Exhibit 4.2
                                                                     -----------


                            FRANKLIN RESOURCES, INC.

                          Liquid Yield Option(TM) Notes
                                    due 2031
                                  $ 877,000,000
                              (Zero Coupon-Senior)
           ----------------------------------------------------------

                                    INDENTURE

                               Dated May 11, 2001
           ----------------------------------------------------------

                              The Bank of New York

                                     TRUSTEE

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

                   (TM)Trademark of Merrill Lynch & Co., Inc.







NY2:\1053536\01\MKWW01!.DOC\99980.0025
<PAGE>

                             CROSS REFERENCE TABLE*


IA Section...................................         Indenture Section
310(a)(1)....................................                7.10
     (a)(2)..................................                7.10
     (a)(3)..................................                N.A.
     (a)(4)..................................                N.A.
     (b).....................................             7.08; 7.10
     (c).....................................                N.A.
311(a).......................................                7.11
     (b).....................................                7.11
     (c).....................................                N.A.
312(a).......................................                2.05
     (b).....................................               13.03
     (c).....................................               13.03
313(a).......................................                7.06
     (b)(1)..................................                N.A.
     (b)(2)..................................                7.06
     (c).....................................               13.02
     (d).....................................                7.06
314(a).......................................         4.02; 4.03; 13.02
     (b).....................................                N.A.
     (c)(1)..................................               13.04
     (c)(2)..................................               13.04
     (c)(3)..................................                N.A.
     (d).....................................                N.A.
     (e).....................................               13.05
     (f).....................................                N.A.
315(a).......................................                7.01
     (b).....................................            7.05; 13.02
     (c).....................................                7.01
     (d).....................................                7.01
     (e).....................................                6.11
316(a) (last sentence).......................                2.08
     (a)(1)(A)...............................                6.05
     (a)(1)(B)...............................                6.04
     (a)(2)..................................                N.A.
     (b).....................................                6.07
317(a)(1)....................................                6.08
     (a)(2)..................................                6.09
     (b).....................................                2.04
318(a).......................................               13.01
                           N.A. means Not Applicable.

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


<PAGE>

                  INDENTURE dated as of May 11, 2001 between FRANKLIN RESOURCES,
INC., a Delaware corporation ("Company"), and The Bank of New York, a New York
banking corporation ("Trustee").

                  Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's
Liquid Yield Option(TM) Notes due 2031 (Zero Coupon - Senior) ("Securities"):

                                    ARTICLE 1

                   DEFINITIONS AND INCORPORATION BY REFERENCE

                  SECTION 1.01 Definitions.
                               -----------

                  "144A Global Security" means a permanent Global Security in
the form of the Security attached hereto as Exhibit A-1, and that is deposited
with and registered in the name of the Depositary, representing Securities sold
in reliance on Rule 144A under the Securities Act.

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

                  "Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, in each case to the
extent applicable to such transaction and as in effect from time to time.

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

                  "Business Day" means each day of the year other than a
Saturday or a Sunday or other day on which banking institutions in The City of
New York are required or authorized to close.

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

                  "Certificated Securities" means Securities that are in the
form of the Securities attached hereto as Exhibit A-2.

                  "Common Stock" shall mean the shares of Common Stock, $0.10
par value, of the Company as it exists on the date of this Indenture or any


<PAGE>

other shares of Capital Stock of the Company into which the Common Stock shall
be reclassified or changed.

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

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

                  "Corporate Trust Office" means the principal office of the
Trustee at which at any time its corporate trust business shall be administered,
which office at the date hereof is located at 101 Barclay Street, New York, NY
10286, Attention: Institutional Trust Services, or such other address as the
Trustee may designate from time to time by notice to the Holders and the
Company, or the principal corporate trust office of any successor Trustee (or
such other address as a successor Trustee may designate from time to time by
notice to the Holders and the Company).

                  "Debt" means with respect to the Company at any date, without
duplication, obligations (other than nonrecourse obligations) for borrowed money
or evidenced by bonds, debentures, notes or similar instruments.

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

                  "Global Securities" means Securities that are in the form of
the Securities attached hereto as Exhibit A-1, and to the extent that such
Securities are required to bear the Legend required by Section 2.06, such
Securities will be in the form of a 144A Global Security.

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

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

                  "Institutional Accredited Investor Security" means a Security
in the form of the Security attached hereto as Exhibit A-2, representing
Securities sold to institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) and (7) under the Securities Act).

                  "Interest Payment Date" means each date specified as such in
paragraph 11(c) of the Securities.

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



                                       2
<PAGE>

                  "Issue Price" of any Security means, in connection with the
original issuance of such Security, the initial issue price at which the
Security is sold as set forth on the face of the Security.

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

                  "Officers' Certificate" means a written certificate containing
the information specified in Sections 13.04 and 13.05, signed in the name of the
Company by any two Officers, and delivered to the Trustee. An Officers'
Certificate given pursuant to Section 4.03 shall be signed by an authorized
financial or accounting Officer of the Company but need not contain the
information specified in Sections 13.04 and 13.05.

                  "Opinion of Counsel" means a written opinion containing the
information specified in Sections 13.04 and 13.05, from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of, or counsel to, the
Company or the Trustee.

                  "Original Issue Discount" of any Security means the difference
between the Issue Price and the Principal Amount at Maturity of the Security as
set forth on the face of the Security.

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

                  "Principal Amount at Maturity" of a Security means the
Principal Amount at Maturity as set forth on the face of the Security.

                  "Purchase Date" means each date specified as such in paragraph
7 of the Securities.

                  "Purchase Price" means, with respect to any Purchase Date, the
applicable amount specified as such in paragraph 7 of the Securities.

                  "Redemption Date" or "redemption date" means the date
specified for redemption of the Securities in accordance with the terms of the
Securities and this Indenture.

                  "Redemption Price" or "redemption price" shall have the
meaning set forth in paragraph 6 of the Securities.

                  "Regular Record Date" means, with respect to any Interest
Payment Date, the date specified in paragraph 11(c) of the Securities.


                                       3
<PAGE>

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

                  "Restricted Security" means a Security required to bear the
restrictive legend set forth in the form of Security set forth in Exhibits A-1
and A-2 of this Indenture.

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

                  "SEC" means the Securities and Exchange Commission.

                  "Securities" means any of the Company's Liquid Yield Option
Notes due 2031 (Zero Coupon-Senior), as amended or supplemented from time to
time, issued under this Indenture.

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

                  "Special Record Date" means for the payment of any Defaulted
Interest, the date fixed by the Trustee pursuant to Section 12.02.

                  "Stated Maturity", when used with respect to any Security or
any installment of semiannual or contingent interest thereon, means the date
specified in such Security as the fixed date on which an amount equal to the
Principal Amount at Maturity of such Security or such installment of semiannual
or contingent interest is due and payable.

                  "Subsidiary" means (i) a corporation, a majority of whose
Capital Stock with voting power, under ordinary circumstances, to elect
directors is, at the date of determination, directly or indirectly owned by the
Company, by one or more Subsidiaries of the Company or by the Company and one or
more Subsidiaries of the Company, (ii) a partnership in which the Company or a
Subsidiary of the Company holds a majority interest in the equity capital or
profits of such partnership, or (iii) any other person (other than a
corporation) in which the Company, a Subsidiary of the Company or the Company
and one or more Subsidiaries of the Company, directly or indirectly, at the date
of determination, has (x) at least a majority ownership interest or (y) the
power to elect or direct the election of a majority of the directors or other
governing body of such person.

                  "Tax Event" means that the Company shall have received an
opinion from independent tax counsel experienced in such matters to the effect
that, on or after May 11, 2001, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing


                                       4
<PAGE>

authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations by any legislative
body, court, governmental agency or regulatory authority, in each case which
amendment or change is enacted, promulgated, issued or announced or which
interpretation is issued or announced or which action is taken, on or after May
11, 2001, there is more than an insubstantial risk that amounts that are treated
as interest on the Securities for United States federal income tax purposes
based on the comparable yield and the projected payment schedule set forth in
Annex C hereof and any net positive adjustments to such accruals resulting from
interest payable on the Securities pursuant to Article 12 hereof (but excluding
any other net positive adjustments) either (i) would not be deductible on a
current accrual basis or (ii) would not be deductible under any other method, in
either case in whole or in part, by the Company (by reason of deferral,
disallowance, or otherwise) for United States federal income tax purposes.

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

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

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

                  SECTION 1.02 Other Definitions.
                               -----------------

                                                                   Defined
Term                                                              in Section
----                                                             -----------
"Act"........................................................... 1.05(a)
"Agent Members"................................................. 2.12(e)
"Associate"..................................................... 3.09(a)
"Average Sale Price"............................................ 11.01
"Bankruptcy Law"................................................ 6.01
"beneficial owner".............................................. 3.09(a)
"Bid Solicitation Agent"........................................ 2.03
"cash".......................................................... 3.08(b)
"Change in Control"............................................. 3.09(a)
"Change in Control Purchase Date"............................... 3.09(a)
"Change in Control Purchase Notice"............................. 3.09(c)


                                       5
<PAGE>

                                                                   Defined
Term                                                              in Section
----                                                             -----------
"Change in Control Purchase Price".............................. 3.09(a)
"Company Notice"................................................ 3.08(e)
"Company Notice Date"........................................... 3.08(c)
"Conversion Agent".............................................. 2.03
"Conversion Date"............................................... 11.02
"Conversion Rate"............................................... 11.01
"Custodian"..................................................... 6.01
"Defaulted Interest"............................................ 12.03
"Depositary".................................................... 2.01(a)
"DTC"........................................................... 2.01(a)
"Event of Default".............................................. 6.01
"Exchange Act".................................................. 3.08(d)
"Ex-Dividend Date".............................................. 11.08(b)
"Ex-Dividend Time".............................................. 11.01
"Extraordinary Cash Dividend"................................... 11.08
"Institutional Accredited Investors"............................ 2.01(b)
"Legal Holiday"................................................. 13.08
"Legend"........................................................ 2.06(f)
"LYON Market Price"............................................. Exhibit A-1
"Market Price".................................................. 3.08(d)
"Measurement Period"............................................ 11.08(a)
"noncontingent Bond Method"..................................... 4.07
"Notice of Default"............................................. 6.01
"Option Exercise Date".......................................... 10.01
"Paying Agent".................................................. 2.03
"Post-Distribution Price"....................................... 11.08(b)
"Purchase Notice"............................................... 3.08(a)
"QIB"........................................................... 2.01(a)
"Registrar"..................................................... 2.03
"Regular Record Date"........................................... 10.01
"Relevant Cash Dividends"....................................... 11.08(a)
"Restated Principal Amount"..................................... 10.01
"Rights"........................................................ 11.19
"Rights Agreement".............................................. 11.19
"Rule 144A Information"......................................... 4.06
"Sale Price".................................................... 3.08(d)
"Securities Act"................................................ 3.08(d)
"Special Record Date"........................................... 12.02
"Tax Event Date"................................................ 10.01
"Time of Determination"......................................... 11.01


                                       6
<PAGE>

                  SECTION 1.03 Incorporation by Reference of Trust Indenture
Act.

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

                  "Commission" means the SEC.

                  "indenture securities" means the Securities.

                  "indenture security holder" means a Securityholder.

                  "indenture to be qualified" means this Indenture.

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

                  "obligor" on the indenture securities means the Company.

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

                  SECTION 1.04 Rules of Construction.
                               ---------------------

                  Unless the context otherwise requires:

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

         (2) an accounting term not otherwise defined has the meaning assigned
         to it in accordance with generally accepted accounting principles as in
         effect from time to time;

         (3) "or" is not exclusive;

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

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

                  SECTION 1.05. Acts of Holders.
                                ---------------

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


                                       7
<PAGE>

instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.

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

                  (c) The ownership of Securities shall be proved by the
register maintained by the Registrar.

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

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



                                       8
<PAGE>

                                    ARTICLE 2

                                 THE SECURITIES

                  SECTION 2.01. Form and Dating.
                                ---------------

                  The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibits A-1 and A-2, which are a part of
this Indenture. The Securities may have notations, legends or endorsements
required by law, stock exchange rule or usage (provided that any such notation,
legend or endorsement required by usage is in a form acceptable to the Company).
The Company shall provide any such notations, legends or endorsements to the
Trustee in writing. Each Security shall be dated the date of its authentication.

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

                  (b) Institutional Accredited Investor Securities. Except as
         provided in this Section 2.01, 2.06 or 2.12, owners of beneficial
         interests in Global Securities will not be entitled to receive physical
         delivery of Certificated Securities. Securities offered and sold within
         the United States to institutional accredited investors as defined in
         Rule 501(a)(1), (2) (3) and (7) under the Securities Act
         ("Institutional Accredited Investors") shall be issued, initially in
         the form of an Institutional Accredited Investor Security, duly
         executed by the Company and authenticated by the Trustee as hereinafter
         provided.

                  (c) Global Securities in General. Each Global Security shall
         represent such of the outstanding Securities as shall be specified
         therein and each shall provide that it shall represent the aggregate
         Principal Amount at Maturity of outstanding Securities from time to
         time endorsed thereon and that the aggregate Principal Amount at
         Maturity of outstanding Securities represented thereby may from time to
         time be reduced or increased, as appropriate, to reflect exchanges,
         redemptions and conversions.

                  Any adjustment of the aggregate Principal Amount at Maturity
of a Global Security to reflect the amount of any increase or decrease in the
Principal Amount at Maturity of outstanding Securities represented thereby shall
be made by the Trustee in accordance with instructions given by the Holder


                                       9
<PAGE>

thereof as required by Section 2.12 hereof and shall be made on the records of
the Trustee and the Depositary.

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

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

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

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

                  (e) Certificated Securities. Securities not issued as
interests in the Global Securities will be issued in certificated form
substantially in the form of Exhibit A-2 attached hereto.

                  SECTION 2.02. Execution and Authentication.
                                ----------------------------

                  The Securities shall be executed on behalf of the Company by
any Officer. The signature of the Officer on the Securities may be manual or
facsimile.

                  Securities bearing the manual or facsimile signatures of an
individual who was at the time of the execution of the Securities the proper
Officer of the Company shall bind the Company, notwithstanding that such
individual has ceased to hold such office prior to the authentication and


                                       10
<PAGE>

delivery of such Securities or did not hold such office at the date of
authentication of such Securities.

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

                  The Trustee shall authenticate and deliver Securities for
original issue in an aggregate Principal Amount at Maturity of up to
$877,000,000 upon a Company Order without any further action by the Company. The
aggregate Principal Amount at Maturity of Securities outstanding at any time may
not exceed the amount set forth in the foregoing sentence, except as provided in
Section 2.07.

                  The Securities shall be issued only in registered form without
coupons and only in denominations of $1,000 of Principal Amount at Maturity and
any integral multiple thereof.

                  SECTION 2.03. Registrar, Paying Agent, Conversion Agent and
                                ---------------------------------------------
Bid Solicitation Agent.
-----------------------

                  The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities may be presented for
purchase or payment ("Paying Agent") and an office or agency where Securities
may be presented for conversion ("Conversion Agent"). The Company shall also
appoint a bid solicitation agent (the "Bid Solicitation Agent") to act pursuant
to paragraph 5 of the Securities. The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may have one or more
co-registrars, one or more additional paying agents and one or more additional
conversion agents. The term Paying Agent includes any additional paying agent,
including any named pursuant to Section 4.05. The term Conversion Agent includes
any additional conversion agent, including any named pursuant to Section 4.05.

                  The Company shall enter into an appropriate agency agreement
with any Registrar or co-registrar, Paying Agent, Conversion Agent or Bid
Solicitation Agent (other than the Trustee). The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar, Paying Agent, Conversion Agent or Bid Solicitation Agent,
the Trustee shall act as such and shall be entitled to appropriate compensation
therefor pursuant to Section 7.07. The Company or any Subsidiary or an Affiliate
of either of them may act as Paying Agent, Registrar, Conversion Agent or
co-registrar. None of the Company or any Subsidiary or any Affiliate of either
of them may act as Bid Solicitation Agent.



                                       11
<PAGE>

                  The Company initially appoints the Trustee as Registrar,
Conversion Agent, Paying Agent and Bid Solicitation Agent in connection with the
Securities.

                  SECTION 2.04. Paying Agent to Hold Money and Securities in
                                --------------------------------------------
Trust.
------

                  Except as otherwise provided herein, by no later than 10 a.m.,
New York City time, on or prior to each due date of payments in respect of any
Security, the Company shall deposit with the Paying Agent a sum of money (in
immediately available funds if deposited on the due date) or Common Stock
sufficient to make such payments when so becoming due. The Company shall require
each Paying Agent (other than the Trustee) to agree in writing that the Paying
Agent shall hold in trust for the benefit of Securityholders or the Trustee all
money and Common Stock held by the Paying Agent for the making of payments in
respect of the Securities and shall notify the Trustee of any default by the
Company in making any such payment. At any time during the continuance of any
such default, the Paying Agent shall, upon the written request of the Trustee,
forthwith pay to the Trustee all money and Common Stock so held in trust. If the
Company, a Subsidiary or an Affiliate of either of them acts as Paying Agent, it
shall segregate the money and Common Stock held by it as Paying Agent and hold
it as a separate trust fund. The Company at any time may require a Paying Agent
to pay all money and Common Stock held by it to the Trustee and to account for
any funds and Common Stock disbursed by it. Upon doing so, the Paying Agent
shall have no further liability for the money or Common Stock.

                  SECTION 2.05. Securityholder Lists.
                                --------------------

                  The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders. If the Trustee is not the Registrar, the Company
shall cause to be furnished to the Trustee at least semiannually on June 1 and
December 1 a listing of Securityholders dated within 15 days of the date on
which the list is furnished and at such other times as the Trustee may request
in writing a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.

                  SECTION 2.06. Transfer and Exchange.
                                ---------------------

                  Subject to Section 2.12 hereof,

                  (a) upon surrender for registration of transfer of any
Security, together with a written instrument of transfer satisfactory to the
Registrar duly executed by the Securityholder or such Securityholder's attorney
duly authorized in writing, at the office or agency of the Company designated as
Registrar or co-registrar pursuant to Section 2.03, the Company shall execute,
and the Trustee upon receipt of a Company Order shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more new
Securities of any authorized denomination or denominations, of a like aggregate
Principal Amount at Maturity. The Company shall not charge a service charge for
any registration of transfer or exchange, but the Company may require payment of


                                       12
<PAGE>

a sum sufficient to pay all taxes, assessments or other governmental charges
that may be imposed in connection with the registration of transfer or exchange
of the Securities from the Securityholder requesting such registration of
transfer or exchange.

                  At the option of the Holder, Certificated Securities may be
exchanged for other Securities of any authorized denomination or denominations,
of a like aggregate Principal Amount at Maturity, upon surrender of the
Securities to be exchanged, together with a written instrument of transfer
satisfactory to the Registrar duly executed by the Securityholder or such
Securityholder's attorney duly authorized in writing, at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee upon receipt of a Company Order shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.

                  The Company shall not be required to make, and the Registrar
need not register, transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion thereof
not to be redeemed) or any Securities in respect of which a Purchase Notice or
Change in Control Purchase Notice has been given and not withdrawn by the Holder
thereof in accordance with the terms of this Indenture (except, in the case of
Securities to be purchased in part, the portion thereof not to be purchased) or
any Securities for a period of 15 days before the mailing of a notice of
redemption of Securities to be redeemed.

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

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

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

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

                  (f) If Securities are issued upon the registration of
transfer, exchange or replacement of Securities subject to restrictions on
transfer and bearing the legends set forth on the form of Security attached
hereto as Exhibits A-1 and A-2 setting forth such restrictions (collectively,
the "Legend"), or if a request is made to remove the Legend on a Security, the


                                       13
<PAGE>

Securities so issued shall bear the Legend, or the Legend shall not be removed,
as the case may be, unless there is delivered to the Company and the Registrar
such satisfactory evidence, which shall include an Opinion of Counsel, as may be
reasonably required by the Company and the Registrar, that neither the Legend
nor the restrictions on transfer set forth therein are required to ensure that
transfers thereof comply with the provisions of Rule 144A or Rule 144 under the
Securities Act or that such Securities are not "restricted" within the meaning
of Rule 144 under the Securities Act. Upon (i) provision of such satisfactory
evidence, or (ii) notification by the Company to the Trustee and Registrar of
the sale of such Security pursuant to a registration statement that is effective
at the time of such sale, the Trustee, at the written direction of the Company,
shall authenticate and deliver a Security that does not bear the Legend. If the
Legend is removed from the face of a Security and the Security is subsequently
held by an Affiliate of the Company, the Legend shall be reinstated by the
Company.

                  The Trustee and the Registrar shall have no obligation or duty
to monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers between or
among Depositary participants or beneficial owners of interests in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by the terms of, this Indenture, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.

                  SECTION 2.07. Replacement Securities.
                                ----------------------

                  If (a) any mutilated Security is surrendered to the Trustee,
or (b) the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a protected purchaser within the
meaning of Article 8 of the Uniform Commercial Code as in effect from time to
time in the State of New York (a "Protected Purchaser"), the Company shall
execute and upon its written request the Trustee shall authenticate and deliver,
in exchange for any such mutilated Security or in lieu of any such destroyed,
lost or stolen Security, a new Security of like tenor and Principal Amount at
Maturity, bearing a number not contemporaneously outstanding.

                  In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, or is about to be purchased by
the Company pursuant to Article 3 hereof, the Company in its discretion may,
instead of issuing a new Security, pay or purchase such Security, as the case
may be.

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



                                       14
<PAGE>

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

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

                  SECTION 2.08. Outstanding Securities; Determinations of
                                -----------------------------------------
Holders' Action.
----------------

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

                  If a Security is replaced pursuant to Section 2.07, the
replaced Security ceases to be outstanding unless the Trustee and the Company
receive proof satisfactory to each of them that the replaced Security is held by
a Protected Purchaser unaware that such Security has been replaced.

                  If the Paying Agent holds, in accordance with this Indenture,
on a Redemption Date, or on the Business Day following the Purchase Date or a
Change in Control Purchase Date, or on Stated Maturity, money or securities, if
permitted hereunder, sufficient to pay Securities payable on that date, then
immediately after such Redemption Date, Purchase Date, Change in Control
Purchase Date or Stated Maturity, as the case may be, such Securities shall
cease to be outstanding and Original Issue Discount and interest (including
contingent interest), if any, on such Securities shall cease to accrue;
provided, that if such Securities are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture.

                  If a Security is converted in accordance with Article 11, then
from and after the time of conversion on the Conversion Date, such Security


                                       15
<PAGE>

shall cease to be outstanding and Original Issue Discount and interest
(including contingent interest), if any, shall cease to accrue on such Security.

