender of such Note for exchange to the Note
registrar in accordance with the provisions of this Section 2.13, be exchanged
for


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a new Note or Notes, of like tenor and aggregate principal amount, which shall
not bear the restrictive legend required by this Section 2.13(c).

     Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in this Section 2.13(c)), a Note in global form may not be
transferred as a whole or in part except (i) by the Depositary to a nominee of
the Depositary, (ii) by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or (iii) by the Depositary or any nominee of
the Depositary to a successor Depositary or a nominee of such successor
Depositary.

     The Depositary shall be a clearing agency registered under the Exchange
Act. The Issuer initially appoints The Depository Trust Company to act as
Depositary with respect to the Notes in global form. Initially, the Global Note
shall be issued to the Depositary, registered in the name of Cede & Co., as the
nominee of the Depositary, and deposited with the Custodian for Cede & Co.

     If at any time the Depositary for a Note in global form notifies the
Issuer that it is unwilling or unable to continue as Depositary for such Note,
the Issuer may appoint a successor Depositary with respect to such Note. If a
successor Depositary is not appointed by the Issuer within ninety (90) days
after the Issuer receives such notice, the Issuer will execute, and the
Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of Notes, will authenticate and deliver, Notes in certificated form,
in aggregate principal amount equal to the principal amount of such Note in
global form, in exchange for such Note in global form.

     If a Note in certificated form is issued in exchange for any portion of a
Note in global form after the close of business at the office or agency where
such exchange occurs on any record date and before the opening of business at
such office or agency on the next succeeding interest payment date, interest
will not be payable on such interest payment date in respect of such
certificated Note, but will be payable on such interest payment date, subject
to the provisions of Section 2.07, only to the Person to whom interest in
respect of such portion of such Note in global form is payable in accordance
with the provisions of this Indenture.

     Notes in certificated form issued in exchange for all or a part of a Note
in global form pursuant to this Section 2.13 shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such Notes in certificated form to the Persons in whose names such
Notes in certificated form are so registered.


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     At such time as all interests in a Note in global form have been redeemed,
converted, canceled, exchanged for Notes in certificated form, or transferred
to a transferee who receives Notes in certificated form thereof, such Note in
global form shall, upon receipt thereof, be canceled by the Trustee in
accordance with standing procedures and instructions existing between the
Depositary and the Custodian. At any time prior to such cancellation, if any
interest in a Note in global form is exchanged for Notes in certificated form,
redeemed, converted, repurchased or canceled, or transferred to a transferee
who receives Notes in certificated form therefor or any Note in certificated
form is exchanged or transferred for part of a Note in global form, the
principal amount of such Note in global form shall, in accordance with the
standing procedures and instructions existing between the Depositary and the
Custodian, be appropriately reduced or increased, as the case may be, and an
endorsement shall be made on such Note in global form, by the Trustee or the
Custodian, at the direction of the Trustee, to reflect such reduction or
increase.

     (d) Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
stock certificate representing Common Stock issued upon conversion of any Note
shall bear a legend in substantially the following form, unless such Common
Stock has been sold pursuant to a registration statement that has been declared
effective under the Securities Act (and which continues to be effective at the
time of such transfer) or such Common Stock has been issued upon conversion of
Notes that have been transferred pursuant to a registration statement that has
been declared effective under the Securities Act, or unless otherwise agreed by
the Issuer in writing with written notice thereof to the transfer agent:

          This security has not been registered under the U.S. Securities Act
     of 1933, as amended (the "Securities Act"), and, accordingly, may not be
     offered or sold within the United States or to, or for the account or
     benefit of, U.S. persons, except as set forth below. By its acquisition
     hereof, the holder (1) represents that (a) it is a "qualified
     institutional buyer" (as defined in Rule 144A under the Securities Act) or
     (b) it is not a U.S. person and is acquiring this security in an offshore
     transaction in compliance with Rule 904 under the Securities Act, (2)
     agrees that it will not within two years after the original issuance of
     the security from which this security was converted resell or otherwise
     transfer this security except (a) to the Issuer or any subsidiary thereof,
     (b) inside the United States to a qualified institutional buyer in
     compliance with Rule 144A under the Securities Act, (c) outside the United
     States in an offshore transaction in compliance with Rule 904 under the
     Securities Act, (d) pursuant to the exemption from registration provided
     by Rule 144 under the Securities Act (if


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     available), (e) pursuant to an effective registration statement under the
     Securities Act or (f) pursuant to another available exemption from the
     registration requirements of the Securities Act and (3) agrees that it
     will give to each person to whom this security is transferred a notice
     substantially to the effect of this legend in connection with any transfer
     of this security within two years after the original issuance of the
     security from which this security was converted. As used herein, the terms
     "offshore transaction," "United States" and "U.S. person" have the meaning
     given to them by Regulation S under the Securities Act. The indenture
     contains a provision requiring the trustee to refuse to register any
     transfer of this security in violation of the foregoing restrictions.

     Any such Common Stock as to which such restrictions on transfer shall have
expired in accordance with their terms or as to which the conditions for
removal of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.13(d).

     (e) Any Note or Common Stock issued upon the conversion or exchange of a
Note that, prior to the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor
provision), is purchased or owned by the Issuer or any Affiliate thereof may
not be resold by the Issuer or such Affiliate unless registered under the
Securities Act or resold pursuant to an exemption from the registration
requirements of the Securities Act in a transaction which results in such Notes
or Common Stock, as the case may be, no longer being "restricted securities"
(as defined under Rule 144).

     4. Additional Reports. In addition to the covenants set forth in Article 3
of the Indenture, the Indenture, with respect to the Notes only, shall include
the following provision:

     SECTION 3.09. Rule 144A Information Requirement. Within the period prior
to the expiration of the holding period applicable to sales thereof under Rule
144(k) under the Securities Act (or any successor provision), the Issuer
covenants and agrees that it shall, during any period in which it is not
subject to Section 13 or 15(d) under the Exchange Act, make available to any
Holder or beneficial owner of Notes or any Common Stock issued upon conversion
thereof which continue to be Restricted Securities in connection with any sale
thereof and any prospective purchaser of Notes or such Common Stock designated
by such Holder or beneficial owner, the information required pursuant to Rule
144A(d)(4) under


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the Securities Act upon the request of any Holder or beneficial owner of the
Notes or such Common Stock and it will take such further action as any Holder
or beneficial owner of such Notes or such Common Stock may reasonably request,
all to the extent required from time to time to enable such Holder or
beneficial owner to sell its Notes or Common Stock without registration under
the Securities Act within the limitation of the exemption provided by Rule
144A, as such Rule may be amended from time to time. Upon the request of any
Holder or any beneficial owner of the Notes or such Common Stock, the Issuer
will deliver to such Holder a written statement as to whether it has complied
with such requirements.

     5. Additional Redemption Provisions. In addition to the redemption
provisions set forth in Article 11 of the Indenture, the Indenture, with
respect to the Notes only, shall include the following additional provisions:

     SECTION 11.06. Conversion Arrangement on Call for Redemption.

     In connection with any redemption of Notes, the Issuer may arrange for the
purchase and conversion of any Notes by an agreement with one or more
investment bankers or other purchasers to purchase such Notes by paying to the
Trustee in trust for the Holders, on or before the date fixed for redemption,
an amount not less than the applicable redemption price, together with interest
accrued to (but excluding) the date fixed for redemption, of such Notes.
Notwithstanding anything to the contrary contained in Article 13 or this
Article 11, the obligation of the Issuer to pay the redemption price of such
Notes, together with interest accrued to (but excluding) the date fixed for
redemption, shall be deemed to be satisfied and discharged to the extent such
amount is so paid by such purchasers. If such an agreement is entered into, a
copy of which will be filed with the Trustee prior to the date fixed for
redemption, any Notes not duly surrendered for conversion by the Holders
thereof may, at the option of the Issuer, be deemed, to the fullest extent
permitted by law, acquired by such purchasers from such Holders and
(notwithstanding anything to the contrary contained in Article 13) surrendered
by such purchasers for conversion, all as of immediately prior to the close of
business on the date fixed for redemption (and the right to convert any such
Notes shall be extended through such time), subject to payment of the above
amount as aforesaid. At the direction of the Issuer, the Trustee shall hold and
dispose of any such amount paid to it in the same manner as it would monies
deposited with it by the Issuer for the redemption of Notes. Without the
Trustee's prior written consent, no arrangement between the Issuer and such
purchasers for the purchase and conversion of any Notes shall increase or
otherwise affect any of the powers, duties, responsibilities or obligations of
the Trustee as set forth in this Indenture.

     SECTION 11.07. Repurchase Upon a Repurchase Event.


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     (a) If there shall occur a Repurchase Event at any time prior to maturity
of the Notes, then each Holder shall have the right, at such Holder's option,
to require the Issuer to repurchase all of such Holder's Notes, or any portion
thereof that is an integral multiple of $1,000 principal amount, on the date
(the "Repurchase Date") that is no earlier than thirty (30) days and no later
than forty-five (45) days after the date of the Issuer Notice (as defined
below) of such Repurchase Event (or, if such day is not a Business Day, the
next succeeding Business Day) at a repurchase price equal to 100% of the
principal amount thereof, together with accrued interest to (but excluding) the
Repurchase Date (or, at the option of the Issuer, by delivery of Common Stock
in accordance with the provisions of Section 11.07(b)); provided that if such
Repurchase Date is May 15 or November 15, then the interest payable on such
date shall be paid to the Holders of record of the Notes on the next preceding
May 1 or November 1, respectively. Upon presentation of any Notes redeemed in
part only, the Issuer shall execute and, upon the Issuer's written direction to
the Trustee, the Trustee shall authenticate and deliver to the Holder thereof,
at the expense of the Issuer, new Notes, of authorized denominations, in
principal amount equal to the unredeemed portion of the Notes so presented.

     Unless the Issuer shall have theretofore called for redemption all of the
outstanding Notes, on or before the tenth (10th) day after the occurrence of a
Repurchase Event, the Issuer, or, at its written request (which must be
received by the Trustee at least five (5) Business Days prior to the date the
Trustee is requested to give notice as described below, unless the Trustee
shall agree to a shorter period), the Trustee in the name of and at the expense
of the Issuer, shall mail or cause to be mailed to all Holders of record on the
date of the Repurchase Event a notice (the "Issuer Notice") of the occurrence
of such Repurchase Event and of the repurchase right at the option of the
Holders arising as a result thereof. Such notice shall be mailed in the manner
and with the effect set forth in Sections 11.02 and 11.03 hereof (without
regard for the time limits set forth therein). If the Issuer shall give such
notice, the Issuer shall also deliver a copy of the Issuer Notice to the
Trustee at such time as it is mailed to Holders. Each Issuer Notice shall
contain the following information:

     (1) the Repurchase Date,

     (2) that the Holder must exercise the repurchase right on or prior to the
close of business on the Repurchase Date (the "Repurchase Event Expiration
Time"),

     (3) the repurchase price and whether the repurchase price shall be payable
in cash or Common Stock and, if payable in Common Stock, the method of
calculating the amount of the Common Stock to be delivered upon the repurchase
as provided in Section 11.07(b),


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     (4) a description of the procedure which a Holder must follow to exercise
a repurchase right, and

     (5) the Conversion Price then in effect, the date on which the right to
convert the principal amount of the Notes to be repurchased will terminate and
the place or places where Notes may be surrendered for conversion.

