<PAGE>
                                                                    EXHIBIT 4.1

                            NABORS INDUSTRIES, INC.,

                                    as Issuer

                             NABORS INDUSTRIES LTD.

                                  as Guarantor

                         ZERO COUPON SENIOR EXCHANGEABLE

                                 NOTES DUE 2023

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

                                    INDENTURE

                            Dated as of June 10, 2003

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

                                 Bank One, N.A.,

                                   as Trustee

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

<PAGE>

                             CROSS REFERENCE TABLE*

<TABLE>
<CAPTION>
                                                                                           INDENTURE
            TIA SECTION                                                                     SECTION
            -----------                                                                     -------
<S>                      <C>                                                                 <C>

         3.10            (a)(1)  ..........................................................  7.10
                         (a)(2)  ..........................................................  7.10
                         (a)(3)  ..........................................................  N.A.**
                         (a)(4)  ..........................................................  N.A.
                            (b)  ..........................................................  7.08; 7.10
                            (c)  ..........................................................  N.A.
         3.11               (a)  ..........................................................  7.11
                            (b)  ..........................................................  7.11
                            (c)  ..........................................................  N.A.
         3.12               (a)  ..........................................................  2.05
                            (b)  ..........................................................  13.03
                            (c)  ..........................................................  13.03
                            (d)  ..........................................................  7.06
         3.13               (a)  ..........................................................  7.06
                         (b)(1)  ..........................................................  N.A.
                         (b)(2)  ..........................................................  7.06
                            (c)  ..........................................................  13.02
                            (d)  ..........................................................  7.06
         3.14               (a)  ..........................................................  4.02; 13.02
                            (b)  ..........................................................  N.A.
                         (c)(1)  ..........................................................  13.04
                         (c)(2)  ..........................................................  13.04
                         (c)(3)  ..........................................................  N.A.
                            (d)  ..........................................................  N.A.
                            (e)  ..........................................................  13.05
                            (f)  ..........................................................  4.03
         3.15               (a)  ..........................................................  7.01
                            (b)  ..........................................................  7.05; 13.02
                            (c)  ..........................................................  7.01
                            (d)  ..........................................................  7.01
                            (e)  ..........................................................  6.11
         3.16               (a)  (last sentence)...........................................  2.08
                      (a)(1)(A)  ..........................................................  6.05
                      (a)(1)(B)  ..........................................................  6.04
                         (a)(2)  ..........................................................  N.A.
                            (b)  ..........................................................  6.07
         3.17            (a)(1)  ..........................................................  6.08
                         (a)(2)  ..........................................................  6.09
                            (b)  ..........................................................  2.04
         3.18               (a)  ..........................................................  13.01
</TABLE>

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

     **  Note: N.A. means Not Applicable.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                PAGE


                                                                  ARTICLE 1.
                                                  DEFINITIONS AND INCORPORATION BY REFERENCE

<S>                        <C>                                                                                  <C>
SECTION 1.01.              DEFINITIONS............................................................................1
SECTION 1.02.              OTHER DEFINITIONS......................................................................6
SECTION 1.03.              INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT......................................7
SECTION 1.04.              RULES OF CONSTRUCTION..................................................................7

                                                                  ARTICLE 2.
                                                                THE SECURITIES

SECTION 2.01.              FORM AND DATING........................................................................8
SECTION 2.02.              EXECUTION AND AUTHENTICATION...........................................................9
SECTION 2.03.              REGISTRAR, PAYING AGENT AND EXCHANGE AGENT............................................10
SECTION 2.04.              PAYING AGENT TO HOLD CASH AND SECURITIES IN TRUST.....................................10
SECTION 2.05.              HOLDER LISTS..........................................................................10
SECTION 2.06.              EXCHANGE AND REGISTRATION OF TRANSFER OF SECURITIES; RESTRICTIONS ON TRANSFERS;
                             DEPOSITARY..........................................................................11
SECTION 2.07.              REPLACEMENT SECURITIES................................................................15
SECTION 2.08.              OUTSTANDING SECURITIES; DETERMINATIONS OF HOLDERS' ACTION.............................16
SECTION 2.09.              TEMPORARY SECURITIES..................................................................17
SECTION 2.10.              CANCELLATION..........................................................................17
SECTION 2.11.              PERSONS DEEMED OWNERS.................................................................17
SECTION 2.12.              CUSIP NUMBERS.........................................................................18

                                                                  ARTICLE 3.
                                                         REDEMPTION AND REPURCHASES

SECTION 3.01.              RIGHT TO REDEEM; NOTICES TO TRUSTEE...................................................18
SECTION 3.02.              SELECTION OF SECURITIES TO BE REDEEMED................................................18
SECTION 3.03.              NOTICE OF REDEMPTION..................................................................19
SECTION 3.04.              EFFECT OF NOTICE OF REDEMPTION........................................................20
SECTION 3.05.              DEPOSIT OF REDEMPTION PRICE...........................................................20
SECTION 3.06.              SECURITIES REDEEMED IN PART...........................................................20
SECTION 3.07.              EXCHANGE ARRANGEMENT ON CALL FOR REDEMPTION...........................................20
SECTION 3.08.              REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER......................................21
SECTION 3.09.              REPURCHASE AT OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE..........................27
SECTION 3.10.              EFFECT OF REPURCHASE NOTICE OR FUNDAMENTAL CHANGE REPURCHASE NOTICE...................27
SECTION 3.11.              DEPOSIT OF PURCHASE PRICE OR FUNDAMENTAL CHANGE PURCHASE PRICE........................29
SECTION 3.12.              SECURITIES REPURCHASED IN PART........................................................29
</TABLE>


                                       i

<PAGE>

<TABLE>
<CAPTION>

<S>                        <C>                                                                                  <C>
SECTION 3.13.              COVENANT TO COMPLY WITH SECURITIES LAWS UPON REPURCHASE OF SECURITIES.................29
SECTION 3.14.              REPAYMENT TO THE COMPANY..............................................................29

                                                                  ARTICLE 4.
                                                                  COVENANTS

SECTION 4.01.              PAYMENT OF SECURITIES.................................................................30
SECTION 4.02.              FINANCIAL INFORMATION; SEC REPORTS....................................................30
SECTION 4.03.              COMPLIANCE CERTIFICATE................................................................31
SECTION 4.04.              FURTHER INSTRUMENTS AND ACTS..........................................................31
SECTION 4.05.              MAINTENANCE OF OFFICE OR AGENCY.......................................................31
SECTION 4.06.              EXISTENCE.............................................................................32
SECTION 4.07.              [RESERVED]............................................................................32
SECTION 4.08.              REGISTRATION RIGHTS...................................................................32
SECTION 4.09.              PAYMENT OF ADDITIONAL AMOUNTS.........................................................33
SECTION 4.10.              CONTINGENT DEBT TAX TREATMENT.........................................................35
SECTION 4.11.              CALCULATION OF TAX ORIGINAL ISSUE DISCOUNT............................................36

                                                                  ARTICLE 5.
                                                            SUCCESSOR CORPORATION

SECTION 5.01.              WHEN THE COMPANY AND THE GUARANTOR MAY MERGE OR TRANSFER ASSETS.......................36
SECTION 5.02.              SUCCESSORS SUBSTITUTED................................................................37

                                                                  ARTICLE 6.
                                                            DEFAULTS AND REMEDIES

SECTION 6.01.              EVENTS OF DEFAULT.....................................................................37
SECTION 6.02.              ACCELERATION..........................................................................38
SECTION 6.03.              OTHER REMEDIES........................................................................39
SECTION 6.04.              WAIVER OF PAST DEFAULTS...............................................................39
SECTION 6.05.              CONTROL BY MAJORITY...................................................................39
SECTION 6.06.              LIMITATION ON SUITS...................................................................40
SECTION 6.07.              RIGHTS OF HOLDERS TO RECEIVE PAYMENT..................................................40
SECTION 6.08.              COLLECTION SUIT BY TRUSTEE............................................................40
SECTION 6.09.              TRUSTEE MAY FILE PROOFS OF CLAIM......................................................40
SECTION 6.10.              PRIORITIES............................................................................41
SECTION 6.11.              UNDERTAKING FOR COSTS.................................................................42
SECTION 6.12.              WAIVER OF STAY, EXTENSION OR USURY LAWS...............................................42

                                                                  ARTICLE 7.
                                                                   TRUSTEE

SECTION 7.01.              DUTIES OF TRUSTEE.....................................................................42
SECTION 7.02.              RIGHTS OF TRUSTEE.....................................................................43
SECTION 7.03.              INDIVIDUAL RIGHTS OF TRUSTEE..........................................................45
SECTION 7.04.              TRUSTEE'S DISCLAIMER..................................................................45
SECTION 7.05.              NOTICE OF DEFAULTS....................................................................45
SECTION 7.06.              REPORTS BY TRUSTEE TO HOLDERS.........................................................45
</TABLE>


                                       ii

<PAGE>

<TABLE>
<CAPTION>

<S>                        <C>                                                                                  <C>
SECTION 7.07.              COMPENSATION AND INDEMNITY............................................................46
SECTION 7.08.              REPLACEMENT OF TRUSTEE................................................................46
SECTION 7.09.              SUCCESSOR TRUSTEE BY MERGER...........................................................47
SECTION 7.10.              ELIGIBILITY; DISQUALIFICATION.........................................................48
SECTION 7.11.              PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.....................................48

                                                                  ARTICLE 8.
                                                           DISCHARGE OF INDENTURE

SECTION 8.01.              DISCHARGE OF LIABILITY ON SECURITIES..................................................48
SECTION 8.02.              REPAYMENT TO THE COMPANY..............................................................48

                                                                  ARTICLE 9.
                                                                  AMENDMENTS

SECTION 9.01.              WITHOUT CONSENT OF HOLDERS............................................................49
SECTION 9.02.              WITH CONSENT OF HOLDERS...............................................................49
SECTION 9.03.              COMPLIANCE WITH TRUST INDENTURE ACT...................................................50
SECTION 9.04.              REVOCATION AND EFFECT OF CONSENTS, WAIVERS AND ACTIONS................................50
SECTION 9.05.              NOTATION ON OR EXCHANGE OF SECURITIES.................................................51
SECTION 9.06.              TRUSTEE TO SIGN SUPPLEMENTAL INDENTURES...............................................51
SECTION 9.07.              EFFECT OF SUPPLEMENTAL INDENTURES.....................................................51

                                                                  ARTICLE 10.
                                                           GUARANTEE OF SECURITIES

SECTION 10.01.             UNCONDITIONAL GUARANTEE...............................................................51
SECTION 10.02.             EXECUTION AND DELIVERY OF NOTATION OF GUARANTEE.......................................54

                                                                  ARTICLE 11.
                                                                   EXCHANGE

SECTION 11.01.             EXCHANGE PRIVILEGE....................................................................54
SECTION 11.02.             EXCHANGE PROCEDURE....................................................................57
SECTION 11.03.             FRACTIONAL SHARES.....................................................................58
SECTION 11.04.             TAXES ON EXCHANGE.....................................................................58
SECTION 11.05.             GUARANTOR TO PROVIDE COMMON SHARES....................................................58
SECTION 11.06.             ADJUSTMENT FOR CHANGE IN CAPITAL STOCK................................................59
SECTION 11.07.             ADJUSTMENT FOR RIGHTS OR WARRANTS.....................................................59
SECTION 11.08.             ADJUSTMENT FOR OTHER DISTRIBUTIONS....................................................60
SECTION 11.09.             WHEN ADJUSTMENT MAY BE DEFERRED.......................................................61
SECTION 11.10.             WHEN NO ADJUSTMENT REQUIRED...........................................................62
SECTION 11.11.             NOTICE OF ADJUSTMENT..................................................................62
SECTION 11.12.             VOLUNTARY CHANGE......................................................................62
SECTION 11.13.             NOTICE OF CERTAIN TRANSACTIONS........................................................63
SECTION 11.14.             EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR TRANSFER.........................63
SECTION 11.15.             COMPANY DETERMINATION FINAL...........................................................64
SECTION 11.16.             TRUSTEE'S ADJUSTMENT DISCLAIMER.......................................................64
</TABLE>


                                      iii

<PAGE>

<TABLE>
<CAPTION>

<S>                        <C>                                                                                  <C>
SECTION 11.17.             SIMULTANEOUS ADJUSTMENTS..............................................................64
SECTION 11.18.             SUCCESSIVE ADJUSTMENTS................................................................64
SECTION 11.19.             RIGHTS ISSUED IN RESPECT OF COMMON SHARES ISSUED UPON EXCHANGE........................64
SECTION 11.20.             GENERAL CONSIDERATIONS................................................................65

                                                                  ARTICLE 12.
                                                             CONTINGENT INTEREST

SECTION 12.01.             GENERAL...............................................................................65
SECTION 12.02.             DEFAULTED CONTINGENT INTEREST; INTEREST RIGHTS PRESERVED..............................66

                                                                  ARTICLE 13.
                                                                 MISCELLANEOUS

SECTION 13.01.             TRUST INDENTURE ACT...................................................................67
SECTION 13.02.             NOTICES...............................................................................67
SECTION 13.03.             COMMUNICATION BY HOLDERS WITH OTHER HOLDERS...........................................68
SECTION 13.04.             CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT....................................68
SECTION 13.05.             STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.........................................69
SECTION 13.06.             SEPARABILITY CLAUSE...................................................................69
SECTION 13.07.             RULES BY TRUSTEE, PAYING AGENT, EXCHANGE AGENT AND REGISTRAR..........................69
SECTION 13.08.             GOVERNING LAW.........................................................................69
SECTION 13.09.             NO RECOURSE AGAINST OTHERS............................................................69
SECTION 13.10.             RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS....................................70
SECTION 13.11.             RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.............................................70
SECTION 13.12.             SUCCESSORS............................................................................70
SECTION 13.13.             MULTIPLE ORIGINALS....................................................................70

EXHIBIT A                  FORM OF SECURITY
ANNEX 1                    PROJECTED PAYMENT SCHEDULE
</TABLE>


                                       iv

<PAGE>

         INDENTURE, dated as of June 10, 2003, between Nabors Industries, Inc.,
a Delaware corporation (the "COMPANY"), Nabors Industries Ltd., a Bermuda
exempted company (the "GUARANTOR"), and Bank One, N.A., a national banking
association, as trustee (the "TRUSTEE").

         Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's Zero Coupon
Senior Exchangeable Notes Due 2023:

                                   ARTICLE 1.
                   DEFINITIONS AND INCORPORATION BY REFERENCE

         SECTION 1.01.     DEFINITIONS.

         "AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For 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.

         "AGENT" means any Registrar or Paying Agent.

         "AMEX" means the American Stock Exchange.

         "BANKRUPTCY LAW" means Title 11, United States Code, or any similar
Federal or state law or any similar Bermudan or other foreign law for the relief
of debtors.

         "BOARD OF DIRECTORS" means either the board of directors of the Company
or the Guarantor, as specified, or any duly authorized committee of such board.

         "BUSINESS DAY" means each day of the year on which banking institutions
are not required or authorized to close in The City of New York, Houston, Texas
or the city in which the Corporate Trust Office is located.

         "COMMON SHARES" means any capital stock of any class of the Guarantor
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Guarantor and which is not subject to redemption by the Guarantor. Subject
to the provisions of Section 11.14 hereof, however, shares issuable upon
exchange of the Securities shall include only Common Shares, par value of US
$0.001 per share, of the Guarantor as such class of shares exists on the date of
this Indenture or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Guarantor and which
are not subject to redemption by the Guarantor; PROVIDED that if at any time
there shall be more than one such resulting class, the shares of each such class
then so issuable pursuant to the terms hereof shall be substantially in the
proportion which the total number of shares of such class


                                       1

<PAGE>

resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.

         "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 its Chairman of the Board, a Vice Chairman,
the Chief Executive Officer, its President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Controller, an Assistant Controller, its
Corporate Secretary or an Assistant Corporate Secretary, and delivered to the
Trustee.

         "CONTINGENT INTEREST" shall have the meaning assigned to such term in
paragraph 10 of the Securities.

         "CONTINGENT INTEREST PAYMENT DATE" shall have the meaning assigned to
such term in paragraph 10 of the Securities.

         "CONTINGENT INTEREST RECORD DATE" shall have the meaning assigned to
such term in paragraph 10 of the Securities.

         "CORPORATE TRUST OFFICE" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office is, at the date as of which this Indenture is dated,
located at 1111 Polaris Parkway, Suite 1K, OH1-0181, Columbus, Ohio 43240,
Attention: Global Corporate Trust Services Group.

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

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

         "DEPOSITARY" means, with respect to the Securities issuable or issued
in whole or in part in global form, the Person specified in Section 2.06 as the
Depositary with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depositary" shall mean or include such successor.

         "DISTRIBUTION COMPLIANCE PERIOD" means the "distribution compliance
period" as defined in Regulation S.

         "DOLLARS" or "$" means the lawful currency of the United States of
America.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.


                                       2

<PAGE>

         "EX-DIVIDEND DATE" means the first date upon which a sale of the Common
Shares will not automatically transfer the right to receive a distribution
described in subparagraph (i) of the last paragraph of Section 11.01 hereof from
the seller of the Common Shares to its buyer.

         "FUNDAMENTAL CHANGE" means the occurrence of any transaction or event
in connection with which all or substantially all Common Shares shall be
exchanged for, converted into, acquired for or constitute solely the right to
receive (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise) any form of consideration which is not all or substantially all
common stock listed (or, upon consummation of or immediately following such
transaction or event, which will be listed) on a United States national
securities exchange or approved for quotation on The NASDAQ National Market or
any similar United States system of automated dissemination of quotations of
securities prices.

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

         "HOLDER" 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.

         "INITIAL PURCHASER" means Citigroup Global Markets Inc.

         "ISSUE DATE" of any Security means June 10, 2003.

          "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 date that is not a Legal Holiday, and to the
extent applicable no Contingent Interest, if any, shall accrue for the
intervening period.

         "MARKET PRICE" means, as of any Repurchase Date or date of
determination, the average of the Sale Prices of the Common Shares for the five
Trading Day period ending on the third Business Day prior to the applicable
Repurchase Date or date of determination (if the third Business Day prior to the
applicable Repurchase Date or date of determination is a Trading Day or, if it
is not a Trading Day, 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 Repurchase Date or date of determination, of any event
described in Sections 11.06, 11.07 or 11.08 hereof; subject, however, to the
conditions set forth in Sections 11.09 and 11.10 hereof.

         "NASDAQ NATIONAL MARKET" means the electronic inter-dealer quotation
system operated by NASDAQ Stock Market, Inc., a subsidiary of the National
Association of Securities Dealers, Inc.


                                       3

<PAGE>

         "NON-U.S. PERSON" means a Person that is not a U.S. Person.

         "OFFICER" means the Chairman of the Board, any Vice Chairman, the Chief
Executive Officer, the President, any Vice President, the Chief Financial
Officer, the Chief Accounting Officer, the Treasurer, the Controller or the
Secretary or any Assistant Treasurer or Assistant Secretary of a Person.

         "OFFICERS' CERTIFICATE" means a written certificate signed in the name
of a Person by two Officers of a Person, one of whom must be the Person's Chief
Executive Officer, Chief Financial Officer, Chief Accounting Officer or Vice
President.

         "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.

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

         "PRINCIPAL" or "PRINCIPAL AMOUNT" of a Security means the principal
amount as set forth on the face of such Security, or on Schedule A thereto in
the case of a Security in global form.

         "QIB" means "qualified institutional buyer" as that term is defined in
Rule 144A.

         "REDEMPTION DATE" means a date specified for redemption of the
Securities in accordance with the terms of the Securities and Section 3.01 of
this Indenture.

         "REDEMPTION PRICE" shall have the meaning set forth in paragraph 5 of
the Securities.