                  SECTION 2.09. Temporary Securities.
                                --------------------

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

                  If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 2.03, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall execute
and the Trustee upon receipt of a Company Order shall authenticate and deliver
in exchange therefor a like Principal Amount at Maturity of definitive
Securities of authorized denominations. Until so exchanged the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities.

                  SECTION 2.10. Cancellation.
                                ------------

                  All Securities surrendered for payment, purchase by the
Company pursuant to Article 3, conversion, redemption or registration of
transfer or exchange shall, if surrendered to any person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. The Company may not issue new Securities to
replace Securities it has paid or delivered to the Trustee for cancellation or
that any Holder has converted pursuant to Article 11. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of by the Trustee in accordance
with the Trustee's customary procedure.

                  SECTION 2.11. Persons Deemed Owners.
                                ---------------------

                  Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of the Security
or the payment of any Redemption Price, Purchase Price or Change in Control
Purchase Price in respect thereof, and interest (including contingent interest,
if any) thereon, for the purpose of conversion and for all other purposes


                                       16
<PAGE>

whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.

                  SECTION 2.12. Global Securities.
                                -----------------

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

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

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

                  (a)      so long as the Securities are Restricted Securities,
                           certification, in the form set forth in Exhibit B-1,
                           and, if requested by the Company or the Registrar,
                           certification in the form set forth in Exhibit B-2,
                           that such beneficial interest in the Global Security
                           is being transferred to an Institutional Accredited
                           Investor in accordance with subparagraphs (a)(1),
                           (2), (3) or (7) of Rule 501 under the Securities Act;

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


                                       17
<PAGE>

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

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

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

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

                  (y)      to exchange such Certificated Securities for an equal
                           Principal Amount at Maturity of Certificated
                           Securities of other authorized denominations,

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

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

                  (b)      so long as such Securities are Restricted Securities,
                           such Securities are being transferred or exchanged
                           pursuant to an effective registration statement under
                           the Securities Act or pursuant to clause (A), (B) or
                           (C) below, and are accompanied by the following
                           additional information and documents, as applicable:

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

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

                                    (C) if such Certificated Securities are
                           being transferred pursuant to an exemption from
                           registration (i) a certification to that effect (in


                                       18
<PAGE>

                           the form set forth in Exhibit B-1 and B-2, if
                           applicable) and (ii) if the Company or Registrar so
                           requests, an Opinion of Counsel or other evidence
                           reasonably satisfactory to them as to the compliance
                           with the restrictions set forth in the Legend.

         (iv) Restrictions on Transfer of a Certificated Security for a
         Beneficial Interest in a Global Security. A Certificated Security may
         not be exchanged for a beneficial interest in a Global Security except
         upon satisfaction of the requirements set forth below.

         Upon receipt by the Trustee of a Certificated Security, duly endorsed
         or accompanied by appropriate instruments of transfer, in form
         satisfactory to the Trustee, together with:

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

                  (b)      written instructions directing the Trustee to make,
                           or to direct the Registrar to make, an adjustment on
                           its books and records with respect to such Global
                           Security to reflect an increase in the aggregate
                           Principal Amount at Maturity of the Securities
                           represented by the Global Security, such instructions
                           to contain information regarding the Depositary
                           account to be credited with such increase,

         then the Trustee shall cancel such Certificated Security and cause, or
         direct the Registrar to cause, in accordance with the standing
         instructions and procedures existing between the Depositary and the
         Registrar, the aggregate Principal Amount at Maturity of Securities
         represented by the Global Security to be increased by the aggregate
         Principal Amount at Maturity of the Certificated Security to be
         exchanged, and shall credit or cause to be credited to the account of
         the Person specified in such instructions a beneficial interest in the
         Global Security equal to the Principal Amount at Maturity of the
         Certificated Security so cancelled. If no Global Securities are then
         outstanding, the Company shall issue and the Trustee upon receipt of a
         Company Order shall authenticate a new Global Security in the
         appropriate Principal Amount at Maturity.

                  (b) Subject to the succeeding paragraph, every Security shall
be subject to the restrictions on transfer provided in the Legend including the
delivery of an Opinion of Counsel, if so provided. Whenever any Restricted
Security is presented or surrendered for registration of transfer or for
exchange for a Security registered in a name other than that of the Holder, such
Security must be accompanied by a certificate in substantially the form set
forth in Exhibit B-1, dated the date of such surrender and signed by the Holder
of such Security, as to compliance with such restrictions on transfer. The
Registrar shall not be required to accept for such registration of transfer or
exchange any Security not so accompanied by a properly completed certificate.



                                       19
<PAGE>

                  (c) The restrictions imposed by the Legend upon the
transferability of any Security shall cease and terminate when such Security has
been sold pursuant to an effective registration statement under the Securities
Act or transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto) or, if earlier, upon the expiration of the holding
period applicable to sales thereof under Rule 144(k) under the Securities Act
(or any successor provision). Any Security as to which such restrictions on
transfer shall have expired in accordance with their terms or shall have
terminated may, upon a surrender of such Security for exchange to the Registrar
in accordance with the provisions of this Section 2.12 (accompanied, in the
event that such restrictions on transfer have terminated by reason of a transfer
in compliance with Rule 144 or any successor provision, by an Opinion of Counsel
having substantial experience in practice under the Securities Act and otherwise
reasonably acceptable to the Company, addressed to the Company, the Trustee and
the Registrar and in form acceptable to the Company, to the effect that the
transfer of such Security has been made in compliance with Rule 144 or such
successor provision), be exchanged for a new Security, of like tenor and
aggregate Principal Amount at Maturity, which shall not bear the restrictive
Legend. The Company shall inform the Trustee of the effective date of any
registration statement registering the Securities under the Securities Act. The
Trustee and the Registrar shall not be liable for any action taken or omitted to
be taken by it in good faith in accordance with the aforementioned Opinion of
Counsel or registration statement.

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

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

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



                                       20
<PAGE>

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

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

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

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

                  SECTION 2.13. CUSIP Numbers.
                                -------------

                  The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers


                                       21
<PAGE>

either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.

                                    ARTICLE 3

                            REDEMPTION AND PURCHASES

                  SECTION 3.01. Right to Redeem; Notices to Trustee.
                                -----------------------------------

                  The Company, at its option, may redeem the Securities in
accordance with the provisions of paragraphs 6 and 8 of the Securities. If the
Company elects to redeem Securities pursuant to paragraph 6 of the Securities,
it shall notify the Trustee in writing of the Redemption Date, the Principal
Amount at Maturity of Securities to be redeemed, the Redemption Price and the
amount of semiannual and contingent interest, if any, payable on the Redemption
Date.

                  The Company shall give the notice to the Trustee provided for
in this Section 3.01 by a Company Order, at least 20 days before the Redemption
Date (unless a shorter notice shall be satisfactory to the Trustee).

                  SECTION 3.02. Selection of Securities to Be Redeemed.
                                --------------------------------------

                  If less than all the Securities are to be redeemed, the
Trustee shall select the Securities to be redeemed pro rata or by lot or by any
other method the Trustee considers fair and appropriate (so long as such method
is not prohibited by the rules of any stock exchange on which the Securities are
then listed). The Trustee shall make the selection at least 15 days but not more
than 60 days before the Redemption Date from outstanding Securities not
previously called for redemption.

                  Securities and portions of them the Trustee selects shall be
in Principal Amounts at Maturity of $1,000 or an integral multiple of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be redeemed.

                  If any Security selected for partial redemption is converted
in part before termination of the conversion right with respect to the portion
of the Security so selected, the converted portion of such Security shall be
deemed (so far as may be) to be the portion selected for redemption. Securities
which have been converted during a selection of Securities to be redeemed may be
treated by the Trustee as outstanding for the purpose of such selection.



                                       22
<PAGE>

                  SECTION 3.03. Notice of Redemption.
                                --------------------

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

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

         (1) the Redemption Date;

         (2) the Redemption Price and, to the extent known at the time of such
         notice, the amount of semiannual and contingent interest, if any,
         payable on the Redemption Date;

         (3) the Conversion Rate;

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

         (5) that Securities called for redemption may be converted at any time
         before the close of business on the second Business Day immediately
         preceding the Redemption Date;

         (6) that Holders who want to convert Securities must satisfy the
         requirements set forth in paragraph 9 of the Securities;

         (7) that Securities called for redemption must be surrendered to the
         Paying Agent to collect the Redemption Price and semiannual and
         contingent interest, if any;

         (8) if fewer than all the outstanding Securities are to be redeemed,
         the certificate number and Principal Amounts at Maturity of the
         particular Securities to be redeemed;

         (9) that, unless the Company defaults in making payment of such
         Redemption Price and semiannual and contingent interest, if any,
         Original Issue Discount and interest (including semiannual and
         contingent interest), if any, on Securities called for redemption will
         cease to accrue on and after the Redemption Date; and

         (10) the CUSIP number of the Securities.

                  At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense, provided that the
Company makes such request at least five Business Days (unless a shorter period
shall be satisfactory to the Trustee) prior to the date such notice of
redemption must be mailed.



                                       23
<PAGE>

                  SECTION 3.04. Effect of Notice of Redemption.
                                ------------------------------

                  Once notice of redemption is given, Securities called for
redemption become due and payable on the Redemption Date and at the Redemption
Price (together with accrued semiannual and contingent interest, if any, to but
not including the date of redemption) stated in the notice except for Securities
which are converted in accordance with the terms of this Indenture. Upon
surrender to the Paying Agent, such Securities shall be paid at the Redemption
Price (together with accrued semiannual and contingent interest, if any, to but
not including the date of redemption) stated in the notice.

                  SECTION 3.05. Deposit of Redemption Price.
                                ---------------------------

                  Prior to 10:00 a.m. (New York City time) on any Redemption
Date, the Company shall deposit with the Paying Agent (or if the Company or a
Subsidiary or an Affiliate of either of them is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the Redemption Price of,
and any accrued and unpaid semiannual and contingent interest to but not
including the date of redemption with respect to, all Securities to be redeemed
on that date other than Securities or portions of Securities called for
redemption which on or prior thereto have been delivered by the Company to the
Trustee for cancellation or have been converted. The Paying Agent shall as
promptly as practicable return to the Company any money, not required for that
purpose because of conversion of Securities pursuant to Article 11. If such
money is then held by the Company in trust and is not required for such purpose
it shall be discharged from such trust.

                  SECTION 3.06. Securities Redeemed in Part.
                                ---------------------------

                  Upon surrender of a Security that is redeemed in part, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder a new Security in an authorized denomination equal in Principal Amount at
Maturity to the unredeemed portion of the Security surrendered.

                  SECTION 3.07. Conversion Arrangement on Call for Redemption.
                                ---------------------------------------------

                  In connection with any redemption of Securities, the Company
may arrange for the purchase and conversion of any Securities called for
redemption by an agreement with one or more investment banks or other purchasers
to purchase such Securities by paying to the Trustee in trust for the
Securityholders, on or prior to 10:00 a.m. New York City time on the Redemption
Date, an amount that, together with any amounts deposited with the Trustee by
the Company for the redemption of such Securities, is not less than the
Redemption Price of, and any accrued and unpaid semiannual and contingent
interest with respect to, such Securities. Notwithstanding anything to the
contrary contained in this Article 3, the obligation of the Company to pay the
Redemption Prices of such Securities 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, any Securities not duly surrendered for conversion by
the Holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, acquired by such purchasers from such Holders and


                                       24
<PAGE>

(notwithstanding anything to the contrary contained in Article 11) surrendered
by such purchasers for conversion, all as of immediately prior to the close of
business on the Business Day prior to the Redemption Date, subject to payment of
the above amount as aforesaid. The Trustee shall hold and pay to the Holders
whose Securities are selected for redemption any such amount paid to it for
purchase and conversion in the same manner as it would moneys deposited with it
by the Company for the redemption of Securities. Without the Trustee's prior
written consent, no arrangement between the Company and such purchasers for the
purchase and conversion of any Securities shall increase or otherwise affect any
of the powers, duties, responsibilities or obligations of the Trustee as set
forth in this Indenture, and the Company agrees to indemnify the Trustee from,
and hold it harmless against, any loss, liability or expense arising out of or
in connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers, including the costs and
expenses incurred by the Trustee in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.

                  SECTION 3.08. Purchase of Securities at Option of the Holder.
                                ----------------------------------------------

                  (a) General. Securities shall be purchased by the Company
pursuant to paragraph 7 of the Securities at the option of the Holder thereof,
upon:

         (1) delivery to the Paying Agent by the Holder of a written notice of
         purchase (a "Purchase Notice") at any time from the opening of business
         on the date that is at least 20 Business Days prior to a Purchase Date
         until the close of business on such Purchase Date stating:

                  (A) the certificate number of the Security which the Holder
                  will deliver to be purchased,

                  (B) the portion of the Principal Amount at Maturity of the
                  Security which the Holder will deliver to be purchased, which
                  portion must be a Principal Amount at Maturity of $1,000 or an
                  integral multiple thereof,

                  (C) that such Security shall be purchased as of the Purchase
                  Date pursuant to the terms and conditions specified in
                  paragraph 7 of the Securities and in this Indenture, and

                  (D) in the event the Company elects, pursuant to Section
                  3.08(b), to pay the Purchase Price to be paid as of such
                  Purchase Date, in whole or in part, in shares of Common Stock
                  but such portion of the Purchase Price shall ultimately be
                  payable to such Holder entirely in cash because any of the
                  conditions to payment of the Purchase Price in Common Stock is
                  not satisfied prior to the close of business on such Purchase
                  Date, as set forth in Section 3.08(d), whether such Holder
                  elects (i) to withdraw such Purchase Notice as to some or all
                  of the Securities to which such Purchase Notice relates
                  (stating the Principal Amount at Maturity and certificate


                                       25
<PAGE>

                  numbers of the Securities as to which such withdrawal shall
                  relate), or (ii) to receive cash in respect of the entire
                  Purchase Price for all Securities (or portions thereof) to
                  which such Purchase Notice relates; and

         (2) delivery of such Security to the Paying Agent prior to, on or after
         the Purchase Date (together with all necessary endorsements) at the
         offices of the Paying Agent, such delivery being a condition to receipt
         by the Holder of the Purchase Price therefor; provided, however, that
         such Purchase Price shall be so paid pursuant to this Section 3.08 only
         if the Security so delivered to the Paying Agent shall conform in all
         respects to the description thereof in the related Purchase Notice, as
         determined by the Company.

                  If a Holder, in such Holder's Purchase Notice and in any
written notice of withdrawal delivered by such Holder pursuant to the terms of
Section 3.10, fails to indicate such Holder's choice with respect to the
election set forth in clause (D) of Section 3.08(a)(1), such Holder shall be
deemed to have elected to receive cash in respect of the Purchase Price for all
Securities subject to such Purchase Notice in the circumstances set forth in
such clause (D).

                  The Company shall purchase from the Holder thereof, pursuant
to this Section 3.08, a portion of a Security if the Principal Amount at
Maturity of such portion is $1,000 or an integral multiple of $1,000. Provisions
of this Indenture that apply to the purchase of all of a Security also apply to
the purchase of such portion of such Security.

                  Any purchase by the Company contemplated pursuant to the
provisions of this Section 3.08 shall be consummated by the delivery of the
consideration to be received by the Holder (including accrued and unpaid
semiannual and contingent interest, if any) promptly following the later of the
Purchase Date and the time of delivery of the Security.

                  Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Purchase Notice contemplated by this Section
3.08(a) shall have the right to withdraw such Purchase Notice at any time prior
to the close of business on the Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.10.

                  The Paying Agent shall promptly notify the Company of the
receipt by it of any Purchase Notice or written notice of withdrawal thereof.

                  (b) Company's Right to Elect Manner of Payment of Purchase
Price. The Securities to be purchased pursuant to Section 3.08(a) may be paid
for, at the election of the Company, in U.S. legal tender ("cash") or Common
Stock, or in any combination of cash and Common Stock, subject to the conditions
set forth in Sections 3.08(c) and (d). The Company shall designate, in the
Company Notice delivered pursuant to Section 3.08(e), whether the Company will
purchase the Securities for cash or Common Stock, or, if a combination thereof,
the percentages of the Purchase Price of Securities in respect of which it will
pay in cash or Common Stock; provided that the Company will pay cash for


                                       26
<PAGE>

fractional interests in Common Stock. For purposes of determining the existence
of potential fractional interests, all Securities subject to purchase by the
Company held by a Holder shall be considered together (no matter how many
separate certificates are to be presented). Each Holder whose Securities are
purchased pursuant to this Section 3.08 shall receive the same percentage of
cash or Common Stock in payment of the Purchase Price for such Securities,
except (i) as provided in Section 3.08(d) with regard to the payment of cash in
lieu of fractional shares of Common Stock and (ii) in the event that the Company
is unable to purchase the Securities of a Holder or Holders for Common Stock
because any necessary qualifications or registrations of the Common Stock under
applicable state securities laws cannot be obtained, the Company may purchase
the Securities of such Holder or Holders for cash. The Company may not change
its election with respect to the consideration (or components or percentages of
components thereof) to be paid once the Company has given its Company Notice to
Securityholders except pursuant to this Section 3.08(b) or pursuant to Section
3.08(d) in the event of a failure to satisfy, prior to the close of business on
the Purchase Date, any condition to the payment of the Purchase Price, in whole
or in part, in Common Stock.

                  At least three Business Days before the Company Notice Date,
the Company shall deliver an Officers' Certificate to the Trustee specifying:

         (i) the manner of payment selected by the Company,

         (ii) the information required by Section 3.08(e),

         (iii) if the Company elects to pay the Purchase Price, or a specified
         percentage thereof, in Common Stock, that the conditions to such manner
         of payment set forth in Section 3.08(d) have been or will be complied
         with, and

         (iv) whether the Company desires the Trustee to give the Company Notice
         required by Section 3.08(e).

                  (c) Purchase with Cash. On each Purchase Date, at the option
of the Company, the Purchase Price of Securities in respect of which a Purchase
Notice pursuant to Section 3.08(a) has been given, or a specified percentage
thereof, may be paid by the Company with cash equal to the aggregate Purchase
Price of such Securities. If the Company elects to purchase Securities with
cash, the Company Notice, as provided in Section 3.08(e), shall be sent to
Holders (and to beneficial owners as required by applicable law) not less than
20 Business Days prior to such Purchase Date (the "Company Notice Date").

                  (d) Payment by Issuance of Common Stock. On each Purchase
Date, at the option of the Company, the Purchase Price of Securities in respect
of which a Purchase Notice pursuant to Section 3.08(a) has been given, or a
specified percentage thereof, may be paid by the Company by the issuance of a
number of shares of Common Stock equal to the quotient obtained by dividing (i)
the amount of cash to which the Securityholders would have been entitled had the
Company elected to pay all or such specified percentage, as the case may be, of


                                       27
<PAGE>

the Purchase Price of such Securities in cash by (ii) the Market Price of a
share of Common Stock, subject to the next succeeding paragraph.

                  The Company will not issue a fractional share of Common Stock
in payment of the Purchase Price. Instead the Company will pay cash for the
current market value of the fractional share. The current market value of a
fraction of a share shall be determined by multiplying the Market Price by such
fraction and rounding the product to the nearest whole cent. It is understood
that if a Holder elects to have more than one Security purchased, the number of
shares of Common Stock shall be based on the aggregate amount of Securities to
be purchased.

                  If the Company elects to purchase the Securities by the
issuance of shares of Common Stock, the Company Notice, as provided in Section
3.08(e), shall be sent to the Holders (and to beneficial owners as required by
applicable law) not later than the Company Notice Date.

                  The Company's right to exercise its election to purchase the
Securities pursuant to Section 3.08 through the issuance of shares of Common
Stock shall be conditioned upon:

         (i) the Company's not having given its Company Notice of an election to
         pay entirely in cash and its giving of timely Company Notice of
         election to purchase all or a specified percentage of the Securities
         with Common Stock as provided herein;

         (ii) the shares of Common Stock having been admitted for listing or
         admitted for listing subject to notice of issuance on the principal
         United States securities exchange on which the Common Stock is then
         listed or, if the Common Stock is not then listed on a national or
         regional securities exchange, as quoted on the National Association of
         Securities Dealers Automated Quotation System;

         (iii) the registration of the shares of Common Stock to be issued in
         respect of the payment of the Purchase Price under the Securities Act
         of 1933, as amended (the "Securities Act"), or the Securities Exchange
         Act of 1934, as amended (the "Exchange Act"), in each case, if
         required;

         (iv) any necessary qualification or registration under applicable state
         securities laws or the availability of an exemption from such
         qualification and registration; and

         (v) the receipt by the Trustee of an Officers' Certificate and an
         Opinion of Counsel each stating that (A) the terms of the issuance of
         the Common Stock are in conformity with this Indenture and (B) the
         shares of Common Stock to be issued by the Company in payment of the
         Purchase Price in respect of Securities have been duly authorized and,
         when issued and delivered pursuant to the terms of this Indenture in
         payment of the Purchase Price in respect of the Securities, will be
         validly issued, fully paid and non-assessable and, to the best of such
         counsel's knowledge, free from preemptive rights, and, in the case of


                                       28
<PAGE>

         such Officers' Certificate, stating that conditions (i), (ii), (iii)
         and (iv) above and the condition set forth in the second succeeding
         sentence have been satisfied and, in the case of such Opinion of
         Counsel, stating that conditions (ii), (iii) and (iv) above have been
         satisfied.

                  Such Officers' Certificate shall also set forth the number of
shares of Common Stock to be issued for each $1,000 Principal Amount at Maturity
of Securities and the Sale Price of a share of Common Stock on each trading day
during the period for which the Market Price is calculated. The Company may pay
the Purchase Price (or any portion thereof) in Common Stock only if the
information necessary to calculate the Market Price is published in a daily
newspaper of national circulation. If the foregoing conditions are not satisfied
with respect to a Holder or Holders prior to the close of business on the
Purchase Date and the Company has elected to purchase the Securities pursuant to
this Section 3.08 through the issuance of shares of Common Stock, the Company
shall pay the entire Purchase Price of the Securities of such Holder or Holders
in cash.

                  The "Market Price" means the average of the Sale Prices of the
Common Stock for the five trading day period ending on the third Business Day
prior to the applicable Purchase Date (if the third Business Day prior to the
applicable Purchase Date is a trading day, or if not, then on the last trading
day prior to such third Business Day), appropriately adjusted to take into
account the occurrence, during the period commencing on the first of such
trading days during such five trading day period and ending on such Purchase
Date, of any event described in Section 11.06, 11.07 or 11.08; subject, however,
to the conditions set forth in Sections 11.09 and 11.10.

                  The "Sale Price" of the Common Stock on any date means the
closing per share sale price (or, if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case, the
average of the average bid and average ask prices) on such date as reported in
the composite transactions for the principal United States securities exchange
on which the Common Stock is traded (which is currently the New York Stock
Exchange) or, if the Common Stock is not listed on a United States national or
regional securities exchange, as reported by the National Association of
Securities Dealers Automated Quotation System or by the National Quotation
Bureau Incorporated.