     No failure of the Issuer to give the foregoing notices and no defect
therein shall limit the Holders' repurchase rights or affect the validity of
the proceedings for the repurchase of the Notes pursuant to this Section 11.07.

     For certificated Notes to be so repaid at the option of the Holder, the
Issuer must receive at the office or agency of the Issuer maintained for that
purpose or, at the option of such Holder, the Corporate Trust Office, such
Notes with the form entitled "Option to Elect Repayment Upon A Repurchase
Event" on the reverse thereof duly completed, together with such Notes duly
endorsed for transfer, on or before the Repurchase Event Expiration Time. All
questions as to the validity, eligibility (including time of receipt) and
acceptance of any Notes for repayment shall be determined by the Issuer, whose
determination shall be final and binding absent manifest error.

     For Global Notes to be so repaid at the option of the Holder, the Holder
must complete the appropriate instruction form for conversion pursuant to the
Depositary's book-entry conversion program, furnish appropriate endorsements
and transfer documents if required by the Issuer or the Trustee or conversion
agent, and pay the funds, if any, required by this Section 11.07.

     On or prior to the Repurchase Date, the Issuer will deposit with the
Trustee or with one or more paying agents (or, if the Issuer is acting as its
own paying agent, set aside, segregate and hold in trust) an amount of money
sufficient to repay on the Repurchase Date all the Notes to be repaid on such
date at the repurchase price, together with accrued interest to (but excluding)
the Repurchase Date; provided that if such payment is made on the Repurchase
Date it must be received by the Trustee or paying agent, as the case may be, by
10:00 a.m. New York City time, on such date; provided further that if the
repurchase price is to be paid in shares of Common Stock, such shares of Common
Stock are to be paid as promptly after the Repurchase Date as practicable.
Payment for Notes surrendered for repurchase (and not withdrawn) prior to the
Repurchase Event Expiration Time will be made promptly (but in no event more
than five (5) Business Days) following the Repurchase Date by mailing checks
for the amount payable to the Holders of such Notes entitled thereto as they
shall appear on the registry books of the Issuer; provided that any payment to
the Depositary or its nominee shall be paid by wire transfer in immediately
available funds in accordance with the wire transfer instruction supplied by
the Depositary or its nominee from time to time to


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the Trustee and paying agent (if different from Trustee) at least two days
prior to the Repurchase Date.

     The Issuer will comply with the provisions of Rule 13e-4 and any other
tender offer rules under the Exchange Act to the extent then applicable in
connection with the repurchase rights of the Holders of Notes in the event of a
Repurchase Event.

     Any issuance of shares of Common Stock in respect of the repurchase price
shall be deemed to have been effected immediately prior to the close of
business on the Repurchase Date and the person or persons in whose name or
names any certificate or certificates for shares of Common Stock shall be
issuable upon such repurchase shall be deemed to have become on the Repurchase
Date the holder or holders of record of the shares represented thereby;
provided, however, that in case of any surrender for repurchase on a date when
the stock transfer books of the Issuer shall be closed, the person or persons
in whose name or names the certificate or certificates for such shares are to
be issued shall be deemed to have become the record holder or holders thereof
for all purposes at the opening of business on the next day on which such stock
transfer books are open. No payment or adjustment shall be made for dividends
or distributions on any Common Stock issued upon repurchase of any Note
declared prior to the Repurchase Date.

     No fractions of shares shall be issued upon repurchase of Notes. If more
than one Note shall be repurchased from the same Holder and the repurchase
price shall be payable in shares of Common Stock, the number of full shares
which shall be issuable upon such repurchase shall be computed on the basis of
the aggregate principal amount of the Notes so repurchased. Instead of any
fractional share of Common Stock which would otherwise be issuable on the
repurchase of any Note or Notes, the Issuer will deliver to the applicable
Holder its check for the current market value of such fractional share. The
current market value of a fraction of a share is determined by multiplying the
current market price of a full share by the fraction, and rounding the result
to the nearest cent. For purposes of this Section, the current market price of
a share of Common Stock is the Closing Price (as defined in Section 13.05(h))
of the Common Stock on the Trading Day (as defined in Section 13.05(h))
immediately preceding the Repurchase Date.

     Any issuance and delivery of certificates for shares of Common Stock on
repurchase of Notes shall be made without charge to the Holder of Notes being
repurchased for such certificates or for any tax or duty in respect of the
issuance or delivery of such certificates or the securities represented
thereby; provided, however, that the Issuer shall not be required to pay any
tax or duty which may be payable in respect of (i) income of the Holder or (ii)
any transfer involved in the issuance or delivery of certificates for shares of
Common Stock in a name other than that of the Holder of the Notes being
repurchased, and no such issuance or


                                       12

<PAGE>


delivery shall be made unless and until the person requesting such issuance or
delivery has paid to the Issuer the amount of any such tax or duty or has
established, to the satisfaction of the Issuer, that such tax or duty has been
paid.

     (b) The Issuer may elect to pay the repurchase price by delivery of shares
of Common Stock pursuant to Section 11.07 if and only if the following
conditions shall have been satisfied:

     (i) The shares of Common Stock deliverable in payment of the repurchase
price shall have a fair market value as of the Repurchase Date of not less than
the repurchase price. For purposes of this Section 11.07, the fair market value
of shares of Common Stock shall be equal to 95% of the average of the Closing
Prices (as defined in Section 13.5(h)) of the Common Stock for the five
consecutive Trading Days (as defined in Section 13.5(h)) immediately preceding
and including the third Trading Day (as defined in Section 13.5(h)) prior to
the Repurchase Date;

     (ii) The repurchase price shall be paid only in cash in the event any
shares of Common Stock to be issued upon repurchase of Notes hereunder (i)
require registration under any federal securities law before such shares may be
freely transferable without being subject to any transfer restrictions under
the Securities Act and if such registration is not completed or does not become
effective prior to the Repurchase Date, and/or (ii) require registration with
or approval of any governmental authority under any state law or any other
federal law before such shares may be validly issued and delivered upon
repurchase and if such registration is not completed or does not become
effective or such approval is not obtained prior to the Repurchase Date;

     (iii) Payment of the repurchase price may not be made in Common Stock
unless such stock is, or shall have been, or approved for quotation on the
Nasdaq National Market or listed on a national securities exchange, in either
case, prior to the Repurchase Date; and

     (iv) All shares of Common Stock which may be issued upon repurchase of the
Notes will be issued out of the Issuer's authorized but unissued Common Stock
and, will upon issue, be duly and validly issued and fully paid and
non-assessable and free of any preemptive rights.

     If all of the conditions set forth in this Section 11.07 are not satisfied
in accordance with the terms thereof, the repurchase price shall be paid by the
Issuer only in cash.

     6. Conversion Provisions. The Indenture, with respect to the Notes only,
shall contain the following provisions regarding conversion:


                                       13

<PAGE>


                                   ARTICLE 13
                              CONVERSION OF NOTES

     SECTION 13.01. Right to Convert.

     Subject to and upon compliance with the provisions of this Indenture, each
Holder shall have the right, at its option, at any time following the original
issuance of the Notes hereunder through the close of business on the final
maturity date of the Notes (except that, with respect to any Notes or portion
thereof which shall be called for redemption, such right shall terminate,
except as provided in Section 13.02 or Section 11.06, at the close of business
on the Business Day next preceding the date fixed for redemption of such Notes
or portion thereof unless the Issuer shall default in payment due upon
redemption thereof) to convert the principal amount of any such Notes, or any
portion of such principal amount which is $1,000 or an integral multiple
thereof, into that number of fully paid and non-assessable shares of Common
Stock obtained by dividing the principal amount of the Notes or portion thereof
surrendered for conversion by the Conversion Price in effect at such time, by
surrender of the Notes so to be converted in whole or in part, together with
any required funds, in the manner provided in Section 13.02. A Holder of Notes
is not entitled to any rights of a holder of Common Stock until such Holder has
converted his Notes to Common Stock, and only to the extent such Notes are
deemed to have been converted to Common Stock under this Article 13. A Note
with respect to which a Holder has delivered a notice in accordance with
Section 11.07 regarding such Holder's election to require the Issuer to
repurchase such Holder's Notes following the occurrence of a Repurchase Event
may be converted in accordance with this Article 13 only if such Holder
withdraws such notice by delivering a written notice of withdrawal to the
Issuer prior to the close of business on last Business Day prior to the day
fixed for repurchase.

     SECTION 13.02. Exercise of Conversion Privilege; Issuance of Common Stock
on Conversion; No Adjustment for Interest or Dividends.

     In order to exercise the conversion privilege with respect to any Notes in
certificated form, the Holder of any such Notes to be converted in whole or in
part shall surrender such Notes, duly endorsed, at an office or agency
maintained by the Issuer as set forth in the Notes, accompanied by the funds,
if any, required by the penultimate paragraph of this Section 13.02, and shall
give written notice of conversion in the form provided on the Notes (or such
other notice which is acceptable to the Issuer) to the office or agency that
the Holder elects to convert such Notes or the portion thereof specified in
said notice. Such notice shall also state the name or names (with address or
addresses) in which the certificate or certificates for shares of Common Stock
which shall be issuable on such conversion shall be issued, and shall be
accompanied by transfer taxes, if required pursuant to Section 13.07. All such
Notes surrendered for conversion shall, unless


                                       14

<PAGE>


the shares issuable on conversion are to be issued in the same name as the
registration of such Notes, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Issuer duly executed by,
the Holder or his duly authorized attorney.

     In order to exercise the conversion privilege with respect to any interest
in Notes in global form, the Holder must complete the appropriate instruction
form for conversion pursuant to the Depositary's book-entry conversion program,
furnish appropriate endorsements and transfer documents if required by the
Issuer or the Trustee or conversion agent, and pay the funds, if any, required
by this Section 13.02 and any transfer taxes if required pursuant to Section
13.07.