         "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
dated as of June 10, 2003 among the Company, the Guarantor and the Initial
Purchaser.

         "REGULATION S" means Regulation S as promulgated under the Securities
Act.

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

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

         "SALE PRICE OF THE COMMON SHARES" means, on any date, the closing sale
price per share, or if no closing sale price is reported, the average bid and
asked prices or, if more than one in either case, the average of the average bid
and average asked prices, on such date as reported in transactions for the
principal U.S. securities exchange on which the Common Shares are traded or, if
the Common Shares are not listed on a U.S. national or regional stock exchange,
as reported by the NASDAQ National Market, in each case without reference to
after-hours or extended market trading. If the Common Shares are not listed for
trading on a U.S. national or


                                       4

<PAGE>

regional securities exchange and not reported by the Nasdaq National Market on
the relevant date, the "sale price" shall be the last quoted bid price for
Common Shares in the over-the-counter market on the relevant date as reported by
the National Quotation Bureau or similar organization. If the Common Shares are
not so quoted, the "sale price" will be the average of the mid-point of the last
bid and asked prices for the Common Shares on the relevant date from each of at
least three nationally recognized independent investment banking firms selected
by the Company for this purpose.

         "SEC" or "COMMISSION" means the Securities and Exchange Commission or
any successor entity.

         "SECURITIES" means the Company's Zero Coupon Senior Exchangeable Notes
Due 2023.

         "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.

         "STATED MATURITY," when used with respect to any Security, means the
date specified in such Security as the fixed date on which an amount equal to
the Principal of such Security is due and payable.

         "TAXES" means any tax, duty, levy, impost, assessment or other
governmental charge of whatever nature imposed or levied by or on behalf of the
Government of Bermuda or of any province or territory thereof or by an authority
or agency therein or thereof having the power to tax, including any interest,
penalties or other charges in respect thereof.

         "TAX ORIGINAL ISSUE DISCOUNT" means the amount of ordinary interest
income on a Security that must be accrued as original issue discount for United
States Federal income tax purposes pursuant to U.S. Treasury Regulation Section
1.1275-4.

         "TIA" means the Trust Indenture Act of 1939, as amended, as in effect
on the date of this Indenture, except as provided in Section 9.03.

         "TRADING DAY" means a day during which trading in securities generally
occurs on the AMEX or, if the applicable security is not listed on the AMEX, on
the principal other national or regional securities exchange on which the
applicable security is then listed or, if the applicable security is not listed
on a national or regional securities exchange, on the NASDAQ National Market, or
if the applicable security is not quoted on the NASDAQ National Market, on the
principal other market on which the applicable security is then traded.

         "TRADING PRICE PER $1,000 PRINCIPAL AMOUNT OF SECURITIES" or "TRADING
PRICE" means, on any Trading Day, the average of the secondary market bid
quotations (expressed as Dollars per $1,000 Principal Amount of Securities)
obtained by the Trustee for $5,000,000 principal amount of Securities at
approximately 3:30 p.m., New York City time, on such Trading Day from three
independent nationally recognized securities dealers selected by the Company;
provided that if at least three such bids cannot reasonably be obtained by the
Trustee, but two bids are obtained, then the average of the two bids shall be
used, and if only one such bid can reasonably be obtained by the Trustee, one
bid shall be used; and provided


                                       5

<PAGE>

further that if the Trustee cannot reasonably obtain at least one such bid, then
for purposes of evaluating the 95% Trading Exception, the Trading Price per
$1,000 Principal Amount of Securities for such Trading Day shall be deemed to be
less than 95% of the product of (i) the Exchange Rate in effect as of such
Trading Day and (ii) the Sale Price of the Common Shares on such Trading Day.

         "TRUST OFFICER" means any officer within the corporate trust department
of the Trustee, including any vice president, assistant vice president,
assistance secretary, assistant treasurer, 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.

         "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.

         "U.S. PERSON" has the meaning specified in Regulation S.

         "VOTING STOCK" means stock of any class or classes, however designated,
having ordinary voting power for the election of a majority of the board of
directors of a corporation, other than stock having such power only by reason of
the occurrence of a contingency.

         SECTION 1.02.     OTHER DEFINITIONS.


         TERM                                                     DEFINED IN
                                                                    SECTION

"ADDITIONAL AMOUNTS"............................................      4.09
"CASH"..........................................................      3.08(b)
"CLEARSTREAM"...................................................      2.06(c)
"COMPANY NOTICE"................................................      3.08(e)
"COMPANY NOTICE DATE"...........................................      3.08(c)
"EXCHANGE AGENT"................................................      2.03
"EXCHANGE DATE".................................................     11.02
"EXCHANGE RATE"............                                          11.01
"DEFAULTED CONTINGENT INTEREST".................................     12.02
"DISTRIBUTED SECURITIES"........................................     11.08(a)
"EUROCLEAR".....................................................      2.06(c)
"EVENT OF DEFAULT"..............................................      6.01
"EXCLUDED HOLDER"...............................................      4.09
"FUNDAMENTAL CHANGE PURCHASE PRICE".............................      3.09(a)
"FUNDAMENTAL CHANGE REPURCHASE DATE"............................      3.09(a)
"FUNDAMENTAL CHANGE REPURCHASE NOTICE"..........................      3.09(b)
"GUARANTEE".....................................................     10.01


                                       6

<PAGE>

"INDENTURE OBLIGATIONS".........................................     10.01
"INTEREST PAYMENT DATE".........................................     12.01
"LIQUIDATED DAMAGES"............................................      4.08(a)
"95% TRADING EXCEPTION".........................................     11.01
"NOTICE OF DEFAULT".............................................      6.01
"OPTION"........................................................      2.02
"PAYING AGENT"..................................................      2.03
"PURCHASE PRICE"................................................      3.08(a)
"REGISTRAR".....................................................      2.03
"REPURCHASE DATE"...............................................      3.08(a)
"REPURCHASE NOTICE".............................................      3.08(a)
"RESTRICTED SECURITIES".........................................      2.06(c)
"RESTRICTED SECURITY LEGEND"....................................      2.06(c)
"SHELF REGISTRATION STATEMENT"..................................      4.08(a)
"SPECIAL CONTINGENT INTEREST RECORD DATE".......................     12.02
"TERRITORY".....................................................      4.09
"TRIGGER EVENT".................................................     11.19


         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 and the Guarantee.

         "Indenture Security Holder" means a Holder.

         "Indenture to be Qualified" means this Indenture.

         "Indenture Trustee" or "Institutional Trustee" means the Trustee.

         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 rules 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;


                                       7

<PAGE>

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

              (3) "or" is not exclusive;

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

              (5) the term "merger" includes a statutory compulsory share
exchange and a conversion of a corporation into a limited liability company, a
partnership or other entity and vice versa;

              (6) references to statutes, rules or regulations include any
successor statute, rule or regulation, as the case may be;

              (7) the masculine gender includes the feminine and the neuter; and

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

                                   ARTICLE 2.
                                 THE SECURITIES

         SECTION 2.01.     FORM AND DATING.

         Other than as provided in Section 2.06, the Securities, any notations
thereon relating to the Guarantee and the Trustee's certificate of
authentication for the Securities shall be substantially in the form of EXHIBIT
A, which is a part of this Indenture. In addition to such legends as may be
required by Section 2.06, 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.

         Any Security in global form shall represent such of the outstanding
Securities as shall be specified therein and shall provide that it shall
represent the aggregate amount of outstanding Securities from time to time
endorsed thereon and that the aggregate amount of outstanding Securities
represented thereby may from time to time be increased or reduced to reflect
transfers or exchanges permitted hereby. Any endorsement of a Security in global
form to reflect the amount of any increase or decrease in the amount of
outstanding Security represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in such manner and upon instructions
given by the Holder of such Security in accordance with this Indenture. Payment
of Principal Amount, Redemption Price, Purchase Price, Fundamental Change
Purchase Price, Additional Amounts, if any, Liquidated Damages, if any, or
Contingent Interest, if any, on any Security in global form shall be made to the
Holder of such Security.


                                       8

<PAGE>

         SECTION 2.02.     EXECUTION AND AUTHENTICATION.

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

         Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper Officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of 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 signatory, 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 (i) for original
issue in an aggregate Principal Amount of $700,000,000 upon a Company Order
without any further action by the Company (or an aggregate Principal Amount not
to exceed $840,000,000 if the option ("OPTION") set forth in Section 2 of the
Purchase Agreement dated June 3, 2003 (as amended from time to time by the
parties thereto) by and among the Company, the Guarantor and the Initial
Purchaser is exercised in full), and (ii) any amount of additional Securities
specified by the Company after the Issue Date, in each case, upon a written
order of the Company signed by one Officer of the Company; provided, however,
that no additional Securities may be issued or guaranteed if a Default or Event
of Default shall have occurred and be continuing. Such order shall specify the
amount of the Securities to be authenticated and the date of original issue
thereof. In authenticating such Securities, the Trustee shall be entitled to
receive, and shall be entitled to rely upon, an Opinion of Counsel substantially
to the effect that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.

         The aggregate Principal Amount of Securities outstanding at any time
may not exceed the aggregate Principal Amount of Securities authorized for
issuance by the Company pursuant to one or more written orders of the Company,
except as provided in Section 2.07. Subject to the foregoing, the aggregate
principal amount of Securities that may be issued under this Indenture shall not
be limited.

         The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, the Guarantor or any of their
respective Affiliates.


                                       9

<PAGE>

         SECTION 2.03. REGISTRAR, PAYING AGENT AND EXCHANGE 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 exchange
into Common Shares ("EXCHANGE AGENT"). 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 exchange agents. The term Paying Agent includes any additional paying
agent. The term Exchange Agent includes any additional exchange agent, including
any named in accordance with the provisions hereof.

         The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent, Exchange Agent or co-registrar (if not the Trustee or
an Affiliate of the Trustee). The agreement shall implement the provisions of
this Indenture that relate to such agent and the relevant Security. 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 or Exchange Agent, the
Trustee shall act as such and shall be entitled to appropriate compensation
therefor pursuant to Section 7.07 hereof. The Company, the Guarantor or an
Affiliate of the Company or the Guarantor may act as Paying Agent, Registrar,
Exchange Agent or co-registrar.

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

         SECTION 2.04. PAYING AGENT TO HOLD CASH AND SECURITIES IN TRUST.

         Except as otherwise provided herein, prior to 10:00 a.m., New York City
time, on each due date of payments in respect of any Security, the Company shall
deposit with the Paying Agent cash or securities sufficient to make such
payments when such payments are due. The Company shall require the Paying Agent
(if not the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Holders or the Trustee all cash and securities 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 cash and securities so held in trust. If the Company, the Guarantor
or an Affiliate of the Company or the Guarantor acts as Paying Agent, it shall
segregate the cash and securities held by it as Paying Agent and hold it as a
separate trust fund. The Company at any time may require the Paying Agent to pay
all cash and securities held by it to the Trustee and to account for any funds
and securities disbursed by it. Upon doing so, the Paying Agent shall have no
further liability for such cash or securities.

         SECTION 2.05. HOLDER LISTS.

         The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall cause to be
furnished to the Trustee at least semiannually on May


                                       10

<PAGE>

26 and November 26 a listing of Holders dated within ten 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 Holders.

         SECTION 2.06. EXCHANGE AND REGISTRATION OF TRANSFER OF SECURITIES;
                       RESTRICTIONS ON TRANSFERS; DEPOSITARY.

              (a) Upon surrender for registration of transfer of any Security at
any office or agency of the Company designated as Registrar or co-registrar
pursuant to Section 2.03 hereof and satisfaction of the requirements for such
transfer set forth in this Section 2.06, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Securities of any authorized denominations and
of a like aggregate Principal Amount and bearing such restrictive legends as may
be required by this Indenture.

         Securities may be exchanged for a like aggregate Principal Amount of
Securities of other authorized denominations. Securities to be exchanged shall
be surrendered at any office or agency to be maintained by the Company
designated as Registrar or co-registrar pursuant to Section 2.03 hereof and the
Company shall execute and register, and the Trustee shall authenticate and
deliver in exchange therefor, the Security or Securities which the Holder making
the exchange shall be entitled to receive, bearing registration numbers not
contemporaneously outstanding.

         All Securities presented for registration of transfer or for exchange
into like Securities, repurchase, redemption or exchange into Common Shares or
payment shall (if so required by the Company, the Trustee, the Registrar or any
co-registrar) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company and the Trustee,
duly executed by the Holder or such Holder's attorney duly authorized in
writing.

         No service charge shall be charged to the Holder for any exchange for
like Securities or registration of transfer of Securities, but the Company may
require payment of a sum sufficient to cover any tax, assessments or other
governmental charges that may be imposed in connection therewith.

         None of the Company, the Trustee, the Registrar or any co-registrar
shall be required to exchange for like Securities or register a transfer of (a)
any Securities for a period of 15 days next preceding the mailing of notice of
Securities to be redeemed, or (b) any Securities or portions thereof selected or
called for redemption, or (c) any Securities or portion thereof surrendered for
exchange into Common Shares or (d) any Securities or portion thereof surrendered
for repurchase or redemption (and not withdrawn) pursuant to Section 3.08 or
3.09 hereof, respectively.

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

              (b) So long as the Securities are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, all
Securities that are so eligible may be


                                       11

<PAGE>

represented by a Security in global form registered in the name of the
Depositary or the nominee of the Depositary, except as otherwise specified
below. The transfer and exchange of beneficial interests in such Security in
global form shall be effected through the Depositary in accordance with this
Indenture and the procedures of the Depositary therefor.

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

              (c) Every Security that bears or is required under this Section
2.06(c) to bear the Restricted Securities Legend (together with any Common
Shares issued upon exchange of the Securities and required to bear the legend
set forth in Section 2.06(d), collectively, the "RESTRICTED SECURITIES") shall
be subject to the restrictions on transfer set forth in this Section 2.06(c)
(including those set forth in the legend set forth below) unless such
restrictions on transfer shall be waived by written consent of the Company, and
the Holder of each such Transfer Restricted Security, by such Holder's
acceptance thereof, agrees to be bound by all such restrictions on transfer. As
used in Section 2.06(c) and 2.06(d), the term "transfer" encompasses any sale,
pledge, transfer or other disposition whatsoever of any Restricted Security.

         Until transferred under Rule 144(k) under the Securities Act (or any
successor provision), any certificate evidencing such Security (and all
securities issued in exchange therefor or substitution thereof, other than
Common Shares issued upon exchange or repurchase thereof, which shall bear the
legend set forth in Section 2.06(d) if applicable) shall bear a legend in
substantially the form set forth on the face of the Security in EXHIBIT A (the
"RESTRICTED SECURITY LEGEND"), unless such Security has been sold pursuant to a
registration statement that has been declared effective under the Securities Act
(and which continues to be effective at the time of such transfer), or unless
otherwise agreed by the Company in writing, with written notice thereof to the
Trustee.

         Any Security (or security issued in exchange or substitution therefor)
as to which the conditions for removal of the Restricted Security Legend have
been satisfied may, upon surrender of such Security for exchange to the
Registrar in accordance with the provisions of this Section 2.06, be exchanged
for a new Security or Securities, of like tenor and aggregate Principal Amount,
which shall not bear the Restricted Security Legend required by this Section
2.06(c).

         Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in Section 2.06(b) and in this Section 2.06(c)), a Security
in global form may not be transferred as a whole or in part except by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.


                                       12

<PAGE>

         The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints The Depository Trust Company to act as
Depositary. Initially, one or more Securities in global form shall be issued to
the Depositary, registered in the name of Cede & Co., as the nominee of the
Depositary, and deposited with the Custodian for Cede & Co. Each Security in
global form, to the extent that it represents the interests of Non-U.S. Persons,
will be held by Cede & Co. for the accounts of designated agents on behalf of
the Euroclear System ("EUROCLEAR") and Clearstream Banking, Societe Anonyme
("CLEARSTREAM"). During the one-year distribution compliance period (as defined
in Regulation S), Non-U.S. Persons holding beneficial interests in a Security in
global form may do so only through Euroclear or Clearstream, and any resale or
transfer of any such interest to a U.S. Person shall only be permitted if such
Person is a QIB or is the Company or an Affiliate of the Company.

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

         Securities in certificated form issued in exchange for all or a part of
a Security in global form pursuant to this Section 2.06 shall be registered in
such names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such Securities in certificated form to the persons in whose names such
Securities in certificated form are so registered.

         At such time as all interests in a Security in global form have been
redeemed, exchanged into Common Shares, canceled or repurchased or exchanged for
Securities in certificated form, or transferred to a transferee who receives
Securities in certificated form, such Security in global form shall, upon
receipt thereof, be canceled by the Trustee in accordance with standing
procedures and instructions existing between the Depositary and the Custodian.
At any time prior to such cancellation, if any interest in a Security in global
form is exchanged for Securities in certificated form, redeemed, exchanged into
Common Shares, repurchased or canceled, the Principal Amount of the Security in
global form shall, in accordance with the standing procedures and instructions
existing between the Depositary and the Custodian, be appropriately reduced and
an endorsement shall be made on such Security in global form, by the Trustee or
the Custodian, at the direction of the Trustee, to reflect such reduction.

              (d) Until transferred under Rule 144(k) under the Securities Act
(or any successor provision), any certificate representing Common Shares issued
upon exchange of any Security shall bear a legend in substantially the following
form, unless such Common Shares have been originally issued upon exchange or
repurchase of Securities or sold pursuant to a registration statement that has
been declared effective under the Securities Act (and which continues to be
effective at the time of such issuance or sale), or unless otherwise agreed by
the Company in writing with written notice thereof to the transfer agent for the
Common Shares:


                                       13

<PAGE>

THE COMMON SHARES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U. S. PERSONS EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT UNTIL THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
(1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE COMMON SHARES EVIDENCED HEREBY
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OF, U. S. PERSONS EXCEPT (A)
TO NABORS INDUSTRIES LTD. OR TO NABORS INDUSTRIES, INC. OR ANY SUBSIDIARY
THEREOF, (B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT PRIOR TO SUCH
TRANSFER, FURNISHES TO EQUISERVE, AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER
AGENT, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE COMMON SHARES
EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRANSFER
AGENT OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE
TIME OF SUCH TRANSFER); (2) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 1(E) ABOVE), IT WILL FURNISH TO EQUISERVE, AS TRANSFER AGENT
(OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS THE TRANSFER AGENT MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND (3) IT WILL DELIVER TO EACH PERSON TO WHOM THE COMMON SHARES EVIDENCED
HEREBY ARE TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(E) ABOVE) A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED
UPON THE EARLIER OF THE TRANSFER OF THE COMMON SHARES EVIDENCED HEREBY PURSUANT
TO CLAUSE 1(E) ABOVE OR UPON ANY TRANSFER OF THE COMMON SHARES EVIDENCED HEREBY
AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITIES
EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION). AS USED HEREIN, THE TERMS "UNITED STATES" AND "U. S. PERSON" HAVE
THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

         Any such Common Shares as to which such restrictions on transfer shall
have expired in accordance with their terms or as to which the conditions for
removal of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such


                                       14

<PAGE>

Common Shares for exchange in accordance with the procedures of the transfer
agent for the Common Shares, be exchanged for a new certificate or certificates
for a like number of Common Shares, which shall not bear the restrictive legend
required by this Section 2.06(d).

              (e) Any Security that, prior to the expiration of the holding
period applicable to sales thereof under Rule 144(k) under the Securities Act,
is purchased or owned by the Company, the Guarantor or any Affiliate of the
Company or the Guarantor may not be resold by the Guarantor, the Company or such
Affiliate unless registered under the Securities Act or resold pursuant to an
exemption from the registration requirements of the Securities Act in a
transaction which results in such Security no longer being "restricted
securities" (as defined under Rule 144).