                  (e) Notice of Election. The Company's notice of election to
purchase with cash or Common Stock or any combination thereof shall be sent to
the Holders (and to beneficial owners as required by applicable law) in the
manner provided in Section 13.02 at the time specified in Section 3.08(c) or
(d), as applicable (the "Company Notice"). Such Company Notice shall state the
manner of payment elected and shall contain the following information:

                  In the event the Company has elected to pay the Purchase Price
(or a specified percentage thereof) with Common Stock, the Company Notice shall:



                                       29
<PAGE>

         (1) state that each Holder will receive Common Stock with a Market
         Price determined as of a specified date prior to the Purchase Date
         equal to such specified percentage of the Purchase Price of the
         Securities held by such Holder (except any cash amount to be paid in
         lieu of fractional shares);

         (2) set forth the method of calculating the Market Price of the Common
         Stock; and

         (3) state that because the Market Price of Common Stock will be
         determined prior to the Purchase Date, Holders will bear the market
         risk with respect to the value of the Common Stock to be received from
         the date such Market Price is determined to the Purchase Date.

                  In any case, each Company Notice shall include a form of
Purchase Notice to be completed by a Securityholder and shall state:

         (i) the Purchase Price, the Conversion Rate and, to the extent known at
         the time of such notice, the amount of semiannual and contingent
         interest, if any, that will be accrued and payable with respect to the
         Securities as of the Purchase Date;

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

         (iii) that Securities as to which a Purchase Notice has been given may
         be converted pursuant to Article 11 hereof only if the applicable
         Purchase Notice has been withdrawn in accordance with the terms of this
         Indenture;

         (iv) that Securities must be surrendered to the Paying Agent to collect
         payment of the Purchase Price and contingent interest, if any;

         (v) that the Purchase Price for any Security as to which a Purchase
         Notice has been given and not withdrawn, together with any accrued
         semiannual and contingent interest payable with respect thereto, will
         be paid promptly following the later of the Purchase Date and the time
         of surrender of such Security as described in (iv);

         (vi) the procedures the Holder must follow to exercise rights under
         Section 3.08 and a brief description of those rights;

         (vii) briefly, the conversion rights of the Securities;

         (viii) the procedures for withdrawing a Purchase Notice (including,
         without limitation, for a conditional withdrawal pursuant to the terms
         of Section 3.08(a)(1)(D) or Section 3.10);

         (ix) that, unless the Company defaults in making payment of such
         Purchase Price and semiannual and contingent interest, if any, Original
         Issue Discount and interest (including semiannual and contingent
         interest), if any, on Securities surrendered for purchase will cease to
         accrue on and after the Purchase Date; and



                                       30
<PAGE>

         (x) the CUSIP number of the Securities.

                  At the Company's request, the Trustee shall give such Company
Notice in the Company's name and at the Company's expense; provided, however,
that, in all cases, the text of such Company Notice shall be prepared by the
Company, and notice to Beneficial Owners shall be forwarded to addresses
provided by the Company or by Beneficial Owners to the Trustee in writing at
least 10 days before the deadline for mailing any such notice.

                  Upon determination of the actual number of shares of Common
Stock to be delivered for each $1,000 Principal Amount at Maturity of
Securities, the Company will issue a press release and publish such
determination on the Company's web site on the World Wide Web.

                  (f) Covenants of the Company. All shares of Common Stock
delivered upon purchase of the Securities shall be newly issued shares or
treasury shares, shall be duly authorized, validly issued, fully paid and
nonassessable and shall be free from preemptive rights and free of any lien or
adverse claim.

                  (g) Procedure upon Purchase. The Company shall deposit cash
(in respect of a cash purchase under Section 3.08(c) or for fractional interests
or contingent interest, as applicable) or shares of Common Stock, or a
combination thereof, as applicable, at the time and in the manner as provided in
Section 3.11, sufficient to pay the aggregate Purchase Price of, and any accrued
and unpaid semiannual and contingent interest with respect to, all Securities to
be purchased pursuant to this Section 3.08. As soon as practicable after the
Purchase Date, the Company shall deliver to each Holder entitled to receive
Common Stock through the Paying Agent, a certificate for the number of full
shares of Common Stock issuable in payment of the Purchase Price and cash in
lieu of any fractional interests. The person in whose name the certificate for
Common Stock is registered shall be treated as a holder of record of shares of
Common Stock on the Business Day following the Purchase Date. No payment or
adjustment will be made for dividends on the Common Stock the record date for
which occurred on or prior to the Purchase Date.

                  (h) Taxes. If a Holder of a Security is paid in Common Stock,
the Company shall pay any documentary, stamp or similar issue or transfer tax
due on such issue of shares of Common Stock. However, the Holder shall pay any
such tax which is due because the Holder requests the shares of Common Stock to
be issued in a name other than the Holder's name. The Paying Agent may refuse to
deliver the certificates representing the Common Stock being issued in a name
other than the Holder's name until the Paying Agent receives a sum sufficient to
pay any tax which will be due because the shares of Common Stock are to be
issued in a name other than the Holder's name. Nothing herein shall preclude any
income tax withholding required by law or regulations.



                                       31
<PAGE>

                  SECTION 3.09. Purchase of Securities at Option of the Holder
                                ----------------------------------------------
upon Change in Control.
-----------------------

                  (a) If on or prior to the date specified in paragraph 7 of the
Securities, there shall have occurred a Change in Control, Securities shall be
purchased by the Company, at the option of the Holder thereof, at a purchase
price specified in paragraph 7 of the Securities (the "Change in Control
Purchase Price"), as of the date that is no later than 35 Business Days after
the occurrence of the Change in Control but in no event prior to the date on
which such Change in Control occurs (the "Change in Control Purchase Date"),
subject to satisfaction by or on behalf of the Holder of the requirements set
forth in Section 3.09(c).

                  A "Change in Control" shall be deemed to have occurred at such
time as either of the following events shall occur:

         (i) There shall be consummated any share exchange, consolidation or
         merger of the Company pursuant to which the Common Stock would be
         converted into cash, securities or other property, in each case other
         than a share exchange, consolidation or merger of the Company in which
         the holders of the Common Stock immediately prior to the share
         exchange, consolidation or merger have, directly or indirectly, at
         least a majority of the total voting power in the aggregate of all
         classes of Capital Stock of the continuing or surviving corporation
         immediately after the share exchange, consolidation or merger; or

         (ii) There is a report filed on Schedule 13D or TO (or any successor
         schedule, form or report) pursuant to the Exchange Act, disclosing that
         any person (for the purposes of this Section 3.09 only, as the term
         "person" is used in Section 13(d)(3) or Section 14(d)(2) of the
         Exchange Act) or any Affiliates or Associates of such person has become
         the beneficial owner (as the term "beneficial owner" is defined under
         Rule 13d-3 or any successor rule or regulation promulgated under the
         Exchange Act) of 50% or more of the voting power of the Common Stock
         then outstanding; provided, however, that a person shall not be deemed
         beneficial owner of, or to own beneficially, (A) any securities
         tendered pursuant to a tender or exchange offer made by or on behalf of
         such person or any of such person's Affiliates or Associates until such
         tendered securities are accepted for purchase or exchange thereunder,
         or (B) any securities if such beneficial ownership (1) arises solely as
         a result of a revocable proxy delivered in response to a proxy or
         consent solicitation made pursuant to the applicable rules and
         regulations under the Exchange Act, and (2) is not also then reportable
         on Schedule 13D (or any successor schedule) under the Exchange Act.

                  Notwithstanding the foregoing provisions of this Section 3.09,
a Change in Control shall not be deemed to have occurred by virtue of any filing
or obligation to file a report under or in response to Schedule 13D or Schedule
TO (or any successor schedule, form or report) under the Exchange Act disclosing
beneficial ownership of shares of Common Stock, whether in excess of 50% or
otherwise, by (a) the Company, any Subsidiary, any employee stock ownership plan
or any other employee benefit plan of the Company or any Subsidiary, or any


                                       32
<PAGE>

person holding Common Stock for or pursuant to the terms of any such employee
benefit plan, or (b) Charles B. Johnson and/or Rupert H. Johnson, Jr. unless, in
the case of this clause (b) only, either (i) the number of outstanding shares of
Common Stock the beneficial owners of which are not Affiliates of the Company is
at any time reduced to less than 20% of the total Common Stock outstanding at
such time or (ii) as a result of the transaction or event that requires such
filing, the Common Stock ceases (or, upon consummation of or immediately
following such transaction or event, will cease) to be listed on a United States
national securities exchange or approved for quotation on the NASDAQ National
Market or any similar system for automated dissemination of quotations of
securities prices.

                  "Associate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date hereof.

                  (b) Within 15 Business Days after the occurrence of a Change
in Control, the Company shall mail a written notice of Change in Control by
first-class mail to the Trustee and to each Holder (and to beneficial owners as
required by applicable law). The notice shall include a form of Change in
Control Purchase Notice to be completed by the Securityholder and shall state:

         (1) briefly, the events causing a Change in Control and the date of
         such Change in Control;

         (2) the date by which the Change in Control Purchase Notice pursuant to
         this Section 3.09 must be given;

         (3) the Change in Control Purchase Date;

         (4) the Change in Control Purchase Price and, to the extent known at
         the time of such notice, the amount of semiannual and contingent
         interest, if any, that will be accrued and payable with respect to the
         Securities as of the Change in Control Purchase Date;

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

         (6) the Conversion Rate and any adjustments thereto;

         (7) that Securities as to which a Change in Control Purchase Notice has
         been given may be converted pursuant to Article 11 hereof only if the
         Change in Control Purchase Notice has been withdrawn in accordance with
         the terms of this Indenture;

         (8) that Securities must be surrendered to the Paying Agent to collect
         payment of the Change in Control Purchase Price and contingent
         interest, if any;

         (9) that the Change in Control Purchase Price for any Security as to
         which a Change in Control Purchase Notice has been duly given and not
         withdrawn, together with any accrued semiannual and contingent interest


                                       33
<PAGE>

         payable with respect thereto, will be paid promptly following the later
         of the Change in Control Purchase Date and the time of surrender of
         such Security as described in (8);

         (10) briefly, the procedures the Holder must follow to exercise rights
         under this Section 3.09;

         (11) briefly, the conversion rights of the Securities;

         (12) the procedures for withdrawing a Change in Control Purchase
         Notice;

         (13) that, unless the Company defaults in making payment of such Change
         in Control Purchase Price and semiannual and contingent interest, if
         any, Original Issue Discount and interest (including semiannual and
         contingent interest), if any, on Securities surrendered for purchase
         will cease to accrue on and after the Change in Control Purchase Date;
         and

         (14) the CUSIP number of the Securities.

                  (c) A Holder may exercise its rights specified in Section
3.09(a) upon delivery of a written notice of purchase (a "Change in Control
Purchase Notice") to the Paying Agent at any time prior to the close of business
on the Change in Control Purchase Date, stating:

         (1) the certificate number of the Security which the Holder will
         deliver to be purchased;

         (2) the portion of the Principal Amount at Maturity of the Security
         which the Holder will deliver to be purchased, which portion must be
         $1,000 or an integral multiple thereof; and

         (3) that such Security shall be purchased pursuant to the terms and
         conditions specified in paragraph 7 of the Securities.

                  The delivery of such Security to the Paying Agent prior to, on
or after the Change in Control Purchase Date (together with all necessary
endorsements) at the offices of the Paying Agent shall be a condition to the
receipt by the Holder of the Change in Control Purchase Price therefor;
provided, however, that such Change in Control Purchase Price shall be so paid
pursuant to this Section 3.09 only if the Security so delivered to the Paying
Agent shall conform in all respects to the description thereof set forth in the
related Change in Control Purchase Notice.

                  The Company shall purchase from the Holder thereof, pursuant
to this Section 3.09, a portion of a Security if the Principal Amount at
Maturity of such portion is $1,000 or an integral multiple of $1,000. Provisions
of this Indenture that apply to the purchase of all of a Security also apply to
the purchase of such portion of such Security.



                                       34
<PAGE>

                  Any purchase by the Company contemplated pursuant to the
provisions of this Section 3.09 shall be consummated by the delivery of the
consideration to be received by the Holder (together with accrued and unpaid
semiannual and contingent interest, if any) promptly following the later of the
Change in Control Purchase Date and the time of delivery of the Security to the
Paying Agent in accordance with this Section 3.09.

                  Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Change in Control Purchase Notice
contemplated by this Section 3.09(c) shall have the right to withdraw such
Change in Control Purchase Notice at any time prior to the close of business on
the Change in Control Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.10.

                  The Paying Agent shall promptly notify the Company of the
receipt by it of any Change in Control Purchase Notice or written withdrawal
thereof.

                  The Company shall not be required to comply with this Section
3.09 if a third party mails a written notice of Change in Control in the manner,
at the times and otherwise in compliance with this Section 3.09 and repurchases
all Securities for which a Change in Control Purchase Notice shall be delivered
and not withdrawn.

                  SECTION 3.10. Effect of Purchase Notice or Change in Control
                                ----------------------------------------------
Purchase Notice.
----------------

                  Upon receipt by the Paying Agent of the Purchase Notice or
Change in Control Purchase Notice specified in Section 3.08(a) or Section
3.09(c), as applicable, the Holder of the Security in respect of which such
Purchase Notice or Change in Control Purchase Notice, as the case may be, was
given shall (unless such Purchase Notice or Change in Control Purchase Notice is
withdrawn as specified in the following two paragraphs) thereafter be entitled
to receive solely the Purchase Price or Change in Control Purchase Price, as the
case may be, and any accrued and unpaid semiannual and contingent interest, with
respect to such Security. Such Purchase Price or Change in Control Purchase
Price and semiannual and contingent interest, if any, shall be paid to such
Holder, subject to receipt of funds and/or securities by the Paying Agent,
promptly following the later of (x) the Purchase Date or the Change in Control
Purchase Date, as the case may be, with respect to such Security (provided the
conditions in Section 3.08(a) or Section 3.09(c), as applicable, have been
satisfied) and (y) the time of delivery of such Security to the Paying Agent by
the Holder thereof in the manner required by Section 3.08(a) or Section 3.09(c),
as applicable. Securities in respect of which a Purchase Notice or Change in
Control Purchase Notice, as the case may be, has been given by the Holder
thereof may not be converted pursuant to Article 11 hereof on or after the date
of the delivery of such Purchase Notice or Change in Control Purchase Notice, as
the case may be, unless such Purchase Notice or Change in Control Purchase
Notice, as the case may be, has first been validly withdrawn as specified in the
following two paragraphs.

                  A Purchase Notice or Change in Control Purchase Notice, as the
case may be, may be withdrawn by means of a written notice of withdrawal
delivered to the office of the Paying Agent in accordance with the Purchase


                                       35
<PAGE>

Notice or Change in Control Purchase Notice, as the case may be, at any time
prior to the close of business on the Purchase Date or the Change in Control
Purchase Date, as the case may be, specifying:

         (1) the certificate number of the Security in respect of which such
         notice of withdrawal is being submitted,

         (2) the Principal Amount at Maturity of the Security with respect to
         which such notice of withdrawal is being submitted, and

         (3) the Principal Amount at Maturity, if any, of such Security which
         remains subject to the original Purchase Notice or Change in Control
         Purchase Notice, as the case may be, and which has been or will be
         delivered for purchase by the Company.

                  A written notice of withdrawal of a Purchase Notice may be in
the form set forth in the preceding paragraph or may be in the form of (i) a
conditional withdrawal contained in a Purchase Notice pursuant to the terms of
Section 3.08(a)(1)(D) or (ii) a conditional withdrawal containing the
information set forth in Section 3.08(a)(1)(D) and the preceding paragraph and
contained in a written notice of withdrawal delivered to the Paying Agent as set
forth in the preceding paragraph.

                  There shall be no purchase of any Securities pursuant to
Section 3.08 (other than through the issuance of Common Stock in payment of the
Purchase Price, including cash in lieu of fractional shares) or 3.09 if there
has occurred (prior to, on or after, as the case may be, the giving, by the
Holders of such Securities, of the required Purchase Notice or Change in Control
Purchase Notice, as the case may be) and is continuing an Event of Default
(other than a default in the payment of the Purchase Price or Change in Control
Purchase Price, as the case may be, and any accrued and unpaid contingent
interest with respect to such Securities). The Paying Agent will promptly return
to the respective Holders thereof any Securities (x) with respect to which a
Purchase Notice or Change in Control Purchase Notice, as the case may be, has
been withdrawn in compliance with this Indenture, or (y) held by it during the
continuance of an Event of Default (other than a default in the payment of the
Purchase Price or Change in Control Purchase Price, as the case may be, and any
accrued and unpaid contingent interest with respect to such Securities) in which
case, upon such return, the Purchase Notice or Change in Control Purchase Notice
with respect thereto shall be deemed to have been withdrawn.

                  SECTION 3.11. Deposit of Purchase Price or Change in Control
                                ----------------------------------------------
Purchase Price.
---------------

                  Prior to 10:00 a.m. (local time in The City of New York) on
the Business Day following the Purchase Date or the Change in Control Purchase
Date, as the case may be, the Company shall deposit with the Trustee or with the
Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of
them is acting as the Paying Agent, shall segregate and hold in trust as
provided in Section 2.04) an amount of money (in immediately available funds if


                                       36
<PAGE>

deposited on such Business Day) or Common Stock, if permitted hereunder,
sufficient to pay the aggregate Purchase Price or Change in Control Purchase
Price, as the case may be, of, and any accrued and unpaid contingent interest
with respect to, all the Securities or portions thereof which are to be
purchased as of the Purchase Date or Change in Control Purchase Date, as the
case may be.

                  SECTION 3.12. Securities Purchased in Part.
                                ----------------------------

                  Any Security which is to be purchased only in part shall be
surrendered at the office of the Paying Agent (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing) and the Company
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Security, without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder in aggregate Principal
Amount at Maturity equal to, and in exchange for, the portion of the Principal
Amount at Maturity of the Security so surrendered which is not purchased.

                  SECTION 3.13. Covenant to Comply With Securities Laws Upon
                                --------------------------------------------
Purchase of Securities.
-----------------------

                  In connection with any offer to purchase or purchase of
Securities under Section 3.08 or 3.09 hereof (provided that such offer or
purchase constitutes an "issuer tender offer" for purposes of Rule 13e-4 (which
term, as used herein, includes any successor provision thereto) under the
Exchange Act at the time of such offer or purchase), the Company shall (i)
comply with Rule 13e-4 and Rule 14e-1 under the Exchange Act, (ii) file the
related Schedule TO (or any successor schedule, form or report) under the
Exchange Act, and (iii) otherwise comply with all Federal and state securities
laws so as to permit the rights and obligations under Sections 3.08 and 3.09 to
be exercised in the time and in the manner specified in Sections 3.08 and 3.09.

                  SECTION 3.14. Repayment to the Company.
                                ------------------------

                  The Trustee and the Paying Agent shall return to the Company
any cash or shares of Common Stock that remain unclaimed as provided in
paragraph 15 of the Securities, together with interest or dividends, if any,
thereon (subject to the provisions of Section 7.01(f)), held by them for the
payment of the Purchase Price or Change in Control Purchase Price, as the case
may be, or contingent interest, if any; provided, however, that to the extent
that the aggregate amount of cash or shares of Common Stock deposited by the
Company pursuant to Section 3.11 exceeds the aggregate Purchase Price or Change
in Control Purchase Price, as the case may be, of, and the accrued and unpaid
contingent interest with respect to, the Securities or portions thereof which
the Company is obligated to purchase as of the Purchase Date or Change in
Control Purchase Date, as the case may be, whether as a result of withdrawal or
otherwise, then promptly after the Business Day following the Purchase Date or
Change in Control Purchase Date, as the case may be, the Trustee shall return
any such excess to the Company together with interest or dividends, if any,
thereon (subject to the provisions of Section 7.01(f)).



                                       37
<PAGE>

                                    ARTICLE 4

                                    COVENANTS

                  SECTION 4.01. Payment of Securities.
                                ---------------------

                  The Company shall promptly make all payments in respect of the
Securities on the dates and in the manner provided in the Securities or pursuant
to this Indenture. Any amounts to be given to the Trustee or Paying Agent, shall
be deposited with the Trustee or Paying Agent by 10:00 a.m., New York City time,
by the Company. Principal Amount at Maturity, Restated Principal Amount, Issue
Price plus accrued Original Issue Discount, Redemption Price, Purchase Price,
Change in Control Purchase Price, semiannual and contingent interest, if any,
shall be considered paid on the applicable date due if on such date (or, in the
case of a Purchase Price or Change in Control Purchase Price, on the Business
Day following the applicable Purchase Date or Change in Control Purchase Date,
as the case may be) the Trustee or the Paying Agent holds, in accordance with
this Indenture, money or securities, if permitted hereunder, sufficient to pay
all such amounts then due.

                  The Company shall, to the extent permitted by law, pay
interest on overdue amounts at the rate per annum set forth in paragraph 1 of
the Securities, compounded semiannually, which interest shall accrue from the
date such overdue amount was originally due to the date payment of such amount,
including interest thereon, has been made or duly provided for. All such
interest shall be payable on demand.

                  SECTION 4.02. SEC and Other Reports.
                                ---------------------

                  The Company shall file with the Trustee, within 15 days after
it files such annual and quarterly reports, information, documents and other
reports with the SEC, copies of its annual report and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the Company is required
to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. In the
event the Company is at any time no longer subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act, it shall continue to provide the
Trustee with reports containing substantially the same information as would have
been required to be filed with the SEC had the Company continued to have been
subject to such reporting requirements. In such event, such reports shall be
provided at the times the Company would have been required to provide reports
had it continued to have been subject to such reporting requirements. The
Company also shall comply with the other provisions of TIA Section 314(a).
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).



                                       38
<PAGE>

                  SECTION 4.03. Compliance Certificate.
                                ----------------------

                  The Company shall deliver to the Trustee within 120 days after
the end of each fiscal year of the Company (beginning with the fiscal year
ending on September 30, 2001) an Officers' Certificate, stating whether or not
to the best knowledge of the signers thereof the Company is in default in the
performance and observance of any of the terms, provisions and conditions of
this Indenture (without regard to any period of grace or requirement of notice
provided hereunder) and if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.

                  SECTION 4.04. Further Instruments and Acts.
                                ----------------------------

                  Upon request of the Trustee, the Company will execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purposes of this
Indenture.

                  SECTION 4.05. Maintenance of Office or Agency.
                                -------------------------------

                  The Company will maintain in the Borough of Manhattan, The
City of New York, an office or agency of the Trustee, Registrar, Paying Agent
and Conversion Agent where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of transfer,
exchange, purchase, redemption or conversion and where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be served.
The agency specified in Section 13.02 shall initially be such office or agency
for all of the aforesaid purposes. The Company shall give prompt written notice
to the Trustee of the location, and of any change in the location, of any such
office or agency (other than a change in the location of the office of the
Trustee). If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 13.02.