     As promptly as practicable after satisfaction of the requirements for
conversion set forth above (but in no event later than three (3) Business Days
after satisfaction of such requirements for conversion), subject to compliance
with any restrictions on transfer if shares issuable on conversion are to be
issued in a name other than that of the Holder (as if such transfer were a
transfer of the Notes (or portion thereof) so converted), the Issuer shall
issue and shall deliver to such Holder at the office or agency maintained by
the Issuer for such purpose as set forth in the Notes, a certificate or
certificates for the number of full shares of Common Stock issuable upon the
conversion of such Notes or portion thereof in accordance with the provisions
of this Article and a check or cash in respect of any fractional interest in
respect of a share of Common Stock arising upon such conversion, as provided in
Section 13.03. In case any Notes of a denomination greater than $1,000 shall be
surrendered for partial conversion, the Issuer shall execute and the Trustee
shall authenticate and deliver to the Holder of the Notes so surrendered,
without charge to him, new Notes in authorized denominations in an aggregate
principal amount equal to the unconverted portion of the surrendered Notes.

     Each conversion shall be deemed to have been effected as to any such Notes
(or portion thereof) on the date on which the requirements set forth above in
this Section 13.02 have been satisfied as to such Notes (or portion thereof),
and the person in whose name any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become on said date the holder of record of the shares represented thereby;
provided, however, that in case of any such surrender on any date when the
stock transfer books of the Issuer shall be closed, the person or persons in
whose name the certificate or certificates for such shares are to be issued
shall be deemed to have become the record holder thereof for all purposes on
the next day on which such stock transfer books are open, but such conversion
shall be at the Conversion Price in effect on the date upon which such Notes
shall be surrendered.

     All Notes or portion thereof surrendered for conversion during the period
from the close of business on the record date for any interest payment date to
the


                                       15

<PAGE>



close of business on the Business Day next preceding the following interest
payment date shall (unless such Notes or portion thereof being converted shall
have been called for redemption on a redemption date which occurs during the
period from the close of business on such record date to the close of business
on the Business Day next preceding the following interest payment date) be
accompanied by payment, in funds acceptable to the Issuer, of an amount equal
to the interest otherwise payable on such interest payment date on the
principal amount being converted; provided, however, that no such payment need
be made if there shall exist at the time of conversion a default in the payment
of interest on the Notes. Except as provided above in this Section 13.02, no
payment or other adjustment shall be made for interest accrued on any Notes
converted or for dividends on any shares issued upon the conversion of such
Notes as provided in this Article.

     Upon the conversion of an interest in Notes in global form, the Trustee
(or other conversion agent appointed by the Issuer), or the Custodian at the
direction of the Trustee (or other conversion agent appointed by the Issuer),
shall make a notation on such Notes in global form as to the reduction in the
principal amount represented thereby. The Issuer shall notify the Trustee in
writing of any conversions of Notes effected through any conversion agent other
than the Trustee.

     SECTION 13.03. Cash Payments in Lieu of Fractional Shares.

     No fractional shares of Common Stock or scrip representing fractional
shares shall be issued upon conversion of Notes. If multiple Notes shall be
surrendered for conversion at one time by the same Holder, the number of full
shares which shall be issuable upon conversion shall be computed on the basis
of the aggregate principal amount of the Notes (or specified portions thereof
to the extent permitted hereby) so surrendered. If any fractional share of
stock would be issuable upon the conversion of any Notes, the Issuer shall make
an adjustment and payment therefor in cash at the current market price thereof
to the holder of Notes. The current market price of a share of Common Stock
shall be the Closing Price (as defined in Section 13.05(h)) of the Common Stock
on the Trading Day (as defined in Section 13.05(h)) immediately preceding the
day on which the Notes (or specified portions thereof) are deemed to have been
converted.

     SECTION 13.04. Conversion Price.

     The conversion price shall be as specified in the form of Note (herein
called the "Conversion Price") attached as Exhibit A hereto, subject to
adjustment as provided in this Article 13.

     SECTION 13.05. Adjustment of Conversion Price.


                                       16

<PAGE>


     The Conversion Price shall be adjusted from time to time by the Issuer as
follows:

          (a) In case the Issuer shall hereafter pay a dividend or make a
     distribution to all holders of the outstanding Common Stock in shares of
     Common Stock, the Conversion Price in effect at the opening of business on
     the date following the date fixed for the determination of stockholders
     entitled to receive such dividend or other distribution shall be reduced
     by multiplying such Conversion Price by a fraction, the numerator of which
     shall be the number of shares of Common Stock outstanding at the close of
     business on the date fixed for such determination and the denominator of
     which shall be the sum of such number of shares and the total number of
     shares constituting such dividend or other distribution, such reduction to
     become effective immediately after the opening of business on the day
     following the date fixed for such determination. If any dividend or
     distribution of the type described in this Section 13.05(a) is declared
     but not so paid or made, the Conversion Price shall again be adjusted to
     the Conversion Price which would then be in effect if such dividend or
     distribution had not been declared.

          (b) In case the Issuer shall issue rights or warrants to all holders
     of its outstanding shares of Common Stock entitling them (for a period
     expiring within forty-five (45) days after the date fixed for
     determination of stockholders entitled to receive such rights or warrants)
     to subscribe for or purchase shares of Common Stock (or securities
     convertible into Common Stock) at a price per share (or having a
     conversion price per share) less than the Current Market Price (as defined
     below) on the date fixed for determination of stockholders entitled to
     receive such rights or warrants, the Conversion Price shall be adjusted so
     that the same shall equal the price determined by multiplying the
     Conversion Price in effect immediately prior to the date fixed for
     determination of stockholders entitled to receive such rights or warrants
     by a fraction, the numerator of which shall be the number of shares of
     Common Stock outstanding at the close of business on the date fixed for
     determination of stockholders entitled to receive such rights or warrants
     plus the number of shares which the aggregate offering price of the total
     number of shares so offered would purchase at such Current Market Price
     (or the aggregate conversion price of the convertible securities so
     offered, which shall be determined by multiplying the number of shares of
     Common Stock issuable upon conversion of such convertible securities by
     the conversion price per share of Common Stock pursuant to the terms of
     such convertible securities), and the denominator of which shall be the
     number of shares of Common Stock outstanding on the date fixed for
     determination of stockholders entitled to receive such rights or warrants
     plus the total number of additional shares of Common Stock offered for
     subscription or purchase or


                                       17

<PAGE>


     into which convertible securities so offered are convertible. Such
     adjustment shall be successively made whenever any such rights or warrants
     are issued, and shall become effective immediately after the opening of
     business on the day following the date fixed for determination of
     stockholders entitled to receive such rights or warrants. To the extent
     that shares of Common Stock (or securities convertible into Common Stock)
     are not delivered, after the expiration of such rights or warrants the
     Conversion Price shall be readjusted to the Conversion Price which would
     then be in effect had the adjustments made upon the issuance of such
     rights or warrants been made on the basis of delivery of only the number
     of shares of Common Stock actually delivered (or the number of shares of
     Common Stock issuable upon conversion of convertible securities actually
     issued). In the event that such rights or warrants are not so issued, the
     Conversion Price shall again be adjusted to be the Conversion Price which
     would then be in effect if such date fixed for the determination of
     stockholders entitled to receive such rights or warrants had not been
     fixed. In determining whether any rights or warrants entitle the holders
     to subscribe for or purchase shares of Common Stock at less than such
     Current Market Price, and in determining the aggregate offering price of
     such shares of Common Stock, there shall be taken into account any
     consideration received by the Issuer for such rights or warrants or to be
     received upon exercise of such rights or warrants, the value of such
     consideration, if other than cash, to be determined by the Board of
     Directors.

          (c) In case outstanding shares of Common Stock shall be subdivided
     into a greater number of shares of Common Stock, the Conversion Price in
     effect at the opening of business on the day following the day upon which
     such subdivision becomes effective shall be proportionately reduced, and
     conversely, in case outstanding shares of Common Stock shall be combined
     into a smaller number of shares of Common Stock, the Conversion Price in
     effect at the opening of business on the day following the day upon which
     such combination becomes effective shall be proportionately increased,
     such reduction or increase, as the case may be, to become effective
     immediately after the opening of business on the day following the day
     upon which such subdivision or combination becomes effective.

          (d) In case the Issuer shall, by dividend or otherwise, distribute to
     all holders of its Common Stock shares of any class of capital stock of
     the Issuer (other than any dividends or distributions to which Section
     13.05(a) applies) or evidences of its indebtedness or assets (including
     securities, but excluding any rights or warrants referred to in Section
     13.05(b), and excluding any dividend or distribution (x) paid exclusively
     in cash or (y) referred to in Section 13.05(a)) (any of the foregoing
     hereinafter in this


                                       18

<PAGE>


     Section 13.05(d) called the "Distributed Securities"), then, in each such
     case (unless the Issuer elects to reserve such Distributed Securities for
     distribution to the Holders upon the conversion of the Notes so that any
     such converting Holder will receive upon such conversion, in addition to
     the shares of Common Stock to which such Holder is entitled, the amount
     and kind of such Distributed Securities which such Holder would have
     received if such Holder had converted its Notes into Common Stock
     immediately prior to the Record Date (as defined in Section 13.05(h)(4))
     for such distribution of the Distributed Securities), the Conversion Price
     shall be reduced so that the same shall be equal to the price determined
     by multiplying the Conversion Price in effect on the Record Date with
     respect to such distribution by a fraction, the numerator of which shall
     be the Current Market Price per share of the Common Stock on such Record
     Date less the fair market value (as determined by the Board of Directors,
     whose good faith determination shall be conclusive, and described in a
     resolution of the Board if Directors) on the Record Date of the portion of
     the Distributed Securities so distributed applicable to one share of
     Common Stock and the denominator of which shall be the Current Market
     Price per share of the Common Stock, such reduction to become effective
     immediately prior to the opening of business on the day following such
     Record Date; provided, however, that in the event the then fair market
     value (as so determined) of the portion of the Distributed Securities so
     distributed applicable to one share of Common Stock is equal to or greater
     than the Current Market Price of the Common Stock on the Record Date, in
     lieu of the foregoing adjustment, adequate provision shall be made so that
     each Holder shall have the right to receive upon conversion the amount of
     Distributed Securities such Holder would have received had such Holder
     converted all Notes on the Record Date. In the event that such dividend or
     distribution is not so paid or made, the Conversion Price shall again be
     adjusted to be the Conversion Price which would then be in effect if such
     dividend or distribution had not been declared. If the Board of Directors
     determines the fair market value of any distribution for purposes of this
     Section 13.05(d) by reference to the actual or when issued trading market
     for any securities, it must in doing so consider the prices in such market
     over the same period used in computing the Current Market Price of the
     Common Stock.

     In the event that the Issuer implements a stockholder rights plan, such
rights plan shall provide that upon conversion of the Notes the Holders will
receive, in addition to the Common Stock issuable upon such conversion, the
rights issued under such rights plan (notwithstanding the occurrence of an
event causing such rights to separate from the Common Stock at or prior to the
time of conversion). Any distribution of rights or warrants pursuant to a
stockholder rights plan complying with the requirements set forth in the
immediately preceding


                                       19

<PAGE>


sentence of this paragraph shall not constitute a distribution of rights or
warrants for the purposes of Section 13.05(b) or this Section 13.05(d).