              (f) Each Holder of a Security agrees to indemnify the Guarantor,
the Company and the Trustee against any liability that may result from the
transfer, exchange or assignment of such Holder's Security in violation of any
provision of this Indenture and/or applicable United States Federal or state
securities laws or foreign securities laws.

         The Trustee 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 a Security in global form)
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 bona fide 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, 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 repurchased or
redeemed by the Company pursuant to Article 3 hereof, or exchanged pursuant to
Article 11 hereof, the Company in its discretion may, instead of issuing a new
Security, pay, repurchase or redeem such Security, or the Guarantor may issue
the underlying securities, as the case may be.

         Upon the issuance of any new Securities under this Section 2.07, the
Company may, as a condition to such issuance, require the payment of a sum
sufficient to cover any tax, assessment


                                       15

<PAGE>

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.

         Every new Security issued pursuant to this Section 2.07 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 2.07 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 canceled by it, those delivered to it for
cancellation, those paid pursuant to Section 4.01 hereof, those exchanged
pursuant to Article 11 hereof, those replaced or paid pursuant to Section 2.07
hereof 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 of Securities have given or concurred in any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company or any Affiliate of the Company 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 the
Trust Officer actually knows to be so owned shall be so disregarded unless
written notice of such ownership is received by the Trustee at the Corporate
Trust Office of the Trustee in accordance with Section 13.02 hereof and such
notice references the Securities and this Indenture. Subject to the foregoing,
only Securities outstanding at the time of such determination shall be
considered in any such determination (including determinations pursuant to
Articles 6 and 9 hereof).

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

         If the Paying Agent holds, in accordance with this Indenture, by 10:00
a.m., New York City time, on a Redemption Date, or on the Business Day following
a Repurchase Date or a Fundamental Change Repurchase Date, or on Stated
Maturity, cash or securities, if permitted hereunder, sufficient to pay all
Securities payable on that date, then on and after that date such Securities
shall cease to be outstanding and Liquidated Damages, if any, Additional
Amounts, if any, and 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 or provision therefor
satisfactory to the Trustee has been made.


                                       16

<PAGE>

         If a Security is exchanged in accordance with Article 11 hereof, then
from and after such exchange such Security shall cease to be outstanding and
Liquidated Damages, if any, Additional Amounts, if any, and 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 upon Company Order the Trustee 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 shall 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
hereof, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like Principal Amount 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, exchange, redemption
or registration of transfer or exchange for the Securities shall, if surrendered
to any Person other than the Trustee, be delivered to the Trustee and shall be
promptly canceled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly canceled by the Trustee. The Company may not
issue new Securities to replace Securities it has paid for or delivered to the
Trustee for cancellation or that any Holder has exchanged pursuant to Article 11
hereof. No Securities shall be authenticated in lieu of or in exchange for any
Securities canceled as provided in this Section 2.10, except as expressly
permitted by this Indenture. All canceled Securities held by the Trustee shall
be disposed of by the Trustee in accordance with its customary procedures.

         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 Amount, Redemption
Price, Purchase Price, Fundamental Change Purchase Price, Liquidated Damages, if
any, Additional Amounts, if any, and Contingent Interest, if any, in respect
thereof, for the purpose of exchange and for all other purposes whatsoever,
whether or


                                       17

<PAGE>

not such Security be overdue, and none of the Company, the Guarantor, the
Trustee or any agent of the Company, the Guarantor or the Trustee shall be
affected by notice to the contrary.

         SECTION 2.12. 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
either as printed on the Securities or as contained in any notice of 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 REPURCHASES

         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 5 and 7 of the Securities. If the Company
elects to redeem Securities pursuant to paragraph 5 of the Securities, it shall
notify the Trustee in writing of the Redemption Date, the Principal Amount of
Securities to be redeemed and the Redemption Price. The Company shall give the
notice to the Trustee provided for in this Section 3.01 in the case of any
redemption of the Securities, at least 20 days before the Redemption Date unless
a shorter notice shall be satisfactory to the Trustee.

         The Company may, upon at least 30 days' notice given to the Holders, on
one or more occasions, elect to extend the period during which the Company
cannot redeem any of the Securities pursuant to paragraph 5 of the Securities.
Such extension period will be as designated in such notice of extension. Each
such election, once made, shall be irrevocable.

         SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED.

         If less than all the Securities held in definitive form are to be
redeemed pursuant to Section 3.01, the Trustee shall select the definitive
Securities to be redeemed pro rata or by lot or by another method the Trustee
considers fair and appropriate (as long as such method is not prohibited by the
rules of any securities exchange or quotation system on which the Securities are
then listed or quoted). The Trustee shall make the selection at least 18 days,
but not more than 65 days, before the Redemption Date from outstanding
definitive Securities not previously called for redemption. The Trustee may
select for redemption portions of the Principal Amount of Securities that have
denominations larger than $1,000. Securities and portions of them the Trustee
selects shall be in Principal Amounts of $1,000 or an integral multiple of
$1,000. Except as expressly stated otherwise, provisions of this Indenture that
apply to definitive Securities called for redemption also apply to portions of
definitive Securities called for redemption. The Trustee shall notify the
Company promptly of the definitive Securities or portions of definitive
Securities to be redeemed.


                                       18

<PAGE>

         Any interest in a Security held in global form by and registered in the
name of the Depositary or its nominee to be redeemed in whole or in part will be
redeemed in accordance with the procedures of the Depositary.

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

         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;

              (3) the Exchange Rate;

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

              (5) that Securities called for redemption may be exchanged at any
time before the close of business on the last Trading Day prior to the
Redemption Date;

              (6) that Holders who want to exchange 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;

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

              (9) that Liquidated Damages, if any, Additional Amounts, if any,
Contingent Interest, if any, and overdue interest, if any, on Securities called
for redemption will cease to accrue on and after the Redemption Date; and

              (10) the CUSIP number or numbers for the Securities called for
redemption.

The notice, if mailed in the manner herein provided, shall be conclusively
presumed to have been duly given, whether or not the Holder receives such
notice. In any case, failure to give such notice by mail or any defect in the
notice to the Holder of any Security designated for


                                       19

<PAGE>

redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security.

         At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense.

         SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.

         Once notice of redemption is given, pursuant to Section 3.03 hereof,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price stated in the notice, together with accrued and
unpaid Liquidated Damages, if any, Additional Amounts, if any, Contingent
Interest, if any, and overdue interest, if any, except for Securities which are
exchanged in accordance with the terms of this Indenture.

         Upon the later of the Redemption Date or the date such Securities are
surrendered to the Paying Agent, such Securities shall be paid at the Redemption
Price stated in the notice.

         SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.

         By 10 a.m., New York City time, on the Redemption Date, the Company
shall deposit with the Paying Agent (or if the Company or an Affiliate of the
Company is the Paying Agent, shall segregate and hold in trust) cash sufficient
to pay the Redemption Price of all Securities to be redeemed on that date other
than Securities or portions of Securities called for redemption which prior
thereto have been delivered by the Company to the Trustee for cancellation or
have been exchanged for Common Shares, together with accrued and unpaid
Liquidated Damages, if any, Additional Amounts, if any, Contingent Interest, if
any, and overdue interest, if any, and on or after the Redemption Date (unless
the Company shall default in the payment of the Securities at the Redemption
Price), Liquidated Damages, if any, Additional Amounts, if any, Contingent
Interest, if any, and overdue interest, if any, on the Securities or portion of
Securities called for redemption shall cease to accrue and such Securities shall
cease after the close of business on the Trading Day immediately preceding the
Redemption Date to be exchangeable for Common Shares and, except as provided in
Section 8.02 hereof, to be entitled to any benefit or security under this
Indenture, and the Holders thereof shall have no right in respect of such
Securities except the right to receive the Redemption Price, and accrued and
unpaid Liquidated Damages, if any, Contingent Interest, if any, Additional
Amounts, if any, and overdue interest, if any, to (but excluding) the Redemption
Date. The Paying Agent shall as promptly as practicable return to the Company
any money, with interest, if any, thereon, not required for that purpose because
of exchange of Securities. 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 to the
unredeemed portion of the Security surrendered.

         SECTION 3.07. EXCHANGE ARRANGEMENT ON CALL FOR REDEMPTION.


                                       20

<PAGE>

         In connection with any redemption of Securities, the Company or the
Guarantor may arrange for the purchase and exchange for Common Shares 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 Paying
Agent in trust for the Holders, on or before the close of business on the
Redemption Date, an amount that, together with any amounts deposited with the
Paying Agent by the Company for the redemption of the Securities, is not less
than the Redemption Price to the Redemption Date, of such Securities.
Notwithstanding anything to the contrary contained in this Article 3, the
obligation of the Company to pay the Redemption Price 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 exchange 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 (notwithstanding anything to the contrary
contained in Article 11) surrendered by such purchasers for exchange, all
immediately prior to the close of business on the Redemption Date, subject to
payment of the above amount as aforesaid. The Paying Agent shall hold and pay to
the Holders whose Securities are selected for redemption any such amount paid to
it in the same manner as it would money deposited with it by the Company for the
redemption of Securities. Without the Paying Agent's prior written consent, no
arrangement between the Company or the Guarantor and such purchasers for the
purchase and exchange of any Securities shall increase or otherwise affect any
of the powers, duties, responsibilities or obligations of the Paying Agent as
set forth in this Indenture, and the Company agrees to indemnify the Paying
Agent 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 exchange
of any Securities between the Company or the Guarantor and such purchasers,
including the costs and expenses incurred by the Paying Agent 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. REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER.

              (a) GENERAL. Securities shall be repurchased by the Company
pursuant to paragraph 6 of the Securities as of June 15, 2008, June 15, 2013 and
June 15, 2018 (each, a "REPURCHASE DATE"), at the purchase price specified
therein (the "PURCHASE PRICE"), together with accrued and unpaid Liquidated
Damages, if any, Contingent Interest, if any, Additional Amounts, if any, and
overdue interest, if any, at the option of the Holder thereof, upon:

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

                 (A) the certificate number of any Security in certificated form
which the Holder will deliver to be repurchased;


                                       21

<PAGE>

                 (B) the portion of the Principal Amount of the Security which
the Holder will deliver to be repurchased, which portion must be $1,000 in
Principal Amount or a multiple thereof;

                 (C) that such Security shall be repurchased as of the
Repurchase Date pursuant to the terms and conditions specified in paragraph 6 of
the Securities and in this Indenture; and

                 (D) if the Company elects, pursuant to a Company Notice, to pay
the Purchase Price to be paid as of such Repurchase Date, in whole or in part,
in Common Shares but such portion of the Purchase Price shall ultimately be
payable to such Holder in cash because any of the conditions to the payment of
the Purchase Price in Common Shares are not satisfied prior to or on the
Repurchase Date, as set forth in Section 3.08(d) hereof, whether such Holder
elects (x) to withdraw such Repurchase Notice as to some or all of the
Securities to which such Repurchase Notice relates (stating the Principal Amount
and certificate numbers of any certificated Securities as to which such
withdrawal shall relate), or (y) to receive cash in respect of the entire
Purchase Price for all Securities (or portions thereof) to which such Repurchase
Notice relates; and

              (2) delivery of such Security to the Paying Agent prior to, on or
after the Repurchase 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 Repurchase Notice.

         If a Holder, in such Holder's Repurchase Notice (and, in any written
notice of withdrawal of a portion of such Holder's Securities previously
submitted for repurchase pursuant to a Repurchase Notice, the portion that
remains subject to the Repurchase Notice), 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 entire Purchase Price for all Securities subject to such
Repurchase 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 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 repurchase 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 promptly following the later of the Repurchase Date
and the time of delivery of the Security.

         Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Repurchase Notice contemplated by this Section 3.08(a)
shall have the right at any time prior to the close of business on the
Repurchase Date to withdraw such Repurchase Notice


                                       22

<PAGE>

by delivery of a written notice of withdrawal to the Paying Agent in accordance
with Section 3.10 hereof.

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

              (b) COMPANY'S RIGHT TO ELECT MANNER OF PAYMENT OF PURCHASE PRICE.
The Company may elect with respect to any Repurchase Date to pay the Purchase
Price in respect of the Securities to be purchased pursuant to Section 3.08(a)
as of such Repurchase Date, in U.S. legal tender ("CASH") or Common Shares, or
in any combination of cash and Common Shares, 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
repurchase the Securities for cash or Common Shares, or, if a combination
thereof, the percentages of the Purchase Price of Securities in respect of which
it will pay in cash and/or Common Shares; PROVIDED that the Company will pay
cash for fractional interests in Common Shares. For purposes of determining the
existence of potential fractional interests, all Securities subject to
repurchase 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 repurchased pursuant to this Section 3.08 shall receive the same
percentage of cash and/or Common Shares 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 interests in Common Shares and (ii) in the
event that the Company is unable to repurchase the Securities of a Holder or
Holders for Common Shares because any necessary qualifications or registrations
of the Common Shares under applicable federal, state or foreign securities laws
cannot be obtained, the Company may repurchase 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 Holders except pursuant to this
Section 3.08(b) or Section 3.08(d).

         At least one Business Day before the Company Notice Date (as defined in
Section 3.08(c)), 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 Shares, 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) REPURCHASE WITH CASH. At the option of the Company, the
Purchase Price of Securities in respect of which a Repurchase 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, or such
specified percentage thereof, as the case may be, of such Securities. If the
Company elects to repurchase all or a portion of Securities with cash, a


                                       23

<PAGE>

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
(the "COMPANY NOTICE DATE") prior to the Repurchase Date.

              (d) PAYMENT BY ISSUANCE OF COMMON SHARES. At the option of the
Company, the Purchase Price of Securities in respect of which a Repurchase
Notice pursuant to Section 3.08(a) has been given, or a specified percentage
thereof, may be paid by the Company by the Guarantor's issuance of a number of
Common Shares equal to the quotient obtained by dividing (i) the amount of cash
to which the Holders would have been entitled had the Company elected to pay all
or such specified percentage, as the case may be, of the Purchase Price of such
Securities in cash by (ii) the Market Price as of the applicable Repurchase
Date, subject to the next succeeding paragraph.

         The Guarantor will not issue, and the Company will not deliver, a
fractional Common Share 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
repurchased, the number of Common Shares shall be based on the aggregate amount
of Securities to be repurchased.

         If the Company elects to repurchase all or a portion of the Securities
by the delivery of Common Shares, a 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 repurchase the
Securities pursuant to Section 3.08 through the delivery of Common Shares shall
be conditioned upon:

              (i) the Company having given timely Company Notice of election to
purchase all or a specified percentage of the Securities with Common Shares as
provided herein;

              (ii) the registration of the Common Shares to be issued by the
Guarantor in respect of the payment of the specified percentage of the Purchase
Price under the Securities Act, unless the Common Shares so issued can be freely
resold by the Holder (unless such Holder is the Company or an Affiliate of the
Company) receiving such shares without registration under the Securities Act;

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

              (iv) 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
Shares are in conformity with this Indenture and (B) the Common Shares to be
issued by the Guarantor in payment of the specified percentage 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 specified
percentage of the Purchase Price in respect of Securities, will be validly
issued, fully paid and nonassessable, and, in the case of such Officers'
Certificate, stating that conditions (i),


                                       24

<PAGE>

(ii) and (iii) above have been satisfied and, in the case of such Opinion of
Counsel, stating that conditions (ii) and (iii) above have been satisfied.

         Such Officers' Certificate shall also set forth the number of Common
Shares to be issued for each $1,000 Principal Amount of Securities and the Sale
Price of the Common Shares on each Trading Day during the period during which
the Market Price is calculated and ending on the Repurchase Date, and the
Company shall give notice of such information as soon as practicable. In
connection with providing such notice, the Company shall issue a press release
and publish a notice containing such information in a newspaper of general
circulation in The City of New York or publish such information on the Company's
then existing Web site or through such other public medium as the Company shall
determine. The Company may elect to pay the Purchase Price (or any portion
thereof) in Common Shares only if the information necessary to calculate the
Market Price is reported in a daily newspaper of national circulation. If such
conditions are not satisfied with respect to a Holder or Holders prior to or on
the Repurchase Date and the Company elected to repurchase the Securities to be
repurchased as of such Repurchase Date pursuant to this Section 3.08 through the
Guarantor's issuance of Common Shares, the Company shall pay the entire Purchase
Price in respect of such Securities of such Holder or Holders in cash.

              (e) NOTICE OF ELECTION. The Company's notices of election to
repurchase with cash or Common Shares, 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 hereof at the time specified in Section 3.08(c)
or (d) hereof, as applicable (each, a "COMPANY NOTICE"). Such Company Notices
shall state the manner of payment elected and shall contain the following
information:

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

         (1) state that each Holder will receive Common Shares with a Market
Price determined as of a specified date prior to the Repurchase 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 a fractional share); and

         (2) set forth the method of calculating the Market Price and state that
because the Market Price of Common Shares will be determined prior to the
Repurchase Date, the Holders will bear the market risk with respect to the value
of the Common Shares to be received from the date such Market Price is
determined to the Repurchase Date.

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

              (i) the Purchase Price and Exchange Rate;

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


                                       25

<PAGE>

              (iii) that Securities as to which a Repurchase Notice has been
given may be exchanged only if the applicable Repurchase 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;

              (v) that the Purchase Price for any Security as to which a
Repurchase Notice has been given and not withdrawn will be paid promptly
following the later of the Repurchase Date and the time of surrender of such
Security as described in clause (iv) above;

              (vi) the procedures the Holder must follow under this Section
3.08;

              (vii) briefly, the exchange rights of the Securities; and

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

         At the Company's request, the Trustee shall give the Company Notice in
the Company's name and at the Company's expense; PROVIDED, HOWEVER, that, in all
cases, the text of the Company Notice shall be prepared by the Company.

              (f) COVENANTS OF THE GUARANTOR. All Common Shares delivered upon
exchange or repurchase of the Securities shall be newly issued shares or
treasury shares, shall be fully paid and nonassessable and shall be free from
preemptive rights and free of any lien or adverse claim. Such shares shall bear
any legend required by Section 2.06(d) hereof.

         The Guarantor shall use its reasonable best efforts to list or cause to
have quoted all such Common Shares on each United States national securities
exchange or over-the-counter or other domestic market on which the Common Shares
are then listed or quoted.

              (g) PROCEDURE UPON PURCHASE. At or before 10:00 a.m., New York
City time, on the Business Day following the Repurchase Date, the Company shall
deposit with the Paying Agent cash (in respect of a cash purchase under Section
3.08(c) hereof or for fractional interests, as applicable), or Common Shares, or
a combination thereof, as applicable, sufficient to pay the aggregate Purchase
Price in respect of the Securities to be repurchased pursuant to this Section
3.08, plus accrued and unpaid Liquidated Damages, if any, Contingent Interest,
if any, Additional Amounts, if any, and overdue interest, if any, to (but
excluding) the Repurchase Date. As soon as practicable after the Repurchase
Date, the Company shall deliver to each Holder entitled to receive Common
Shares, through the Paying Agent, a certificate for the number of full shares of
Common Shares, as applicable, issuable in payment of such Purchase Price and
cash in lieu of any fractional interests. The Person in whose name the
certificate for Common Shares is registered shall be treated as a holder of
record following the Repurchase Date. No payment or adjustment will be made for
dividends on the Common Shares the record date for which occurred on or prior to
the Repurchase Date.


                                       26

<PAGE>

              (h) TAXES. If a Holder of a Security is paid in Common Shares, the
Company or the Guarantor shall pay any documentary, stamp or similar issue or
transfer tax due on such issue of Common Shares. However, the Holder shall pay
any such tax which is due because the Holder requests the Common Shares to be
issued in a name other than the Holder's name. The Paying Agent may refuse to
deliver the certificates representing the Common Shares 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 Common Shares 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.