                  The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in the Borough of Manhattan, The City of New York, for such purposes.

                  SECTION 4.06. Delivery of Certain Information.
                                -------------------------------

                  At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act, upon the request of a Holder or any beneficial holder
of Securities or shares of Common Stock, which are restricted securities issued
upon conversion thereof, the Company will promptly furnish or cause to be
furnished Rule 144A Information (as defined below) to such Holder or any
beneficial holder of Securities or holder of shares of Common Stock issued upon
conversion of Securities, or to a prospective purchaser of any such security


                                       39
<PAGE>

designated by any such holder, as the case may be, to the extent required to
permit compliance by such Holder or holder with Rule 144A under the Securities
Act in connection with the resale of any such security. "Rule 144A Information"
shall be such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act.

                  SECTION 4.07. Calculation of Original Issue Discount.
                                --------------------------------------

                  The Company agrees, and each Holder and any beneficial owner
of a Security by its purchase thereof shall be deemed to agree, to treat, for
United States federal income tax purposes, the Securities as debt instruments
that are subject to Section 1.1275-4(b) of the treasury regulations promulgated
by the Department of Treasury pursuant to the Internal Revenue Code of 1986, as
amended (the "Treasury Regulations"). For United States federal income tax
purposes, the Company shall accrue, and each Holder or beneficial owner of a
Security shall accrue, interest with respect to outstanding Securities as
original issue discount according to the "noncontingent bond method," set forth
in section 1.1275-4(b) of the Treasury Regulations, using the comparable yield
set forth in Annex C to this Indenture compounded semiannually and the projected
payment schedule attached as Annex C to this Indenture. The Company shall file
with the Trustee promptly at the end of each calendar year (i) a written notice
specifying the amount of original issue discount for United States federal
income tax purposes (including daily rates and accrual periods) accrued on
outstanding Securities as of the end of such year and (ii) such other specific
information relating to such original issue discount as may then be relevant
under the Internal Revenue Code of 1986, as amended from time to time, including
the amount of any adjustment made under the noncontingent bond method to account
for the amount of any difference between the amount of an actual payment and the
amount of a projected payment.

                  The Company acknowledges and agrees, and each Holder and any
         beneficial holder of a Security by its purchase thereof shall be deemed
         to acknowledge and agree, that (i) the comparable yield means the
         annual yield the Company would pay, as of the Issue Date, on a fixed
         rate nonconvertible debt security with no contingent payments, but with
         terms and conditions otherwise comparable to those of the LYONs, (ii)
         the schedule of projected payments is determined on the basis of an
         assumption of linear growth of the stock price and a constant dividend
         yield and is not determined for any purpose other than for the
         determination of interest accruals and adjustments thereof in respect
         of the Securities for United States federal income tax purposes and
         (iii) the comparable yield and the schedule of projected payments do
         not constitute a projection or representation regarding the amounts
         payable on the Securities.



                                       40
<PAGE>

                                    ARTICLE 5

                              SUCCESSOR CORPORATION

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

                  The Company shall not consolidate with or merge with or into
any other person or convey, transfer or lease all or substantially all of its
properties and assets to any person, unless:

                  (a) either (1) the Company shall be the continuing corporation
or (2) the person (if other than the Company) formed by such consolidation or
into which the Company is merged or the person which acquires by conveyance,
transfer or lease the properties and assets of the Company substantially as an
entirety (i) shall be organized and validly existing under the laws of the
United States or any State thereof or the District of Columbia and (ii) shall
expressly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all of the obligations of the
Company under the Securities and this Indenture;

                  (b) immediately after giving effect to such transaction, no
Default shall have occurred and be continuing; and

                  (c) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture, comply with this Article 5 and that all conditions precedent herein
provided for relating to such transaction have been satisfied.

                  For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise) of the properties and assets of one or more
Subsidiaries (other than to the Company or another Subsidiary), which, if such
assets were owned by the Company, would constitute all or substantially all of
the properties and assets of the Company, shall be deemed to be the transfer of
all or substantially all of the properties and assets of the Company.

                  The successor person formed by such consolidation or into
which the Company is merged or the successor person to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor had been named as the Company herein; and
thereafter, except in the case of a lease and obligations the Company may have
under a supplemental indenture pursuant to Section 11.14, the Company shall be
discharged from all obligations and covenants under this Indenture and the
Securities. Subject to Section 9.06, the Company, the Trustee and the successor
person shall enter into a supplemental indenture to evidence the succession and
substitution of such successor person and such discharge and release of the
Company.



                                       41
<PAGE>

                                    ARTICLE 6

                              DEFAULTS AND REMEDIES

                  SECTION 6.01. Events of Default.
                                -----------------

                  An "Event of Default" occurs if:

         (1) the Company defaults in payment of any contingent interest or of
         any semiannual interest which becomes payable after the Securities have
         been converted to semiannual coupon notes following the occurrence of a
         Tax Event, which default, in any case, continues for 30 days;

         (2) the Company defaults in the payment of the Principal Amount at
         Maturity (or, if the Securities have been converted to semiannual
         coupon notes following a Tax Event pursuant to Article 10, the Restated
         Principal Amount), Issue Price plus accrued Original Issue Discount,
         Redemption Price, Purchase Price or Change in Control Purchase Price on
         any Security when the same becomes due and payable at its Stated
         Maturity, upon redemption, upon declaration, when due for purchase by
         the Company or otherwise;

         (3) the Company fails to comply with any of its agreements in the
         Securities or this Indenture (other than those referred to in clauses
         (1) and (2) above) and such failure continues for 60 days after receipt
         by the Company of a Notice of Default;

         (4) (a) the Company fails to make any payment by the end of any
         applicable grace period after maturity of Debt in an amount in excess
         of $25,000,000 and continuance of such failure, or (b) the acceleration
         of Debt has occurred in an amount in excess of $25,000,000 because of a
         default with respect to such Debt without such Debt having been
         discharged or such acceleration having been cured, waived, rescinded or
         annulled, in the case of (a) or (b) above, for a period of 30 days
         after receipt by the Company of a Notice of Default; provided, however,
         that if any such failure or acceleration referred to in (a) or (b)
         above shall cease or be cured, waived, rescinded or annulled, then the
         Event of Default by reason thereof shall be deemed not to have
         occurred; or

         (5) the Company or any Subsidiary pursuant to or under or within the
         meaning of any Bankruptcy Law:

                  (A) commences a voluntary case or proceeding;

                  (B) consents to the entry of an order for relief against it in
                  an involuntary case or proceeding or the commencement of any
                  case against it;

                  (C) consents to the appointment of a Custodian of it or for
                  any substantial part of its property;



                                       42
<PAGE>

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

                  (E) files a petition in bankruptcy or answer or consent
                  seeking reorganization or relief; or

                  (F) consents to the filing of such petition or the appointment
                  of or taking possession by a Custodian; or

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

                  (A) is for relief against the Company or any Subsidiary in an
                  involuntary case or proceeding, or adjudicates the Company or
                  any Subsidiary insolvent or bankrupt;

                  (B) appoints a Custodian of the Company or any Subsidiary or
                  for any substantial part of its property; or

                  (C) orders the winding up or liquidation of the Company or any
                  Subsidiary;

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

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

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

                  A Default under clause (3) or clause (4) above is not an Event
of Default until the Trustee notifies the Company, or the Holders of at least
25% in aggregate Principal Amount at Maturity of the Securities at the time
outstanding notify the Company and the Trustee, of the Default and the Company
does not cure such Default (and such Default is not waived) within the time
specified in clause (3) or clause (4) above after actual receipt of such notice.
Any such notice must specify the Default, demand that it be remedied and state
that such notice is a "Notice of Default".

                  The Company shall deliver to the Trustee, within 30 days after
it becomes aware of the occurrence thereof, written notice of any event which
with the giving of notice or the lapse of time, or both, would become an Event
of Default under clause (3) or clause (4) above, its status and what action the
Company is taking or proposes to take with respect thereto.

                  SECTION 6.02. Acceleration.
                                ------------

                  If an Event of Default (other than an Event of Default
specified in Section 6.01(5) or (6) in respect of the Company) occurs and is
continuing, the Trustee by Notice to the Company, or the Holders of at least 25%
in aggregate Principal Amount at Maturity of the Securities at the time


                                       43
<PAGE>

outstanding by notice to the Company and the Trustee, may declare the Issue
Price plus accrued Original Issue Discount through the date of declaration, and
any accrued and unpaid interest (including semiannual and contingent interest)
through the date of such declaration, on all the Securities to be immediately
due and payable. Upon such a declaration, such Issue Price plus accrued Original
Issue Discount, and such accrued and unpaid interest (including semiannual and
contingent interest), if any, shall be due and payable immediately. If an Event
of Default specified in Section 6.01(5) or (6) in respect of the Company occurs
and is continuing, the Issue Price plus accrued Original Issue Discount plus
accrued and unpaid interest (including semiannual and contingent interest), if
any, on all the Securities shall become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any
Securityholders. The Holders of a majority in aggregate Principal Amount at
Maturity of the Securities at the time outstanding, by notice to the Trustee
(and without notice to any other Securityholder) may rescind an acceleration and
its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived except
nonpayment of the Issue Price plus accrued Original Issue Discount plus accrued
and unpaid interest that have become due solely as a result of acceleration and
if all amounts due to the Trustee under Section 7.07 have been paid. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.

                  SECTION 6.03. Other Remedies.
                                --------------

                  If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of the Issue Price plus
accrued Original Issue Discount plus any accrued and unpaid interest (including
semiannual interest and contingent interest), if any, on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.

                  The Trustee may maintain a proceeding even if the Trustee does
not possess any of the Securities or does not produce any of the Securities in
the proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of, or acquiescence in, the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.

                  SECTION 6.04. Waiver of Past Defaults.
                                -----------------------

                  Subject to Section 6.02, the Holders of a majority in
aggregate Principal Amount at Maturity of the Securities at the time
outstanding, by notice to the Trustee (and without notice to any other
Securityholder), may waive an existing Default and its consequences except (1)
an Event of Default described in Section 6.01(1) or (2), (2) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected or (3) a Default which constitutes a
failure to convert any Security in accordance with the terms of Article 11. When
a Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right. This Section 6.04


                                       44
<PAGE>

shall be in lieu of Section 316(a)1(B) of the TIA and such Section 316(a)1(B) is
hereby expressly excluded from this Indenture, as permitted by the TIA.

                  SECTION 6.05. Control by Majority.
                                -------------------

                  The Holders of a majority in aggregate Principal Amount at
Maturity of the Securities at the time outstanding may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture or that the Trustee determines in good faith is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability unless the Trustee is offered indemnity satisfactory to it. This
Section 6.05 shall be in lieu of Section 316(a)1(A) of the TIA and such Section
316(a)1(A) is hereby expressly excluded from this Indenture, as permitted by the
TIA.

                  SECTION 6.06. Limitation on Suits.
                                -------------------

                  A Securityholder may not pursue any remedy with respect to
this Indenture or the Securities unless:

         (1) the Holder gives to the Trustee written notice stating that an
         Event of Default is continuing;

         (2) the Holders of at least 25% in aggregate Principal Amount at
         Maturity of the Securities at the time outstanding make a written
         request to the Trustee to pursue the remedy;

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

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

         (5) the Holders of a majority in aggregate Principal Amount at Maturity
         of the Securities at the time outstanding do not give the Trustee a
         direction inconsistent with the request during such 60-day period.

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

                  SECTION 6.07. Rights of Holders to Receive Payment.
                                ------------------------------------

                  Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of the Principal Amount at Maturity (or
if the Securities have been converted to semiannual coupon notes following a Tax
Event pursuant to Article 10, the Restated Principal Amount), Issue Price plus
accrued Original Issue Discount, Redemption Price, Purchase Price, Change in
Control Purchase Price, contingent interest or interest, if any, in respect of
the Securities held by such Holder, on or after the respective due dates


                                       45
<PAGE>

expressed in the Securities or any Redemption Date, and to convert the
Securities in accordance with Article 11, or to bring suit for the enforcement
of any such payment on or after such respective dates or the right to convert,
shall not be impaired or affected adversely without the consent of such Holder.

                  SECTION 6.08. Collection Suit by Trustee.
                                --------------------------

                  If an Event of Default described in Section 6.01(1) or (2)
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount owing
with respect to the Securities and the amounts provided for in Section 7.07.

                  SECTION 6.09. Trustee May File Proofs of Claim.
                                --------------------------------

                  In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the Principal Amount at
Maturity, Issue Price plus accrued Original Issue Discount, Redemption Price,
Purchase Price, Change in Control Purchase Price, contingent interest or
interest, if any, in respect of the Securities shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of any such
amount) shall be entitled and empowered, by intervention in such proceeding or
otherwise,

         (a) to file and prove a claim for the whole amount of the Principal
         Amount at Maturity, Issue Price plus accrued Original Issue Discount,
         Redemption Price, Purchase Price, Change in Control Purchase Price as
         the case may be, and contingent interest or semiannual interest, if
         any, and to file such other papers or documents as may be necessary or
         advisable in order to have the claims of the Trustee (including any
         claim for the reasonable compensation, expenses, disbursements and
         advances of the Trustee, its agents and counsel or any other amounts
         due the Trustee under Section 7.07) and of the Holders allowed in such
         judicial proceeding, and

         (b) to collect and receive any moneys or other property payable or
         deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07.

                  Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the


                                       46
<PAGE>

Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.

                  SECTION 6.10. Priorities.
                                ----------

                  If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:

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

         SECOND: to Securityholders for amounts due and unpaid on the Securities
         for the Principal Amount at Maturity, Issue Price plus accrued Original
         Issue Discount, Redemption Price, Purchase Price, Change in Control
         Purchase Price, as the case may be, and contingent interest or
         semiannual interest, if any, ratably, without preference or priority of
         any kind, according to such amounts due and payable on the Securities;
         and

         THIRD:  the balance, if any, to the Company.

                  The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section 6.10. At least 15 days
before such record date, the Trustee shall mail to each Securityholder and the
Company a notice that states the record date, the payment date and the amount to
be paid.

                  SECTION 6.11. Undertaking for Costs.
                                ---------------------

                  In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant (other than the Trustee) in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in aggregate Principal Amount at Maturity of the
Securities at the time outstanding. This Section 6.11 shall be in lieu of
Section 315(e) of the TIA and such Section 315(e) is hereby expressly excluded
from this Indenture, as permitted by the TIA.

                  SECTION 6.12. Waiver of Stay, Extension or Usury Laws.
                                ---------------------------------------

                  The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury or other law wherever enacted, now or at any time hereafter in
force, which would prohibit or forgive the Company from paying all or any
portion of the Principal Amount at Maturity, Issue Price plus accrued Original
Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase
Price, as the case may be, and contingent interest or semiannual interest, if


                                       47
<PAGE>

any, in respect of Securities, or any interest on such amounts, as contemplated
herein, or which may affect the covenants or the performance of this Indenture;
and the Company (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.

                                    ARTICLE 7

                                     TRUSTEE

                  SECTION 7.01. Duties of Trustee.
                                -----------------

                  (a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.

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

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

         (2) in the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon certificates or
         opinions furnished to the Trustee and conforming to the requirements of
         this Indenture, but in case of any such certificates or opinions which
         by any provision hereof are specifically required to be furnished to
         the Trustee, the Trustee shall examine the certificates and opinions to
         determine whether or not they conform to the requirements of this
         Indenture, but need not confirm or investigate the accuracy of
         mathematical calculations or other facts stated therein.

                  This Section 7.01(b) shall be in lieu of Section 315(a) of the
TIA and such Section 315(a) is hereby expressly excluded from this Indenture, as
permitted by the TIA.

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

         (1) this paragraph (c) does not limit the effect of paragraph (b) of
         this Section 7.01;

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



                                       48
<PAGE>

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

                  Subparagraphs (c)(1), (2) and (3) shall be in lieu of Sections
315(d)(1), 315(d)(2) and 315(d)(3) of the TIA and such Sections 315(d)(1),
315(d)(2) and 315(d)(3) are hereby expressly excluded from this Indenture, as
permitted by the TIA.

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

                  (e) The Trustee may refuse to perform any duty or exercise any
right or power or extend or risk its own funds or otherwise incur any financial
liability unless it receives indemnity satisfactory to it against any loss,
liability or expense.

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

                  SECTION 7.02. Rights of Trustee.
                                -----------------

                  Subject to its duties and responsibilities under the
provisions of Section 7.01, and, except as expressly excluded from this
Indenture pursuant to said Section 7.01, subject also to its duties and
responsibilities under the TIA,

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

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

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

                  (d) the Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith which it believes to be
authorized or within its rights or powers conferred under this Indenture;



                                       49
<PAGE>

                  (e) the Trustee may consult with counsel selected by it and
any advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such advice or Opinion of Counsel;

                  (f) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which may be
incurred therein or thereby;

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

                  (h) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally or by agent
or attorney at the sole cost of the Company and shall incur no liability or
additional liability of any kind by reason of such inquiry or investigation;

                  (i) the Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is in fact
such a default is received by the Trustee at the Corporate Trust Office of the
Trustee, and such notice references the Securities and this Indenture;

                  (j) the rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder; and

                  (k) the Trustee may request that the Company deliver an
Officers' Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by any person authorized to
sign an Officers' Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded.

                  SECTION 7.03. Individual Rights of Trustee.
                                ----------------------------

                  The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or
its Affiliates with the same rights it would have if it were not Trustee. Any


                                       50
<PAGE>

Paying Agent, Registrar, Conversion Agent or co-registrar may do the same with
like rights. However, the Trustee must comply with Sections 7.10 and 7.11.

                  SECTION 7.04. Trustee's Disclaimer.
                                --------------------

                  The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be accountable for
the Company's use or application of the proceeds from the Securities, it shall
not be responsible for any statement in the registration statement for the
Securities under the Securities Act or in the Indenture or the Securities (other
than its certificate of authentication), or the determination as to which
beneficial owners are entitled to receive any notices hereunder.

                  SECTION 7.05. Notice of Defaults.
                                ------------------

                  If a Default occurs and if it is known to the Trustee, the
Trustee shall give to each Securityholder notice of the Default within 90 days
after it occurs unless such Default shall have been cured or waived before the
giving of such notice. Except in the case of a Default described in Section
6.01(1) or (2), the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Securityholders. The second sentence of this
Section 7.05 shall be in lieu of the proviso to Section 315(b) of the TIA and
such proviso is hereby expressly excluded from this Indenture, as permitted by
the TIA. The Trustee shall not be deemed to have knowledge of a Default unless a
Responsible Officer of the Trustee has received written notice of such Default.

                  SECTION 7.06. Reports by Trustee to Holders.
                                -----------------------------

                  Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, the Trustee shall mail to each
Securityholder a brief report dated as of such May 15 that complies with TIA
Section 313(a), if required by such Section 313(a). The Trustee also shall
comply with TIA Section 313(b).

                  A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each securities exchange, if
any, on which the Securities are listed. The Company agrees to promptly notify
the Trustee whenever the Securities become listed on any securities exchange and
of any delisting thereof.

                  SECTION 7.07. Compensation and Indemnity.
                                --------------------------

                  The Company agrees:

                  (a) to pay to the Trustee from time to time such compensation
         as the Company and the Trustee shall from time to time agree in writing
         for all services rendered by it hereunder (which compensation shall not
         be limited (to the extent permitted by law) by any provision of law in
         regard to the compensation of a trustee of an express trust);



                                       51
<PAGE>

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

                  (c) to indemnify the Trustee or any predecessor Trustee and
         their agents for, and to hold them harmless against, any loss, damage,
         claim, liability, cost or expense (including attorney's fees and
         expenses and taxes (other than taxes based upon, measured by or
         determined by the income of the Trustee)) incurred without negligence
         or bad faith on its part, arising out of or in connection with the
         acceptance or administration of this trust, including the costs and
         expenses of defending itself against any claim (whether asserted by the
         Company or any Holder or any other Person) or liability in connection
         with the acceptance, exercise or performance of any of its powers or
         duties hereunder.

                  To secure the Company's payment obligations in this Section
7.07, Holders shall have been deemed to have granted to the Trustee a lien prior
to the Securities on all money or property held or collected by the Trustee,
except that held in trust to pay the Principal Amount at Maturity, Issue Price
plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change
in Control Purchase Price, contingent interest or interest, if any, as the case
may be, on particular Securities.

                  The Company's payment obligations pursuant to this Section
7.07 shall survive the discharge of this Indenture and the resignation or
removal of the Trustee. When the Trustee incurs expenses after the occurrence of
a Default specified in Section 6.01(5) or (6), the expenses including the
reasonable charges and expenses of its counsel, are intended to constitute
expenses of administration under any Bankruptcy Law.

                  SECTION 7.08. Replacement of Trustee.
                                ----------------------

                  The Trustee may resign by so notifying the Company; provided,
however, no such resignation shall be effective until a successor Trustee has
accepted its appointment pursuant to this Section 7.08. The Holders of a
majority in aggregate Principal Amount at Maturity of the Securities at the time
outstanding may remove the Trustee by so notifying the Trustee and the Company.
The Company shall remove the Trustee if:

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

         (2)      the Trustee is adjudged bankrupt or insolvent;

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

         (4)      the Trustee otherwise becomes incapable of acting.



                                       52
<PAGE>

                  If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint, by
resolution of its Board of Directors, a successor Trustee.

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

                  If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in aggregate Principal Amount at Maturity
of the Securities at the time outstanding may petition any court of competent
jurisdiction at the expense of the Company for the appointment of a successor
Trustee.

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

                  SECTION 7.09. Successor Trustee by Merger.
                                ---------------------------

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

                  SECTION 7.10. Eligibility; Disqualification.
                                -----------------------------

                  The Trustee shall at all times satisfy the requirements of TIA
Sections 310(a)(1) and 310(b). The Trustee (or its parent holding company) shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. Nothing herein contained shall
prevent the Trustee from filing with the Commission the application referred to
in the penultimate paragraph of TIA Section 310(b).

                  SECTION 7.11. Preferential Collection of Claims Against
                                -----------------------------------------
Company.
--------

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



                                       53
<PAGE>

                                    ARTICLE 8

                             DISCHARGE OF INDENTURE

                  SECTION 8.01. Discharge of Liability on Securities.
                                ------------------------------------

                  When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancellation or (ii) all outstanding Securities have become due and payable and
the Company deposits with the Trustee, the Paying Agent (if the Paying Agent is
not the Company or any Subsidiary or any Affiliate of either of them) or the
Conversion Agent cash or, if expressly permitted by the terms of the Securities
or the Indenture, Common Stock sufficient to pay all amounts due and owing on
all outstanding Securities (other than Securities replaced pursuant to Section
2.07), and if in either case the Company pays all other sums payable hereunder
by the Company, then this Indenture shall, subject to Section 7.07, cease to be
of further effect. The Trustee shall join in the execution of a document
prepared by the Company acknowledging satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
Opinion of Counsel and at the cost and expense of the Company.