     Rights or warrants distributed by the Issuer to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Issuer's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 13.05 (and no adjustment to the Conversion Price under
this Section 13.05 will be required) until the occurrence of the earliest
Trigger Event, whereupon such rights and warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to the
Conversion Price shall be made under this Section 13.05(d). If any such right
or warrant, including any such existing rights or warrants distributed prior to
the date of this Indenture, are subject to events, upon the occurrence of which
such rights or warrants become exercisable to purchase different securities,
evidences of indebtedness or other assets, then the date of the occurrence of
any and each such event shall be deemed to be the date of distribution and
record date with respect to new rights or warrants with such rights (and a
termination or expiration of the existing rights or warrants without exercise
by any of the holders thereof). In addition, in the event of any distribution
(or deemed distribution) of rights or warrants, or any Trigger Event or other
event (of the type described in the preceding sentence) with respect thereto
that was counted for purposes of calculating a distribution amount for which an
adjustment to the Conversion Price under this Section 13.05 was made, (1) in
the case of any such rights or warrants which shall all have been redeemed or
repurchased without exercise by any holders thereof, the Conversion Price shall
be readjusted upon such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price received by
a holder or holders of Common Stock with respect to such rights or warrants
(assuming such holder had retained such rights or warrants), made to all
holders of Common Stock as of the date of such redemption or repurchase, and
(2) in the case of such rights or warrants which shall have expired or been
terminated without exercise by any holders thereof, the Conversion Price shall
be readjusted as if such rights and warrants had not been issued.

     For purposes of this Section 13.05(d) and Sections 13.05(a) and (b), any
dividend or distribution to which this Section 13.05(d) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights or warrants (and
any Conversion Price reduction required by this Section 13.05(d) with respect
to


                                       20

<PAGE>


such dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights or
warrants (and any further Conversion Price reduction required by Sections
13.05(a) and (b) with respect to such dividend or distribution shall then be
made), except (A) the Record Date of such dividend or distribution shall be
substituted as "the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution" and "the date fixed for such
determination" within the meaning of Sections 13.05(a) and (b) and (B) any
shares of Common Stock included in such dividend or distribution shall not be
deemed "outstanding at the close of business on the date fixed for such
determination" within the meaning of Section 13.05(a).

          (e) In case the Issuer shall, by dividend or otherwise, distribute to
     all holders of its Common Stock cash (excluding any cash that is
     distributed upon a merger or consolidation to which Section 13.06 applies
     or as part of a distribution referred to in Section 13.05(d)), in an
     aggregate amount that, combined together with (1) the aggregate amount of
     any other such distributions to all holders of its Common Stock made
     exclusively in cash within the twelve (12) months preceding the date of
     payment of such distribution, and in respect of which no adjustment
     pursuant to this Section 13.05(e) has been made, and (2) the aggregate of
     any cash plus the fair market value (as determined by the Board of
     Directors, whose good faith determination shall be conclusive and
     described in a resolution of the Board of Directors) of consideration
     payable in respect of any tender offer by the Issuer or any of its
     subsidiaries for all or any portion of the Common Stock concluded within
     the twelve (12) months preceding the date of payment of such distribution,
     and in respect of which no adjustment pursuant to Section 13.05(f) has
     been made, exceeds 10% of the product of the Current Market Price on the
     Record Date with respect to such distribution times the number of shares
     of Common Stock outstanding on such date, then, and in each such case,
     immediately after the close of business on such date, the Conversion Price
     shall be reduced so that the same shall equal the price determined by
     multiplying the Conversion Price in effect immediately prior to the close
     of business on such Record Date by a fraction (i) the numerator of which
     shall be equal to the Current Market Price on the Record Date less an
     amount equal to the quotient of (x) the excess of such combined amount
     over such 10% and (y) the number of shares of Common Stock outstanding on
     the Record Date and (ii) the denominator of which shall be equal to the
     Current Market Price on such date; provided, however, that in the event
     the portion of the cash so distributed applicable to one share of Common
     Stock is equal to or greater than the Current Market Price of the Common
     Stock on the Record Date, in lieu of the foregoing adjustment, adequate
     provision shall be made so that each Noteholder shall have the right to
     receive upon conversion of a Note (or any portion thereof) the amount of
     cash such


                                       21

<PAGE>


     Holder would have received had such Holder converted such Note (or portion
     thereof) immediately prior to such Record Date. In the event that such
     dividend or distribution is not so paid or made, the Conversion Price
     shall again be adjusted to be the Conversion Price which would then be in
     effect if such dividend or distribution had not been declared. Any cash
     distribution to all holders of Common Stock as to which the Issuer makes
     the election permitted by Section 13.05(n) and as to which the Issuer has
     complied with the requirements of such Section shall be treated as not
     having been made for all purposes of this Section 13.05(e)).

          (f) In case a tender offer made by the Issuer or any of its
     subsidiaries for all or any portion of the Common Stock shall expire and
     such tender offer (as amended upon the expiration thereof) shall require
     the payment to stockholders (based on the acceptance (up to any maximum
     specified in the terms of the tender offer) of Purchased Shares (as
     defined below)) of an aggregate consideration having a fair market value
     (as determined by the Board of Directors, whose good faith determination
     shall be conclusive and described in a resolution of the Board of
     Directors) that combined together with (1) the aggregate of the cash plus
     the fair market value (as determined by the Board of Directors, whose good
     faith determination shall be conclusive and described in a resolution of
     the Board of Directors), as of the expiration of such tender offer, of
     consideration payable in respect of any other tender offers, by the Issuer
     or any of its subsidiaries for all or any portion of the Common Stock
     expiring within the twelve (12) months preceding the expiration of such
     tender offer and in respect of which no adjustment pursuant to this
     Section 13.05(f) has been made and (2) the aggregate amount of any
     distributions to all holders of the Issuer's Common Stock made exclusively
     in cash within twelve (12) months preceding the expiration of such tender
     offer and in respect of which no adjustment pursuant to Section 13.05(e)
     has been made, exceeds 10% of the product of the Current Market Price as
     of the last time (the "Expiration Time") tenders could have been made
     pursuant to such tender offer (as it may be amended) times the number of
     shares of Common Stock outstanding (including any tendered shares) at the
     Expiration Time, then, and in each such case, immediately prior to the
     opening of business on the day after the date of the Expiration Time, the
     Conversion Price shall be reduced so that the same shall equal the price
     determined by multiplying the Conversion Price in effect immediately prior
     to close of business on the date of the Expiration Time by a fraction of
     which the numerator shall be the number of shares of Common Stock
     outstanding (including any tendered shares) at the Expiration Time
     multiplied by the Current Market Price of the Common Stock on the Trading
     Day next succeeding the Expiration Time and the denominator shall be the
     sum of (x) the fair market value (determined as aforesaid) of the
     aggregate consideration payable to stockholders based on the


                                       22

<PAGE>


     acceptance (up to any maximum specified in the terms of the tender offer)
     of all shares validly tendered and not withdrawn as of the Expiration Time
     (the shares deemed so accepted, up to any such maximum, being referred to
     as the "Purchased Shares") and (y) the product of the number of shares of
     Common Stock outstanding (less any Purchased Shares) at the Expiration
     Time and the Current Market Price of the Common Stock on the Trading Day
     next succeeding the Expiration Time, such reduction (if any) to become
     effective immediately prior to the opening of business on the day
     following the Expiration Time. In the event that the Issuer is obligated
     to purchase shares pursuant to any such tender offer, but the Issuer is
     permanently prevented by applicable law from effecting any such purchases
     or all such purchases are rescinded, the Conversion Price shall again be
     adjusted to be the Conversion Price which would then be in effect if such
     tender offer had not been made. If the application of this Section
     13.05(f) to any tender offer would result in an increase in the Conversion
     Price, no adjustment shall be made for such tender offer under this
     Section 13.05(f). Any cash distribution to all holders of Common Stock as
     to which the Issuer has made the election permitted by Section 13.05(n)
     and as to which the Issuer has complied with the requirements of such
     Section shall be treated as not having been made for all purposes of this
     Section 13.05(f).

          (g) In case of a tender or exchange offer made by a person other than
     the Issuer or any of its subsidiaries for an amount which increases the
     offeror's ownership of Common Stock to more than twenty-five percent (25%)
     of the Common Stock outstanding and shall involve the payment by such
     person of consideration per share of Common Stock having a fair market
     value (as determined by the Board of Directors, whose good faith
     determination shall be conclusive and described in a resolution of the
     Board of Directors) at the last time (the "Offer Expiration Time") tenders
     or exchanges may be made pursuant to such tender or exchange offer (as it
     shall have been amended) that exceeds the Current Market Price of the
     Common Stock on the Trading Day next succeeding the Offer Expiration Time,
     and in which, as of the Offer Expiration Time, the Board of Directors is
     not recommending rejection of the offer, the Conversion Price shall be
     reduced so that the same shall equal the price determined by multiplying
     the Conversion Price in effect immediately prior to the close of business
     on the date of the Offer Expiration Time by a fraction, the numerator of
     which shall be the number of shares of Common Stock outstanding (including
     any tendered or exchanged shares) at the Offer Expiration Time multiplied
     by the Current Market Price of the Common Stock on the Trading Day next
     succeeding the Offer Expiration Time and the denominator of which shall be
     the sum of (x) the fair market value (determined as aforesaid) of the
     aggregate consideration payable to stockholders based on the acceptance
     (up to any maximum specified in the


                                       23

<PAGE>


     terms of the tender or exchange offer) of all shares validly tendered or
     exchanged and not withdrawn as of the Offer Expiration Time (the shares
     deemed so accepted, up to any such maximum, being referred to as the
     "Accepted Purchased Shares") and (y) the product of the number of shares
     of Common Stock outstanding (less any Accepted Purchased Shares) at the
     Offer Expiration Time and the Current Market Price of the Common Stock on
     the Trading Day next succeeding the Offer Expiration Time, such reduction
     to become effective immediately prior to the opening of business on the
     day following the Offer Expiration Time. In the event that such person is
     obligated to purchase shares pursuant to any such tender or exchange
     offer, but such person is permanently prevented by applicable law from
     effecting any such purchases or all such purchases are rescinded, the
     Conversion Price shall again be adjusted to be the Conversion Price which
     would then be in effect if such tender or exchange offer had not been
     made. Notwithstanding the foregoing, the adjustment described in this
     Section 13.05(g) shall not be made if, as of the Offer Expiration Time,
     the offering documents with respect to such offer disclose a plan or
     intention to cause the Issuer to engage in any transaction described in
     Article 8.