         SECTION 3.09. REPURCHASE AT OPTION OF THE HOLDER UPON A FUNDAMENTAL
                       CHANGE.

              (a) If a Fundamental Change shall occur at any time prior to June
15, 2023, each Holder of Securities shall have the right, at such Holder's
option, to require the Company to repurchase any or all of Holder's Securities
on the date that is 30 days after the date of the Company's notice of such
Fundamental Change (the "FUNDAMENTAL CHANGE REPURCHASE DATE") (or if such date
is not a Business Day, the next succeeding Business Day). The Securities may be
repurchased in integral multiples of $1,000 of Principal Amount. The Company
shall repurchase such Securities at a price (the "FUNDAMENTAL CHANGE PURCHASE
PRICE") equal to the Principal Amount plus accrued and unpaid Liquidated
Damages, if any, Contingent Interest, if any, Additional Amounts, if any, and
overdue interest, if any, to (but excluding) the Fundamental Change Repurchase
Date.

              (b) The Company, or at its request (which must be received by the
Trustee at least three Business Days prior to the date the Trustee is requested
to give such notice as described below) the Trustee in the name of and at the
expense of the Company, shall mail to all Holders of record of the Securities a
notice (a "FUNDAMENTAL CHANGE REPURCHASE NOTICE") of the occurrence of a
Fundamental Change and of the repurchase right arising as a result thereof on or
before the thirtieth day after the occurrence of such Fundamental Change. The
Company shall promptly furnish the Trustee a copy of such notice.

              (c) For a Security to be so repurchased at the option of the
Holder, the Paying Agent must receive such Security with the form entitled
"Option to Elect Repurchase Upon a Fundamental Change" on the reverse thereof
duly completed, together with such Security duly endorsed for transfer, on or
before the 30th day after the date of the Fundamental Change Repurchase Notice
(or if such 30th day is not a Business Day, the immediately preceding Business
Day). All questions as to the validity, eligibility (including time of receipt)
and acceptance of any Security for repurchase shall be determined by the
Company, whose determination shall be final and binding.

         SECTION 3.10.     EFFECT OF REPURCHASE NOTICE OR FUNDAMENTAL CHANGE
                           REPURCHASE NOTICE.

         Upon receipt by the Company of the Repurchase Notice or Option to Elect
Repurchase Upon a Fundamental Change specified in Section 3.08(a) hereof or
Section 3.09(c) hereof, as applicable, the Holder of the Security in respect of
which such Repurchase Notice or Option to


                                       27

<PAGE>

Elect Repurchase Upon a Fundamental Change, as the case may be, was given shall
(unless such Repurchase Notice or Option to Elect Repurchase Upon a Fundamental
Change is withdrawn as specified in the following two paragraphs) thereafter be
entitled to receive solely the Purchase Price or Fundamental Change Purchase
Price, as the case may be, with respect to such Security, together with accrued
and unpaid Liquidated Damages, if any, Contingent Interest, if any, Additional
Amounts, if any, and overdue interest, if any. Such Purchase Price or
Fundamental Change Purchase Price, together with Liquidated Damages, if any,
Contingent Interest, if any, Additional Amounts, if any, and overdue interest,
if any, shall be paid to such Holder promptly following the later of (x) the
Repurchase Date or the Fundamental Change Repurchase Date, as the case may be,
with respect to such Security (provided the conditions in Section 3.08(a) hereof
or Section 3.09(c) hereof, 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) hereof or Section 3.09(c) hereof, as
applicable. Securities in respect of which a Repurchase Notice or Option to
Elect Repurchase Upon a Fundamental Change, as the case may be, has been given
by the Holder thereof may not be exchanged for Common Shares on or after the
date of the delivery of such Repurchase Notice (or Option to Elect Repurchase
Upon a Fundamental Change, as the case may be), unless such Repurchase Notice
(or Option to Elect Repurchase Upon a Fundamental Change, as the case may be)
has first been validly withdrawn as specified in the following two paragraphs.

         A Repurchase Notice or Option to Elect Repurchase Upon a Fundamental
Change, as the case may be, may be withdrawn by means of a written notice of
withdrawal delivered to the office of the Paying Agent at any time prior to the
close of business on the Repurchase Date or the Fundamental Change Repurchase
Date, as the case may be, to which it relates specifying:

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

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

              (3) the Principal Amount, if any, of such Security which remains
subject to the original Repurchase Notice or Option to Elect Repurchase Upon a
Fundamental Change, as the case may be, and which has been or will be delivered
for purchase or redemption by the Company.

         A written notice of withdrawal of a Repurchase Notice may be in the
form of (i) a conditional withdrawal contained in a Repurchase Notice pursuant
to the terms of Section 3.08(a)(1)(D) hereof or (ii) a conditional withdrawal
containing the information set forth in Section 3.08(a)(1)(D) hereof 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 repurchase of any Securities pursuant to Section 3.08
hereof (other than through the issuance of Common Shares in payment of the
Purchase Price, including cash in lieu of any fractional shares) or repurchase
pursuant to Section 3.09 hereof if there has occurred (prior to, on or after, as
the


                                       28

<PAGE>

case may be, the giving, by the Holders of such Securities, of the required
Repurchase Notice or Option to Elect Repurchase Upon a Fundamental Change, as
the case may be) and is continuing an Event of Default (other than a default in
the payment of the Purchase Price or Fundamental Change Purchase Price, as the
case may be, with respect to such Securities).

         SECTION 3.11.     DEPOSIT OF PURCHASE PRICE OR FUNDAMENTAL CHANGE
                           PURCHASE PRICE.

         At or before 10 a.m., New York City time, on the Business Day following
a Repurchase Date or a Fundamental Change Repurchase Date, as the case may be,
the Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company or an Affiliate of the Company is acting as the Paying Agent, shall
segregate and hold in trust as provided in Section 2.04 hereof) an amount of
cash and/or securities, if permitted hereunder, sufficient to pay the aggregate
Purchase Price or Fundamental Change Purchase Price, as the case may be, of all
the Securities or portions thereof which are to be purchased as of such
Repurchase Date or Fundamental Change Repurchase Date, as the case may be, plus
Liquidated Damages, if any, Contingent Interest, if any, and Additional Amounts,
if any, and overdue interest, if any.

         SECTION 3.12.     SECURITIES REPURCHASED IN PART.

         Any Security that is to be repurchased 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 equal to, and in exchange for, the portion of the Principal Amount of the
Security so surrendered which is not repurchased.

         SECTION 3.13.     COVENANT TO COMPLY WITH SECURITIES LAWS UPON
                           REPURCHASE OF SECURITIES.

         In connection with any repurchase of Securities under Section 3.08 or
3.09 hereof, the Company shall (i) comply with Rule 13e-4 (which term, as used
herein, includes any successor provision thereto) under the Exchange Act, if
applicable, (ii) file the related Schedule 13E-4 (or any successor schedule,
form or report) under the Exchange Act, if applicable, 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 Common Shares that remain unclaimed as provided in paragraph 14 of the
Securities, together with interest or dividends, if any, thereon, held by them
for the payment of a Purchase Price or Fundamental Change Purchase Price, as the
case may be, together with Liquidated Damages, if any, Contingent Interest, if
any, and Additional Amounts, if any; PROVIDED, HOWEVER, that to the extent that
the aggregate amount of cash or Common Shares deposited by the Company pursuant
to Section 3.11 hereof exceeds the aggregate Purchase Price or Fundamental
Change


                                       29

<PAGE>

Purchase Price, as the case may be, of the Securities or portions thereof which
the Company is obligated to repurchase as of the Repurchase Date or Fundamental
Change Repurchase Date, as the case may be, together with Liquidated Damages, if
any, Contingent Interest, if any, and Additional Amounts, if any, then promptly
after the Business Day following the Repurchase Date or Fundamental Change
Repurchase Date, as the case may be, the Trustee and the Paying Agent shall
return any such excess to the Company together with interest or dividends, if
any, thereon.

                                    ARTICLE 4.
                                    COVENANTS

         SECTION 4.01.     PAYMENT OF SECURITIES.

         The Company shall promptly pay or cause to be paid all payments in
respect of the Securities on the dates and in the manner provided in the
Securities or pursuant to this Indenture. Principal Amount, Redemption Price,
Purchase Price, Fundamental Change Purchase Price, Liquidated Damages, if any,
Contingent Interest, if any, and Additional Amounts, if any, shall be considered
paid on the applicable date due or, in the case of a Purchase Price or
Fundamental Change Purchase Price, on the Business Day following the applicable
Repurchase Date or Fundamental Change Repurchase Date, as the case may be, if by
10:00 a.m., New York City time, on such date the Trustee or the Paying Agent
holds, in accordance with this Indenture, cash or securities, if permitted
hereunder, sufficient to pay all such amount then due.

         The Company shall pay interest on overdue amounts at the rate set forth
in paragraph 1 of the Securities and it shall pay interest on overdue interest
at the same rate compounded semiannually (to the extent that the payment of such
interest shall be legally enforceable), which interest on overdue interest shall
accrue from the date such amounts became overdue.

         SECTION 4.02.     FINANCIAL INFORMATION; SEC REPORTS.

         The Guarantor will deliver to the Trustee (a) as soon as available and
in any event within 120 days after the end of each fiscal year of the Guarantor
(i) a consolidated balance sheet of the Guarantor and its subsidiaries as of the
end of such fiscal year and the related consolidated statements of operations,
stockholders' equity and cash flows for such fiscal year, all reported on by an
independent public accountant of nationally recognized standing and (ii) a
report containing a management's discussion and analysis of the financial
condition and results of operations and a description of the business and
properties of the Guarantor and (b) as soon as available and in any event within
60 days after the end of each of the first three quarters of each fiscal year of
the Guarantor (i) an unaudited consolidated financial report for such quarter
and (ii) a report containing a management's discussion and analysis of the
financial condition and results of operations of the Guarantor; PROVIDED that
the foregoing shall not be required for any fiscal year or quarter, as the case
may be, with respect to which the Guarantor files or expects to file with the
Trustee an annual report or quarterly report, as the case may be, pursuant to
the third paragraph of this Section 4.02.

         At any time when neither the Guarantor nor the Company is subject to
either Section 13 or 15(d) of the Exchange Act, the Guarantor and the Company
shall at the request of any Holder


                                       30

<PAGE>

(or holders of Common Shares issued upon exchange of the Securities) provide to
such Holder (or holders of such Common Shares) and any prospective purchaser
designated by such Holders (or holders of such Common Shares), as the case may
be, such information, if any, required by Rule 144A(d)(4) under the Securities
Act.

         The Guarantor 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 Guarantor is
required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act.

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

         SECTION 4.03.     COMPLIANCE CERTIFICATE.

         The Company and the Guarantor shall each deliver to the Trustee, within
120 days after the end of each fiscal year of the Company, an Officers'
Certificate in which one of the two Officers signing such certificate is either
the Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer
of the Company or the Guarantor, as applicable, stating whether or not to the
knowledge of the signers thereof the Company or the Guarantor, as applicable, 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 or the Guarantor,
as applicable, shall be in default, specifying all such defaults and the nature
and status thereof of which the signers may have knowledge.

         The Company and the Guarantor will deliver to the Trustee, as soon as
possible and in any event within five days, upon becoming aware of any default
or any Event of Default, an Officers' Certificate specifying with particularity
such Default or Event of Default and further stating what action the Company and
the Guarantor has taken, is taking or proposes to take with respect thereto.

         Any notice required to be given under this Section 4.03 shall be
delivered to the Trustee at its Corporate Trust Office.

         SECTION 4.04.     FURTHER INSTRUMENTS AND ACTS.

         Upon request of the Trustee, the Company and the Guarantor 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 appoint in the Borough of Manhattan, The City of New
York, an office or agency where Securities may be presented or surrendered for
payment, where Securities


                                       31

<PAGE>

may be surrendered for registration of transfer, exchange, purchase, redemption
or exchange and where notices and demands to or upon the Company in respect of
the Securities and this Indenture may be served. The office or agency of the
Trustee in the Borough of Manhattan, The City of New York, which on the date
hereof is located at 14 Wall Street, 8th Floor, Window 2, New York, New York,
shall be the office or agency for all of the aforesaid purposes unless the
Company shall appoint some other office or agency for such purposes and shall
give prompt written notice to the Trustee of the location, and any change in the
location, of such other office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office.

         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.     EXISTENCE.

         Subject to Article 5 hereof, each of the Company and the Guarantor will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence under the laws of its jurisdiction of
incorporation and rights (charter and statutory); PROVIDED, HOWEVER, that
neither the Company nor the Guarantor shall be required to preserve any such
right if the Company or the Guarantor shall determine that the maintenance
thereof is no longer desirable in the conduct of the business of the Company or
the Guarantor and that the loss thereof is not disadvantageous in any material
respect to the Holders.

         SECTION 4.07.     [RESERVED]



         SECTION 4.08.     REGISTRATION RIGHTS.

              (a) The Company and the Guarantor agree that the Holders (and any
Person that has a beneficial interest in a Security) from time to time of
Registrable Securities (as such term is defined in the Registration Rights
Agreement) are entitled to the benefits of the Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, the Company and the Guarantor
have agreed for the benefit of the Holders from time to time of Registrable
Securities, at the Company's and the Guarantor's expense, to use all reasonable
best efforts (i) to file within 90 days after the Issue Date, a shelf
registration statement (the "SHELF REGISTRATION STATEMENT") with the Commission
with respect to resales of the Restricted Securities and the issuance by the
Guarantor or, to the extent applicable, resale by the holders of the Common
Shares issuable upon exchange of the Securities, (ii) to cause such Shelf
Registration Statement to be declared effective by the Commission not later than
180 days after the Issue Date, and (iii) to maintain such Shelf Registration
Statement continuously effective under the Securities Act subject to and in
accordance with the terms of the Registration Rights Agreement. Liquidated
damages ("LIQUIDATED DAMAGES") with respect to the Securities


                                       32

<PAGE>

shall be assessed if a Registration Default (as defined in the Registration
Rights Agreement) occurs, in such amounts and at such times as provided in the
Registration Rights Agreement.

              (b) The Company shall pay Liquidated Damages due pursuant to
clause (a) of this Section 4.08 to the Holders in cash in the amounts and on the
dates specified in Section 3 of the Registration Rights Agreement and in this
Indenture.

         Whenever in this Indenture there is mentioned, in any context, any
payment in respect of any Security, such mention shall be deemed to include
mention of the payment of Liquidated Damages provided for in this Section to the
extent that, in such context, Liquidated Damages are, were or would be payable
in respect thereof pursuant to the provisions of this Section 4.08, and express
mention of the payment of Liquidated Damages (if applicable) in any provisions
hereof shall not be construed as excluding Liquidated Damages in those
provisions hereof where such express mention is not made.

         If Liquidated Damages become payable to the Holders pursuant to the
Registration Rights Agreement, at least five Business Days prior to the date on
which such Liquidated Damages are payable, the Company shall deliver to the
Trustee a certificate to that effect stating (i) the amount of such Liquidated
Damages that is payable and (ii) the date on which such amount is payable.
Unless and until a Trust Officer receives at the Corporate Trust Office such a
certificate, the Trustee may assume without inquiry that no such amount is
payable.

         SECTION 4.09.     PAYMENT OF ADDITIONAL AMOUNTS.

         Unless otherwise required by Bermudan law, neither the Company nor the
Guarantor will deduct or withhold from payments made with respect to the
Securities and the Guarantee on account of any present or future Taxes. In the
event that either the Company or the Guarantor is required to withhold or deduct
on account of any Taxes due from any payment made under or with respect to the
Securities or the Guarantee, as the case may be, the Company or the Guarantor,
as the case may be, will pay such additional amounts ("ADDITIONAL AMOUNTS") as
may be necessary so that the net amount received by each Holder of Securities
will equal the amount that the Holder would have received if the Taxes had not
been required to be withheld or deducted; provided that no Additional Amounts
will be payable with respect to a payment made to a Holder (an "EXCLUDED
HOLDER") to the extent: (i) that any Taxes would not have been so imposed but
for the existence of any present or former connection between the Holder and
Bermuda, other than the mere receipt of the payment, the acquisition, ownership
or disposition of such Securities or the exercise or enforcement of rights under
the Securities, the Guarantee or this Indenture; (ii) of any estate,
inheritance, gift, sales, transfer or personal property Taxes imposed with
respect to the Securities, except as described below or as otherwise provided in
this Indenture; (iii) that any such Taxes would not have been imposed but for
the presentation of the Securities, where presentation is required, for payment
on a date more than 30 days after the date on which the payment became due and
payable or the date on which payment thereof is duly provided for, whichever is
later, except to the extent that the beneficiary or Holder thereof would have
been entitled to Additional Amounts had the Securities been presented for
payment on any date during such 30-day period; or (iv) that the Holder would not
be liable or subject to such withholding or deduction of Taxes but for the
failure to make a valid declaration of non-residence or other similar claim for
exemption, if: (a) the making of the declaration or claim is


                                       33

<PAGE>

required or imposed by statute, treaty, regulation, ruling or administrative
practice of the relevant taxing authority as a precondition to an exemption
from, or reduction in, the relevant Taxes; and (b) at least 60 days prior to the
first payment with respect to which the Company or the Guarantor shall apply
this clause (iv), the Company or the Guarantor shall have notified all Holders
of the Securities in writing that they shall be required to provide this
declaration or claim. The Company and the Guarantor shall also (i) withhold or
deduct such Taxes as required; (ii) remit the full amount of Taxes deducted or
withheld to the relevant taxing authority in accordance with all applicable
laws; (iii) use reasonable efforts to obtain from each relevant taxing authority
imposing the Taxes certified copies of tax receipts evidencing the payment of
any Taxes deducted or withheld; and (iv) upon request, make available to the
Holders of the Securities, within 60 days after the date the payment of any
Taxes deducted or withheld is due pursuant to applicable law, certified copies
of tax receipts evidencing such payment by the Company or the Guarantor and,
notwithstanding the Company's or the Guarantor's efforts to obtain the receipts,
if the same are not obtainable, other evidence of such payments.

         In addition, the Company or the Guarantor will pay any stamp, issue,
registration, documentary or other similar taxes and duties, including interest,
penalties and additional amounts with respect thereto, payable in Bermuda or the
United States, or any political subdivision or taxing authority of or in the
foregoing with respect to the creation, issue, offering, enforcement, redemption
or retirement of the Securities or the Guarantee.

         At least 30 days prior to each date on which any payment under or with
respect to the Securities is due and payable, if the Company or the Guarantor
becomes obligated to pay Additional Amounts with respect to such payment, the
Company (or in respect of the Guarantee, the Guarantor) shall deliver to the
Trustee an Officers' Certificate stating the fact that such Additional Amounts
will be payable, and the amounts so payable and will set forth such other
information as is necessary to enable the Trustee to pay such Additional Amounts
to the Holders on the payment date. Whenever in this Indenture there is
mentioned, in any context, the payment of Principal Amount, Redemption Price,
Purchase Price, Fundamental Change Purchase Price, Liquidated Damages, if any,
Contingent Interest, if any, or overdue interest, or any other amount payable on
or with respect to any of the Securities, such mention shall be deemed to
include mention of the payment of Additional Amounts provided for in this
Section 4.09 to the extent that, in such context, Additional Amounts are, were
or would be payable in respect thereof pursuant to the provisions of this
Section 4.09 and express mention of the payment of Additional Amounts in those
provisions hereof shall not be construed as excluding Additional Amounts in
those provisions hereof where such express mention is not made (if applicable).