                  SECTION 8.02. Repayment to the Company.
                                ------------------------

                  The Trustee and the Paying Agent shall return to the Company
upon written request any money or securities held by them for the payment of any
amount with respect to the Securities that remains unclaimed for two years,
subject to applicable unclaimed property law. After return to the Company,
Holders entitled to the money or securities must look to the Company for payment
as general creditors unless an applicable abandoned property law designates
another person and the Trustee and the Paying Agent shall have no further
liability to the Securityholders with respect to such money or securities for
that period commencing after the return thereof.

                                    ARTICLE 9

                                   AMENDMENTS

                  SECTION 9.01. Without Consent of Holders.
                                --------------------------

                  The Company and the Trustee may amend this Indenture or the
Securities without the consent of any Securityholder:

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

         (2) to comply with Article 5 or Section 11.14;

         (3) to secure the Company's obligations under the Securities and this
         Indenture;



                                       54
<PAGE>

         (4) to add to the Company's covenants for the benefit of the
         Securityholders or to surrender any right or power conferred upon the
         Company; or

         (5) to make any change to comply with the TIA, or any amendment
         thereto, or to comply with any requirement of the SEC in connection
         with the qualification of the Indenture under the TIA, or as necessary
         in connection with the registration of the Securities under the
         Securities Act.

                  Notwithstanding the foregoing, no amendment contemplated
pursuant to clause (1), (3), (4) or (5) of the preceding paragraph may be made
without the written consent of the Holders of at least a majority in aggregate
Principal Amount at Maturity of Securities at the time outstanding if such
amendment may materially and adversely affect the interests of the Holders, it
being understood that no amendment described in clause (1) above made solely to
conform this Indenture to the final offering memorandum provided to investors in
connection with the initial offering of the Securities by the Company will be
deemed to materially and adversely affect the interests of the Holders.

                  SECTION 9.02. With Consent of Holders.
                                -----------------------

                  With the written consent of the Holders of at least a majority
in aggregate Principal Amount at Maturity of the Securities at the time
outstanding, the Company and the Trustee may amend this Indenture or the
Securities. However, without the consent of each Securityholder affected, an
amendment to this Indenture or the Securities may not:

         (1) change the provisions of this Indenture that relate to modifying or
         amending this Indenture;

         (2) make any change in the manner or rate of accrual in connection with
         Original Issue Discount, make any change in the manner of calculation
         of, or that adversely affects the right to receive, semiannual or
         contingent interest, reduce the rate of interest referred to in
         paragraph 1 of the Securities, reduce the rate of interest referred to
         in Section 10.01 upon the occurrence of a Tax Event, or extend the time
         for payment of Original Issue Discount, semiannual or contingent
         interest or interest, if any, on any Security;

         (3) reduce the Principal Amount at Maturity, Restated Principal Amount
         or the Issue Price of or extend the Stated Maturity of any Security;

         (4) reduce the Redemption Price, Purchase Price or Change in Control
         Purchase Price of any Security;

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

         (6) make any change in Section 6.04, Section 6.07 or this Section 9.02,
         except to increase any percentage set forth therein;

         (7) make any change that adversely affects the right to convert any
         Security;


                                       55
<PAGE>

         (8) make any change that adversely affects the right to require the
         Company to purchase the Securities in accordance with the terms thereof
         and this Indenture; or

         (9) impair the right to receive payment with respect to, a Security, or
         right to institute suit for the enforcement of any payment with respect
         to, or conversion of, the Securities.

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

                  After an amendment under this Section 9.02 becomes effective,
the Company shall mail to each Holder a notice briefly describing the amendment.

                  SECTION 9.03. Compliance with Trust Indenture Act.
                                -----------------------------------

                  Every supplemental indenture executed pursuant to this Article
shall comply with the TIA.

                  SECTION 9.04. Revocation and Effect of Consents, Waivers and
                                ----------------------------------------------
Actions.
--------

                  Until an amendment, waiver or other action by Holders becomes
effective, a consent thereto by a Holder of a Security hereunder is a continuing
consent by the Holder and every subsequent Holder of that Security or portion of
the Security that evidences the same obligation as the consenting Holder's
Security, even if notation of the consent, waiver or action is not made on the
Security. However, any such Holder or subsequent Holder may revoke the consent,
waiver or action as to such Holder's Security or portion of the Security if the
Trustee receives the notice of revocation before the date the amendment, waiver
or action becomes effective. After an amendment, waiver or action becomes
effective, it shall bind every Securityholder.

                  SECTION 9.05. Notation on or Exchange of Securities.
                                -------------------------------------

                  Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
outstanding Securities.

                  SECTION 9.06. Trustee to Sign Supplemental Indentures.
                                ---------------------------------------

                  The Trustee shall sign any supplemental indenture authorized
pursuant to this Article 9 if the amendment contained therein does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it does,
the Trustee may, but need not, sign such supplemental indenture. In signing such


                                       56
<PAGE>

supplemental indenture the Trustee shall receive, and (subject to the provisions
of Section 7.01) shall be fully protected in relying upon, in addition to the
documents required by Section 13.04, an Officers' Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture.

                  SECTION 9.07. Effect of Supplemental Indentures.
                                ---------------------------------

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

                                   ARTICLE 10

                          SPECIAL TAX EVENT CONVERSION

                  SECTION 10.01. Optional Conversion to Semiannual Coupon Note
                                 ---------------------------------------------
Upon Tax Event.
---------------

                  From and after (i the date (the "Tax Event Date") of the
occurrence of a Tax Event or (ii) the date the Company exercises the option
provided for in this Section 10.01, whichever is later (the later of such dates,
the "Option Exercise Date"), at the option of the Company, interest in lieu of
future Original Issue Discount shall accrue at the rate per annum specified in
paragraph 11(a) of the Securities on a restated principal amount per $1,000
original Principal Amount at Maturity (the "Restated Principal Amount") equal to
the Issue Price plus Original Issue Discount accrued through the Option Exercise
Date and shall be payable semiannually each Interest Payment Date to holders of
record at the close of business on the related "Regular Record Date". Interest
will be computed on the basis of a 360-day year comprised of twelve 30-day
months and will accrue from the most recent date on which interest has been paid
or, if no interest has been paid, from the Option Exercise Date. Within 15 days
of the occurrence of a Tax Event, the Company shall mail a written notice of
such Tax Event by facsimile and first-class mail to the Trustee and within 15
days of its exercise of such option the Company shall mail a written notice of
the Option Exercise Date by facsimile and first-class mail to the Trustee and by
first class mail to the Holders of the Securities. From and after the Option
Exercise Date, (i) the Company shall be obligated to pay at Stated Maturity in
lieu of the Principal Amount at Maturity of a Security, the Restated Principal
Amount thereof plus accrued and unpaid interest with respect to any Security,
(ii) "Issue Price and accrued Original Issue Discount," "Issue Price plus
Original Issue Discount" or similar words, as used herein, shall mean Restated
Principal Amount plus accrued and unpaid interest with respect to any Security
and (iii) contingent interest shall cease to accrue on the Securities.
Securities authenticated and delivered after the Option Exercise Date may, and
shall if required by the Trustee, bear a notation in a form approved by the
Trustee as to the conversion of the Securities to semiannual coupon notes. No
other changes to the Indenture shall result as a result of the events described
in Section 10.01.



                                       57
<PAGE>

                                   ARTICLE 11

                                   CONVERSION

                  SECTION 11.01. Conversion Privilege.
                                 --------------------

                  A Holder of a Security may convert such Security into Common
Stock at any time during the period stated in paragraph 9 of the Securities.
Upon determination that Holders are or will be entitled to convert their
Securities into Common Stock in accordance with paragraph 9 of the Securities,
the Company will issue a press release and publish such determination on the
Company's web site. The number of shares of Common Stock issuable upon
conversion of a Security per $1,000 of Principal Amount at Maturity thereof (the
"Conversion Rate") shall be that set forth in paragraph 9 in the Securities,
subject to adjustment as herein set forth.

                  A Holder may convert a portion of the Principal Amount at
Maturity of a Security if the portion is $1,000 or an integral multiple of
$1,000. Provisions of this Indenture that apply to conversion of all of a
Security also apply to conversion of a portion of a Security.

                  "Average Sale Price" means the average of the Sale Prices of
the Common Stock for the shorter of

         (i) 30 consecutive trading days ending on the last full trading day
         prior to the Time of Determination with respect to the rights, warrants
         or options or distribution in respect of which the Average Sale Price
         is being calculated, or

         (ii) the period (x) commencing on the date next succeeding the first
         public announcement of (a) the issuance of rights, warrants or options
         or (b) the distribution, in each case, in respect of which the Average
         Sale Price is being calculated and (y) proceeding through the last full
         trading day prior to the Time of Determination with respect to the
         rights, warrants or options or distribution in respect of which the
         Average Sale Price is being calculated (excluding days within such
         period, if any, which are not trading days), or

         (iii) the period, if any, (x) commencing on the date next succeeding
         the Ex-Dividend Time with respect to the next preceding (a) issuance of
         rights, warrants or options or (b) distribution, in each case, for
         which an adjustment is required by the provisions of Section 11.06(4),
         11.07 or 11.08 and (y) proceeding through the last full trading day
         prior to the Time of Determination with respect to the rights, warrants
         or options or distribution in respect of which the Average Sale Price
         is being calculated (excluding days within such period, if any, which
         are not trading days).

                  In the event that the Ex-Dividend Time (or in the case of a
subdivision, combination or reclassification, the effective date with respect
thereto) with respect to a dividend, subdivision, combination or
reclassification to which Section 11.06(1), (2), (3) or (5) applies occurs
during the period applicable for calculating "Average Sale Price" pursuant to


                                       58
<PAGE>

the definition in the preceding sentence, "Average Sale Price" shall be
calculated for such period in a manner determined by the Board of Directors to
reflect the impact of such dividend, subdivision, combination or
reclassification on the Sale Price of the Common Stock during such period.

                  "Time of Determination" means the time and date of the earlier
of (i) the determination of stockholders entitled to receive rights, warrants or
options or a distribution, in each case, to which Section 11.07 or 11.08 applies
and (ii) the time ("Ex-Dividend Time") immediately prior to the commencement of
"ex-dividend" trading for such rights, warrants or options or distribution on
the New York Stock Exchange or such other national or regional exchange or
market on which the Common Stock is then listed or quoted.

                  SECTION 11.02. Conversion Procedure.
                                 --------------------

                  To convert a Security a Holder must satisfy the requirements
in paragraph 9 of the Securities. The date on which the Holder satisfies all
those requirements is the conversion date (the "Conversion Date"). As soon as
practicable after the Conversion Date, the Company shall deliver to the Holder,
through the Conversion Agent, a certificate for the number of full shares of
Common Stock issuable upon the conversion and cash in lieu of any fractional
share determined pursuant to Section 11.03. The person in whose name the
certificate is registered shall be treated as a stockholder of record on and
after the Conversion Date; provided, however, that no surrender of a Security on
any date when the stock transfer books of the Company shall be closed shall be
effective to constitute the person or persons entitled to receive the shares of
Common Stock upon such conversion as the record holder or holders of such shares
of Common Stock on such date, but such surrender shall be effective to
constitute the person or persons entitled to receive such shares of Common Stock
as the record holder or holders thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer books are open;
such conversion shall be at the Conversion Rate in effect on the date that such
Security shall have been surrendered for conversion, as if the stock transfer
books of the Company had not been closed. Upon conversion of a Security, such
person shall no longer be a Holder of such Security.

                  No payment or adjustment will be made for dividends on, or
other distributions with respect to, any Common Stock except as provided in this
Article 11. On conversion of a Security, that portion of accrued Original Issue
Discount (or interest, if the Company has exercised its option provided for in
Section 10.01) attributable to the period from the Issue Date (or, if the
Company has exercised the option provided for in Section 10.01, the later of (x)
the date of such exercise and (y) the date on which interest was last paid) of
the Security through but not including the Conversion Date and accrued
semiannual and contingent interest with respect to the converted Security shall
not be cancelled, extinguished or forfeited, but rather shall be deemed to be
paid in full to the Holder thereof through delivery of the Common Stock
(together with the cash payment, if any, in lieu of fractional shares) in
exchange for the Security being converted pursuant to the provisions hereof
(except to the extent that interest in lieu of Original Issue Discount and
semiannual and contingent interest are paid in cash as provided in paragraph 9
of the Securities); and the fair market value of such shares of Common Stock


                                       59
<PAGE>

(together with any such cash payment in lieu of fractional shares) shall be
treated as issued, to the extent thereof, first in exchange for Original Issue
Discount (or interest, if the Company has exercised its option provided for in
Section 10.01) accrued through the Conversion Date and accrued contingent
interest, and the balance, if any, of such fair market value of such Common
Stock (and any such cash payment) shall be treated as issued in exchange for the
Issue Price of the Security being converted pursuant to the provisions hereof.

                  If the Holder converts more than one Security at the same
time, the number of shares of Common Stock issuable upon the conversion shall be
based on the total Principal Amount at Maturity of the Securities converted.

                  If the last day on which a Security may be converted is a
Legal Holiday, the Security may be surrendered on the next succeeding day that
is not a Legal Holiday.

                  Upon surrender of a Security that is converted in part, the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder, a new Security in an authorized denomination equal in Principal Amount
at Maturity to the unconverted portion of the Security surrendered.

                  SECTION 11.03. Fractional Shares.
                                 -----------------

                  The Company will not issue a fractional share of Common Stock
upon conversion of a Security. Instead, the Company will deliver cash for the
current market value of the fractional share. The current market value of a
fractional share shall be determined, to the nearest 1/1,000th of a share, by
multiplying the Sale Price of the Common Stock, on the last trading day prior to
the Conversion Date, of a full share by the fractional amount and rounding the
product to the nearest whole cent.

                  SECTION 11.04. Taxes on Conversion.
                                 -------------------

                  If a Holder converts a Security, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of shares
of Common Stock upon the conversion. However, the Holder shall pay any such tax
which is due because the Holder requests the shares to be issued in a name other
than the Holder's name. The Conversion Agent may refuse to deliver the
certificates representing the Common Stock being issued in a name other than the
Holder's name until the Conversion Agent receives a sum sufficient to pay any
tax which will be due because the shares are to be issued in a name other than
the Holder's name. Nothing herein shall preclude any tax withholding required by
law or regulations.

                  SECTION 11.05. Company to Provide Stock.
                                 ------------------------

                  The Company shall, prior to issuance of any Securities under
this Article 11, and from time to time as may be necessary, reserve out of its
authorized but unissued Common Stock a sufficient number of shares of Common
Stock to permit the conversion of the Securities.



                                       60
<PAGE>

                  All shares of Common Stock delivered upon conversion of the
Securities shall be newly issued shares or treasury shares, shall be duly and
validly issued and fully paid and nonassessable and shall be free from
preemptive rights and free of any lien or adverse claim.

                  The Company will comply with all federal and state securities
laws regulating the offer and delivery of shares of Common Stock upon conversion
of Securities, if any, and will list or cause to have quoted such shares of
Common Stock on each national securities exchange or in the over-the-counter
market or such other market on which the Common Stock is then listed or quoted.

                  SECTION 11.06. Adjustment for Change In Capital Stock.
                                 --------------------------------------

                  If, after the Issue Date of the Securities, the Company:

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

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

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

         (4) pays a dividend or makes a distribution on its Common Stock in
         shares of its Capital Stock (other than Common Stock or rights,
         warrants or options for its Capital Stock); or

         (5) issues by reclassification of its Common Stock any shares of its
         Capital Stock (other than rights, warrants or options for its Capital
         Stock), then the conversion privilege and the Conversion Rate in effect
         immediately prior to such action shall be adjusted so that the Holder
         of a Security thereafter converted may receive the number of shares of
         Capital Stock of the Company which such Holder would have owned
         immediately following such action if such Holder had converted the
         Security immediately prior to such action.

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

                  If after an adjustment a Holder of a Security upon conversion
of such Security may receive shares of two or more classes of Capital Stock of
the Company, the Conversion Rate shall thereafter be subject to adjustment upon
the occurrence of an action taken with respect to any such class of Capital
Stock as is contemplated by this Article 11 with respect to the Common Stock, on
terms comparable to those applicable to Common Stock in this Article 11.



                                       61
<PAGE>

                  SECTION 11.07. Adjustment for Rights Issue.
                                 ---------------------------

                  If after the Issue Date of the Securities, the Company
distributes any rights, warrants or options to all holders of its Common Stock
entitling them, for a period expiring within 60 days after the record date for
such distribution, to purchase shares of Common Stock at a price per share less
than the Sale Price of the Common Stock as of the Time of Determination, the
Conversion Rate shall be adjusted in accordance with the formula:


                                                          (O + N)
                                       R' = R x     --------------------
                                                      (O + (N x P)/M)
                  where:

                  R' = the adjusted Conversion Rate.

                  R = the current Conversion Rate.

                  O = the number of shares of Common Stock outstanding on the
         record date for the distribution to which this Section 11.07 is being
         applied.

                  N = the number of additional shares of Common Stock offered
         pursuant to the distribution.

                  P = the offering price per share of the additional shares.

                  M = the Average Sale Price, minus, in the case of (i) a
         distribution to which Section 11.06(4) applies or (ii) a distribution
         to which Section 11.08 applies, for which, in each case, (x) the record
         date shall occur on or before the record date for the distribution to
         which this Section 11.07 applies and (y) the Ex-Dividend Time shall
         occur on or after the date of the Time of Determination for the
         distribution to which this Section 11.07 applies, the fair market value
         (on the record date for the distribution to which this Section 11.07
         applies) of the

         (1) Capital Stock of the Company distributed in respect of each share
         of Common Stock in such Section 11.06(4) distribution and

         (2) assets of the Company or debt securities or any rights, warrants or
         options to purchase securities of the Company distributed in respect of
         each share of Common Stock in such Section 11.08 distribution.

The Board of Directors shall determine fair market values for the purposes of
this Section 11.07.

                  The adjustment shall become effective immediately after the
record date for the determination of shareholders entitled to receive the
rights, warrants or options to which this Section 11.07 applies. If all of the
shares of Common Stock subject to such rights, warrants or options have not been


                                       62
<PAGE>

issued when such rights, warrants or options expire, then the Conversion Rate
shall promptly be readjusted to the Conversion Rate which would then be in
effect had the adjustment upon the issuance of such rights, warrants or options
been made on the basis of the actual number of shares of Common Stock issued
upon the exercise of such rights, warrants or options.

                  No adjustment shall be made under this Section 11.07 if the
application of the formula stated above in this Section 11.07 would result in a
value of R' that is equal to or less than the value of R.

                  SECTION 11.08. Adjustment for Other Distributions.
                                 ----------------------------------

                  (a) If, after the Issue Date of the Securities, the Company
distributes to all holders of its Common Stock any of its assets excluding
distributions of Capital Stock or equity interests referred to in Section
11.08(b), or debt securities or any rights, warrants or options to purchase
securities of the Company (including securities or cash, but excluding (x)
distributions of Capital Stock referred to in Section 11.06 and distributions of
rights, warrants or options referred to in Section 11.07 and (y) cash dividends
or other cash distributions that are paid out of consolidated current net
earnings or earnings retained in the business as shown on the books of the
Company unless such cash dividends or other cash distributions are Extraordinary
Cash Dividends), the Conversion Rate shall be adjusted, subject to the
provisions of Section 11.08(c), in accordance with the formula:

                                      R' =      R x M
                                                -----
                                                 M-F

                  where:

                  R' = the adjusted Conversion Rate.

                  R = the current Conversion Rate.

                  M = the Average Sale Price, minus, in the case of a
         distribution to which Section 11.06(4) applies, for which (i) the
         record date shall occur on or before the record date for the
         distribution to which this Section 11.08(a) applies and (ii) the
         Ex-Dividend Time shall occur on or after the date of the Time of
         Determination for the distribution to which this Section 11.08(a)
         applies, the fair market value (on the record date for the distribution
         to which this Section 11.08(a) applies) of any Capital Stock of the
         Company distributed in respect of each share of Common Stock in such
         Section 11.06(4) distribution.

                  F = the fair market value (on the record date for the
         distribution to which this Section 11.08(a) applies) of the assets,
         securities, rights, warrants or options to be distributed in respect of
         each share of Common Stock in the distribution to which this Section
         11.08(a) is being applied (including, in the case of cash dividends or
         other cash distributions giving rise to an adjustment, all such cash
         distributed concurrently).



                                       63
<PAGE>

The Board of Directors shall determine fair market values for the purposes of
this Section 11.08(a).

                  The adjustment shall become effective immediately after the
record date for the determination of shareholders entitled to receive the
distribution to which this Section 11.08(a) applies.

                  For purposes of this Section 11.08(a), the term "Extraordinary
Cash Dividend" shall mean any cash dividend with respect to the Common Stock the
amount of which, together with the aggregate amount of cash dividends on the
Common Stock to be aggregated with such cash dividend in accordance with the
provisions of this paragraph, equals or exceeds the threshold percentage set
forth in item (i) below. For purposes of item (i) below, the "Measurement
Period" with respect to a cash dividend on the Common Stock shall mean the 365
consecutive day period ending on the date prior to the Ex-Dividend Time with
respect to such cash dividend, and the "Relevant Cash Dividends" with respect to
a cash dividend on the Common Stock shall mean the cash dividends on the Common
Stock with Ex-Dividend Times occurring in the Measurement Period.

         (i) If, upon the date prior to the Ex-Dividend Time with respect to a
         cash dividend on the Common Stock, the aggregate amount of such cash
         dividend together with the amounts of all Relevant Cash Dividends
         equals or exceeds on a per share basis 5% of the Sale Price of the
         Common Stock on the last trading day preceding the date of declaration
         by the Board of Directors of the cash dividend with respect to which
         this provision is being applied, then such cash dividend together with
         all Relevant Cash Dividends, shall be deemed to be an Extraordinary
         Cash Dividend and for purposes of applying the formula set forth above
         in this Section 11.08(a), the value of "F" shall be equal to (y) the
         aggregate amount of such cash dividend together with the amount of all
         Relevant Cash Dividends, minus (z) the aggregate amount of all Relevant
         Cash Dividends for which a prior adjustment in the Conversion Rate was
         previously made under this Section 11.08(a).

         In making the determinations required by item (i) above, the amount of
         cash dividends paid on a per share basis and the amount of any Relevant
         Cash Dividends specified in item (i) above, shall be appropriately
         adjusted to reflect the occurrence during such period of any event
         described in Section 11.06.