          (h) For purposes of this Section 13.05, the following terms shall
     have the meaning indicated:

               (1) "Closing Price" with respect to any securities on any day
          shall mean the closing sale price, regular way, on such day or, in
          case no such sale takes place on such day, the average of the
          reported closing bid and asked prices, regular way, in each case on
          the principal national securities exchange or quotation system on
          which such security is quoted or listed or admitted to trading, or,
          if not quoted or listed or admitted to trading on any national
          securities exchange or quotation system, the average of the closing
          bid and asked prices of such security on the over-the-counter market
          on the day in question as reported by the National Quotation Bureau
          Incorporated, or a similar generally accepted reporting service, or
          if not so available, in such manner as furnished by any New York
          Stock Exchange member firm selected from time to time by the Board of
          Directors for that purpose, or a price determined in good faith by
          the Board of Directors whose determination shall be conclusive.

               (2) "Current Market Price" shall, for the purposes of any
          computation under subsections (b), (d), (e), (f) and (g) above
          relating to the current market price per share of Common Stock at a
          specified date, mean the average of the Closing Prices for the ten
          (10) consecutive Trading Days (as defined below) preceding the


                                       24

<PAGE>


          day before the record date (or, if earlier, the ex-dividend date)
          with respect to any distribution, issuance or other event requiring
          such computation.

               (3) "fair market value" shall mean the amount which a willing
          buyer would pay a willing seller in an arm's length transaction.

               (4) "Record Date" shall mean, with respect to any dividend,
          distribution or other transaction or event in which the holders of
          Common Stock have the right to receive any cash, securities or other
          property or in which the Common Stock (or other applicable security)
          is exchanged for or converted into any combination of cash,
          securities or other property, the date fixed for determination of
          stockholders entitled to receive such cash, securities or other
          property (whether such date is fixed by the Board of Directors or by
          statute, contract or otherwise).

               (5) "Trading Day" shall mean (x) if the applicable security is
          quoted on the Nasdaq National Market, a day on which trades may be
          made on thereon or (y) if the applicable security is listed or
          admitted for trading on the New York Stock Exchange or another
          national security exchange, a day on which the New York Stock
          Exchange or such other national security exchange is open for
          business or (z) if the applicable security is not so listed, admitted
          for trading or quoted, any day other than a Saturday or Sunday or a
          day on which banking institutions in the State of New York are
          authorized or obligated by law or executive order to close.

          (i) The Issuer may make such reductions in the Conversion Price, in
     addition to those required by Sections 13.05 (a), (b), (c), (d), (e), (f)
     or (g), as the Board of Directors considers to be advisable to avoid or
     diminish any income tax to holders of Common Stock or rights to purchase
     Common Stock resulting from any dividend or distribution of stock (or
     rights to acquire stock) or from any event treated as such for income tax
     purposes.

     To the extent permitted by applicable law, the Issuer from time to time
may reduce the Conversion Price by any amount for any period of time if the
period is at least twenty (20) days, the reduction is irrevocable during the
period and the Board of Directors shall have made a determination that such
reduction would be in the best interests of the Issuer, which determination
shall be conclusive. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Issuer shall mail to holders of record of the Notes a
notice of the


                                       25

<PAGE>



reduction at least fifteen (15) days prior to the date the reduced Conversion
Price takes effect, and such notice shall state the reduced Conversion Price
and the period during which it will be in effect.

          (j) No adjustment in the Conversion Price shall be required unless
     such adjustment would require an increase or decrease of at least one
     percent (1%) in such price; provided, however, that any adjustments which
     by reason of this Section 13.05(j) are not required to be made shall be
     carried forward and taken into account in any subsequent adjustment. All
     calculations under this Article 13 shall be made by the Issuer and shall
     be made to the nearest cent or to the nearest one-hundredth (1/100) of a
     share, as the case may be. No adjustment need be made for rights to
     purchase Common Stock pursuant to an Issuer plan for reinvestment of
     dividends or interest. To the extent the Notes become convertible into
     cash, assets, property or securities (other than capital stock of the
     Issuer), no adjustment need be made thereafter as to the cash, assets,
     property or such securities. Interest will not accrue on the cash.

          (k) Whenever the Conversion Price is adjusted as herein provided, the
     Issuer shall promptly file with the Trustee and any conversion agent other
     than the Trustee an Officers' Certificate setting forth the Conversion
     Price after such adjustment and setting forth a brief statement of the
     facts requiring such adjustment. Unless and until a Responsible Officer of
     the Trustee shall have received such Officers' Certificate, the Trustee
     shall not be deemed to have knowledge of any adjustment of the Conversion
     Price and may assume without inquiry that the last Conversion Price of
     which it has knowledge is still in effect. Promptly after delivery of such
     certificate, the Issuer shall prepare a notice of such adjustment of the
     Conversion Price setting forth the adjusted Conversion Price and the date
     on which each adjustment becomes effective and shall mail such notice of
     such adjustment of the Conversion Price to each Holder of Notes at his
     last address appearing on the list of Securityholders provided for in
     Section 3.06 of this Indenture, within twenty (20) days after execution
     thereof. Failure to deliver such notice shall not affect the legality or
     validity of any such adjustment.

          (l) In any case in which this Section 13.05 provides that an
     adjustment shall become effective immediately after a Record Date for an
     event, the Issuer may defer until the occurrence of such event (i) issuing
     to the holder of any Notes converted after such Record Date and before the
     occurrence of such event the additional shares of Common Stock issuable
     upon such conversion by reason of the adjustment required by such event
     over and above the Common Stock issuable upon such conversion before
     giving effect to such adjustment and (ii) paying to such holder any amount
     in cash in lieu of any fraction pursuant to Section 13.03.


                                       26

<PAGE>


          (m) For purposes of this Section 13.05, the number of shares of
     Common Stock at any time outstanding shall not include shares held in the
     treasury of the Issuer but shall include shares issuable in respect of
     scrip certificates issued in lieu of fractions of shares of Common Stock.
     The Issuer will not pay any dividend or make any distribution on shares of
     Common Stock held in the treasury of the Issuer.

          (n) In lieu of making any adjustment to the Conversion Price pursuant
     to Section 13.05(e) or 13.05(f), the Issuer may elect to reserve an amount
     of cash for distribution to the Holders of the Notes upon the conversion
     of the Notes so that any such Holder converting Notes will receive upon
     such conversion, in addition to the shares of Common Stock and other items
     to which such Holder is entitled, the full amount of cash which such
     Holder would have received if such Holder had, immediately prior to the
     Record Date for such distribution of cash, converted its Notes into Common
     Stock, together with any interest accrued with respect to such amount, in
     accordance with this Section 13.05(n). The Issuer may make such election
     by providing an Officers' Certificate to the Trustee to such effect on or
     prior to the payment date for any such distribution and depositing with
     the Trustee on or prior to such date an amount of cash equal to the
     aggregate amount the Holders of the Notes would have received if such
     Holders had, immediately prior to the Record Date for such distribution,
     converted all of the Notes into Common Stock. Any such funds so deposited
     by the Issuer with the Trustee shall be invested by the Trustee in
     marketable obligations issued or fully guaranteed by the United States
     government with a maturity not more than three (3) months from the date of
     issuance. Upon conversion of Notes by a Holder, the Holder will be
     entitled to receive, in addition to the Common Stock issuable upon
     conversion, an amount of cash equal to the amount such Holder would have
     received if such Holder had, immediately prior to the Record Date for such
     distribution, converted its Note into Common Stock, along with such
     Holder's pro rata share of any accrued interest earned as a consequence of
     the investment of such funds. Promptly after making an election pursuant
     to this Section 13.05(n), the Issuer shall give or shall cause to be given
     notice to all Noteholders of such election, which notice shall state the
     amount of cash per $1,000 principal amount of Notes such Holders shall be
     entitled to receive (excluding interest) upon conversion of the Notes as a
     consequence of the Issuer having made such election.

     SECTION 13.06. Effect of Reclassification, Consolidation, Merger or Sale.

     If any of the following events occur, namely (i) any reclassification or
change of shares of Common Stock issuable upon conversion of the Notes (other


                                       27

<PAGE>


than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination, or any
other change for which an adjustment is provided in Section 13.05(c), (ii) any
consolidation or merger or combination to which the Issuer is a party other
than a merger in which the Issuer is the continuing corporation and which does
not result in any reclassification of, or change (other than in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination) in outstanding shares of Common Stock,
or (iii) any sale or conveyance of all or substantially all of the properties
and assets of the Issuer to any other person as a result of which holders of
Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such Common
Stock, then the Issuer or the successor or purchasing person, as the case may
be, shall execute with the Trustee a supplemental indenture (which shall comply
with the Trust Indenture Act of 1939 as in force at the date of execution of
such supplemental indenture) providing that such Notes shall be convertible
into the kind and amount of shares of stock, securities or other property or
assets (including cash) receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance by a holder of a number
of shares of Common Stock issuable upon conversion of such Notes (assuming, for
such purposes, a sufficient number of authorized shares of Common Stock
available to convert all such Notes) immediately prior to such
reclassification, change, consolidation, merger, combination, sale or
conveyance, assuming such holder of Common Stock did not exercise his rights of
election, if any, as to the kind or amount of securities, cash or other
property receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance (provided that, if the kind or amount of stock,
securities or other property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or
conveyance is not the same for each share of Common Stock in respect of which
such rights of election shall not have been exercised ("nonelecting share"),
then for the purposes of this Section 13.06, the kind and amount of securities,
cash or other property receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance for each non-electing
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). Such supplemental indenture shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 13.

     The above provisions of this Section shall similarly apply to successive
reclassifications, changes, consolidations, mergers, combinations, sales and
conveyances. If this Section 13.06 applies to any event or occurrence, Section
13.05 shall not apply.

     SECTION 13.07. Taxes on Shares Issued.


                                       28

<PAGE>


     The issue of stock certificates on conversions of Notes shall be made
without charge to the converting Holder for any tax in respect of the issue
thereof. The Issuer shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of stock
in any name other than that of the Holder of any Notes converted, and the
Issuer shall not be required to issue or deliver any such stock certificate
unless and until the person or persons requesting the issue thereof shall have
paid to the Issuer the amount of such tax or shall have established to the
satisfaction of the Issuer that such tax has been paid.

     SECTION 13.08. Reservation of Shares; Shares to be Fully Paid; Compliance
with Governmental Requirements; Listing of Common Stock.

     The Issuer shall provide, free from preemptive rights, out of its
authorized but unissued shares or shares held in treasury, sufficient shares of
Common Stock to provide for the conversion of the Notes from time to time as
such Notes are presented for conversion.

     Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common
Stock issuable upon conversion of the Notes, the Issuer will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Issuer may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.