         If payments with respect of the Securities or the Guarantee become
subject generally to the taxing jurisdiction of any Territory or any political
subdivision or taxing authority thereof or therein having power to tax, other
than or in addition to Bermuda or any political subdivision or taxing authority
therein or thereof having power to tax, immediately upon becoming aware thereof
the Company shall notify the Trustee of such event, and thereupon the Company or
the Guarantor, as the case may be, shall be obligated to pay Additional Amounts
in respect thereof on terms corresponding to the terms of the foregoing
provisions of this Section 4.09 with the substitution for (or, as the case may
be, in addition to) the references herein to Bermuda or any political
subdivision or authority therein or thereof having


                                       34

<PAGE>

power to tax of references to that other or additional Territory or any
political subdivision or authority therein or thereof having power to tax to
whose taxing jurisdiction such payments shall have become subject as aforesaid.
The term "TERRITORY" means for this purpose any jurisdiction in which the
Company or the Guarantor, as the case may be, is incorporated or in which it has
its place of central management or central control.

         The obligations of the Company and the Guarantor under this Section
4.09 shall survive the termination of this Indenture and the payment of all
amounts under or with respect to this Indenture and the Securities.

         SECTION 4.10.     CONTINGENT DEBT TAX TREATMENT.

         The Company agrees, and by acceptance of a Security or beneficial
interest in a Security, each Holder and beneficial holder of the Security is
deemed to have agreed, with respect to each of the matters set forth in (a) and
(b) below, as follows:

              (a) Tax Treatment:

                 (i) to treat the Securities as indebtedness of the Company for
all tax purposes;

                 (ii) to treat the Securities as indebtedness that is subject to
the special regulations governing contingent payment debt instruments that are
contained in U.S. Treasury Regulation section 1.1275-4; and

                 (iii) to treat any payment to and receipt by a holder of Common
Shares upon exchange of a Security as a contingent payment that may result in an
adjustment under U.S. Treasury Regulation section 1.1275-4(b).

              (b) Comparable Yield and Projected Payment Schedule. Solely for
purposes of applying U.S. Treasury Regulation section 1.1275-4 to the
Securities.

                 (i) for United States Federal Income Tax purposes, the Company
shall accrue interest with respect to outstanding Securities as Tax Original
Issue Discount according to the "noncontingent bond method," as set forth in
U.S. Treasury Regulation section 1.1275-4(b);

                 (ii) the Company has determined that the comparable yield as
defined in U.S. Treasury Regulation section 1.1275-4(b)(4)(i), for the
Securities is 5.53%, compounded semiannually;

                 (iii) the Company has determined that the projected payment
schedule, as defined in U.S. Treasury Regulation section 1.1275-4(b)(ii), for
the Securities consists of the projected payment schedule referred to in (v)
below;

                 (iv) the Company acknowledges and agrees, and each Holder and
any beneficial holder of Securities, by its acceptance of a Security or
beneficial interest in a Security, shall be deemed to acknowledge and agree that
(A) the projected payment schedule is determined on a basis of an assumption of
linear growth of stock price, (B) the comparable yield and the projected payment
schedule are not determined for any purpose other than for the


                                       35

<PAGE>

purpose of applying U.S. Treasury Regulation section 1.1275-4(b) to the
Securities and (C) the comparable yield and the projected payment schedule do
not constitute a projection or representation regarding the actual amounts
payable on the Securities; and

                 (v) the projected payment schedule, as defined in U.S. Treasury
Regulation section 1.1275-4(b)(4)(ii) for the Securities is set forth in Annex 1
hereto.

         SECTION 4.11.     CALCULATION OF TAX ORIGINAL ISSUE DISCOUNT.

         The Company shall file with the Trustee promptly at the end of each
calendar year (i) a written notice specifying the amount of Tax Original Issue
Discount (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 Tax Original Issue Discount as may then be relevant under the
Internal Revenue Code of 1986, as amended from time to time.

                                   ARTICLE 5.
                              SUCCESSOR CORPORATION

         SECTION 5.01.     WHEN THE COMPANY AND THE GUARANTOR MAY MERGE OR
                           TRANSFER ASSETS.

         The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, unless:

                 (i) 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 shall be a corporation, limited liability company,
partnership or trust organized and validly existing under the laws of the United
States or any State thereof or the District of Columbia, and shall expressly
assume by an indenture supplemental hereto, executed and delivered to the
Trustee in form reasonably satisfactory to the Trustee, the due and punctual
payment of the Principal Amount, Redemption Price, Purchase Price, Fundamental
Change Purchase Price, Liquidated Damages, if any, Contingent Interest, if any,
Additional Amounts, if any, and overdue interest, if any, on the Securities,
according to their tenor, and the due and punctual performance of all of the
covenants and obligations of the Company under the Securities and this
Indenture, and shall have provided for exchange rights in accordance with this
Indenture;

                 (ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and

                 (iii) 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.

         The Guarantor shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person unless:


                                       36

<PAGE>

              (1) the Person (if other than the Guarantor) formed by such
consolidation or into which the Guarantor is merged or the Person which acquires
by conveyance or transfer, or which leases, the properties and assets of the
Guarantor substantially as an entirety shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, the due and punctual payment of all obligations in
respect of the Guarantee and the performance of every covenant of this Indenture
on the part of the Guarantor to be performed or observed;

              (2) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and

              (3) the Guarantor has 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
executed 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 complied with.

         SECTION 5.02.     SUCCESSORS SUBSTITUTED

         Upon any consolidation of the Company or Guarantor with, or merger of
the Company or Guarantor into, any other Person, or any conveyance, transfer or
lease of the properties and assets of the Company or the Guarantor substantially
as an entirety in accordance with Section 5.01, the successor Person formed by
such consolidation or into which the Company or the Guarantor is merged or 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 or the
Guarantor, as the case may be, under this Indenture with the same effect as if
such successor Person had been named as the Company or the Guarantor, as the
case may be, herein, and thereafter, except in the case of a lease to another
Person, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.

                                   ARTICLE 6.
                              DEFAULTS AND REMEDIES

         SECTION 6.01.     EVENTS OF DEFAULT.

         An "EVENT OF DEFAULT" occurs if:

              (1) there is a default in the payment of the Principal Amount,
Redemption Price, Purchase Price or a Fundamental Change Purchase Price on any
Security when the same becomes due and payable at its Stated Maturity, upon
redemption, upon declaration, when due for repurchase by the Company or
otherwise, and such default continues for a period of ten days;

              (2) there is a default in the payment of Liquidated Damages, if
any, Contingent Interest, if any, or Additional Amounts, if any, on any Security
when it becomes due and payable, and such default continues for a period of 30
days;

              (3) failure of the Company or the Guarantor to perform or comply
with the provisions of Section 11.02 hereof, and such failure continues for a
period of 20 days;


                                       37

<PAGE>

              (4) the Company or the Guarantor fails to comply with any of its
agreements or covenants in the Securities or this Indenture (other than those
referred to in clauses (1) through (3) above) and such failure continues for 90
days after receipt by the Company of a Notice of Default;

              (5) a decree or order by a court having jurisdiction in the
premises shall have been entered adjudging the Company or the Guarantor a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization of the Company or the Guarantor under any Bankruptcy Law, and
such decree or order shall have continued undischarged and unstayed for a period
of 90 consecutive days; or a decree or order of a court having jurisdiction in
the premises of the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of the Company or the Guarantor or of its
property, or for the winding-up or liquidation of its affairs, shall have been
entered, and such decree or order shall have remained in force undischarged and
unstayed of a period of 90 consecutive days;

              (6) the Company or the Guarantor shall institute proceedings to be
adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent seeking
reorganization under any Bankruptcy Law, or shall consent to the filing of any
such petition, or shall consent to the appointment of a receiver or liquidator
or trustee or assignee in bankruptcy or insolvency of it or of its property or
shall make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due; or

              (7) the Guarantee ceases to be in full force and effect or becomes
unenforceable or invalid or is declared null and void (other than in accordance
with the terms of the Guarantee) or the Guarantor denies or disaffirms its
obligations under the Guarantee.

         A Default under 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 of the Securities at the time outstanding notify the Company
and the Trustee, of the Default and neither the Company nor the Guarantor cures
such Default (and such Default is not waived) within the time specified in
clause (4) above after actual receipt of such notice (a "NOTICE OF DEFAULT").
Any such notice must specify the Default, demand that it be remedied and state
that such notice is a Notice of Default.

         SECTION 6.02.     ACCELERATION.

         If an Event of Default (other than an Event of Default specified in
Section 6.01(5) or (6) hereof) occurs and is continuing, the Trustee by notice
to the Company, or the Holders of at least 25% in aggregate Principal Amount of
the Securities at the time outstanding by notice to the Company and the Trustee,
may declare the Principal Amount and Liquidated Damages, if any, Contingent
Interest, if any, and Additional Amounts, if any, accrued and unpaid to the date
of declaration on all the Securities to be immediately due and payable. Upon
such a declaration, such Principal Amount and Liquidated Damages, if any,
Contingent Interest, if any, and Additional Amounts, if any, shall become and be
due and payable immediately. If an Event of Default specified in Section 6.01(5)
or (6) hereof occurs and is continuing, the Principal Amount and Liquidated
Damages, if any, Contingent Interest, if any, and Additional Amounts, if any,


                                       38

<PAGE>

accrued and unpaid to the date of such occurrence 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 Holders. The Holders of a majority in
aggregate Principal Amount of the Securities at the time outstanding, by notice
to the Company and the Trustee (and without notice to any other Holder), 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 Principal Amount that has become
due solely as a result of acceleration and if all amounts due to the Trustee
under Section 7.07 hereof have been paid. No such rescission shall affect any
subsequent or other Default or Event of Default or impair any consequent right.

         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 all amounts due 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 Holder 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.

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

         SECTION 6.05. CONTROL BY MAJORITY.

         The Holders of a majority in aggregate Principal Amount 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 any law or this Indenture or
that the Trustee determines in good faith is unduly prejudicial to the rights of
other Holders or would involve the Trustee in personal liability unless the
Trustee is offered indemnity reasonably satisfactory to it.


                                       39

<PAGE>

         SECTION 6.06.     LIMITATION ON SUITS.

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

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

              (2) the Holders of at least 25% in aggregate Principal Amount 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 reasonable
security or indemnity against any loss, liability or expense satisfactory to the
Trustee;

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

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

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

         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, Redemption Price, Purchase
Price, Fundamental Change Purchase Price, Liquidated Damages, if any, Contingent
Interest, if any, Additional Amounts, if any, and overdue interest, if any, in
respect of the Securities held by such Holder, on or after the respective due
dates expressed in the Securities, to exchange 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 exchange the Securities in accordance with
Article 11, shall not be impaired or affected adversely without the consent of
each such Holder.

         SECTION 6.08.     COLLECTION SUIT BY TRUSTEE.

         If an Event of Default described in Section 6.01(1) or (2) hereof
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
hereof.

         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, the Guarantor or any other obligor
upon the Securities or the property of the Company, of the Guarantor or of such
other obligor or their creditors, the Trustee (irrespective of


                                       40

<PAGE>

whether the Principal Amount, Redemption Price, Purchase Price, Fundamental
Change Purchase Price, Liquidated Damages, if any, Contingent Interest, if any,
Additional Amounts, if any, or overdue 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 or the Guarantor 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, Redemption Price, Purchase Price, Fundamental Change Purchase
Price, Liquidated Damages, if any, Contingent Interest, if any, Additional
Amounts, if any, or overdue 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) and of the
Holders allowed in such judicial proceeding, and

              (b) to collect and receive any money 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 hereof.

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

         SECOND: to Holders for amounts due and unpaid on the Securities for the
Principal Amount, Redemption Price, Purchase Price, Fundamental Change Purchase
Price, Liquidated Damages, if any, Contingent Interest, if any, or Additional
Amounts, if any, or overdue interest, if any, as the case may be, 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 proposed record date and payment date for any
payment to Holders pursuant to this Section 6.10 and shall notify the Company in
writing with respect to such proposed record date and payment date. At least 15
days before such record date, the


                                       41

<PAGE>

Company (or the Trustee at the request of the Company) shall mail to each Holder
and the Trustee a notice that states the record date, the payment date and
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, any suit by a Holder for the enforcement of the payment of the
Principal Amount, Redemption Price, Purchase Price, Fundamental Change Purchase
Price, Liquidated Damages, if any, Contingent Interest, if any, or Additional
Amounts, if any, or overdue interest, if any, on or after the due date expressed
in such Security or to any suit for the enforcement of the right to exchange the
Security pursuant to Article 11, or a suit by Holders of more than 10% in
aggregate Principal Amount of the Securities at the time outstanding.

         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, Redemption Price, Purchase Price or Fundamental Change Purchase Price in
respect of Securities, Liquidated Damages, if any, Contingent Interest, if any,
or Additional Amounts, if any, or any overdue interest on any 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 laws 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 man would
exercise or use under the circumstances in the conduct of his own affairs.

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

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


                                       42

<PAGE>

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

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 Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and

                 (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 hereof.

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 reasonably 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.

         SECTION 7.02.     RIGHTS OF TRUSTEE.

         Subject to Section 7.01:

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


                                       43

<PAGE>

              (b) Before the Trustee acts or refrains from acting, it may
require a Company Order, an Officers' Certificate or an Opinion of Counsel. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on a Company Order, Officers' Certificate or Opinion of
Counsel.

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

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

              (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, unless the Holders shall
have offered to the Trustee reasonable security or indemnity reasonably
satisfactory to it against the costs, expenses and liabilities which may be
incurred therein or thereby.

              (g) 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 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 and the Guarantor during normal
business hours at reasonable frequencies, personally or by agent or attorney at
the sole cost of the Company and the Guarantor and shall incur no liability or
additional liability of any kind by reason of such inquiry or investigation.

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

              (i) The Trustee shall not be deemed to have notice of any Default
or Event of Default unless a Trust 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 in
accordance with Section 13.02 hereof, 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.


                                       44

<PAGE>

              (k) The Trustee shall be under no obligation to expend or risk its
own funds or to exercise, at the request or direction of any of the Holders, any
of the rights or powers vested in it by this Indenture pursuant to this
Indenture.

         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, the
Guarantor or their Affiliates with the same rights it would have if it were not
Trustee. Any Paying Agent, Registrar, Exchange Agent or co-registrar may do the
same with the like rights. However, the Trustee must comply with Sections 7.10
and 7.11 hereof.

         SECTION 7.04.     TRUSTEE'S DISCLAIMER.

         The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities; it shall not be accountable for the Company's
use of the proceeds from the Securities; and it shall not be responsible for any
statement in the offering memorandum for the Securities or in this Indenture or
the Securities (other than its certificate of authentication), the acts of a
prior Trustee hereunder, 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 is continuing and if it is actually known by a
Trust Officer or if 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 in
accordance with Section 13.02 hereof, and such notice references the Securities
and this Indenture, the Trustee shall give to each Holder notice of the Default
within 90 days after it is actually known to a Trust Officer. Except in the case
of a Default described in Section 6.01(1) or (2) hereof, the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in good
faith determines that withholding the notice is in the interests of Holders. The
second sentence of this Section 7.05 shall be in lieu of the proviso to Section
315(b) of the TIA and such provision is hereby expressly excluded from this
Indenture, as permitted by the TIA. The Trustee shall not give notice of a
Default pursuant to Section 6.01(4) until at least 90 days have passed since its
occurrence.

         SECTION 7.06.     REPORTS BY TRUSTEE TO HOLDERS.

         Within 60 days after each May 1, beginning with the May 1 following the
date of this Indenture, the Trustee shall mail to each Holder a brief report
dated as of such May 1 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 Holders shall be
filed with the SEC and each securities exchange 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.


                                       45

<PAGE>

         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 by
any provision of law in regard to the compensation of a trustee of an express
trust);

              (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 compensation and
the expense, advances and disbursements of its outside 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 for, and to hold it harmless against,
any and all loss, damage, claims, liability or expense (including 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, any Holder or any other Person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder.

         To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay the Principal
Amount, Redemption Price, Purchase Price, Fundamental Change Purchase Price,
Liquidated Damages, if any, Contingent Interest, if any, Additional Amounts, if
any, or overdue 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. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.01(5) or (6), the expenses
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,
that 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 of the Securities at the time outstanding
may remove the Trustee by so notifying the Trustee and may appoint a successor
Trustee. The Company shall remove the Trustee if:

              (1) the Trustee fails to comply with, or ceases to be eligible
under, Section 7.10 hereof;

              (2) the Trustee is adjudged bankrupt or insolvent;


                                       46

<PAGE>

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

              (4) the Trustee otherwise in the Company's reasonable judgment
becomes incapable of acting.

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

         Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder, subject to the lien provided for in Section
7.07 hereof. Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts. No
successor Trustee shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be eligible under this Article.

         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 of the Securities at the
time outstanding may petition any court of competent jurisdiction for the
appointment of a successor Trustee at the expense of the Company.

         If the Trustee fails to comply with Section 7.10 hereof, any Holder 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 (including the trust
created by this Indenture) or assets to, another corporation, the resulting,
surviving or transferee corporation without any further act shall be the
successor Trustee hereunder, PROVIDED such corporation shall be otherwise
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. As soon as practicable,
the successor Trustee shall give written notice of its succession to the
Company. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.


                                       47


<PAGE>

         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 shall have a combined capital and surplus of
at least $50,000,000 (or if the Trustee is a member of a bank holding company
system, its bank 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
conditions. Nothing herein contained shall prevent the Trustee from filing with
the SEC the application referred to in the penultimate paragraph of TIA Section
310(b). If at any time the Trustee shall cease to be eligible in accordance with
the provisions of this Section 7.10, it shall correct such ineligibility or
resign immediately in the manner and with the effect specified in this Article
7.

         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.

                                   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 hereof) for
cancellation or (ii) all outstanding Securities have become due and payable and
the Company deposits with the Trustee cash and/or securities, as permitted by
the terms hereof, sufficient to pay at Stated Maturity the Principal Amount of
all outstanding Securities (other than Securities replaced pursuant to Section
2.07 hereof), 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
hereof, 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 six months;
PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being required
to make any such return, shall, in the event that the Securities are no longer
held in global form, at the expense of the Company cause to be published once in
a newspaper of general circulation in The City of New York or mail to each such
Holder notice that such money or securities remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication or mailing, any unclaimed money or securities then remaining
will be returned to the Company. After return to the Company, Holders entitled
to the money or securities must look to the


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Company for payment as general creditors unless an applicable abandoned property
law designates another Person.

                                   ARTICLE 9.
                                   AMENDMENTS

         SECTION 9.01.     WITHOUT CONSENT OF HOLDERS.

         The Company, the Guarantor and the Trustee may amend this Indenture and
the Securities without the consent of any Holder:

              (1) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, PROVIDED that, in any case, such change shall not
materially adversely affect the interests of the Holders;

              (2) to provide for the assumption of the Company's or the
Guarantor's obligations to the Holders of the Securities in case of a merger or
consolidation or conveyance, transfer or lease of the Company's or the
Guarantor's properties and assets substantially as an entirety;

              (3) to provide for uncertificated Securities in addition to or in
place of certificated Securities so long as such uncertificated Securities are
in registered form for purposes of the Internal Revenue Code of 1986, as
amended;

              (4) to make any change that does not adversely affect the right of
any Holder; 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, if any, of this Indenture under the TIA.

         SECTION 9.02.     WITH CONSENT OF HOLDERS.

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

              (1) make any change to the Principal Amount of Securities whose
Holders must consent to an amendment;

              (2) make any change to the manner or rate of accrual in connection
with Liquidated Damages, if any, Contingent Interest, if any, Additional
Amounts, if any, or overdue interest, if any, reduce the rate of overdue
interest referred to in paragraph 1 of the Securities or extend the time for
payment of Liquidated Damages, if any, Contingent Interest, if any, Additional
Amounts, if any, or overdue interest, if any, on any Security;


                                       49

<PAGE>

              (3) reduce the Principal Amount of or extend the Stated Maturity
of any Security;

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

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

              (6) [INTENTIONALLY OMITTED];

              (7) make any change in Section 6.04 or 6.07 hereof or this Section
9.02, except to increase the percentage of Holders referenced in Section 6.04 or
6.07 hereof or this Section 9.02, as applicable;

              (8) make any change that adversely affects the right of Holders to
exchange any Security; or

              (9) make any change that adversely affects the right of Holders to
require the Company to repurchase the Securities, or the right to require the
Company to repurchase the Securities upon a Fundamental Change, in accordance
with the terms thereof and this Indenture.