                  (b) If, after the Issue Date of the Securities, the Company
pays a dividend or makes a distribution to all holders of its Common Stock
consisting of Capital Stock of any class or series, or similar equity interests,
of or relating to a Subsidiary or other business unit of the Company, the
Conversion Rate shall be adjusted in accordance with the formula:

                                      R' = R x      (1 + F/M)



                                       64
<PAGE>

where:

                  R' = the adjusted Conversion Rate.

                  R = the current Conversion Rate.

                  M = the average of the Post-Distribution Prices of the Common
         Stock for the 10 trading days commencing on and including the fifth
         trading day after the date on which "ex-dividend trading" commences for
         such dividend or distribution on the principal United States exchange
         or market which such securities are then listed or quoted (the
         "Ex-Dividend Date").

                  F = the fair market value of the securities distributed in
         respect of each share of Common Stock for which this Section 11.08(b)
         shall mean the number of securities distributed in respect of each
         share of Common Stock multiplied by the average of the
         Post-Distribution Prices of those securities distributed for the 10
         trading days commencing on and including the fifth trading day after
         the Ex-Dividend Date.

                  "Post-Distribution Price" of Capital Stock or any similar
equity interest on any date means the closing per unit sale price (or, if no
closing sale price is reported, the average of the bid and ask prices or, if
more than one in either case, the average of the average bid and the average ask
prices) on such date for trading of such units on a "when issued" basis without
due bills (or similar concept) as reported in the composite transactions for the
principal United States securities exchange on which such Capital Stock or
equity interest is traded or, if the Capital Stock or equity interest, as the
case may be, is not listed on a United States national or regional securities
exchange, as reported by the National Association of Securities Dealers
Automated Quotation System or by the National Quotation Bureau Incorporated;
provided that if on any date such units have not traded on a "when issued"
basis, the Post-Distribution Price shall be the closing per unit sale price (or,
if no closing sale price is reported, the average of the bid and ask prices or,
if more than one in either case, the average of the average bid and the average
ask prices) on such date for trading of such units on a "regular way" basis
without due bills (or similar concept) as reported in the composite transactions
for the principal United States securities exchange on which such Capital Stock
or equity interest is traded or, if the Capital Stock or equity interest, as the
case may be, is not listed on a United States national or regional securities
exchange, as reported by the National Association of Securities Dealers
Automated Quotation System or by the National Quotation Bureau Incorporated. In
the absence of such quotation, the Company shall be entitled to determine the
Post-Distribution Price on the basis of such quotations which reflect the
post-distribution value of the Capital Stock or equity interests as it considers
appropriate.

                  (c) In the event that, with respect to any distribution to
which Section 11.08(a) would otherwise apply, the difference "M-F" as defined in
the formula set forth in Section 11.08(a) is less than $1.00 or "F" is equal to
or greater than "M", then the adjustment provided by Section 11.08(a) shall not
be made and in lieu thereof the provisions of Section 11.14 shall apply to such
distribution.



                                       65
<PAGE>

                  SECTION 11.09. When Adjustment May Be Deferred.
                                 -------------------------------

                  No adjustment in the Conversion Rate need be made unless the
adjustment would require an increase or decrease of at least 1% in the
Conversion Rate. Any adjustments that are not made shall be carried forward and
taken into account in any subsequent adjustment.

                  All calculations under this Article 11 shall be made to the
nearest cent or to the nearest 1/1,000th of a share, as the case may be.

                  SECTION 11.10. When No Adjustment Required.
                                 ---------------------------

                  No adjustment need be made for a transaction referred to in
Section 11.06, 11.07, 11.08 or 11.14 if Securityholders are to participate in
the transaction on a basis and with notice that the Board of Directors
determines to be fair and appropriate in light of the basis and notice on which
holders of Common Stock participate in the transaction. Such participation by
Securityholders may include participation upon conversion provided that an
adjustment shall be made at such time as the Securityholders are no longer
entitled to participate.

                  No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.

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

                  To the extent the Securities become convertible pursuant to
this Article 11 into cash, no adjustment need be made thereafter as to the cash.
Interest will not accrue on the cash.

                  SECTION 11.11. Notice of Adjustment.
                                 --------------------

                  Whenever the Conversion Rate is adjusted, the Company shall
promptly mail to Securityholders a notice of the adjustment. The Company shall
file with the Trustee and the Conversion Agent such notice and a certificate
from the Company's independent public accountants briefly stating the facts
requiring the adjustment and the manner of computing it. The certificate shall
be conclusive evidence that the adjustment is correct. Neither the Trustee nor
any Conversion Agent shall be under any duty or responsibility with respect to
any such certificate except to exhibit the same to any Holder desiring
inspection thereof.

                  SECTION 11.12. Voluntary Increase.
                                 ------------------

                  The Company from time to time may increase the Conversion Rate
by any amount for any period of time. Whenever the Conversion Rate is increased,
the Company shall mail to Securityholders and file with the Trustee and the
Conversion Agent a notice of the increase. The Company shall mail the notice at
least 15 days before the date the increased Conversion Rate takes effect. The


                                       66
<PAGE>

notice shall state the increased Conversion Rate and the period it will be in
effect.

                  A voluntary increase of the Conversion Rate does not change or
adjust the Conversion Rate otherwise in effect for purposes of Section 11.06,
11.07 or 11.08.

                  SECTION 11.13. Notice of Certain Transactions.
                                 ------------------------------

                  If:

         (1) the Company takes any action that would require an adjustment in
         the Conversion Rate pursuant to Section 11.06, 11.07 or 11.08 (unless
         no adjustment is to occur pursuant to Section 11.10); or

         (2) the Company takes any action that would require a supplemental
         indenture pursuant to Section 11.14; or

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

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

                  SECTION 11.14. Reorganization of Company; Special
                                 ----------------------------------
Distributions.
--------------

                  If the Company is a party to a transaction subject to Section
5.01 (other than a sale of all or substantially all of the assets of the Company
in a transaction in which the holders of Common Stock immediately prior to such
transaction do not receive securities, cash or other assets of the Company or
any other person) or a merger or binding share exchange which reclassifies or
changes the outstanding Common Stock of the Company, the person obligated to
deliver securities, cash or other assets upon conversion of Securities shall
enter into a supplemental indenture. If the issuer of securities deliverable
upon conversion of Securities is an Affiliate of the successor Company, that
issuer shall join in the supplemental indenture.

                  The supplemental indenture shall provide that the Holder of a
Security may convert it into the kind and amount of securities, cash or other
assets which such Holder would have received immediately after the
consolidation, merger, binding share exchange or transfer if such Holder had
converted the Security immediately before the effective date of the transaction,
assuming (to the extent applicable) that such Holder (i) was not a constituent
person or an Affiliate of a constituent person to such transaction; (ii) made no
election with respect thereto; and (iii) was treated alike with the plurality of
non-electing Holders. The supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practical to the adjustments


                                       67
<PAGE>

provided for in this Article 11. The successor Company shall mail to
Securityholders a notice briefly describing the supplemental indenture.

                  If this Section applies, neither Section 11.06 nor 11.07
applies.

                  If the Company makes a distribution to all holders of its
Common Stock of any of its assets, or debt securities or any rights, warrants or
options to purchase securities of the Company that, but for the provisions of
Section 11.08(c), would otherwise result in an adjustment in the Conversion Rate
pursuant to the provisions of Section 11.08, then, from and after the record
date for determining the holders of Common Stock entitled to receive the
distribution, a Holder of a Security that converts such Security in accordance
with the provisions of this Indenture shall upon such conversion be entitled to
receive, in addition to the shares of Common Stock into which the Security is
convertible, the kind and amount of securities, cash or other assets comprising
the distribution that such Holder would have received if such Holder had
converted the Security immediately prior to the record date for determining the
holders of Common Stock entitled to receive the distribution.

                  SECTION 11.15. Company Determination Final.
                                 ---------------------------

                  Any determination that the Company or the Board of Directors
must make pursuant to Section 11.03, 11.06, 11.07, 11.08, 11.09, 11.10, 11.14 or
11.17 is conclusive.

                  SECTION 11.16. Trustee's Adjustment Disclaimer.
                                 -------------------------------

                  The Trustee has no duty to determine when an adjustment under
this Article 11 should be made, how it should be made or what it should be. The
Trustee has no duty to determine whether a supplemental indenture under Section
11.14 need be entered into or whether any provisions of any supplemental
indenture are correct. The Trustee shall not be accountable for and makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Securities. The Trustee shall not be responsible for the
Company's failure to comply with this Article 11. Each Conversion Agent shall
have the same protection under this Section 11.16 as the Trustee.

                  SECTION 11.17. Simultaneous Adjustments.
                                 ------------------------

                  In the event that this Article 11 requires adjustments to the
Conversion Rate under more than one of Sections 11.06(4), 11.07 or 11.08, and
the record dates for the distributions giving rise to such adjustments shall
occur on the same date, then such adjustments shall be made by applying, first,
the provisions of Section 11.06, second, the provisions of Section 11.08 and,
third, the provisions of Section 11.07.

                  SECTION 11.18. Successive Adjustments.
                                 ----------------------

                  After an adjustment to the Conversion Rate under this Article
11, any subsequent event requiring an adjustment under this Article 11 shall
cause an adjustment to the Conversion Rate as so adjusted.



                                       68
<PAGE>

                                   ARTICLE 12

                               PAYMENT OF INTEREST

                  SECTION 12.01. Interest Payments.
                                 -----------------

                  Semiannual or contingent interest on any Security that is
payable, and is punctually paid or duly provided for, on any applicable payment
date shall be paid to the person in whose name that Security is registered at
the close of business on the Regular Record Date or accrual date, as the case
may be, for such interest at the office or agency of the Company maintained for
such purpose. Each installment of semiannual or contingent interest payable in
cash on any Security shall be paid in same-day funds by transfer to an account
maintained by the payee located inside the United States, if the Trustee shall
have received proper wire transfer instructions from such payee not later than
the related Regular Record Date or accrual date, as the case may be, or, if no
such instructions have been received by check drawn on a bank in The City of New
York mailed to the payee at its address set forth on the Registrar's books. In
the case of a permanent Global Security, semiannual or contingent interest
payable on any applicable payment date will be paid to the Depositary, with
respect to that portion of such permanent Global Security held for its account
by Cede & Co. for the purpose of permitting such party to credit the interest
received by it in respect of such permanent Global Security to the accounts of
the beneficial owners thereof.

                  SECTION 12.02. Defaulted Interest.
                                 ------------------

                  Except as otherwise specified with respect to the Securities,
any semiannual or contingent interest on any Security that is payable, but is
not punctually paid or duly provided for, within 30 days following any
applicable payment date (herein called "Defaulted Interest", which term shall
include any accrued and unpaid interest that has accrued on such defaulted
amount in accordance with paragraph 1 of the Securities), shall forthwith cease
to be payable to the registered Holder thereof on the relevant Regular Record
Date or accrual date, as the case may be, by virtue of having been such Holder,
and such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:

         (1) The Company may elect to make payment of any Defaulted Interest to
         the persons in whose names the Securities are registered at the close
         of business on a Special Record Date for the payment of such Defaulted
         Interest, which shall be fixed in the following manner. The Company
         shall notify the Trustee in writing of the amount of Defaulted Interest
         proposed to be paid on each Security and the date of the proposed
         payment (which shall not be less than 20 days after such notice is
         received by the Trustee), and at the same time the Company shall
         deposit with the Trustee an amount of money equal to the aggregate
         amount proposed to be paid in respect of such Defaulted Interest or
         shall make arrangements satisfactory to the Trustee for such deposit on
         or prior to the date of the proposed payment, such money when deposited
         to be held in trust for the benefit of the persons entitled to such
         Defaulted Interest as in this clause provided. Thereupon the Trustee


                                       69
<PAGE>

         shall fix a special record date for the payment of such Defaulted
         Interest which shall be not more than 15 days and not less than 10 days
         prior to the date of the proposed payment and not less than 10 days
         after the receipt by the Trustee of the notice of the proposed payment
         (the "Special Record Date"). The Trustee shall promptly notify the
         Company of such Special Record Date and, in the name and at the expense
         of the Company, shall cause notice of the proposed payment of such
         Defaulted Interest and the Special Record Date therefor to be mailed,
         first-class postage prepaid, to each Holder of Securities at his
         address as it appears on the list of Securityholders maintained
         pursuant to Section 2.05 not less than 10 days prior to such Special
         Record Date. Notice of the proposed payment of such Defaulted Interest
         and the Special Record Date therefor having been mailed as aforesaid,
         such Defaulted Interest shall be paid to the persons in whose names the
         Securities are registered at the close of business on such Special
         Record Date and shall no longer be payable pursuant to the following
         clause (2).

         (2) The Company may make payment of any Defaulted Interest on the
         Securities in any other lawful manner not inconsistent with the
         requirements of any securities exchange on which such Securities may be
         listed, and upon such notice as may be required by such exchange, if,
         after notice given by the Company to the Trustee of the proposed
         payment pursuant to this clause, such manner of payment shall be deemed
         practicable by the Trustee.

                  SECTION 12.03. Interest Rights Preserved.
                                 -------------------------

                  Subject to the foregoing provisions of this Article 12 and
Section 2.06, each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall carry the
rights to semiannual and contingent interest accrued and unpaid, and to accrue,
which were carried by such other Security.

                                   ARTICLE 13

                                  MISCELLANEOUS

                  SECTION 13.01. Trust Indenture Act Controls.
                                 ----------------------------

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

                  SECTION 13.02. Notices; Address of Agency in Manhattan.
                                 ---------------------------------------

                  Any request, demand, authorization, notice, waiver, consent or
communication shall be in writing and delivered in person or mailed by
first-class mail, postage prepaid, addressed as follows or transmitted by
facsimile transmission (confirmed by guaranteed overnight courier) to the
following facsimile numbers:



                                       70
<PAGE>

                  if to the Company:

                           Franklin Resources, Inc.
                           777 Mariners Island Blvd.
                           San Mateo, CA  94404
                           Telephone No.:      (650) 312-2000
                           Facsimile No.:      (650)  312-2804
                           Attention:          Martin L. Flanagan
                                               Leslie M. Kratter

                  if to the Trustee:

                           The Bank of New York
                           101 Barclay Street, Floor 21 West
                           New York, NY  10286
                           Telephone No.:      (212) 815-5763
                           Facsimile No.:      (212) 815-5915
                           Attention:          Corporate Trust - Trustee
                                               Administration

                  The Company or the Trustee by notice given to the other in the
manner provided above may designate additional or different addresses for
subsequent notices or communications.

                  Any notice or communication given to a Securityholder shall be
mailed to the Securityholder, by first-class mail, postage prepaid, at the
Securityholder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.

                  Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not received by the addressee.

                  If the Company mails a notice or communication to the
Securityholders, it shall mail a copy to the Trustee and each Registrar, Paying
Agent, Conversion Agent or co-registrar.

                  The initial office or agency of the Company in the Borough of
Manhattan as required by Section 4.05 shall be:


                  SECTION 13.03. Communication by Holders with Other Holders.
                                 -------------------------------------------

                  Securityholders may communicate pursuant to TIA Section 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee, the Registrar, the Paying Agent, the
Conversion Agent and anyone else shall have the protection of TIA Section
312(c).



                                       71
<PAGE>

                  SECTION 13.04. Certificate and Opinion as to Conditions
                  -------------------------------------------------------
Precedent.
----------

                  Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:

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

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

                  SECTION 13.05. Statements Required in Certificate or Opinion.
                                 ----------------------------------------------

                  Each Officers' Certificate or Opinion of Counsel with respect
to compliance with a covenant or condition provided for in this Indenture shall
include:

         (1) a statement that each person making such Officers' Certificate or
         Opinion of Counsel has read such covenant or condition;

         (2) a brief statement as to the nature and scope of the examination or
         investigation upon which the statements or opinions contained in such
         Officers' Certificate or Opinion of Counsel are based;

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

         (4) a statement that, in the opinion of such person, such covenant or
         condition has been complied with.

                  SECTION 13.06. Separability Clause.
                                 -------------------

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

                  SECTION 13.07. Rules by Trustee, Paying Agent, Conversion
                                 ------------------------------------------
Agent and Registrar.
--------------------

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



                                       72
<PAGE>

                  SECTION 13.08. Calculations.
                                 ------------

                  The calculation of the Purchase Price, Change in Control
Purchase Price, Conversion Rate, Market Price, Sale Price of the Common Stock
and each other calculation to be made hereunder (other than the LYON Market
Price) shall be the obligation of the Company. All calculations made by the
Company as contemplated pursuant to this Section 13.08 shall be final and
binding on the Company and the Holders absent manifest error. The Trustee,
Paying Agent, Conversion Agent and Bid Solicitation Agent shall not be obligated
to recalculate, recompute or confirm any such calculations.

                  SECTION 13.09. Legal Holidays.
                                 --------------

                  A "Legal Holiday" is any day other than a Business Day. If any
specified date (including a date for giving notice) is a Legal Holiday, the
action shall be taken on the next succeeding day that is not a Legal Holiday,
and, if the action to be taken on such date is a payment in respect of the
Securities, no Original Issue Discount or interest, if any, shall accrue for the
intervening period.

                  SECTION 13.10. GOVERNING LAW.
                                 -------------

                  THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE
AND THE SECURITIES.

                  SECTION 13.11. No Recourse Against Others.
                                 --------------------------

                  A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.

                  SECTION 13.12. Successors.
                                 ----------

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

                  SECTION 13.13. Multiple Originals.
                                 ------------------

                  The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement. One signed copy is enough to prove this Indenture.




                                       73
<PAGE>

                  IN WITNESS WHEREOF, the undersigned, being duly authorized,
have executed this Indenture on behalf of the respective parties hereto as of
the date first above written.

                          FRANKLIN RESOURCES, Inc.


                          By:   /s/ Leslie M. Kratter
                                --------------------
                                Name:  Leslie M. Kratter
                                Title: Senior Vice President and Secretary




                          THE BANK OF NEW YORK,
                          as Trustee


                          By:   /s/ Michael Pitfick
                                --------------------
                                Name:  Michael Pitfick
                                Title: Assistant Treasurer







                                       74
<PAGE>

                                   EXHIBIT A-1

                        [FORM OF FACE OF GLOBAL SECURITY]

                  FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE
CODE, THIS SECURITY IS ISSUED WITH AN INDETERMINATE AMOUNT OF ORIGINAL ISSUE
DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE DATE IS MAY
11, 2001, AND THE YIELD TO MATURITY FOR PURPOSES OF ACCRUING ORIGINAL ISSUE
DISCOUNT IS 6.19% PER ANNUM.

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

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

                  THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.

                  THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES
TO OFFER, SELL, OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE"), WHICH IS TWO YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH FRANKLIN RESOURCES,




                                     A-1-1
<PAGE>

INC. (THE "COMPANY" OR THE "ISSUER") OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2),(3) OR (7) OF RULE 501 UNDER THE SECURITIES
ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSE (C) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE.

                  THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON
SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE.




                                     A-1-2
<PAGE>

                            FRANKLIN RESOURCES, INC.
                      Liquid Yield Option(TM) Note due 2031
                              (Zero Coupon-Senior)

No. R-   CUSIP:  [________]
Issue Date:  May 11, 2001  Original Issue Discount:  $428.72

Issue Price:  $571.28      (for each $1,000 Principal
(for each $1,000 Principal  Amount at Maturity)
Amount at Maturity)

                  FRANKLIN RESOURCES, INC., a Delaware corporation, promises to
pay to Cede & Co. or registered assigns, the Principal Amount at Maturity of
[____] DOLLARS ($[____]) on May 11, 2031.

                  This Security shall not bear interest except as specified on
the other side of this Security. Original Issue Discount will accrue as
specified on the other side of this Security. This Security is convertible as
specified on the other side of this Security.

                  Additional provisions of this Security are set forth on the
other side of this Security.

Dated:  _______________               FRANKLIN RESOURCES, INC.


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


TRUSTEE'S CERTIFICATE OF
  AUTHENTICATION

The Bank of New York, as Trustee,
certifies that this is one of the Securities
referred to in the within-mentioned Indenture.


By:
      -----------------------------------------------
                  Authorized Officer






                                     A-1-3
<PAGE>

                         [FORM OF REVERSE SIDE OF LYON]
                      Liquid Yield Option(TM) Note due 2031
                              (Zero Coupon-Senior)

1.       Interest.

                  This Security shall not bear interest, except as specified in
this paragraph or in paragraphs 5 and 11 hereof. If the Principal Amount at
Maturity hereof or any portion of such Principal Amount at Maturity is not paid
when due (whether upon acceleration pursuant to Section 6.02 of the Indenture,
upon the date set for payment of the Redemption Price pursuant to paragraph 6
hereof, upon the date set for payment of the Purchase Price or Change in Control
Purchase Price pursuant to paragraph 7 hereof or upon the Stated Maturity of
this Security) or if interest (including semiannual or contingent interest, if
any) due hereon or any portion of such interest is not paid when due in
accordance with paragraph 5 or 11 hereof, then in each such case the overdue
amount shall, to the extent permitted by law, bear interest at the rate of
1.875% per annum, compounded semiannually, which interest shall accrue from the
date such overdue amount was originally due to the date payment of such amount,
including interest thereon, has been made or duly provided for. All such
interest shall be payable on demand.

                  Original Issue Discount (the difference between the Issue
Price and the Principal Amount at Maturity of the Security), in the period
during which a Security remains outstanding, shall accrue at 1.875% per annum,
on a semiannual bond equivalent basis using a 360-day year composed of twelve
30-day months, from the Issue Date of this Security.

2.       Method of Payment.

                  Subject to the terms and conditions of the Indenture, the
Company will make payments in respect of Redemption Prices, Purchase Prices,
Change in Control Purchase Prices and at Stated Maturity to Holders who
surrender Securities to a Paying Agent to collect such payments in respect of
the Securities. The Company will pay any cash amounts in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may make such cash payments by check payable
in such money.

3.       Paying Agent, Conversion Agent, Registrar and Bid Solicitation Agent.

                  Initially, The Bank of New York, a New York banking
corporation (the "Trustee"), will act as Paying Agent, Conversion Agent,
Registrar and Bid Solicitation Agent. The Company may appoint and change any
Paying Agent, Conversion Agent, Registrar or co-registrar or Bid Solicitation
Agent without notice, other than notice to the Trustee except that the Company
will maintain at least one Paying Agent in the State of New York, The City of
New York, Borough of Manhattan, which shall initially be an office or agency of
the Trustee. The Company or any of its Subsidiaries or any of their Affiliates
may act as Paying Agent, Conversion Agent, Registrar or co-registrar. None of


                                     A-1-4
<PAGE>

the Company, any of its Subsidiaries or any of their Affiliates shall act as Bid
Solicitation Agent.