     The Issuer covenants that all shares of Common Stock which may be issued
upon conversion of Notes will upon issue be fully paid and non-assessable by
the Issuer and free from all taxes, liens and charges with respect to the issue
thereof.

     The Issuer covenants that if any shares of Common Stock to be provided for
the purpose of conversion of Notes hereunder require registration with or
approval of any governmental authority under any federal or state law before
such shares may be validly issued upon conversion, the Issuer will in good
faith and as expeditiously as possible endeavor to secure such registration or
approval, as the case may be.

     The Issuer further covenants that, if at any time the Common Stock shall
be listed on any national securities exchange or automated quotation system,
the Issuer will, if permitted by the rules of such exchange or automated
quotation system, list and keep listed, so long as the Common Stock shall be so
listed on such exchange or automated quotation system, all Common Stock
issuable upon conversion of the Notes; provided, however, that if rules of such
exchange or automated quotation system permit the Issuer to defer the listing
of such Common Stock until the first conversion of the Notes into Common Stock
in accordance


                                       29

<PAGE>


with the provisions of this Indenture, the Issuer covenants to list such Common
Stock issuable upon conversion of the Notes in accordance with the requirements
of such exchange or automated quotation system at such time.

     SECTION 13.09. Responsibility of Trustee.

     The Trustee and any other conversion agent shall not at any time be under
any duty or responsibility to any Holder of Notes to determine the Conversion
Price or whether any facts exist which may require any adjustment of the
Conversion Price, or with respect to the nature or extent or calculation of any
such adjustment when made, or with respect to the method employed, or herein or
in any supplemental indenture provided to be employed, in making the same. The
Trustee and any other conversion agent shall not be accountable with respect to
the validity or value (or the kind or amount) of any shares of Common Stock, or
of any securities or property, which may at any time be issued or delivered
upon the conversion of any Notes; and the Trustee and any other conversion
agent make no representations with respect thereto. Neither the Trustee nor any
conversion agent shall be responsible for any failure of the Issuer to issue,
transfer or deliver any shares of Common Stock or stock certificates or other
securities or property or cash upon the surrender of any Notes for the purpose
of conversion or to comply with any of the duties, responsibilities or
covenants of the Issuer contained in this Article. Without limiting the
generality of the foregoing, neither the Trustee nor any conversion agent shall
be under any responsibility to determine the correctness of any provisions
contained in any supplemental indenture entered into pursuant to Section 13.06
relating either to the kind or amount of shares of stock or securities or
property (including cash) receivable by Holders upon the conversion of their
Notes after any event referred to in such Section 13.06 or to any adjustment to
be made with respect thereto, but, subject to the provisions of Section 5.01,
may accept as conclusive evidence of the correctness of any such provisions,
and shall be protected in relying upon, the Officers' Certificate (which the
Issuer shall be obligated to file with the Trustee prior to the execution of
any such supplemental indenture) with respect thereto.

     SECTION 13.10. Notice to Holders Prior to Certain Actions.

     In case:

          (a) the Issuer shall declare a dividend (or any other distribution)
     on its Common Stock that would require an adjustment in the Conversion
     Price pursuant to Section 13.05; or

          (b) the Issuer shall authorize the granting to the holders of all or
     substantially all of its Common Stock of rights or warrants to subscribe
     for or purchase any share of any class or any other rights or warrants; or


                                       30

<PAGE>


          (c) of any reclassification or reorganization of the Common Stock of
     the Issuer (other than a subdivision or combination of its outstanding
     Common Stock, or a change in par value, or from par value to no par value,
     or from no par value to par value), or of any consolidation or merger to
     which the Issuer is a party and for which approval of any stockholders of
     the Issuer is required, or of the sale or transfer of all or substantially
     all of the assets of the Issuer or any of its Significant Subsidiaries; or

          (d) of the voluntary or involuntary dissolution, liquidation or
     winding up of the Issuer or any of its Significant Subsidiaries;

the Issuer shall cause to be filed with the Trustee and to be mailed to each
Holder of Notes at his address appearing on the list of Securityholders
provided for in Section 3.06 of this Indenture, as promptly as possible but in
any event at least fifteen (15) days prior to the applicable date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution or rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution or rights are to be
determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective or occur, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such dividend, distribution, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.

     7. Additional Provisions. In addition to the provisions set forth in
Article 9 of the Indenture, the Indenture, with respect to the Notes only,
shall include the following additional provisions:

     SECTION 9.06. Legal Defeasance of Notes. The Issuer shall be deemed to
have paid and discharged the entire indebtedness on all the outstanding Notes
on the 91st day after the date of the deposit referred to in subparagraph (d)
hereof, and the provisions of this Indenture, as it relates to the outstanding
Notes, shall no longer be in effect (and the Trustee, at the expense of the
Issuer, shall, upon written request by the Issuer, execute proper instruments
acknowledging the same), except as to:

     (a) the rights of Holders of Notes to receive, from the trust funds
described in subparagraph (d) hereof, payment of the principal of and each
installment of principal of and interest on the outstanding Notes on the
maturity of such principal or installment of principal or interest;


                                       31

<PAGE>


     (b) the provisions of Sections 2.08, 2.09, 2.11, 3.02, 9.02, 9.03 and this
9.06; and

     (c) the rights, powers, trust and immunities of the Trustee hereunder;

     provided that, the following conditions shall have been satisfied:

     (d) the Issuer shall have deposited or caused to be deposited irrevocably
with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for and dedicated solely
to the benefit of the Holders of such Notes, cash in Dollars (or such other
money or currencies as shall then be legal tender in the United States) and/or
U.S. Government Obligations, which through the payment of interest and
principal in respect thereof, in accordance with their terms, will provide (and
without reinvestment and assuming no tax liability will be imposed on the
Trustee), not later than one day before the due date of any payment of money,
an amount in cash, sufficient, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge each installment of principal of
and interest, if any, on all the Notes on the dates such installments of
interest or principal are due at maturity or, if the Issuer has made
irrevocable arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the Issuer's name and at the Issuer's expense,
on the applicable redemption date;

     (e) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or instrument
to which the Issuer is a party or by which it is bound;

     (f) no Event of Default with respect to the Notes shall have occurred and
be continuing on the date of such deposit or during the period ending on the
91st day after such date;

     (g) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel to the effect that (i) the Issuer has
received from, or there has been published by, the Internal Revenue Service a
ruling, or (ii) since the date of execution of this Indenture, there has been a
change in the applicable U. S. federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that, the
Holders of the Notes will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of such deposit, defeasance and discharge and
will be subject to U.S. federal income tax on the same amount and in the same
manner and at the same times as would have been the case if such deposit, and
legal defeasance had not occurred;

     (h) the Issuer shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Issuer with the intent
of preferring the


                                       32

<PAGE>


Holders of the Notes over any other creditors of the Issuer or with the intent
of defeating, hindering, delaying or defrauding any other creditors of the
Issuer;

     (i) the Issuer shall have delivered to the Trustee an Opinion of Counsel
to the effect that (i) the trust funds will not be subject to any rights of
holders of Senior Indebtedness and (ii) after the 91st day following the
deposit, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally;

     (j) the legal defeasance must not cause the Trustee to have a conflicting
interest within the meaning of the Trust Indenture Act of 1939, assuming all
Notes were in default within the meaning of the Trust Indenture Act of 1939;

     (k) such deposit shall not result in the trust arising from such deposit
constituting an investment company (as defined in the Investment Company Act of
1940, as amended), or such trust shall be qualified under such Act or exempt
from regulation thereunder; and

     (l) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the defeasance contemplated by this Section
have been complied with.

     SECTION 9.07. Covenant Defeasance.

     On and after the 91st day after the date of the deposit referred to in
subparagraph (a) hereof, the Issuer may omit to comply with any term, provision
or condition set forth under Sections 3.09 and 11.07 (and the failure to comply
with any such covenants shall not constitute an Event of Default under Section
4.01) and the occurrence of any event described in clause (e) or (f) of Section
4.01 shall not constitute an Event of Default hereunder, with respect to the
Notes, provided that the following conditions shall have been satisfied:

     (a) With reference to this Section 9.07, the Issuer has deposited or
caused to be deposited irrevocably with the Trustee as trust funds in trust for
the purpose of making the following payments, specifically pledged as security
for and dedicated solely to the benefit of the Holders of the Notes, cash in
Dollars (or such other money or currencies as shall then be legal tender in the
United States) and/or U.S. Government Obligations, which through the payment of
interest and principal in respect thereof, in accordance with their terms, will
provide (and without reinvestment and assuming no tax liability will be imposed
on the Trustee), not later than one day before the due date of any payment of
money, an amount in cash, sufficient, in the opinion of a nationally recognized
firm of independent certified public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge each
installment of principal of and interest, if any, on all the Notes on the dates
such installments of interest or


                                       33

<PAGE>


principal are due at maturity or, if the Issuer has made irrevocable
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the Issuer's name and at the Issuer's expense, on the
applicable redemption date;

     (b) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or instrument
to which the Issuer is a party or by which it is bound;

     (c) no Event of Default with respect to the Notes shall have occurred and
be continuing on the date of such deposit or during the period ending on the
91st day after such date;

     (d) the Issuer shall have delivered to the Trustee an Opinion of Counsel
confirming that Holders of the Notes will not recognize income, gain or loss
for U.S. federal income tax purposes as a result of such deposit and covenant
defeasance and will be subject to U.S. federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
deposit and covenant defeasance had not occurred;

     (e) the Issuer shall have delivered to the Trustee an Officers'
Certificate stating the deposit was not made by the Issuer with the intent of
preferring the Holders of the Notes over any other creditors of the Issuer or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Issuer;

     (f) the Issuer shall have delivered to the Trustee an Opinion of Counsel
to the effect that (i) the trust funds will not be subject to any rights of
holders of Senior Indebtedness and (ii) after the 91st day following the
deposit, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally;

     (g) the defeasance must not cause the Trustee to have a conflicting
interest within the meaning of the Trust Indenture Act of 1939, assuming all
Notes were in default within the meaning of the Trust Indenture Act of 1939;

     (k) such deposit shall not result in the trust arising from such deposit
constituting an investment company (as defined in the Investment Company Act of
1940, as amended), or such trust shall be qualified under such Act or exempt
from regulation thereunder; and

     (h) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the covenant defeasance contemplated
by this Section have been complied with.