         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 9 shall
comply with the TIA as then in effect, if then required to so comply.

         SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS, WAIVERS AND ACTIONS.

         Until an amendment, waiver or other action becomes effective, a consent
to it or any other action by a Holder of a Security 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 Holder.


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<PAGE>

         SECTION 9.05.     NOTATION ON OR EXCHANGE OF SECURITIES.

         Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article 9 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 Trustee and the
Board of Directors of the Company, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for 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 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 amendment the Trustee
shall be entitled to receive, and (subject to the provisions of Section 7.01
hereof) shall be fully protected in relying upon, an Officers' Certificate of
the Company 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 9,
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.
                             GUARANTEE OF SECURITIES

         SECTION 10.01.    UNCONDITIONAL GUARANTEE.

              (a) For value received, the Guarantor hereby fully, irrevocably,
unconditionally and absolutely guarantees to the Holders and to the Trustee the
due and punctual payment of the principal of, Liquidated Damages, if any,
Additional Amounts, if any, and Contingent Interest, if any, on the Securities
and all other amounts due and payable under this Indenture and the Securities by
the Company (including, without limitation, all costs and expenses (including
reasonable legal fees and disbursements) incurred by the Trustee or the Holders
in connection with the enforcement of this Indenture, the Securities and the
Guarantee) (collectively, the "INDENTURE OBLIGATIONS"), when and as such
principal, Liquidated Damages, if any, Additional Amounts, if any, Contingent
Interest, if any, and such other amounts shall become due and payable, whether
at the Stated Maturity, upon redemption or repurchase or by declaration of
acceleration or otherwise, according to the terms of the Securities and this
Indenture. The guarantee by the Guarantor set forth in this Article 10 is
referred to herein as the "GUARANTEE." Without limiting the generality of the
foregoing, the Guarantor's liability shall extend to all amounts that constitute
part of the Indenture Obligations and would be owed by the Company under this
Indenture and the Securities but for the fact that they are unenforceable,
reduced, limited, impaired, suspended or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Company.


                                       51

<PAGE>

              (b) Failing payment when due of any amount guaranteed pursuant to
the Guarantee, for whatever reason, the Guarantor will be obligated to pay the
same immediately to the Trustee, without set-off or counterclaim or other
reduction whatsoever (whether for taxes, withholding or otherwise). The
Guarantee is intended to be a general, unsecured, senior obligation of the
Guarantor and will rank pari passu in right of payment with all indebtedness of
the Guarantor that is not, by its terms, expressly subordinated in right of
payment to the Guarantee. The Guarantor hereby agrees that its obligations
hereunder shall be full, irrevocable, unconditional and absolute, irrespective
of the validity, regularity or enforceability of the obligations and liabilities
of any other obligor with respect to the Securities, the Guarantee or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder with respect to any provisions hereof or thereof with respect to
the same, the recovery of any judgment against the Company, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of the Guarantor.

         The Guarantor hereby agrees that in the event of a default in payment
of the principal of, Liquidated Damages, if any, Additional Amounts, if any, or
Contingent Interest, if any, on the Securities or any other amounts payable
under this Indenture and the Securities by the Company, whether at the Stated
Maturity, upon redemption or repurchase or by declaration of acceleration or
otherwise, legal proceedings may be instituted by the Trustee on behalf of the
Holders or, subject to Section 6.06, by the Holders, on the terms and conditions
set forth in this Indenture, directly against the Guarantor to enforce the
Guarantee without first proceeding against the Company.

              (c) To the fullest extent permitted by applicable law, the
obligations of the Guarantor under this Article 10 shall be as aforesaid full,
irrevocable, unconditional and absolute and shall not be impaired, modified,
discharged, released or limited by any occurrence or condition whatsoever,
including, without limitation, (i) any compromise, settlement, release, waiver,
renewal, extension, indulgence or modification of, or any change in, any of the
obligations and liabilities of any other obligor with respect to the Securities
contained in any of the Securities or this Indenture, (ii) any impairment,
modification, release or limitation of the liability of the Company, the
Guarantor or any of their respective estates in bankruptcy, or any remedy for
the enforcement thereof, resulting from the operation of any present or future
provision of any applicable Bankruptcy Law, as amended, or other statute or from
the decision of any court, (iii) the assertion or exercise by the Company, the
Guarantor or the Trustee of any rights or remedies under any of the Securities
or this Indenture or its delay in or failure to assert or exercise any such
rights or remedies, (iv) the assignment or the purported assignment of any
property as security for any of the Securities, including all or any part of the
rights of the Company or the Guarantor under this Indenture, (v) the extension
of the time for payment by the Company or the Guarantor of any payments or other
sums or any part thereof owing or payable under any of the terms and provisions
of any of the Securities or this Indenture or of the time for performance by the
Company or the Guarantor of any other obligations under or arising out of any
such terms and provisions or the extension or the renewal of any thereof, (vi)
the modification or amendment (whether material or otherwise) of any duty,
agreement or obligation set forth in this Indenture of any other obligor with
respect to the Securities, (vii) the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all of the
assets, marshaling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of, or other


                                       52

<PAGE>

similar proceeding affecting, either the Company or the Guarantor or any of
their respective assets, or the disaffirmance of any of the Securities, the
Guarantee or this Indenture in any such proceeding, (viii) the release or
discharge of the Company or the Guarantor from the performance or observance of
any agreement, covenant, term or condition contained in any of such instruments
by operation of law, (ix) the unenforceability of any of the obligations of any
of the other obligors under the Securities, the Guarantee or this Indenture, (x)
any change in the name, business, capital structure, corporate existence, or
ownership of the Company or the Guarantor, or (xi) any other circumstance which
might otherwise constitute a defense available to, or a legal or equitable
discharge of, a surety or the Guarantor.

              (d) The Guarantor hereby (i) waives diligence, presentment, demand
of payment, notice of acceptance, filing of claims with a court in the event of
the merger, insolvency or bankruptcy of the Company or the Guarantor, and all
demands and notices whatsoever, (ii) acknowledges that any agreement, instrument
or document evidencing the Guarantee may be transferred and that the benefit of
its obligations hereunder shall extend to each holder of any agreement,
instrument or document evidencing the Guarantee without notice to them and (iii)
covenants that its Guarantee will not be discharged except by complete
performance of the Guarantee or of the obligations guaranteed thereby. The
Guarantor further agrees that if at any time all or any part of any payment
theretofore applied by any Person to the Guarantee is, or must be, rescinded or
returned for any reason whatsoever, including, without limitation, the
insolvency, bankruptcy or reorganization of the Guarantor, the Guarantee shall,
to the extent that such payment is or must be rescinded or returned, be deemed
to have continued in existence notwithstanding such application, and the
Guarantee shall continue to be effective or be reinstated, as the case may be,
as though such application had not been made.

              (e) The Guarantor shall be subrogated to all rights of the Holders
and the Trustee against the Company in respect of any amounts paid by the
Guarantor pursuant to the provisions of this Indenture; provided, however, that
the Guarantor shall not be entitled to enforce or to receive any payments
arising out of, or based upon, such right of subrogation with respect to any of
the Securities until all of the Securities and the Guarantee thereof shall have
been paid in full or discharged.

              (f) A director, officer, employee or stockholder, as such, of the
Guarantor shall not have any liability for any obligations of the Guarantor
under this Indenture or for any claim based on, in respect of or by reason of
such obligations or their creation.

              (g) No failure to exercise and no delay in exercising, on the part
of the Trustee or the Holders, any right, power, privilege or remedy under this
Article 10 and the Guarantee shall operate as a waiver thereof, nor shall any
single or partial exercise of any rights, power, privilege or remedy preclude
any other or further exercise thereof, or the exercise of any other rights,
powers, privileges or remedies. The rights and remedies herein provided for are
cumulative and not exclusive of any rights or remedies provided in law or
equity. Nothing contained in this Article 10 shall limit the right of the
Trustee or the Holders to take any action to accelerate the maturity of the
Securities pursuant to Article 6 or to pursue any rights or remedies hereunder
or under applicable law.


                                       53

<PAGE>

         SECTION 10.02.    EXECUTION AND DELIVERY OF NOTATION OF GUARANTEE.

         To further evidence the Guarantee, the Guarantor hereby agrees that on
the date of this Indenture a notation of the Guarantee may be endorsed on each
Security authenticated and delivered by the Trustee and executed by either
manual or facsimile signature of an Officer of the Guarantor.

         The Guarantor hereby agrees that the Guarantee shall remain in full
force and effect notwithstanding any failure to endorse on each Security a
notation relating to the Guarantee thereof.

         If an Officer of a Guarantor whose signature is on this Indenture or a
Security no longer holds that office, or if any other or additional Person shall
have become a "Guarantor" hereunder in accordance with Section 5.01 hereof, at
the time the Trustee authenticates such Security or at any time thereafter, the
Guarantor's Guarantee of such Security shall be valid nevertheless.

         The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee set forth in
this Indenture on behalf of the Guarantor and each other Person which may at
such time constitute the "Guarantor" hereunder.

                                  ARTICLE 11.
                                   EXCHANGE

         SECTION 11.01.    EXCHANGE PRIVILEGE.

         A Holder of a Security may exchange such Security for Common Shares
prior to the close of business on June 15, 2023 (unless earlier redeemed or
repurchased), but only upon the occurrence of one of the events set forth in
this Section 11.01. The number of Common Shares issuable upon exchange of a
Security per $1,000 of Principal Amount thereof (the "EXCHANGE RATE") shall be
that set forth in paragraph 9 in the Securities, subject to adjustment as herein
set forth. The "EXCHANGE PRICE" in effect at any time shall be equal to $1,000
divided by the Exchange Rate.

         The Holders' right to exchange Securities into Common Shares is subject
to the Company's right to elect to instead pay such Holder, in respect of all or
a portion of such Securities, the amount of cash set forth in the next
succeeding sentence, in lieu of delivering all or a part of such Common Shares;
PROVIDED, HOWEVER, that (x) if such payment of cash is not permitted pursuant to
the provisions of this Indenture or the provisions of any other agreement or
instrument to which the Company is a party or by which it is bound or otherwise
or (y) if an Event of Default (other than a default in a cash payment upon
exchange of the Securities) shall have occurred and be continuing, the Company
shall deliver Common Shares (and cash in lieu of fractional Common Shares) in
accordance with this Article 11, whether or not the Company has delivered a
notice pursuant to Section 11.02 hereof to the effect that the Securities would
be paid in cash, PROVIDED FURTHER, HOWEVER, that this clause (y) shall not apply
in the event that an Event of Default occurs after such cash is paid. The amount
of cash to be paid pursuant to Section 11.02 hereof for each $1,000 of Principal
Amount of a Security to be exchanged shall be equal to the average of the Sale
Prices of the Common Shares


                                       54

<PAGE>

for the five Trading Days beginning on the Trading Day immediately following the
date on which the Company notifies the Holders that it has elected to pay cash
in lieu of delivering Common Shares with respect to all or part of such
exchanges, multiplied by the Exchange Rate in effect on such notification date.

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

         The Securities shall be exchangeable only during the period specified
in paragraph 9 of the Securities and only:

              (i) (A) during any calendar quarter of the Company after the
quarter ending September 30, 2003, and prior to July 1, 2008, for which the Sale
Price of the Common Shares exceeded 120% of the Exchange Price for at least 20
Trading Days in the 30 consecutive Trading Day period ending on the last Trading
Day of the preceding calendar quarter or (B) during any calendar quarter of the
Company beginning on or after July 1, 2008, for which the Sale Price of the
Common Shares exceeded 110% of the Exchange Price for at least 20 Trading Days
in the 30 consecutive Trading Day period ending on the last Trading Day of the
preceding calendar quarter (it being understood for purposes of this Section
11.01 that the Exchange Price in effect at the close of business on each of the
30 consecutive Trading Days shall be used);

              (ii) as described below after the occurrence of the 95% Trading
Exception;

              (iii) if such Security has been called for redemption, at any time
on or after the date the notice of redemption has been given until the close of
business on the Business Day immediately preceding the Redemption Date; or

              (iv) as described below after the occurrence of any of the
specified corporate transactions described below.

         The Company shall, within the first five Business Days of each calendar
quarter, determine whether the Securities shall be exchangeable during such
calendar quarter as a result of the occurrence of an event specified in clause
(i) above, and, if the Securities shall be so exchangeable, the Company shall
promptly deliver to the Trustee written notice thereof. Whenever the Securities
shall become exchangeable pursuant to this Section 11.01, the Company or, at the
Company's request, the Trustee in the name and at the expense of the Company,
shall notify the Holders of the event triggering such exchangeability in the
manner provided in Section 13.02.

Exchange after the Occurrence of the 95% Trading Exception.

         Securities may be surrendered for exchange during the five Business Day
period (but only to the extent such five Business Day period occurs during the
period specified in paragraph 9 of the Securities) immediately after any ten
consecutive Trading Day period in which the Trading Price per $1,000 Principal
Amount of Securities, as determined following a request by a Holder according to
the procedures described below, for each day of such ten Trading Day period was
less than 95% of the product of the Sale Price of the Common Shares and the


                                       55

<PAGE>

Exchange Rate as of such Trading Day (the "95% TRADING EXCEPTION"); PROVIDED,
HOWEVER, Securities may not be surrendered for exchange pursuant to the 95%
Trading Exception and such exchange privilege shall not apply if the average of
the Sale Prices of the Common Shares for such ten consecutive Trading Day period
is greater than (x) the then applicable Exchange Price but less than (y) (i)
120% of such Exchange Price until June 15, 2008, or (ii) 110% of such Exchange
Price from and after June 15, 2008.

         In connection with any exchange pursuant to the 95% Trading Exception,
the Trustee shall not have any obligation to determine the Trading Price unless
the Company has requested such determination, and the Company shall have no
obligation to make such request unless a Holder provides the Company with
reasonable evidence that the 95% Trading Exception will apply. At such time, the
Company shall instruct the Trustee to determine the Trading Price beginning on
the next Trading Day and on each successive Trading Day until the Trading Price
per $1,000 Principal Amount of Securities is greater than or equal to 95% of the
product of the Sale Price of a Common Share and the Exchange Rate as of such
Trading Day.

Exchange after the Occurrence of Specified Corporation Transactions.

         If:

              (i) (A) the Guarantor distributes to all holders of its Common
Shares rights or warrants entitling them (for a period expiring within 45 days
after the record date for the determination of the stockholders entitled to
receive such distribution) to subscribe for or purchase Common Shares at a price
per share less than the Sale Price of the Common Shares on the Trading Day
immediately preceding the date such distribution is first publicly announced by
the Guarantor, or (B) the Guarantor distributes to all holders of its Common
Shares, assets, debt securities or rights to purchase its securities, where the
value of such distribution per Common Share, as determined by the Board of
Directors of the Guarantor, exceeds 15% of the Sale Price of the Common Shares
on the Trading Day immediately preceding the date such distribution is first
publicly announced by the Guarantor, then, in either case, the Securities may be
surrendered for exchange at any time on or after the date that the Company gives
notice of such distribution to the Holders, which shall be not less than 20
Business Days prior to the Ex-Dividend Date for such distribution, until the
earlier of the close of business on the Business Day immediately preceding, but
not including, the Ex-Dividend Date or the date the Company publicly announces
that such distribution will not take place (but only to the extent such period
occurs during the period specified in paragraph 9 of the Securities); provided
that the Holder of a Security may not exchange such Security pursuant to this
provision if the Holder will otherwise participate in such distribution without
exchange; or

              (ii) the Guarantor proposes to engage in a transaction described
in clause (ii) of Section 11.14 hereof, then the Securities may be surrendered
for exchange, if during the period specified in paragraph 9 of the Securities,
at any time from and after the date 15 days prior to the announced anticipated
effective date of the transaction and ending on and including the date five days
after the consummation of the transaction. The Guarantor's Board of Director
shall determine the anticipated effective date of the transaction, and such
determination shall be conclusive and binding on the Holders and shall be
publicly announced by the Guarantor and posted on its web site or notified to
the Holders by the Guarantor or, at the Guarantor's request,


                                       56

<PAGE>

the Trustee in the name and at the expense of the Guarantor, in either case, not
later than two Business Days prior to such 15th day. For the avoidance of doubt,
if such transaction constitutes a Fundamental Change, the Holders may exercise
their rights under Section 3.09.

         SECTION 11.02.    EXCHANGE PROCEDURE.

         To exchange a Security a Holder must satisfy the requirements in
paragraph 9 of the Securities. The date on which the Holder of Securities
satisfies all those requirements is the exchange date (the "EXCHANGE DATE"). The
Company shall use reasonable efforts to deliver, on the same Business Day as its
receipt of an exchange notice from the Exchange Agent (but, in any event within
one Business Day following the receipt of an exchange notice from the Exchange
Agent), to the Exchange Agent for delivery to the Holders written notice of
whether such Security shall be exchanged for Common Shares or paid in cash. If
the Company shall have notified the Exchange Agent that all or a portion of such
Security shall be exchanged for Common Shares, the Company shall deliver to the
Holder no later than the seventh Business Day following the Exchange Date a
certificate for the number of full Common Shares issuable upon the exchange and
cash in lieu of any fractional share determined pursuant to Section 11.03
hereof. Except as provided in Section 11.01 hereof, if the Company shall have
notified the Holder that all or a portion of such Security shall be paid in
cash, the Company shall deliver to the Holder surrendering such Security the
amount of cash payable with respect to such Security no later than the tenth
Business Day following such Exchange Date. Except as provided in Section 11.01
hereof, the Company may not change its election with respect to the
consideration to be delivered upon exchange of a Security once the Company has
notified the Holder in accordance with this paragraph. The Person in whose name
the certificate is registered shall be treated as the stockholder of record on
and after the Exchange Date; PROVIDED, HOWEVER, that no surrender of a Security
on any date when the stock transfer books of the Guarantor shall be closed shall
be effective to constitute the Person or Persons entitled to receive the Common
Shares upon such exchange as the record holder or holders of such Common Shares
on such date, but such surrender shall be effective to constitute the Person or
Persons entitled to receive such Common Shares 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 exchange shall be at the Exchange
Rate in effect on the date that such Security shall have been surrendered for
exchange, as if the stock transfer books of the Guarantor had not been closed.
Upon exchange of a Security, such Person shall no longer be a Holder of such
Security.

         No payment on the Securities or adjustment of the Exchange Rate will be
made for dividends on or other distributions with respect to any Common Share
except as provided in this Article 11. On exchange of a Security, that portion
of accrued and unpaid Contingent Interest, if any, and Additional Amounts, if
any, to the Exchange Date with respect to the exchanged Security shall be deemed
to be canceled, extinguished and forfeited, through delivery of the Common
Shares (together with the cash payment, if any, in lieu of fractional shares) in
exchange for the Security being exchanged pursuant to the provisions hereof.

         If a Holder exchanges more than one Security at the same time, the
number of Common Shares issuable or cash paid upon the exchange shall be based
on the total Principal Amount of the Securities exchanged.


                                       57

<PAGE>

         Upon surrender of a Security that is exchanged 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 to the
unexchanged portion of the Security surrendered.

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

         SECTION 11.03.    FRACTIONAL SHARES.

         The Guarantor will not issue a fractional Common Share upon exchange 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 1/10,000th of a share by multiplying the last reported
Sale Price of the Common Shares on the last Trading Day prior to the Exchange
Date by the fractional amount and rounding the product to the nearest whole
cent.