4.       Indenture.

                  The Company issued the Securities under an Indenture dated as
of May 11, 2001 (the "Indenture"), between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as in
effect from time to time (the "TIA"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the TIA for a statement of those terms.

                  The Securities are general unsecured and unsubordinated
obligations of the Company limited to $877,000,000 aggregate Principal Amount at
Maturity (subject to Section 2.07 of the Indenture). The Indenture does not
limit other indebtedness of the Company, secured or unsecured.

5.       Contingent Interest.

                  Subject to the accrual and record date provisions specified in
this paragraph 5, the Company shall pay contingent interest to the Holders
during any six-month period (a "Contingent Interest Period") from May 12 to
November 11 and from November 12 to May 11, commencing May 12, 2006, if the
average LYON Market Price for the Five-Day Period with respect to such
Contingent Interest Period equals 120% or more of the sum of the Issue Price of
a Security and Original Issue Discount accrued thereon to the day immediately
preceding the first day of the relevant Contingent Interest Period.

                  The amount of contingent interest payable per $1,000 Principal
Amount at Maturity hereof in respect of any Quarterly Period within a Contingent
Interest Period shall equal the greater of (x) Regular Cash Dividends paid by
the Company per share of Common Stock during that Quarterly Period multiplied by
the number of shares of Common Stock into which $1,000 Principal Amount at
Maturity hereof is convertible pursuant to paragraph 9 hereof as of the accrual
date for such contingent interest and (y) $0.065 multiplied by the then
applicable Conversion Rate with respect to such Contingent Interest Period.

                  Contingent interest, if any, will accrue and be payable to
Holders as of the record date for the related Regular Cash Dividend or, if no
Regular Cash Dividend is paid by the Company during a Quarterly Period, to
Holders as of the 15th day preceding the last day of the relevant Contingent
Interest Period. Such payments shall be paid on the payment date of the related
Regular Cash Dividend or, if no Regular Cash Dividend is paid by the Company
during any Quarterly Period, on the last day of the relevant Contingent Interest
Period. Original Issue Discount will continue to accrue at 1.875% per annum
whether or not contingent interest is paid.

                  "Five-Day Period" means, with respect to any Contingent
Interest Period, the five trading days ending on the second trading day
immediately preceding the first day of such Contingent Interest Period;


                                     A-1-5
<PAGE>

provided, however, if the Company shall have declared a Regular Cash Dividend on
its Common Stock that is payable during such Contingent Interest Period but for
which the record date for determining stockholders entitled thereto precedes the
first day of such Contingent Interest Period, then "Five-Day Period" shall mean,
with respect to such Contingent Interest Period, the five trading days ending on
the second trading day immediately preceding such record date.

                  "Regular Cash Dividends" means quarterly or other periodic
cash dividends on the Company's Common Stock as declared by the Company's Board
of Directors as part of its cash dividend payment practices and that are not
designated by them as extraordinary or special or other nonrecurring dividends.

                  "LYON Market Price" means, as of any date of determination,
the average of the secondary market bid quotations per $1,000 Principal Amount
at Maturity obtained by the Bid Solicitation Agent for $10 million Principal
Amount at Maturity of Securities at approximately 4:00 p.m., New York City time,
on such determination date from three recognized securities dealers in The City
of New York (none of which shall be an Affiliate of the Company) selected by the
Company; provided, however, if (a) at least three such bids are not obtained by
the Bid Solicitation Agent or (b) in the Company's reasonable judgment, the bid
quotations are not indicative of the secondary market value of the Securities as
of such determination date, then the LYON Market Price for such determination
date shall equal (i) the Conversion Rate in effect as of such determination date
multiplied by (ii) the average Sale Price of the Common Stock for the five
trading days ending on such determination date, appropriately adjusted to take
into account the occurrence, during the period commencing on the first of such
trading days during such five trading day period and ending on such
determination date, of any event described in Section 11.06, 11.07 or 11.08
(subject to the conditions set forth in Sections 11.09 and 11.10) of the
Indenture.

                  The term "Quarterly Period" shall mean, with respect to any
Contingent Interest Period, any quarterly period within such Contingent Interest
Period extending from May 12 to August 11, from August 12 to November 11, from
November 12 to February 11 or from February 12 to May 11.

                  Upon determination that Holders will be entitled to receive
contingent interest which may become payable during a Contingent Interest
Period, on or prior to the first day of such Contingent Interest Period, the
Company shall promptly notify the Trustee of such determination and shall issue
a press release and publish such information on its web site on the World Wide
Web. The Company shall also notify the Trustee of the declaration of any Regular
Cash Dividends and the related record and payment dates.

6.       Redemption at the Option of the Company.

                  No sinking fund is provided for the Securities. The Securities
are redeemable as a whole, or from time to time in part, at any time at the
option of the Company in accordance with the Indenture at the Redemption Prices
set forth below, provided that the Securities are not redeemable prior to May
11, 2006.



                                     A-1-6
<PAGE>

                  The table below shows Redemption Prices of a Security per
$1,000 Principal Amount at Maturity on the dates shown below and at Stated
Maturity, which prices reflect accrued Original Issue Discount calculated to
each such date. The Redemption Price of a Security redeemed between such dates
shall include an additional amount reflecting the additional Original Issue
Discount accrued since the preceding date in the table but not including the
Redemption Date.
<TABLE>
<CAPTION>
                                                  (1)                   (2)                   (3)
                                                                      Accrued             Redemption
                                                 LYON             Original Issue             Price
Redemption Date                               Issue Price            Discount              (1) + (2)
---------------                               -----------            --------              ---------
May 11:
<S>                                          <C>                   <C>                   <C>
  2006................................       $    571.28           $     55.87           $    627.15
  2007................................            571.28                 67.69                638.97
  2008................................            571.28                 79.72                651.00
  2009................................            571.28                 91.99                663.27
  2010................................            571.28                104.48                675.76
  2011................................            571.28                117.21                688.49
  2012................................            571.28                130.18                701.46
  2013................................            571.28                143.40                714.68
  2014................................            571.28                156.86                728.14
  2015................................            571.28                170.58                741.86
  2016................................            571.28                184.55                755.83
  2017................................            571.28                198.79                770.07
  2018................................            571.28                213.30                784.58
  2019................................            571.28                228.07                799.35
  2020................................            571.28                243.13                814.41
  2021................................            571.28                258.47                829.75
  2022................................            571.28                274.11                845.39
  2023................................            571.28                290.03                861.31
  2024................................            571.28                306.26                877.54
  2025................................            571.28                322.79                894.07
  2026................................            571.28                339.63                910.91
  2027................................            571.28                356.79                928.07
  2028................................            571.28                374.27                945.55
  2029................................            571.28                392.08                963.36
  2030................................            571.28                410.23                981.51
At Stated Maturity....................            571.28                428.72              1,000.00
</TABLE>

                  If this Security has been converted to a semiannual coupon
note following the occurrence of a Tax Event, the Redemption Price will be equal
to the Restated Principal Amount plus accrued and unpaid interest from the date
of such conversion to but not including the Redemption Date.

                  In addition to the Redemption Price payable with respect to
all Securities or portions thereof to be redeemed as of a Redemption Date, the
Holders of such Securities (or portions thereof) shall be entitled to receive
accrued and unpaid semiannual and contingent interest, if any, with respect
thereto, which interest shall be paid in cash on the Redemption Date.


                                     A-1-7
<PAGE>

7.       Purchase by the Company at the Option of the Holder.

                  Subject to the terms and conditions of the Indenture, the
Company shall become obligated to purchase, at the option of the Holder, the
Securities held by such Holder on the following Purchase Dates and at the
following Purchase Prices per $1,000 Principal Amount at Maturity, upon delivery
of a Purchase Notice containing the information set forth in the Indenture, at
any time from the opening of business on the date that is 20 Business Days prior
to such Purchase Date until the close of business on such Purchase Date and upon
delivery of the Securities to the Paying Agent by the Holder as set forth in the
Indenture.

                          Purchase Date             Purchase Price
                          -------------             --------------
                   May 11, 2003..................       $    593.01
                           2004..................            604.18
                           2006..................            627.15
                           2011..................            688.49
                           2016..................            755.83
                           2021..................            829.75
                           2026..................            910.91

                  The Purchase Price (equal to the Issue Price plus accrued
Original Issue Discount to the Purchase Date) may be paid, at the option of the
Company, in cash or by the issuance and delivery of shares of Common Stock of
the Company, or in any combination thereof.

                  If prior to a Purchase Date this Security has been converted
to a semiannual coupon note following the occurrence of a Tax Event, the
Purchase Price will be equal to the Restated Principal Amount plus accrued and
unpaid interest from the date of conversion to the Purchase Date.

                  At the option of the Holder and subject to the terms and
conditions of the Indenture, the Company shall become obligated to purchase the
Securities held by such Holder no later than 35 Business Days after the
occurrence of a Change in Control of the Company but in no event prior to the
date on which such Change in Control occurs occurring on or prior to May 11,
2006 for a Change in Control Purchase Price equal to the Issue Price plus
accrued Original Issue Discount to the Change in Control Purchase Date, which
Change in Control Purchase Price shall be paid in cash. If prior to a Change in
Control Purchase Date this Security has been converted to a semiannual coupon
note following the occurrence of a Tax Event, the Change in Control Purchase
Price shall be equal to the Restated Principal Amount plus accrued and unpaid
interest from the date of conversion to the Change in Control Purchase Date.

                  A third party may make the offer and purchase of the
Securities in lieu of the Company in accordance with the Indenture.



                                     A-1-8
<PAGE>

                  In addition to the Purchase Price or Change in Control
Purchase Price, as the case may be, payable with respect to all Securities or
portions thereof to be purchased as of the Purchase Date or the Change in
Control Purchase Date, as the case may be, the Holders of such Securities (or
portions thereof) shall be entitled to receive accrued and unpaid semiannual and
contingent interest, if any, with respect thereto, which interest shall be paid
in cash promptly following the later of the Purchase Date or the Change in
Control Purchase Date, as the case may be and the time of delivery of such
Securities to the Paying Agent pursuant to the Indenture.

                  Holders have the right to withdraw any Purchase Notice or
Change in Control Purchase Notice, as the case may be, by delivering to the
Paying Agent a written notice of withdrawal in accordance with the provisions of
the Indenture.

                  If cash (and/or securities if permitted under the Indenture)
sufficient to pay the Purchase Price or Change in Control Purchase Price, as the
case may be, of, together with any accrued and unpaid semiannual and contingent
interest with respect to, all Securities or portions thereof to be purchased as
of the Purchase Date or the Change in Control Purchase Date, as the case may be,
is deposited with the Paying Agent on the Business Day following the Purchase
Date or the Change in Control Purchase Date, as the case may be, Original Issue
Discount and interest (including semiannual and contingent interest), if any,
shall cease to accrue on such Securities (or portions thereof) immediately after
such Purchase Date or Change in Control Purchase Date, as the case may be, and
the Holder thereof shall have no other rights as such (other than the right to
receive the Purchase Price or Change in Control Purchase Price, as the case may
be, and accrued and unpaid semiannual and contingent interest, if any, upon
surrender of such Security).

8.       Notice of Redemption.

                  Notice of redemption will be mailed at least 15 days but not
more than 60 days before the Redemption Date to each Holder of Securities to be
redeemed at the Holder's registered address. If money sufficient to pay the
Redemption Price of, and accrued and unpaid semiannual and contingent interest,
if any, with respect to, all Securities (or portions thereof) to be redeemed on
the Redemption Date is deposited with the Paying Agent prior to or on the
Redemption Date, on such Redemption Date, Original Issue Discount and interest
(including semiannual and contingent interest), if any, shall cease to accrue on
such Securities or portions thereof. Securities in denominations larger than
$1,000 of Principal Amount at Maturity may be redeemed in part but only in
integral multiples of $1,000 of Principal Amount at Maturity.

9.       Conversion.

                  Subject to the provisions of this paragraph 9 and
notwithstanding the fact that any other condition to conversion has not been
satisfied, Holders may convert the Securities into Common Stock on a Conversion
Date in any calendar quarter commencing after June 30, 2001, if, as of the last
day of the preceding calendar quarter, the Sale Price of the Common Stock for at
least 20 trading days in a period of 30 consecutive trading days ending on the
last trading day of such preceding calendar quarter is greater than the


                                     A-1-9
<PAGE>

conversion trigger price. The "conversion trigger price" for any calendar
quarter shall be a reference percentage, beginning at 120%, and declining 0.084%
per quarter thereafter, of the accreted conversion price per share of Common
Stock on the last trading day of such preceding calendar quarter.

                  The "accreted conversion price" per share of Common Stock as
of any day equals the quotient of:

                  o        the Issue Price and accrued Original Issue Discount
                           to that day, divided by

                  o        the number of shares of Common Stock issuable upon
                           conversion of a Security or $1,000 Principal Amount
                           at Maturity of Securities, as the context may
                           require, on that day.

                  For illustrative purposes only, the table below shows the
conversion trigger price per share of Common Stock in respect of each of the
first 20 calendar quarters. These prices reflect the accreted conversion price
per share of Common Stock (assuming that no events occurred requiring an
adjustment to the initial Conversion Rate of 9.3604 shares of Common Stock per
$1,000 Principal Amount at Maturity) multiplied by the applicable percentage for
the respective calendar quarter. Thereafter, the accreted conversion price per
share of Common Stock increases each calendar quarter by the accrued Original
Issue Discount for the quarter and the applicable percentage declines by 0.084%
per quarter.
<TABLE>
<CAPTION>
                                                             (1)              (2)               (3)
                                                          Accreted         Applicable       Conversion
                                                         Conversion        Reference       Trigger Price
Quarter                                                     Price          Percentage        (1) x (2)
-------                                                     -----          ----------        ---------
<S>                                                      <C>                 <C>            <C>
2001
----
    Third Quarter...................................     $   61.03           120.00%        $   73.24
    Fourth Quarter..................................         61.32           119.92%            73.53

2002
----
    First Quarter...................................         61.60           119.83%            73.82
    Second Quarter..................................         61.89           119.75%            74.11
    Third Quarter...................................         62.18           119.66%            74.41
    Fourth Quarter..................................         62.47           119.58%            74.70

2003
----
    First Quarter...................................         62.76           119.50%            75.00
    Second Quarter..................................         63.06           119.41%            75.30
    Third Quarter...................................         63.35           119.33%            75.60
    Fourth Quarter..................................         63.65           119.24%            75.90


                                     A-1-10
<PAGE>

                                                             (1)              (2)               (3)
                                                          Accreted         Applicable       Conversion
                                                         Conversion        Reference       Trigger Price
Quarter                                                     Price          Percentage        (1) x (2)
-------                                                     -----          ----------        ---------
2004
----
    First Quarter...................................         63.95           119.16%            76.20
    Second Quarter..................................         64.25           119.08%            76.50
    Third Quarter...................................         64.55           118.99%            76.80
    Fourth Quarter..................................         64.85           118.91%            77.11

2005
----
    First Quarter...................................         65.15           118.82%            77.42
    Second Quarter..................................         65.46           118.74%            77.72
    Third Quarter...................................         65.76           118.66%            78.03
    Fourth Quarter..................................         66.07           118.57%            78.34

2006
----
    First Quarter...................................         66.38           118.49%            78.65
    Second Quarter..................................         66.69           118.40%            78.96
</TABLE>
                  Subject to the provisions of this paragraph 9 and
notwithstanding the fact any other condition to conversion has not been
satisfied, Holders may convert the Securities into Common Stock on a Conversion
Date during any period in which the credit rating assigned to the Securities by
a Rating Agency is at or below the Applicable Rating. "Rating Agency" means (1)
Moody's Investors Service, Inc. and its successors ("Moody's"), (2) Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies Inc., and its
successors ("Standard & Poor's") or (3) if Moody's or Standard & Poor's or both
of them are not making ratings of the Securities publicly available, a
nationally recognized U.S. rating agency or agencies, as the case may be,
selected by the Company, which will be substituted for Moody's or Standard &
Poor's or both, as the case may be. "Applicable Rating" means (1) Baa2, in the
case of Moody's (or its equivalent under any successor ratings categories of
Moody's), (2) BBB in the case of Standard & Poor's (or its equivalent, under any
successor ratings categories of Standard & Poor's) or (3) the equivalent in
respect of ratings categories of any Rating Agencies substituted for Moody's or
Standard & Poor's.

                  Subject to the provisions of this paragraph 9 and
notwithstanding the fact that any other condition to conversion has not been
satisfied, a Holder may convert into Common Stock a Security or portion of a
Security which has been called for redemption pursuant to paragraph 6 hereof,
but such Securities may be surrendered for conversion until the close of
business on the second Business Day immediately preceding the Redemption Date.

                  Subject to the provisions of this paragraph 9 and
notwithstanding the fact that any other condition to conversion has not been
satisfied, in the event that the Company declares a dividend or distribution
described in Section 11.07 of the Indenture, or a dividend or a distribution
described in Section 11.08 of the Indenture where the fair market value of such
dividend or distribution per share of Common Stock, as determined in the
Indenture, exceeds 15% of the Sale Price of the Common Stock on the Business Day


                                     A-1-11
<PAGE>

immediately preceding the date of declaration for such dividend or distribution,
the Company will be required to give notice to the Holders of the Securities at
least 20 days prior to the Ex-Dividend Time for such dividend or distribution,
and Securities may be surrendered for conversion at any time thereafter until
the close of business on the Business Day prior to the Ex-Dividend Time or until
the Company announces that such dividend or distribution will not take place.

                  Subject to the provisions of this paragraph 9 and
notwithstanding the fact that any other condition to conversion has not been
satisfied, in the event the Company is a party to a consolidation, merger or
binding share exchange pursuant to which the Common Stock would be converted
into cash, securities or other property as set forth in Section 11.14 of the
Indenture, the Securities may be surrendered for conversion at any time from and
after the date which is 15 days prior to the date the Company announces the
anticipated effective time until 15 days after the actual effective date of such
transaction, and at the effective time of such transaction the right to convert
a Security into Common Stock will be deemed to have changed into a right to
convert it into the kind and amount of cash, securities or other property of the
Company or another person which the holder would have received if the holder had
converted its Security immediately prior to the transaction.

                  A Security in respect of which a Holder has delivered a
Purchase Notice or Change in Control Purchase Notice exercising the option of
such Holder to require the Company to purchase such Security may be converted
only if such notice of exercise is withdrawn in accordance with the terms of the
Indenture.

                  The initial Conversion Rate is 9.3604 shares of Common Stock
per $1,000 Principal Amount at Maturity, subject to adjustment in certain events
described in the Indenture. The Company will deliver cash or a check in lieu of
any fractional share of Common Stock.

                  In the event the Company exercises its option pursuant to
Section 10.01 of the Indenture to have interest in lieu of Original Issue
Discount accrue on the Security following a Tax Event, the Holder will be
entitled on conversion to receive the same number of shares of Common Stock such
Holder would have received if the Company had not exercised such option.

                  Accrued and unpaid interest in lieu of Original Issue Discount
and semiannual and contingent interest will not be paid in cash on Securities
that are converted but will be paid in the manner provided in the following
paragraph; provided, however that Securities surrendered for conversion during
the period, in the case of interest in lieu of Original Issue Discount payable
under Section 11(a), from the close of business on any Regular Record Date next
preceding any Interest Payment Date to the opening of business on such Interest
Payment Date or, in the case of contingent interest, from the close of business
on any date on which contingent interest accrues to the opening of business on
the date on which such contingent interest is payable, shall be entitled to
receive such interest in lieu of Original Issue Discount or semiannual or
contingent interest, as the case may be, payable on such Securities on the
corresponding Interest Payment Date or the date on which such contingent
interest is payable and (except Securities with respect to which the Company has


                                     A-1-12
<PAGE>

mailed a notice of redemption) Securities surrendered for conversion during such
periods must be accompanied by payment of an amount equal to the interest in
lieu of Original Issue Discount or semiannual or contingent interest with
respect thereto that the registered Holder is to receive.

                  A Holder may convert a portion of a Security if the Principal
Amount at Maturity of such portion is $1,000 or an integral multiple of $1,000.
No payment or adjustment will be made for dividends on the Common Stock except
as provided in the Indenture. On conversion of a Security, that portion of
accrued Original Issue Discount (or interest if the Company has exercised its
option provided for in paragraph 11(a) hereof) attributable to the period from
the Issue Date (or, if the Company has exercised the option referred to in
paragraph 11(a) hereof, the later of (w) the date of such exercise and (x) the
date on which interest was last paid through the Conversion Date and (except as
provided above) accrued contingent interest with respect to the converted
Security shall not be cancelled, extinguished or forfeited, but rather shall be
deemed to be paid in full to the Holder thereof through the delivery of the
Common Stock (together with the cash payment, if any, in lieu of fractional
shares) in exchange for the Security being converted pursuant to the terms
hereof; and the fair market value of such shares of Common Stock (together with
any such cash payment in lieu of fractional shares) shall be treated as issued,
to the extent thereof, first in exchange for Original Issue Discount (or
interest, if the Company has exercised its option provided for in paragraph
11(a) hereof) accrued through the Conversion Date and accrued contingent
interest, and the balance, if any, of such fair market value of such Common
Stock (and any such cash payment) shall be treated as issued in exchange for the
Issue Price of the Security being converted pursuant to the provisions hereof.

                  To convert a Security, a Holder must (1) complete and manually
sign the conversion notice below (or complete and manually sign a facsimile of
such notice) and deliver such notice to the Conversion Agent, (2) surrender the
Security to the Conversion Agent, (3) furnish appropriate endorsements and
transfer documents if required by the Conversion Agent, the Company or the
Trustee and (4) pay any transfer or similar tax, if required.

                  The Conversion Rate will be adjusted for dividends or
distributions on Common Stock payable in Common Stock or other Capital Stock;
subdivisions, combinations or certain reclassifications of Common Stock;
distributions to all holders of Common Stock of certain rights to purchase
Common Stock for a period expiring within 60 days of the record date for such
distribution at less than the Sale Price of the Common Stock at the Time of
Determination; and distributions to such holders of assets (including shares of
Capital Stock of a Subsidiary) or debt securities of the Company or certain
rights to purchase securities of the Company (excluding certain cash dividends
or distributions). However, no adjustment need be made if Securityholders may
participate in the transaction or in certain other cases. The Company from time
to time may voluntarily increase the Conversion Rate.

                  If the Company is a party to a consolidation, merger or
binding share exchange or a transfer of all or substantially all of its assets,
or upon certain distributions described in the Indenture, the right to convert a


                                     A-1-13
<PAGE>

Security into Common Stock may be changed into a right to convert it into
securities, cash or other assets of the Company or another person.