                                       34

<PAGE>


     8. Additional Definitions. In addition to the definitions set forth in
Article 1 of the Indenture or, where applicable, in lieu thereof, the
Indenture, with respect to the Notes only, shall include the following
definitions:

     "Change in Control" shall be deemed to have occurred when (i) any "person"
or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner" (as defined in Rules 13-d3 and 13-d5
under the Exchange Act) of shares representing more than 50% of the combined
voting power of the then outstanding securities entitled to vote generally in
elections of directors of the Issuer (the "Voting Stock"); (ii) approval by
stockholders of the Issuer of any plan or proposal for the liquidation,
dissolution or winding up of the Issuer; (iii) the Issuer (A) consolidates with
or merges into any other Person or any other Person merges into the Issuer, and
in the case of any such transaction, the outstanding Common Stock of the Issuer
is changed or exchanged into other assets or securities as a result, unless the
stockholders of the Issuer immediately before such transaction own, directly or
indirectly immediately following such transaction, at least 51% of the combined
voting power of the outstanding voting securities of the corporation resulting
from such transaction in substantially the same proportion as their ownership
of the Voting Stock immediately before such transaction, or (B) conveys,
transfers or leases all or substantially all of its assets to any Person; or
(iv) any time Continuing Directors do not constitute a majority of the Board of
Directors of the Issuer (or, if applicable, a successor Person to the Issuer);
provided that a Change in Control shall not be deemed to have occurred if
either (x) the Closing Price (as defined in Section 13.05(h)(1) hereof) of the
Common Stock for any five (5) Trading Days during the ten (10) Trading Days
immediately preceding the Change in Control is at least equal to 105% of the
Conversion Price in effect on the date on which the Change in Control occurs or
(y) in the case of a merger or consolidation otherwise constituting a Change in
Control, all of the consideration (excluding cash payments for fractional
shares) in such merger or consolidation constituting the Change in Control
consists of common stock traded on a United States national securities exchange
or quoted on the Nasdaq National Market (or which will be so traded or quoted
when issued or exchanged in connection with such Change in Control) and as a
result of such transaction or transactions the Notes become convertible solely
into such common stock.

     "Common Stock" means any stock of any class of the Issuer which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Issuer
and which is not subject to redemption by the Issuer. Subject to the provisions
of Section 13.06, however, shares issuable on conversion of Notes shall include
only shares of the class designated as common stock of the Issuer at the date
of this Indenture or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation,


                                       35

<PAGE>


dissolution or winding up of the Issuer and which are not subject to redemption
by the Issuer; provided that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares
of all such classes resulting from all such reclassifications.

     "Continuing Director" means, at any date, a member of the Issuer's board
of directors (i) who was a member of such board on March 31, 2001 or (ii) who
was nominated or elected by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election or whose
election to the Issuer's board of directors was recommended or endorsed by at
least a majority of the directors who were Continuing Directors at the time of
such nomination or election or such lesser number comprising a majority of a
nominating committee if authority for such nominations or elections has been
delegated to a nominating committee whose authority and composition have been
approved by at least a majority of the directors who were Continuing Directors
at the time such committee was formed. (Under this definition, if the board of
directors of the Issuer as of the date of this Indenture were to approve a new
director or directors and then resign, no Change in Control would occur even
though the current board of directors would thereafter cease to be in office)

     "Depositary" means, with respect to the Notes issued in global form, the
Person specified in Section 2.13(c) as the Depositary with respect to such
Notes, until a successor shall have been appointed and become such pursuant to
the applicable provisions of the Indenture, and thereafter, "Depositary" shall
mean or include such successor.

     "Global Note" has the meaning set forth in Section 2.13(a).

     "interest" means, with respect to any Note, interest and Liquidated
Damages (as defined in any registration rights agreement between the Issuer and
the initial purchaser of such Notes), if any, on such Note.

     "Portal Market" means The Portal Market operated by the National
Association of Securities Dealers, Inc. or any successor thereto.

     "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

     "Repurchase Event" means a Change in Control or a Termination of Trading.

     "Restricted Securities" has the meaning specified in Section 2.13(c).


                                       36

<PAGE>


     "Rule 144A" means Rule 144A as promulgated under the Securities Act.

     "Termination of Trading" shall have occurred if the Common Stock (or other
common stock into which the Notes are then convertible) is neither listed for
trading on a United States national securities exchange nor approved for
trading on the Nasdaq Stock Market or another established automated
over-the-counter trading market in the United States.

     "U.S. Government Obligations" means securities which are (i) direct
obligations of The United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of The United States
of America the payment of which is unconditionally guaranteed as a full faith
and credit obligation by The United States of America, and which in the case of
(i) and (ii) are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation evidenced by such depository receipt.

     9. Board Resolutions. Attached hereto as Exhibit B are true and correct
copies of the Resolutions. The Resolutions have not been amended, modified or
rescinded and remain in full force and effect, and the Resolutions are the only
resolutions adopted by the Issuer's board of directors or any committee thereof
relating to the Notes and the transactions related thereto.

     Each of the undersigned officers further states that he has read the
provisions of the Indenture setting forth the conditions precedent to the
issuance, authentication and delivery of the Notes and the definitions relating
thereto, the Resolutions authorizing the issuance of the Notes and the Form of
Notes; that the statements made in this Certificate are based upon the
examination of the provisions of such Indenture, the Resolutions and the Form
of Notes; that he has, in his opinion, made such examination or investigation
as is necessary to enable him to express an informed opinion as to whether or
not the conditions precedent for the issuance, authentication and delivery of
the Notes have been complied with; and that, in his opinion, such conditions
have been complied with.

                            [Signature page follows]


                                       37

<PAGE>


     IN WITNESS WHEREOF, said officers have signed this certificate this ___
day of May, 2001.



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









                                       38

<PAGE>



                                                        EXHIBIT A - FORM OF NOTE

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

     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY (OR, IF THIS SECURITY IS COMMON STOCK, OF THE
SECURITY CONVERTED INTO COMMON STOCK) RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL
GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE


                                       39

<PAGE>


OF THIS SECURITY (OR, IF THIS SECURITY IS COMMON STOCK, OF THE SECURITY
CONVERTED INTO COMMON STOCK). AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION
S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE
FOREGOING RESTRICTIONS.

                              E*TRADE GROUP, INC.

                 6.75% Convertible Subordinated Notes Due 2008

No. 1                         CUSIP NO. 269246AC8              U.S. $325,000,000

     E*TRADE Group, Inc., a corporation duly organized and validly existing
under the laws of the State of Delaware (herein called the "Issuer", which term
includes any successor corporation under the Indenture referred to on the
reverse hereof), for value received hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of Three Hundred Twenty-Five Million
United States Dollars ($325,000,000) on May 15, 2008 and to pay interest on
said principal sum semi-annually on May 15 and November 15 of each year,
commencing November 15, 2001 at the rate per annum specified in the title of
this Note, accrued from the May 15 or November 15, as the case may be, next
preceding the date of this Note to which interest has been paid or duly
provided for, unless the date of this Note is a date to which interest has been
paid or duly provided for, in which case interest shall accrue from the date of
this Note, or unless no interest has been paid or duly provided for on this
Note, in which case interest shall accrue from May 29, 2001 until payment of
said principal sum has been made or duly provided for. Notwithstanding the
foregoing, if the date hereof is after any May 1 or November 1 as the case may
be, and before the following May 15 or November 15, this Note shall bear
interest from such May 15 or November 15, respectively; provided, however, that
if the Issuer shall default in the payment of interest due on such May 15 or
November 15, then this Note shall bear interest from the next preceding May 15
or November 15 to which interest has been paid or duly provided for or, if no
interest has been paid or duly provided for on this Note, from May 29, 2001.
Except as otherwise provided in the Indenture, the interest payable on this
Note pursuant to the Indenture on any May 15 or November 15 will be paid to the
person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on the record date, which shall be the May 1 or
November 1 (whether or not a Business Day) next preceding such May 15 or
November 15, respectively; provided that any such interest not punctually paid
or duly provided for shall be payable as provided in the Indenture. Payment


                                       40

<PAGE>


of the principal of and interest accrued on this Note shall be made by check
mailed to the address of the Holder of this Note specified in the register of
Notes, or, at the option of the holder of this Note, at the Corporate Trust
Office, in such lawful money of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts;
provided further, however, that, with respect to any holder of Notes with an
aggregate principal amount in excess of $2,000,000, at the request of such
holder in writing to the Issuer, interest on such holder's Notes shall be paid
by wire transfer in immediately available funds in accordance with the written
wire transfer instruction supplied by such holder from time to time to the
Trustee and paying agent (if different from the Trustee) at least two days
prior to the applicable record date; provided that any payment to the
Depositary or its nominee shall be paid by wire transfer in immediately
available funds in accordance with the wire transfer instruction supplied by
the Depositary or its nominee from time to time to the Trustee and paying agent
(if different from Trustee) at least two days prior to the applicable record
date.

     Reference is made to the further provisions of this Note set forth on the
reverse hereof, including, without limitation, provisions subordinating the
payment of principal of and premium, if any, and interest on this Note to the
prior payment in full of all Senior Indebtedness as defined in the Indenture
and provisions giving the holder of this Note the right to convert this Note
into Common Stock of the Issuer on the terms and subject to the limitations
referred to on the reverse hereof and as more fully specified in the Indenture.
Such further provisions shall for all purposes have the same effect as though
fully set forth at this place.

     This Note shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of said State (without regard to the conflicts of laws
provisions thereof).

     This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.


                                       41

<PAGE>


     IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed.


                                            E*TRADE GROUP, INC.


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


Attest:


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



                         CERTIFICATE OF AUTHENTICATION

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


                                            THE BANK OF NEW YORK, as Trustee


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



<PAGE>


                             (REVERSE OF SECURITY)

                 6.75% Convertible Subordinated Notes Due 2008

     Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Indenture referred to below.

     This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its 6.75% Convertible Subordinated Notes due 2008 (herein called
the "Notes"), all issued or to be issued under and pursuant to an Indenture
dated as of May 29, 2001 (herein called the "Indenture"), between the Issuer
and The Bank of New York, (herein called the "Trustee"), to which Indenture and
all indentures supplemental thereto reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Issuer and the holders of the Notes.

     In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest on all Notes may be declared, and upon said declaration shall become,
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.