         SECTION 11.04.    TAXES ON EXCHANGE.

         If a Holder exchanges a Security, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of Common
Shares upon the exchange. 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 Exchange Agent may refuse to deliver the certificates
representing the Common Shares being issued in a name other than the Holder's
name until the Exchange 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.    GUARANTOR TO PROVIDE COMMON SHARES.

         The Guarantor shall, prior to issuance of any Securities hereunder, and
from time to time as may be necessary, reserve out of its authorized but
unissued Common Shares a sufficient number of Common Shares to permit the
exchange of the Securities. The Common Shares or other securities issued upon
exchange of the Securities shall bear any legend required by Section 2.06(d)
hereof.

         All Common Shares delivered upon exchange 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 Guarantor covenants that if any Common Shares to be provided for
the purpose of exchange of Securities hereunder require registration with or
approval of any governmental authority under any Bermudan, federal or state law
before such shares may be validly issued upon exchange, the Guarantor will in
good faith and as expeditiously as possible endeavor to secure such registration
or approval, as the case may be.

         The Guarantor further covenants that if at any time the Common Shares
shall be quoted or listed on the NASDAQ National Market or the AMEX or any other
automated quotation


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<PAGE>

system or national securities exchange, the Guarantor will, if permitted by the
rules of such automated quotation system or exchange, list and keep listed, so
long as the Common Shares shall be so listed on such automated quotation system
or exchange, all Common Shares issuable upon exchange of the Securities;
PROVIDED, HOWEVER, that if the rules of such automated quotation system or
exchange permit the Guarantor to defer the listing of such Common Shares until
the first exchange of the Securities into Common Shares in accordance with the
provisions of this Indenture, the Guarantor covenants to list such Common Shares
issuable upon exchange of the Securities in accordance with the requirements of
such automated quotation system or exchange at such time.

         SECTION 11.06.    ADJUSTMENT FOR CHANGE IN CAPITAL STOCK.

         In case the Guarantor shall (i) pay a dividend, or make a distribution,
in Common Shares, on its Common Shares, (ii) subdivide its outstanding Common
Shares into a greater number of shares, or (iii) combine its outstanding Common
Shares into a smaller number of shares, the Exchange Rate in effect immediately
prior thereto shall be adjusted so that the Holder of any Security thereafter
surrendered for exchange shall be entitled to receive the number of Common
Shares which such Holder would have owned or have been entitled to receive after
the occurrence of any of the events described above had such Security been
exchanged immediately prior to the occurrence of such event. If any dividend or
distribution of the type described in clause (i) above is not so paid or made,
the Exchange Rate shall again be adjusted to the Exchange Rate which would then
be in effect if such dividend as distribution had not been declared. An
adjustment made pursuant to this Section 11.06 shall become effective
immediately after the record date in the case of a dividend and shall become
effective immediately after the effective date in the case of a subdivision or
combination.

         SECTION 11.07.    ADJUSTMENT FOR RIGHTS OR WARRANTS.

         In case the Guarantor shall issue rights or warrants to all holders of
its Common Shares entitling them (for a period expiring within 45 days after the
record date mentioned below) to subscribe for or purchase Common Shares at a
price per share less than the Market Price per Common Share at the record date
for the determination of stockholders entitled to receive such rights or
warrants, the Exchange Rate in effect immediately prior thereto shall be
adjusted so that the same shall equal the Exchange Rate determined by
multiplying the Exchange Rate in effect immediately prior to the date of
issuance of such rights or warrants by a fraction of which the numerator shall
be the number of Common Shares outstanding on the date of issuance of such
rights or warrants plus the number of additional Common Shares offered to
holders of Common Shares for subscription or purchase, and of which the
denominator shall be the number of Common Shares outstanding on the date of
issuance of such rights or warrants plus the number of Common Shares which the
aggregate offering price of the total number of shares so offered would purchase
at such Market Price. Such adjustment shall be made successively whenever any
such rights or warrants are issued, and shall become effective immediately after
the opening of business on the day following the record date for the
determination of the stockholders entitled to receive such rights or warrants.
To the extent that Common Shares are not delivered after the expiration of such
rights or warrants, the Exchange Rate shall be readjusted to the Exchange Rate
which would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of delivery of only the number of
Common Shares


                                       59

<PAGE>

actually delivered. If such rights or warrants are not so issued, the Exchange
Rate shall again be adjusted to be the Exchange Rate which would then be in
effect if such record date for the determination of stockholders entitled to
receive such rights or warrants had not been fixed. In determining whether any
rights or warrants entitle the holders to subscribe for or purchase Common
Shares at less than such Market Price of such Common Shares, and in determining
the aggregate offering price of such Common Shares, there shall be taken into
account any consideration received by the Guarantor for such rights or warrants,
the value of such consideration, if other than cash, to be determined by the
Guarantor's Board of Directors.

SECTION 11.08.    ADJUSTMENT FOR OTHER DISTRIBUTIONS.

              (a) In case the Guarantor shall distribute to all holders of its
Common Shares (excluding any distribution in connection with the liquidation,
dissolution or winding up of the Guarantor, whether voluntary or involuntary)
any shares of any class of capital stock of the Guarantor (other than Common
Shares), or evidences of indebtedness of the Guarantor or of assets (other than
cash and other than dividends, distributions or rights or warrants to subscribe
for or purchase any of its securities referred to in Section 11.07 hereof) (any
of the foregoing hereinafter in this Section 11.08(a) called the "DISTRIBUTED
SECURITIES"), then, the Exchange Rate shall be adjusted so that the same shall
equal the Exchange Rate determined by multiplying the Exchange Rate in effect
immediately prior to the date of such distribution by a fraction of which the
numerator shall be the Market Price per Common Share on the record date
mentioned below, and the denominator shall be the Market Price per Common Share
on such record date less the fair market value on such record date (as
determined by the Guarantor's Board of Directors, whose determination shall be
conclusive, and described in a certificate filed with the Trustee) of the
Distributed Securities so distributed applicable to one Common Share. Such
adjustment shall become effective immediately after the record date for the
determination of stockholders entitled to receive such distribution.
Notwithstanding the foregoing, in the event that the then fair market value (as
so determined) of the portion of the Distributed Securities so distributed
applicable to one Common Share is equal to or greater than the Market Price of
the Common Shares on the record date, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Holder shall have the right to
receive upon exchange the amount of Distributed Securities such Holder would
have received had such Holder exchanged each Security immediately prior to such
record date. In the event that such distribution is not so paid or made, the
Exchange Rate shall again be adjusted to the Exchange Rate which would then be
in effect if such distribution had not been declared. If the Guarantor's Board
of Directors determines the fair market value of any distribution for purposes
of this Section 11.08(a) by reference to the actual or when issued trading
market for any securities, it must in doing so consider the prices in such
market over the same period used in computing the Market Price of the Common
Shares.

         Notwithstanding the foregoing provisions of this Section 11.08(a), no
adjustment shall be made thereunder for any distribution of Distributed
Securities if the Guarantor makes proper provision so that each Holder of a
Security who exchanges such Security (or any portion thereof) after the record
date for such distribution shall be entitled to receive upon such exchange, in
addition to the Common Shares issuable upon such exchange, the amount and kind
of Distributed Securities that such Holder would have been entitled to receive
if such Holder had, immediately prior to such record date, exchanged such
Security for Common Stock; PROVIDED


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<PAGE>

that, with respect to any Distributed Securities that are convertible,
exchangeable or exercisable, the foregoing provision shall only apply to the
extent (and so long as) the Distributed Securities receivable upon exchange of
such Security would be convertible, exchangeable or exercisable, as applicable,
without any loss of rights or privileges for a period of at least 60 days
following exchange of such Security.

              (b) In case the Guarantor shall, by dividend or otherwise,
distribute to all holders of its Common Shares cash (excluding (x) any quarterly
cash dividend on the Common Stock to the extent the aggregate cash dividend per
Common Share in any fiscal quarter does not exceed the greater of (A) the amount
per Common Share of the immediately preceding quarterly cash dividend on the
Common Shares to the extent such preceding quarterly dividend did not require
any adjustment of the Exchange Rate pursuant to this Section 11.08(b) (as
adjusted to reflect subdivisions or combinations of the Common Shares), and (B)
4.5% of the average of the last reported sales price of the Common Shares
(determined as provided in the definition of Market Price) during the ten
Trading Days immediately prior to the date of declaration of such dividend and
(y) any dividend or distribution in connection with the liquidation, dissolution
or winding up of the Guarantor, whether voluntary or involuntary), then, in such
case, unless the Guarantor elects to reserve such cash for distribution to the
Holders of the Securities upon the exchange of the Securities so that any such
Holder exchanging Securities will receive upon such exchange in addition to the
Common Shares to which such Holder is entitled, the amount of cash which such
Holder would have received if such Holder had, immediately prior to the record
date for such distribution of cash, exchanged its Securities for Common Shares,
the Exchange Rate shall be increased so that the same shall equal the Exchange
Rate determined by multiplying the Exchange Rate in effect immediately prior to
the record date by a fraction of which the numerator shall be such Market Price
of the Common Shares and the denominator shall be the Market Price of the Common
Shares on the record date less the amount of cash so distributed (and not
excluded as provided above) applicable to one Common Shares, such increase to be
effective immediately prior to the opening of business on the day following the
record date; PROVIDED, HOWEVER, that in the event that the portion of the cash
so distributed applicable to one Common Share is equal to or greater than the
Market Price of the Common Shares on the record date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall have the
right to receive upon exchange the amount of cash such Holder would have
received had such Holder exchanged each Security on the record date. If such
dividend or distribution is not so paid or made, the Exchange Rate shall again
be adjusted to be the Exchange Rate which would then be in effect if such
dividend or distribution had not been declared. If any adjustment is required to
be made as set forth in this Section 11.08(b) as a result of a distribution that
is a quarterly dividend, such adjustment shall be based upon the amount by which
such distribution exceeds the amount of the quarterly cash dividend permitted to
be excluded pursuant hereto. If an adjustment is required to be made as set
forth in this Section 11.08(b) above as a result of a distribution that is not a
quarterly dividend, such adjustment shall be based upon the full amount of the
distribution.

         SECTION 11.09.    WHEN ADJUSTMENT MAY BE DEFERRED.

         No adjustment in the Exchange Rate need be made unless the adjustment
would require an increase or decrease of at least 1% in the Exchange Rate. Any
adjustments that are made shall be carried forward and taken into account any
subsequent adjustment.


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<PAGE>

         All calculations under this Article 11 shall be made to the nearest
cent or to the nearest 1/10,000th of a share, as the case may be.

         SECTION 11.10.    WHEN NO ADJUSTMENT REQUIRED.

         No adjustment need be made for rights to purchase Common Shares
pursuant to a Guarantor 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 Shares.

         To the extent the Securities become exchangeable for cash, assets,
property or securities (other than capital stock of the Guarantor), no
adjustment need be made thereafter as to the cash, assets, property or such
securities. Interest will not accrue on the cash.

         SECTION 11.11.    NOTICE OF ADJUSTMENT.

         Whenever the Exchange Rate is adjusted, the Company shall promptly mail
to Holders a notice of the adjustment. The Company shall file with the Trustee
and the Exchange Agent such notice. The certificate shall, absent manifest
error, be conclusive evidence that the adjustment is correct. Neither the
Trustee nor any Exchange 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 CHANGE.

         The Guarantor may make such increases or decreases, in one or more
increments, in the Exchange Rate, in addition to those required by Sections
11.06, 11.07 and 11.08 hereof, as the Guarantor's Board of Directors considers
to be advisable to avoid or diminish any income tax to holders of Common Shares
or rights to purchase Common Shares resulting from any dividend or distribution
of stock (or rights to acquire stock) or from any event treated as such for
income tax purposes. To the extent permitted by applicable law, the Guarantor
may from time to time increase, in one or more increments, the Exchange Rate by
any amount for any period of time if the period is at least 20 Business Days,
the increase is irrevocable during the period and the Guarantor's Board of
Directors shall have made a determination that such increase would be in the
best interests of the Guarantor, which determination shall be conclusive.
Subsequent to any such increase, the Guarantor may from time to time lower the
Exchange Rate to any rate that is not lower than the Exchange Rate that would
have been applicable had any such increase not occurred, if the Guarantor's
Board of Directors has determined that the decrease would be in the Guarantor's
best interests. Whenever the Exchange Rate is changed pursuant to this Section
11.12, the Company shall mail to Holders and file with the Trustee and the
Exchange Agent a notice of such increase. The Company shall mail such notice at
least seven days before the date the increased or decreased Exchange Rate takes
effect. The notice shall state the increased or decreased Exchange Rate and the
period it will be in effect.


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<PAGE>

         SECTION 11.13.    NOTICE OF CERTAIN TRANSACTIONS.

         If:

              (1) the Guarantor makes any distribution or dividend that would
require an adjustment in the Exchange Rate pursuant to Section 11.06, 11.07 or
11.08 hereof; or

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

              (3) there is a liquidation, dissolution or winding-up of the
Guarantor;

then the Company shall mail to Holders and file with the Trustee and the
Exchange 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, conveyance , transfer, lease,
dissolution, liquidation or winding-up. The Company shall file and mail the
notice at least 10 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.    EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER
                           OR TRANSFER.

         If any of the following events occur, namely (i) any reclassification
or change of outstanding Common Shares (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), (ii) any consolidation, merger or
combination of the Guarantor with one or more other Persons as a result of which
holders of Common Shares shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Shares, or (iii) any conveyance, transfer or lease of the properties and
assets of the Guarantor substantially as an entirety to any other Person as a
result of which holders of Common Shares shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to or in
exchange for such Common Shares, then the Company and the Guarantor or the
successor or purchasing Person, as the case may be, shall execute with the
Trustee a supplemental indenture, providing that each Security shall be
exchangeable for the kind and amount of shares of stock and other securities or
property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, combination, conveyance, transfer or lease by a
holder of a number of Common Shares issuable upon exchange of such Securities
immediately prior to such reclassification, change, consolidation, merger,
combination, conveyance, transfer or lease. Such supplemental indenture shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article.

         The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder of Securities, at such Holder's address
appearing on the Security register provided for in Section 2.03 hereof.

         The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
conveyances, transfers or leases.


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<PAGE>

         If this Section applies, none of Sections 11.06, 11.07 nor 11.08 hereof
apply.

         SECTION 11.15.    COMPANY DETERMINATION FINAL.

         Any determination that the Company or its Board of Directors or the
Guarantor or its Board of Directors must make pursuant to Section 11.03, 11.06,
11.07, 11.08, 11.09, 11.10, 11.12, 11.14 or 11.17 hereof shall be conclusive in
the absence of manifest error.

         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 hereof 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 exchange of Securities. The Trustee shall not be responsible for the
Company's or the Guarantor's failure to comply with this Article 11, and shall
not be deemed to have knowledge of any adjustment unless and until it shall have
received a notice of adjustment pursuant to Section 11.11 hereof. Each Exchange
Agent (other than the Company or one of its Affiliates) 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 Exchange
Rate under more than one of Section 11.06, 11.07, 11.08(a) or 11.08(b) hereof,
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 11.08(a) hereof, second, the provisions of Section
11.08(b) hereof, third, the provisions of Section 11.06 hereof and, fourth, the
provisions of Section 11.07 hereof, PROVIDED that no adjustment shall be made
more than once pursuant to any such individual Section.

         SECTION 11.18.    SUCCESSIVE ADJUSTMENTS.

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

         SECTION 11.19.    RIGHTS ISSUED IN RESPECT OF COMMON SHARES ISSUED
                           UPON EXCHANGE.

         Notwithstanding any other provision hereof, in the event that the
Guarantor implements a stockholders' rights plan, such rights plan shall provide
that upon exchange of the Securities the Holders will receive, in addition to
the Common Shares issuable upon such exchange, such rights, whether or not such
rights have separated from the Common Shares at the time of such exchange.

         Rights or warrants distributed by the Guarantor to all holders of
Common Shares entitling the holders thereof to subscribe for or purchase shares
of the Guarantor's capital stock (either


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<PAGE>

initially or under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("TRIGGER EVENT"):

              (i) are deemed to be transferred with such Common Shares,

              (ii) are not exercisable, and

              (iii) are also issued in respect of future issuances of Common
Shares,

shall not be deemed distributed for purposes of Section 11.08(a) hereof until
the occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of rights or warrants, or any Trigger Event with respect thereto,
that shall have resulted in an adjustment to the Exchange Rate under Section
11.08(a) hereof, (1) in the case of any such rights or warrants which shall all
have been redeemed or repurchased without exercise by any holders thereof, the
Exchange Rate shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be, as though
it were a cash distribution, equal to the per share redemption or repurchase
price received by a holder of Common Shares with respect to such rights or
warrants (assuming such holder had retained such rights or warrants), made to
all holders of Common Shares as of the date of such redemption or repurchase,
and (2) in the case of any such rights or warrants all of which shall have
expired without exercise by any holder thereof, the Exchange Rate shall be
readjusted as if such issuance had not occurred.

         SECTION 11.20.    GENERAL CONSIDERATIONS.

         Whenever successive adjustments to the Exchange Rate are called for
pursuant to this Article 11, such adjustments shall be made to the Market Price
as may be necessary or appropriate to effectuate the intent of this Article 11
and to avoid unjust or inequitable results as determined in good faith by the
Guarantor's Board of Directors.

                                  ARTICLE 12.
                              CONTINGENT INTEREST

         SECTION 12.01.    GENERAL.

              (a) The Securities shall provide for payment of Contingent
Interest in certain circumstances as specified in paragraph 10 of the
Securities.

              (b) Holders of Securities at the close of business on a Contingent
Interest Record Date will receive payment of Contingent Interest, payable on the
corresponding Contingent Interest Payment Date notwithstanding the exchange of
such Securities at any time after the close of business on such Contingent
Interest Record Date. Securities surrendered for exchange by a Holder during the
period from the close of business on any Contingent Interest Record Date to the
opening of business on the immediately following Contingent Interest Payment
Date must be accompanied by payment of an amount equal to the Contingent
Interest that the Holder is to receive on the Securities; provided, however,
that no such payment need be made if (1) the Company has specified a Redemption
Date that is after a Contingent Interest Record Date and on or prior to the
immediately following Contingent Interest Payment Date, (2) the Company has
specified a Fundamental Change Repurchase Date following a Fundamental


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<PAGE>

Change that is during such period or (3) any overdue Contingent Interest exists
at the time of exchange with respect to such Securities to the extent of such
overdue Contingent Interest. The Holders of the Securities and any Common Shares
issuable upon exchange thereof will continue to be entitled to receive
Liquidated Damages, if any, in accordance with the Registration Rights
Agreement.

              (c) In the event that any date on which Contingent Interest or any
other amount is payable on a Security is not a Business Day, then a payment of
the amount payable on such date will be made on the next succeeding day which is
a Business Day and (without any interest or other payment in respect of any such
delay) with the same force and effect as if made on the date the payment was
originally payable.

         SECTION 12.02.    DEFAULTED CONTINGENT INTEREST; INTEREST RIGHTS
                           PRESERVED.