                  In the event that the Company pays a dividend of or makes a
distribution on shares of Common Stock of the Company consisting of Capital
Stock of, or similar equity interests in, a Subsidiary or other business unit of
the Company, the Conversion Rate will be adjusted based on the market value of
the securities so distributed relative to the market value of the Common Stock
of the Company, in each case based on the average closing prices of those
securities for the ten trading days commencing on and including the fifth
trading day after the date on which "ex-dividend" trading commences for such
dividend or distribution on the principal United States securities exchange or
market on which the securities are then listed or quoted.

10.      Conversion Arrangement on Call for Redemption.

                  Any Securities called for redemption, unless surrendered for
conversion before the close of business on the Redemption Date, may be deemed to
be purchased from the Holders of such Securities at an amount not less than the
Redemption Price, by one or more investment bankers or other purchasers who may
agree with the Company to purchase such Securities from the Holders, to convert
them into Common Stock of the Company and to make payment for such Securities to
the Trustee in trust for such Holders.

11.      Tax Event

                  (a) From and after (i) the date (the "Tax Event Date") of the
occurrence of a Tax Event and (ii) the date the Company exercises such option,
whichever is later (the later of such dates, the "Option Exercise Date"), at the
option of the Company, interest in lieu of future Original Issue Discount shall
accrue at the rate of 1.875% per annum on a principal amount per Security (the
"Restated Principal Amount") equal to the Issue Price plus Original Issue
Discount accrued through the Option Exercise Date.

                  (b) From and after the Option Exercise Date, contingent
interest provided for in paragraph 5 hereof shall cease to accrue on this
Security.

                  (c) Interest accrual on any Security under paragraph 11(a)
above shall be payable semiannually on May 11 and November 11 of each year (each
an "Interest Payment Date") to holders of record at the close of business on
April 26 or October 27 (each a "Regular Record Date") immediately preceding such
Interest Payment Date. Such interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months and will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from the
Option Exercise Date. Interest on any Security that is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the person in whose name that Security is registered at the close of business
on the Regular Record Date for such interest at the office or agency of the
Company maintained for such purpose. Each installment of interest on any
Security shall be paid in same-day funds by transfer to an account maintained by
the payee located inside the United States.

                                     A-1-14
<PAGE>

12.      Defaulted Interest

                  Except as otherwise specified with respect to the Securities,
any Defaulted Interest on any Security shall forthwith cease to be payable to
the registered Holder thereof on the relevant Regular Record Date or accrual
date, as the case may be, by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company as provided for in Section
12.02(b) of the Indenture.

13.      Denominations; Transfer; Exchange.

                  The Securities are in fully registered form, without coupons,
in denominations of $1,000 of Principal Amount at Maturity and integral
multiples of $1,000. A Holder may transfer or exchange Securities in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
transfer or exchange any Securities selected for redemption (except, in the case
of a Security to be redeemed in part, the portion of the Security not to be
redeemed) or any Securities in respect of which a Purchase Notice or Change in
Control Purchase Notice has been given and not withdrawn (except, in the case of
a Security to be purchased in part, the portion of the Security not to be
purchased) or any Securities for a period of 15 days before the mailing of a
notice of redemption of Securities to be redeemed.

14.      Persons Deemed Owners.

                  The registered Holder of this Security may be treated as the
owner of this Security for all purposes.

15.      Unclaimed Money or Securities.

                  The Trustee and the Paying Agent shall return to the Company
upon written request any money or securities held by them for the payment of any
amount with respect to the Securities that remains unclaimed for two years,
subject to applicable unclaimed property laws. After return to the Company,
Holders entitled to the money or securities must look to the Company for payment
as general creditors unless an applicable abandoned property law designates
another person.

16.      Amendment; Waiver.

                  Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding and (ii) certain Defaults may be waived with
the written consent of the Holders of a majority in aggregate Principal Amount
at Maturity of the Securities at the time outstanding. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the


                                     A-1-15
<PAGE>

Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 or Section 11.14 of the Indenture, to secure the Company's
obligations under this Security or to add to the Company's covenants for the
benefit of the Securityholders or to surrender any right or power conferred, or
to comply with any requirement of the SEC in connection with the qualification
of the Indenture under the TIA, or as necessary in connection with the
registration of the Securities under the Securities Act.

17.      Defaults and Remedies.

                  Under the Indenture, Events of Default include (i) default in
the payment of contingent interest when the same becomes due and payable or of
semiannual interest which becomes due and payable upon exercise by the Company
of its option provided for in paragraph 11(a) hereof which default in any such
case continues for 30 days; (ii) default in payment of the Principal Amount at
Maturity (or, if the Securities have been converted to semiannual coupon notes
following a Tax Event, the Restated Principal Amount), Issue Price plus accrued
Original Issue Discount, Redemption Price, Purchase Price or Change in Control
Purchase Price, as the case may be, in respect of the Securities when the same
becomes due and payable; (iii) failure by the Company to comply with other
agreements in the Indenture or the Securities, subject to notice and lapse of
time; (iv)(a) failure of the Company to make any payment by the end of any
applicable grace period after maturity of Debt in an amount in excess of
$25,000,000, or (b) the acceleration of Debt in an amount in excess of
$25,000,000 because of a default with respect to such Debt without such Debt
having been discharged or such acceleration having been cured, waived, rescinded
or annulled, subject to notice and lapse of time; provided, however, that if any
such failure or acceleration referred to in (a) or (b) above shall cease or be
cured, waived, rescinded or annulled, then the Event of Default by reason
thereof shall be deemed not to have occurred; and (v) certain events of
bankruptcy or insolvency. If an Event of Default occurs and is continuing, the
Trustee, or the Holders of at least 25% in aggregate Principal Amount at
Maturity of the Securities at the time outstanding, may declare all the
Securities plus the original issue discount on the Securities accrued through
the date of such declaration, and any accrued and unpaid interest (including
semiannual interest and contingent interest, if any) through the date of such
declaration to be due and payable immediately. Certain events of bankruptcy or
insolvency are Events of Default which will result in the Securities plus the
original issue discount on the Securities, and any accrued and unpaid interest
(including semiannual interest and contingent interest, if any), through the
occurrence of such event, becoming due and payable immediately upon the
occurrence of such Events of Default.

                  Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives indemnity or security
reasonably satisfactory to it. Subject to certain limitations, Holders of a
majority in aggregate Principal Amount at Maturity of the Securities at the time
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of amounts specified in clause (i) or (ii) above)
if it determines that withholding notice is in their interests.



                                     A-1-16
<PAGE>

18.      Trustee Dealings with the Company.

                  Subject to certain limitations imposed by the TIA, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.

19.      No Recourse Against Others.

                  A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.

20.      Authentication.

                  This Security shall not be valid until an authorized officer
of the Trustee manually signs the Trustee's Certificate of Authentication on the
other side of this Security.

21.      Abbreviations.

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

22.      Original Issue Discount Information Reporting Requirements.

     In accordance with the United States Treasury Regulation Section 1.1275-3,
a Holder may obtain the projected payment schedule by submitting a written
request for such information to the following representative of the Company:
Charles Sims, Franklin Resources, Inc., 777 Mariners Island Blvd, San Mateo, CA
94404.

23.      GOVERNING LAW.

                  THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE
AND THIS SECURITY.

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




                                     A-1-17
<PAGE>

                  The Company will furnish to any Securityholder upon written
request and without charge a copy of the Indenture which has in it the text of
this Security in larger type. Requests may be made to:

                           Franklin Resources, Inc.
                           777 Mariners Island Blvd.
                           San Mateo, CA  94404
                           Attention:  Leslie M. Kratter


















                                     A-1-18
<PAGE>
<TABLE>
<CAPTION>
                  ASSIGNMENT FORM                           CONVERSION NOTICE
<S>                                                     <C>
To assign this Security, fill in the form               To convert this Security into Common
below:                                                  Stock of the Company, check the box:

I or we assign and transfer this Security                             [ ]
to
                                                        To convert only part of this Security, state the
                                                        Principal Amount at Maturity to be converted
_________________________________                       (which must be $1,000 or an integral multiple of
                                                        $1,000):
_________________________________

(Insert assignee's soc. sec. or tax ID no.)             $__________________

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

_________________________________
(Print or type assignee's name, address and zip         _________________________________
code)                                                   (Insert other person's soc. sec. or tax ID no.)

and irrevocably appoint

_____________________ agent to transfer this            _________________________________
Security on the books of the Company.  The agent
may substitute another to act for him.                  _________________________________

                                                        _________________________________

                                                        _________________________________
                                                        (Print or type other person's name,
                                                        address and zip code)
_______________________________________________________________________________

Date:  ______________________  Your Signature:  _______________________________

_______________________________________________________________________________
     (Sign exactly as your name appears on the other side of this Security)

</TABLE>


                                     A-1-19
<PAGE>

                                   EXHIBIT A-2

                         [Form of Certificated Security]

                  FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE
CODE, THIS SECURITY IS ISSUED WITH AN INDETERMINATE AMOUNT OF ORIGINAL ISSUE
DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE DATE IS MAY
11, 2001, AND THE YIELD TO MATURITY FOR PURPOSES OF ACCRUING ORIGINAL ISSUE
DISCOUNT IS 6.19% PER ANNUM.

                  [INCLUDE IF SECURITY IS A CERTIFICATED SECURITY TO BE HELD BY
AN INSTITUTIONAL ACCREDITED INVESTOR--IN CONNECTION WITH ANY TRANSFER, THE
HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND
OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT
THE TRANSFER COMPLIES WITH THE FOLLOWING RESTRICTIONS.]

                  THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.

                  THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES
TO OFFER, SELL, OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE"), WHICH IS TWO YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH FRANKLIN RESOURCES,
INC. (THE "COMPANY" OR THE "ISSUER") OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2),(3) OR (7) OF RULE 501 UNDER THE SECURITIES
ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT



                                     A-2-1
<PAGE>

WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSE (C) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE.

                  THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON
SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE.











                                     A-2-2
<PAGE>

                            FRANKLIN RESOURCES, INC.
                      Liquid Yield Option(TM) Note due 2031
                              (Zero Coupon-Senior)

No. R-   CUSIP:  [____________]
Issue Date:  May 11, 2001..Original Issue Discount:  $428.72

Issue Price:  $571.28 (for each $1,000 Principal
(for each $1,000 Principal.                          Amount at Maturity)
Amount at Maturity)

                  FRANKLIN RESOURCES, INC., a Delaware corporation, promises to
pay to [____] or registered assigns, the Principal Amount at Maturity of [____]
DOLLARS ($[____]) on May 11, 2031.

                  This Security shall not bear interest except as specified on
the other side of this Security. Original Issue Discount will accrue as
specified on the other side of this Security. This Security is convertible as
specified on the other side of this Security.

                  Additional provisions of this Security are set forth on the
other side of this Security.

Dated:  _______________            FRANKLIN RESOURCES, INC.


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


TRUSTEE'S CERTIFICATE OF
  AUTHENTICATION

The Bank of New York, as Trustee,
certifies that this is one of the Securities
referred to in the within-mentioned Indenture.


By:
      -----------------------------------------------
                  Authorized Officer







                                     A-2-3
<PAGE>

                                   EXHIBIT B-1

                              Transfer Certificate

                  In connection with any transfer of any of the Securities
within the period prior to the expiration of the holding period applicable to
the sales thereof under Rule 144(k) under the Securities Act of 1933, as amended
(the "Securities Act") (or any successor provision), the undersigned registered
owner of this Security hereby certifies with respect to $[____] Principal Amount
at Maturity of the above-captioned securities presented or surrendered on the
date hereof (the "Surrendered Securities") for registration of transfer, or for
exchange or conversion where the securities issuable upon such exchange or
conversion are to be registered in a name other than that of the undersigned
registered owner (each such transaction being a "transfer"), that such transfer
complies with the restrictive legend set forth on the face of the Surrendered
Securities for the reason checked below:

         [ ]      A transfer of the Surrendered Securities is made to the
                  Company or any subsidiaries; or

         [ ]      The transfer of the Surrendered Securities complies with
                  Rule 144A under the U.S. Securities Act of 1933, as amended
                  (the "Securities Act"); or

         [ ]      The transfer of the Surrendered Securities is to an
                  institutional accredited investor, as described in Rule
                  501(a)(1), (2), (3) or (7) of Regulation D under the
                  Securities Act; or

         [ ]      The transfer of the Surrendered Securities is pursuant to an
                  effective registration statement under the Securities Act, or

         [ ]      The transfer of the Surrendered Securities is pursuant to an
                  offshore transaction in accordance with Rule 904 of Regulation
                  S under the Securities Act; or

         [ ]      The transfer of the Surrendered Securities is pursuant to
                  another available exemption from the registration requirement
                  of the Securities Act.

and unless the box below is checked, the undersigned confirms that, to the
undersigned's knowledge, such Securities are not being transferred to an
"affiliate" of the Company as defined in Rule 144 under the Securities Act (an
"Affiliate").

         [ ]      The transferee is an Affiliate of the Company.

DATE:
       -------------------------------       ----------------------------------
                                                       Signature(s)

            (If the registered owner is a corporation, partnership or
             fiduciary, the title of the Person signing on behalf of
                     such registered owner must be stated.)



                                     B-1-1
<PAGE>

                                   EXHIBIT B-2

             Form of Letter to be Delivered by Accredited Investors

Franklin Resources, Inc.
777 Mariners Island Blvd
San Mateo, CA  94404

Attention:  General Counsel

The Bank of New York
101 Barclay Street
New York, NY  10286

Attention:  Institutional Trust Services

Dear Sirs:

                  We are delivering this letter in connection with the proposed
transfer of $[____] Principal Amount at Maturity of the Liquid Yield Option
Notes due 2031 ("LYONs") of Franklin Resources, Inc. (the "Company"), which are
convertible into shares of the Company's Common Stock, $0.10 par value per share
(the "Common Stock").

                  We hereby confirm that:

                  we are an "accredited investor" within the meaning of Rule
         501(a)(1), (2) or (3) under the Securities Act of 1933, as amended (the
         "Securities Act"), or an entity in which all of the equity owners are
         accredited investors within the meaning of Rule 501(a)(1), (2) or (3)
         under the Securities Act (an "Institutional Accredited Investor");

                  the purchase of LYONs by us is for our own account or for the
         account of one or more other Institutional Accredited Investors or as
         fiduciary for the account of one or more trusts, each of which is an
         "accredited investor" within the meaning of Rule 501(a)(7) under the
         Securities Act and for each of which we exercise sole investment
         discretion or (B) we are a "bank," within the meaning of Section
         3(a)(2) of the Securities Act, or a "savings and loan association" or
         other institution described in Section 3(a)(5)(A) of the Securities Act
         that is acquiring LYONs as fiduciary for the account of one or more
         institutions for which we exercise sole investment discretion;

                  we will acquire LYONs having a minimum principal amount at
         maturity of not less than $250,000 for our own account or for any
         separate account for which we are acting;

                  we have such knowledge and experience in financial and
         business matters that we are capable of evaluating the merits and risks
         of purchasing LYONs; and


                                     B-2-1
<PAGE>

                  we are not acquiring LYONs with a view to distribution thereof
         or with any present intention of offering or selling LYONs or the
         Common Stock issuable upon conversion thereof, except as permitted
         below; provided that the disposition of our property and property of
         any accounts for which we are acting as fiduciary shall remain at all
         times within our control.

                  We understand that the LYONs were originally offered and sold
in a transaction not involving any public offering within the United States
within the meaning of the Securities Act and that the LYONs and the shares of
Common Stock (the "Securities") issuable upon conversion thereof have not been
registered under the Securities Act, and we agree, on our own behalf and on
behalf of each account for which we acquire any LYONs, that if in the future we
decide to resell or otherwise transfer such Securities prior to the date (the
"Resale Restriction Termination Date") which is two years after the later of the
original issuance of the LYONs and the last date on which the Company or an
affiliate of the Company was the owner of the Security, such Securities may be
resold or otherwise transferred only (i) to Franklin Resources, Inc. or any
subsidiary thereof, or (ii) for as long as the LYONs are eligible for resale
pursuant to Rule 144A, to a person it reasonably believes is a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) that
purchases for its own account or for the account of a qualified institutional
buyer to which notice is given that the transfer is being made in reliance on
Rule 144A, or (iii) to an Institutional Accredited Investor that is acquiring
the Security for its own account, or for the account of such Institutional
Accredited Investor for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act,
or (iv) pursuant to another available exemption from registration under the
Securities Act (if applicable), or (v) pursuant to a registration statement
which has been declared effective under the Securities Act and, in each case, in
accordance with any applicable securities laws of any State of the United States
or any other applicable jurisdiction and in accordance with the legends set
forth on the Securities. We further agree to provide any person purchasing any
of the Securities other than pursuant to clause (v) above from us a notice
advising such purchaser that resales of such securities are restricted as stated
herein. We understand that the trustee or the transfer agent, as the case may
be, for the Securities will not be required to accept for registration of
transfer any Securities pursuant to (iii) or (iv) above except upon presentation
of evidence satisfactory to the Company that the foregoing restrictions on
transfer have been complied with. We further understand that any Securities will
be in the form of definitive physical certificates and that such certificates
will bear a legend reflecting the substance of this paragraph other than
certificates representing Securities transferred pursuant to clause (v) above.

                  We acknowledge that the Company, others and you will rely upon
our confirmations, acknowledgments and agreements set forth herein, and we agree
to notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.


                                     B-2-2
<PAGE>

                  THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.


                               ------------------------------------------------
                               (Name of Purchaser)


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











                                     B-2-3
<PAGE>

                                     ANNEX C

                           Projected Payment Schedule*

Comparable Yield:  6.19% per annum

Quarterly Period Ending                    Projected Payment per LYON
-----------------------                    --------------------------
July 15, 2001                                         0.00
October 15, 2001                                      0.00
January 15, 2002                                      0.00
April 15, 2002                                        0.00
July 15, 2002                                         0.00
October 15, 2002                                      0.00
January 15, 2003                                      0.00
April 15, 2003                                        0.00
July 15, 2003                                         0.00
October 15, 2003                                      0.00
January 15, 2004                                      0.00
April 15, 2004                                        0.00
July 15, 2004                                         0.00
October 15, 2004                                      0.00
January 15, 2005                                      0.00
April 15, 2005                                        0.00
July 15, 2005                                         0.00
October 15, 2005                                      0.00
January 15, 2006                                      0.00
April 15, 2006                                        0.00
July 15, 2006                                         0.00
October 15, 2006                                      0.00
January 15, 2007                                      0.00
April 15, 2007                                        0.00
                                                                 (Continued)

----------
* The comparable yield means the annual yield the Company would pay, as of the
Issue Date, on a fixed-rate nonconvertible debt security with no contingent
payments, but with terms and conditions otherwise comparable to those of the
LYONs, and the schedule of projected payments has been determined on the basis
of an assumption of linear growth of the stock price and a constant dividend
yield and has not been determined for any purpose other than for the
determination of interest accruals and adjustments thereof in respect of the
Securities for United States federal income tax purposes. The comparable yield
and the schedule of projected payments do not constitute a projection or
representation regarding the amounts payable on Securities.



                                       C-1
<PAGE>

Quarterly Period Ending                    Projected Payment per LYON
-----------------------                    --------------------------
July 15, 2007                                         0.00
October 15, 2007                                      0.00
January 15, 2008                                      0.00
April 15, 2008                                        0.00
July 15, 2008                                         0.00
October 15, 2008                                      0.00
January 15, 2009                                      0.00
April 15, 2009                                        0.00
July 15, 2009                                         0.00
October 15, 2009                                      0.00
January 15, 2010                                      0.00
April 15, 2010                                        0.00
July 15, 2010                                         0.00
October 15, 2010                                      0.00
January 15, 2011                                      0.00
April 15, 2011                                        0.00
July 15, 2011                                         0.00
October 15, 2011                                      0.00
January 15, 2012                                      0.00
April 15, 2012                                        0.00
July 15, 2012                                         1.3077
October 15, 2012                                      1.3303
January 15, 2013                                      1.3532
April 15, 2013                                        1.3766
July 15, 2013                                         1.4003
October 15, 2013                                      1.4244
January 15, 2014                                      1.4490
April 15, 2014                                        1.4740
July 15, 2014                                         1.4994
October 15, 2014                                      1.5253
January 15, 2015                                      1.5516
April 15, 2015                                        1.5783
July 15, 2015                                         1.6055
October 15, 2015                                      1.6332
January 15, 2016                                      1.6614
April 15, 2016                                        1.6900
July 15, 2016                                         1.7192
October 15, 2016                                      1.7488
January 15, 2017                                      1.7790
April 15, 2017                                        1.8097
July 15, 2017                                         1.8409
October 15, 2017                                      1.8726
January 15, 2018                                      1.9049
April 15, 2018                                        1.9377
                                                                 (Continued)


                                       C-2
<PAGE>

Quarterly Period Ending                    Projected Payment per LYON
-----------------------                    --------------------------

July 15, 2018                                         1.9712
October 15, 2018                                      2.0052
January 15, 2019                                      2.0397
April 15, 2019                                        2.0749
July 15, 2019                                         2.1107
October 15, 2019                                      2.1471
January 15, 2020                                      2.1841
April 15, 2020                                        2.2218
July 15, 2020                                         2.2601
October 15, 2020                                      2.2990
January 15, 2021                                      2.3387
April 15, 2021                                        2.3790
July 15, 2021                                         2.4200
October 15, 2021                                      2.4618
January 15, 2022                                      2.5042
April 15, 2022                                        2.5474
July 15, 2022                                         2.5913
October 15, 2022                                      2.6360
January 15, 2023                                      2.6815
April 15, 2023                                        2.7277
July 15, 2023                                         2.7747
October 15, 2023                                      2.8226
January 15, 2024                                      2.8713
April 15, 2024                                        2.9208
July 15, 2024                                         2.9711
October 15, 2024                                      3.0224
January 15, 2025                                      3.0745
April 15, 2025                                        3.1275
July 15, 2025                                         3.1814
October 15, 2025                                      3.2363
January 15, 2026                                      3.2921
April 15, 2026                                        3.3489
July 15, 2026                                         3.4066
October 15, 2026                                      3.4654
January 15, 2027                                      3.5251
April 15, 2027                                        3.5859
July 15, 2027                                         3.6477
October 15, 2027                                      3.7106
January 15, 2028                                      3.7746
April 15, 2028                                        3.8397
July 15, 2028                                         3.9059
October 15, 2028                                      3.9733
January 15, 2029                                      4.0418
April 15, 2029                                        4.1115
                                                                 (Continued)


                                      C-3
<PAGE>

Quarterly Period Ending                    Projected Payment per LYON
-----------------------                    --------------------------

July 15, 2029                                         4.1824
October 15, 2029                                      4.2545
January 15, 2030                                      4.3279
April 15, 2030                                        4.4025
July 15, 2030                                         4.4784
October 15, 2030                                      4.5556
January 15, 2031                                      4.6342
April 15, 2031.                                       4.7141
May 11, 2031                                          3.132.6









                                      C-4