     The Indenture contains provisions permitting the Issuer and the Trustee in
certain limited circumstances, without the consent of the holders of the Notes,
and in other circumstances, with the consent of the holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding,
evidenced as in the Indenture provided, to execute supplemental indentures
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or modifying in
any manner the rights of the holders of the Notes; provided, however, that no
such supplemental indenture shall (i) change the final maturity of any Note, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or change the currency in which the Notes are
payable, or impair or change in any respect adverse to the Noteholders the
right to convert the Notes into any other security or modify the provisions
with respect to the subordination of the Notes, or alter or waive any provision
regarding redemption thereof, or impair or affect the right of any Noteholder
to institute suit for the payment thereof, in any case, without the consent of
the Holder of each Note so affected, or (ii) reduce the aforesaid percentage of
Notes, the holders of which are required to consent to any such supplemental
indenture, without the consent of the holders of all Notes then outstanding. It
is also provided in the Indenture that, prior to any declaration accelerating
the maturity of the Notes, the holders of a majority in aggregate principal
amount of the Notes at the time outstanding may on behalf of


<PAGE>


the holders of all of the Notes waive any past default or Event of Default
under the Indenture and its consequences except (i) a default in the payment of
interest or premium, if any, on, or the principal of, the Notes when due or
(ii) a default in respect of a covenant or provisions of the Indenture which
under Article 7 cannot be modified or amended without the consent of the
holders of all Notes then outstanding. Any such consent or waiver by the holder
of this Note (unless revoked as provided in the Indenture) shall be conclusive
and binding upon such holder and upon all future holders and owners of this
Note and any Notes which may be issued in exchange or substitution hereof,
irrespective of whether or not any notation thereof is made upon this Note or
such other Notes.

     The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, expressly subordinate and subject in right of
payment to the prior payment in full in cash or other payment satisfactory to
the holders of Senior Indebtedness of all Senior Indebtedness of the Issuer, as
defined in the Indenture, whether outstanding at the date of the Indenture or
thereafter incurred, and this Note is issued subject to the provisions of the
Indenture with respect to such subordination. Each holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided and appoints the
Trustee his attorney-in-fact for such purpose.

     No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Note at the place, at the respective times, at the rate and in
the lawful money herein prescribed.

     Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.

     The Notes are issuable in registered form without coupons in denominations
of $1,000 principal amount and integral multiples thereof. At the office or
agency of the Issuer referred to on the face hereof, and in the manner and
subject to the limitations provided in the Indenture, without payment of any
service charge but with payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration or
exchange of Notes, Notes may be exchanged for a like aggregate principal amount
of Notes of other authorized denominations.

     The Notes will not be redeemable at the option of the Issuer prior to May
20, 2004. On or after such date and prior to maturity the Notes may be redeemed


<PAGE>


at the option of the Issuer as a whole, or from time to time in part, upon
mailing a notice of such redemption not less than 30 nor more than 60 days
before the date fixed for redemption to the holders of Notes at their last
registered addresses, all as provided in the Indenture, at the following
redemption prices (expressed as percentages of the principal amount), together
in each case with accrued interest, if any, to, but excluding, the date fixed
for redemption:

Period                                                          Redemption Price
------                                                          ----------------
Beginning on May 20, 2004 and ending on May 14, 2005...........     103.3750%
Beginning on May 15, 2005 and ending on May 14, 2006...........     102.5313%
Beginning on May 15, 2006 and ending on May 14, 2007...........     101.6875%
Beginning on May 15, 2007 and ending on May 14, 2008...........     100.8438%

     The Notes are not subject to redemption through the operation of any
sinking fund.

     Upon the occurrence of a Repurchase Event, the Noteholder has the right,
at such holder's option, to require the Issuer to repurchase all or any portion
of such holder's Notes on the date (the "Repurchase Date") that is no earlier
than thirty (30) days and no later than forty-five (45) days (or, if such day
is not a Business Day, the next succeeding Business Day) after notice of such
Repurchase Event at a price equal to 100% of the principal amount of the Notes
such holder elects to require the Issuer to repurchase, together in each case
with accrued interest to the date fixed for repurchase; provided that if such
repurchase date is May15 or November 15, then the interest payable on such date
shall be paid to the holder of record of the Note on the next preceding May 1
or November 1, respectively. The Issuer or, at the written request of the
Issuer, the Trustee shall mail to all holders of record of the Notes a notice
of the occurrence of a Repurchase Event and of the repurchase right arising as
a result thereof on or before the thirtieth (30th) calendar day after the
occurrence of such Repurchase Event. Payment of the repurchase price may be
made in shares of the Issuer's Common Stock under certain circumstances as
provided in Section 11.07(b) of the Indenture.

     Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time following the date of original issuance of
the Notes and prior to the close of business on May 15, 2008, (except that with
respect to any Note or portion of a Note which shall be called for redemption,
prior to the close of business on the Business Day next preceding the date
fixed for redemption) (unless the Issuer shall default in payment due upon
redemption), to convert the principal hereof or any portion of such principal
which is $1,000 or an integral multiple thereof, into that number of fully paid
and non-assessable shares of Issuer's Common Stock, as said shares shall be
constituted at the date of


<PAGE>


conversion, obtained by dividing the principal amount of this Note or portion
thereof to be converted by the conversion price of $10.925 or such conversion
price as adjusted from time to time as provided in the Indenture, upon
surrender of this Note, together with a conversion notice as provided in the
Indenture (the form entitled "Conversion Notice" on the reverse hereof), to the
Issuer at the office or agency of the Issuer maintained for that purpose in the
Borough of Manhattan, The City of New York, or at the option of such holder,
the Corporate Trust Office, and, unless the shares issuable on conversion are
to be issued in the same name as this Note, duly endorsed by, or accompanied by
instruments of transfer in form satisfactory to the Issuer duly executed by,
the holder or by his duly authorized attorney. No adjustment in respect of
interest or dividends will be made upon any conversion; provided, however, that
if this Note shall be surrendered for conversion during the period from the
close of business on any record date for the payment of interest through the
close of business on the Business Day next preceding the following interest
payment date, and either (x) have not been called for redemption on a
redemption date that occurs during such period or (y) are not to be redeemed in
connection with a Repurchase Event on a Repurchase Date that occurs during such
period, such Notes (or portion thereof being converted) must be accompanied by
an amount, in funds acceptable to the Issuer, equal to the interest payable on
such interest payment date on the principal amount being converted; provided,
however, that no such payment shall be required if there shall exist at the
time of conversion a default in the payment of interest on the Notes. No
fractional shares will be issued upon any conversion, but an adjustment and
payment in cash will be made, as provided in the Indenture, in respect of any
fraction of a share which would otherwise be issuable upon the surrender of any
Notes for conversion. Notes in respect of which a Holder is exercising its
right to require repurchase upon a Repurchase Event may be converted only if
such Holder withdraws its election to exercise such right in accordance with
the terms of the Indenture. Any Notes called for redemption, unless surrendered
for conversion by the Holders thereof on or before the close of business on the
Business Day preceding the date fixed for redemption, may be deemed to be
redeemed from such Holders for an amount equal to the applicable redemption
price, together with accrued but unpaid interest to (but excluding) the date
fixed for redemption, by one or more investment banks or other purchasers who
may agree with the Issuer (i) to purchase such Notes from the holders thereof
and convert them into shares of the Issuer's Common Stock and (ii) to make
payment for such Notes as aforesaid to the Trustee in trust for the holders.

     Upon due presentment for registration of transfer of this Note at the
office or agency of the Issuer in the Borough of Manhattan, The City of New
York, or at the option of the holder of this Note, at the Corporate Trust
Office, a new Note or Notes of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange thereof, subject
to the limitations provided


<PAGE>


in the Indenture, without charge except for any tax or other governmental
charge imposed in connection therewith.

     The Issuer, the Trustee, any authenticating agent, any paying agent, any
conversion agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this Note
shall be overdue and notwithstanding any notation of ownership or other writing
hereon made by anyone other than the Issuer or any Note registrar), for the
purpose of receiving payment hereof, or on account hereof, for the conversion
hereof and for all other purposes, and neither the Issuer nor the Trustee nor
any other authenticating agent nor any paying agent nor any other conversion
agent nor any Note registrar shall be affected by any notice to the contrary.
All payments made to or upon the order of such registered holder shall, to the
extent of the sum or sums paid, satisfy and discharge liability for monies
payable on this Note.

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

     Customary abbreviations may be used in the name of a Noteholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).









<PAGE>



                               CONVERSION NOTICE

TO:   E*TRADE Group, Inc.

      The undersigned registered owner of this Note hereby irrevocably exercises
the option to convert this Note, or the portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of
E*TRADE Group, Inc. in accordance with the terms of the Indenture referred to
in this Note, and directs that the shares issuable and deliverable upon such
conversion, together with any check in payment for fractional shares and any
Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
check the appropriate box below and pay all transfer taxes payable with respect
thereto. Any amount required to be paid to the undersigned on account of
interest accompanies this Note.

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

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

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

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

      ------------------------------
      Signature Guarantee

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


      --------------------------------      Principal amount to be converted
                   (Name)                   (if less than all): $_______________

      --------------------------------
              (Street Address)

      --------------------------------      Social Security or Other Taxpayer
         (City, State and Zip Code)         Identification Number_______________







<PAGE>


                           OPTION TO ELECT REPAYMENT
                            UPON A REPURCHASE EVENT

TO:   E*TRADE Group, Inc.

      The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from E*TRADE Group, Inc. (the "Issuer") as to
the occurrence of a Repurchase Event with respect to the Issuer and requests
and instructs the Issuer to repay the entire principal amount of this Note, or
the portion thereof (which is $1,000 or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Note at the redemption price, together with accrued interest to, but excluding,
such date, to the registered holder hereof.

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

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

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

      NOTICE: The above signatures of the registered holder(s) hereof must
correspond with the name as written upon the face of the Note in every
particular without alteration or enlargement or any change whatever.


      Principal amount to be converted
      (if less than all): $
                          ------------------

      Social Security or Other Taxpayer
      Identification Number
                           -----------------






<PAGE>


                                ASSIGNMENT FORM

     If you, Holder, want to assign this Note, fill in the form below and have
your signature guaranteed.

     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________

(Please insert assignee's social security or tax ID number) ___________________

_______________________________________________________________________________

_______________________________________________________________________________
          (Please print or type assignee's name, address and zip code)

the within Note and all rights thereunder, and hereby irrevocably constitute
and appoint such person attorney to transfer such Note on the books of the
Issuer, with full power of substitution in the premises.

      In connection with any transfer of the within Note occurring within
two years (or such shorter holding period required under Rule 144(k) of the
Securities Act) of the original issuance of such Note (unless such Note is
being transferred pursuant to a registration statement that has been declared
effective under the Securities Act), the undersigned confirms that such Note is
being transferred:
      [ ]   To E*TRADE, Group, Inc. or a subsidiary thereof;

      [ ]   Pursuant to and in compliance with Rule 144A under the Securities
            Act;

      [ ]   Pursuant to and in compliance with Rule 144 under the Securities
            Act; or

      [ ]   Pursuant to another available exemption from the registration
            requirements of the Securities Act;

and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Issuer as defined in Rule 144
under the Securities Act (an "Affiliate"):

      [ ]   The transferee is an Affiliate of the Issuer.

Dated:                                  Your signature:
      --------------------------------                 -------------------------

NOTICE:  The signature to this assignment must correspond with the name as
         written upon the face of the within Note in every particular without
         alteration or enlargement or any change whatsoever.


                                        Signature guarantee:

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




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