         Except as otherwise specified with respect to the Securities, any
Contingent Interest on any Security that is payable, but is not punctually paid
or duly provided for, within 30 days following any Contingent Interest Payment
Date (herein called "DEFAULTED CONTINGENT INTEREST") shall forthwith cease to be
payable to the registered Holder thereof on the relevant Contingent Interest
Record Date by virtue of having been such Holder, and such Defaulted Contingent
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
Contingent Interest to the Persons in whose names the Securities are registered
at the close of business on a special record date (herein called "SPECIAL
CONTINGENT INTEREST RECORD DATE") for the payment of such Defaulted Contingent
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 Contingent
Interest or shall make arrangements satisfactory to the Trustee for such deposit
on or prior to the date of proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Contingent Interest as in this clause provided. Thereupon the Trustee shall fix
a Special Contingent Interest Record Date for the payment of such Defaulted
Contingent Interest which shall be not more than 15 days and not less than 10
days prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Contingent Interest Record
Date and, in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Contingent Interest and the Special
Contingent Interest 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 Holders maintained pursuant to Section 2.05 hereof not less than 10 days
prior to such Special Contingent Interest Record Date. The Trustee may, in its
discretion, in the name and at the expense of the Company, cause a similar
notice to be published at least once in an Authorized Newspaper in each place of
payment, but such publications shall not be a condition precedent to the
establishment of such Special Contingent Interest Record Date. Notice of the


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<PAGE>

proposed payment of such Defaulted Contingent Interest and the Special Record
Date therefor having been mailed as aforesaid, such Defaulted Contingent
Interest shall be paid to the persons in whose names the Securities are
registered at the close of business on such Special Contingent Interest Record
Date and shall no longer be payable pursuant to the following clause (2).

              (2) The Company may make payment of any Defaulted Contingent
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.

         Subject to the foregoing provisions of this Section and Section 2.07
hereof, 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 Contingent Interest accrued and unpaid, and to accrue, which were
carried by such other Security.

                                  ARTICLE 13.
                                 MISCELLANEOUS

         SECTION 13.01.    TRUST INDENTURE ACT.

         This Indenture is hereby made subject to, and shall be governed by, the
provisions of the TIA required to be part of and to govern indentures qualified
under the TIA; PROVIDED, HOWEVER that this Section 13.01 shall not require this
Indenture or the Trustee to be qualified under the TIA prior to the time such
qualification is in fact required under the terms of the TIA, nor shall it
constitute any admission or acknowledgment by any party that any such
qualification is required prior to the time such qualification is in fact
required under the terms of the TIA. If any provision hereof limits, qualifies
or conflicts with another provision hereof which is required to be included in
an indenture qualified under the TIA, such required provision shall control.

         SECTION 13.02.    NOTICES.

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

         if to the Company:

                  Nabors Industries, Inc.
                  c/o Nabors Corporate Services, Inc.
                  515 West Greens Road, Suite 1200
                  Houston, Texas  77067
                  Attn:  General Counsel
                  Telephone Number:  (281) 874-0035
                  Facsimile Number:  (281) 775-8431

         if to the Guarantor:


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<PAGE>
                  Nabors Industries, Ltd.
                  2nd Fl., International Trading Centre
                  Warrens
                  St. Michael, Barbados
                  Attn:  Vice President-Administration
                  Telephone Number:  (246) 421-9471
                  Facsimile Number:  (246) 421-9472

         if to the Trustee:

                  Bank One, N.A.
                  1111 Polaris Parkway Suite 1K, OH1-0181
                  Columbus, Ohio  43240
                  Attn:  Global Corporate Trust Services Group
                  Telephone Number:  (614) 248-6229
                  Facsimile Number:  (614) 248-5195

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

         Any notice or communication given to a Holder shall be mailed to the
Holder, by first class mail, postage prepaid, at the Holder'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 Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not received by the addressee.

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

         SECTION 13.03.    COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.

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

         SECTION 13.04.    CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

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


                                       68

<PAGE>

              (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 individual 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 individual, he
or she has made such examination or investigation as is necessary to enable him
or her 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 individual, 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, EXCHANGE AGENT
                           AND REGISTRAR.

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

         SECTION 13.08.    GOVERNING LAW.

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

         SECTION 13.09.    NO RECOURSE AGAINST OTHERS.

         A director, officer, employee or stockholder, as such, of the Company
or the Guarantor shall not have any liability for any obligations of the Company
or the Guarantor under the Securities, the Guarantee 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 Holder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Securities.


                                       69

<PAGE>

         SECTION 13.10.    RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS.

         The Company may set a record date for purposes of determining the
identity of Holders entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture, which record date shall be the
later of 10 days prior to the first solicitation of such vote or consent or the
date of the most recent list of Holders furnished to the Trustee pursuant to
Section 2.05 prior to such solicitation. If a record date is fixed, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to take such action by vote or consent
or to revoke any vote or consent previously given, whether or not such Persons
continue to be Holders after such record date.

         SECTION 13.11.    RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.

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

         SECTION 13.12.    SUCCESSORS.

         All agreements of the Company and the Guarantor in this Indenture and
the Securities shall bind their respective successors. 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 (including by facsimile) 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.

                            (SIGNATURE PAGE FOLLOWS)


                                       70
<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 written above.



                                      NABORS INDUSTRIES, INC.



                                      By:  /s/ BRUCE P. KOCH
                                          -------------------------------------
                                      Name: Bruce P. Koch
                                      Title:



                                      NABORS INDUSTRIES LTD.



                                      By:  /s/ BRUCE P. KOCH
                                          -------------------------------------
                                      Name: Bruce P. Koch
                                      Title:





                                      BANK ONE, N.A., as Trustee



                                      By: /s/ JOSIE HIXON
                                          -------------------------------------
                                      Name: Josie Hixon
                                      Title: Vice President


                                       71

<PAGE>
                                    EXHIBIT A

                           [FORM OF FACE OF SECURITY]

FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE CODE, THIS
SECURITY IS A CONTINGENT PAYMENT DEBT INSTRUMENT AND WILL ACCRUE ORIGINAL ISSUE
DISCOUNT AT THE ISSUER'S "COMPARABLE YIELD" FOR UNITED STATES FEDERAL INCOME TAX
PURPOSES. PURSUANT TO SECTION 4.10 OF THE INDENTURE, THE COMPANY AGREES, AND BY
ACCEPTANCE OF A BENEFICIAL OWNERSHIP INTEREST IN THE SECURITY, EACH BENEFICIAL
HOLDER OF THE SECURITIES WILL BE DEEMED TO HAVE AGREED, FOR UNITED STATES
FEDERAL INCOME TAX PURPOSES, (i) TO TREAT THE SECURITIES AS INDEBTEDNESS THAT IS
SUBJECT TO THE CONTINGENT PAYMENT DEBT INSTRUMENT REGULATIONS UNDER SECTION
1.1275-4 OF THE UNITED STATES TREASURY REGULATIONS (THE "CPDI REGULATIONS"),
AND, FOR PURPOSES OF THE CPDI REGULATIONS, TO TREAT THE FAIR MARKET VALUE OF
COMMON SHARES RECEIVED BY A BENEFICIAL HOLDER UPON ANY EXCHANGE OF THE
SECURITIES AS A CONTINGENT PAYMENT AND (ii) TO BE BOUND BY THE COMPANY'S
DETERMINATION OF THE "COMPARABLE YIELD" AND "PROJECTED PAYMENT SCHEDULE" WITHIN
THE MEANING OF THE CPDI REGULATIONS, WITH RESPECT TO THE SECURITIES AND TO
ACCRUE ORIGINAL ISSUE DISCOUNT AT THE COMPARABLE YIELD AS DETERMINED BY THE
COMPANY. THE COMPANY'S DETERMINATION OF THE "COMPARABLE YIELD" IS 5.53% PER
ANNUM, COMPOUNDED SEMIANNUALLY. THE PROJECTED PAYMENT SCHEDULE, DETERMINED BY
THE COMPANY, IS ATTACHED TO THE INDENTURE AS ANNEX 1. YOU MAY OBTAIN THE AMOUNT
OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE, COMPARABLE YIELD AND PROJECTED PAYMENT
SCHEDULE FOR THE SECURITY BY TELEPHONING THE COMPANY'S TREASURY DEPARTMENT AT
(281) 874-0035 OR SUBMITTING A WRITTEN REQUEST FOR SUCH INFORMATION TO: NABORS
INDUSTRIES, INC., 515 W. GREENS ROAD, SUITE 1200, HOUSTON, TEXAS 77067,
ATTENTION: TREASURY DEPARTMENT.

                      [FORM OF LEGEND FOR GLOBAL SECURITY]

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

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFER IN WHOLE, BUT NOT
IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF


                                      A-1

<PAGE>

OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

                          [RESTRICTED SECURITY LEGEND]

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS NOTE AND THE COMMON SHARES ISSUABLE UPON EXCHANGE
HEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE
IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY AND THE GUARANTOR
THAT (A) THIS NOTE AND THE COMMON SHARES ISSUABLE UPON EXCHANGE HEREOF MAY BE
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED STATES
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO
IN (A) ABOVE IN ANY CASE, THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY,
ENGAGE IN ANY HEDGING TRANSACTIONS WITH REGARD TO THE SECURITIES EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT.


                                      A-2

<PAGE>

                             NABORS INDUSTRIES, INC.

                  ZERO COUPON SENIOR EXCHANGEABLE NOTE DUE 2023



No.
Issue Date:  June 10, 2003
Principal Amount:  $

                                                          CUSIP:  629568 AJ 5(1)

         Nabors Industries, Inc., a Delaware corporation, promises to pay to
______________________ or registered assigns, on June 15, 2023 the Principal
Amount of __________________________________ Dollars ($________________) [or
such greater or lesser Principal Amount as may be shown on Schedule A
hereto].(2)

         This Security shall not bear interest except as specified on the other
side of this Security. This Security is exchangeable for Common Shares of Nabors
Industries Ltd. as specified on the other side of this Security.

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

         Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

         IN WITNESS WHEREOF, Nabors Industries, Inc. has caused this instrument
to be duly executed.

                                          NABORS INDUSTRIES, INC.



                                          By:_________________________________

                                          Name:_______________________________

                                          Title:______________________________

Dated:___________________


--------------
1 For Restricted Securities only; otherwise, 629568 AK 2.
2 For inclusion in the global Security only.



                                      A-3

<PAGE>

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

         Bank One, N.A., as Trustee, certifies that this is one of the
Securities referred to in the within-mentioned Indenture.

By_____________________________
Authorized Signatory


                                      A-4

<PAGE>

                       [FORM OF REVERSE SIDE OF SECURITY]

                             NABORS INDUSTRIES, INC.

                  ZERO COUPON SENIOR EXCHANGEABLE NOTE DUE 2023

1.       INTEREST

         This Security shall not bear interest except as specified in this
paragraph or in paragraph 10 hereof. If the Principal Amount hereof or any
portion of such Principal Amount 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 5 hereof, upon the date set for payment
of a Purchase Price or Fundamental Change Purchase Price pursuant to paragraph 6
hereof or upon the Stated Maturity of this Security), or if Contingent Interest,
if any, due hereon is not paid when due in accordance with paragraph 10 hereof,
then in each such case the overdue amount shall bear interest at the rate of
1.0% per annum, compounded semiannually (to the extent that the payment of such
interest shall be legally enforceable), which interest shall accrue from the
date such overdue amount was 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.

2.       METHOD OF PAYMENT

         Subject to the terms and conditions of the Indenture, the Company will
make payments in respect of the Securities to the Persons entitled thereto.
Holders must surrender Securities to the Paying Agent to collect payments in
respect of the Principal Amount of the Securities. The Company will make all
cash payments due on the Securities (i) by wire transfer of immediately
available funds with respect to Securities held in book-entry form or Securities
held in certificated form with an aggregate Principal Amount in excess of
$2,000,000 whose Holder has requested such method of payment and provided wire
transfer instructions to the Paying Agent or (ii) by check payable in such money
mailed to a Holder's registered address with respect to any other certificated
Securities. The Company will pay cash amounts due on the Securities in money of
the United States that at the time of payment is legal tender for payment of
public and private debts.

3.       PAYING AGENT, EXCHANGE AGENT AND REGISTRAR

         Initially, Bank One, N. A., a national banking association (the
"TRUSTEE"), will act as Paying Agent, Exchange Agent and Registrar. The Company
may appoint and change any Paying Agent, Exchange Agent, Registrar or
co-registrar without notice, other than notice to the Trustee. The Company, the
Guarantor or any of their Subsidiaries or Affiliates may act as Paying Agent,
Exchange Agent, Registrar or co-registrar.


                                       A-5

<PAGE>


4.       INDENTURE

         The Company issued the Securities under an Indenture (the "INDENTURE"),
dated as of June 10, 2003, among the Company, the Guarantor and the Trustee.
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
Holders are referred to the Indenture for a statement of those terms.

         The Securities are general unsecured obligations of the Company, and
are fully and unconditionally guaranteed as to payment by the Guarantor as
provided in Article 10 of the Indenture and as evidenced by the notation of
Guarantee endorsed hereon. The Indenture does not limit the indebtedness issued
thereunder or other indebtedness of the Company or the Guarantor, whether
secured or unsecured.

5.       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 at the Principal Amount plus accrued and unpaid Liquidated
Damages, if any, Contingent Interest, if any, and Additional Amounts, if any,
and overdue interest, if any, provided that the Securities are not redeemable
prior to June 15, 2008. The Company may, upon at least 30 days' notice to the
Holders, on one or more occasions, elect to extend the period in which it cannot
redeem the Securities.

6.       REPURCHASE BY THE COMPANY AT THE OPTION OF THE HOLDER; REPURCHASE AT
         THE OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE

              (a) Subject to the terms and conditions of the Indenture, the
Company shall become obligated to repurchase, at the option of the Holder, all
or any portion of the Securities held by such Holder on June 15, 2008, June 15,
2013 and June 15, 2018 at a Purchase Price equal to the Principal Amount
thereof, together with accrued and unpaid Liquidated Damages, if any, Contingent
Interest, if any, Additional Amounts, if any, and overdue interest, if any, upon
delivery of a Repurchase Notice containing the information set forth in the
Indenture, at any time during the period from the opening of business on the
date that is 20 Business Days prior to such Repurchase Date until the close of
business on such Repurchase Date and upon delivery of the Securities to the
Paying Agent by the Holder as set forth in the Indenture. Such Purchase Price
may be paid, at the option of the Company, in cash or by the issuance and
delivery of Common Shares of the Guarantor, or in any combination thereof.

         Securities in denominations larger than $1,000 of Principal Amount may
be repurchased in part, but only in integral multiples of $1,000 of Principal
Amount.

              (b) At the option of the Holder and subject to the terms and
conditions of the Indenture, the Company shall become obligated to repurchase
the Securities held by such Holder and delivered to the Company or its
designated agent on or before 30 days after the date of the Company's notice of
a Fundamental Change occurring on or prior to June 15, 2023 for a Fundamental
Change Purchase Price equal to the Principal Amount thereof plus accrued and
unpaid Liquidated Damages, if any, Contingent Interest, if any, Additional
Amounts, if any, and


                                      A-6

<PAGE>

overdue interest, if any, to the Fundamental Change Repurchase Date, which
Fundamental Change Purchase Price shall be paid in cash. Securities in
denominations larger than $1,000 of Principal Amount may be repurchased in part
in connection with a Fundamental Change, but only in integral multiples of
$1,000 of Principal Amount.

              (c) Holders have the right to withdraw any Repurchase Notice or
Fundamental Change Repurchase 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.

              (d) If cash (and/or securities if permitted under the Indenture)
sufficient to pay a Purchase Price or Fundamental Change Purchase Price, as the
case may be, of all Securities or portions thereof to be repurchased as of the
Repurchase Date or the Fundamental Change Repurchase Date, as the case may be,
is deposited with the Paying Agent by 10:00 a.m., New York City time, on the
Business Day following the Repurchase Date or the Fundamental Change Repurchase
Date, as the case may be, Liquidated Damages, if any, Contingent Interest, if
any, Additional Amounts, if any, and overdue interest, if any, cease to accrue
on such Securities (or portions thereof) on and after such date, and the Holder
thereof shall have no other rights as such (other than the right to receive the
Purchase Price or Fundamental Change Purchase Price, as the case may be, upon
surrender of such Security).

7.       NOTICE OF REDEMPTION AT THE OPTION OF THE COMPANY

         Notice of redemption at the option of the Company 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 all Securities (or portions thereof)
to be redeemed on the Redemption Date is deposited with the Paying Agent by
10:00 a.m., New York City time, on the Redemption Date, on and after such date
Liquidated Damages, if any, Contingent Interest, if any, Additional Amounts, if
any, and overdue interest, if any, cease to accrue on such Securities or
portions thereof. Securities in denominations larger than $1,000 of Principal
Amount may be redeemed in part but only in multiples of $1,000 of Principal
Amount.

8.       RANKING

         The Securities and the Guarantee rank equally in contractual right of
payment with all of the other existing and future unsubordinated indebtedness of
the Company and the Guarantor, respectively.

9.       EXCHANGE

         Subject to the next two succeeding sentences, a Holder of a Security
may exchange this Security for Common Shares of the Guarantor prior to the close
of business on June 15, 2023 (unless earlier redeemed or repurchased), but only
upon the occurrence of one of the four events set forth in Section 11.01 of the
Indenture. If this Security is called for redemption, the Holder may exchange it
at any time before the close of the last Trading Day prior to the Redemption
Date. A Security in respect of which a Holder has delivered a notice of exercise
of the option to require the Company to repurchase such Security or to
repurchase such Security in the event of a


                                      A-7

<PAGE>

Fundamental Change may be exchanged only if the notice of exercise is withdrawn
in accordance with the terms of the Indenture.

         The initial Exchange Rate is 14.2653 Common Shares per $1,000 Principal
Amount, subject to adjustment in certain events described in the Indenture. The
Company will deliver cash or a check in lieu of any fractional Common Share.

         The Holders' right to exchange Securities into Common Shares is subject
to the Company's right to elect to instead pay such Holder, in respect of all or
a portion of such Securities, the amount of cash set forth in the next
succeeding sentence in lieu of delivering all or part of such Common Shares;
PROVIDED, HOWEVER, that if such payment of cash is not permitted pursuant to the
provisions of the Indenture or the provisions of any other agreement or
instrument to which the Company is a party or by which it is bound or otherwise,
the Company shall deliver Common Shares (and cash in lieu of fractional Common
Shares) in accordance with Article 11 of the Indenture, whether or not the
Company has delivered a notice pursuant to Section 11.02 to the effect that the
Securities will be paid in cash. The amount of cash to be paid for each $1,000
Principal Amount of a Security to be exchanged shall be equal to the average of
the Sale Prices of the Common Shares for the five Trading Days beginning on the
Trading Day immediately following the date on which the Company notifies the
Holders that it has elected to pay cash in lieu of delivering Common Shares with
respect to all or part of such exchanges, multiplied by the Exchange Rate in
effect on such notification date.

         The Company shall not pay cash in lieu of delivering all or part of
such Common Shares upon the exchange of any Security pursuant to the terms of
Article 11 of the Indenture (other than cash in lieu of fractional shares) if
there has occurred (prior to, on or after, as the case may be, the Exchange Date
or the date on which the Company delivers its notice of whether each Security
shall be exchanged for Common Shares or cash) and is continuing an Event of
Default (other than a default in such payment on such Securities); PROVIDED,
HOWEVER, that this sentence shall not apply in the event that an Event of
Default occurs after such cash is paid.

         To exchange this Security a Holder must (1) complete and manually sign
the exchange notice on the back of this Security (or complete and manually sign
a facsimile of such notice) and deliver such notice to the Exchange Agent, (2)
complete and manually sign the exchange notice to the Company on the back of
this Security (or complete and manually sign a facsimile of such notice) and
deliver such notice to the Company, (3) surrender this Security to the Exchange
Agent, (4) furnish appropriate endorsements and transfer documents if required
by the Exchange Agent, the Company or the Trustee, (5) pay any transfer or
similar tax, if required, and (6) if required by Section 12.01 of the Indenture,
pay funds equal to the Contingent Interest payable on the next Contingent
Interest Payment Date.

         A Holder may exchange a portion of this Security if the Principal
Amount 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 Shares except as provided
in the Indenture. Except as provided in Section 12.01 of the Indenture, on
exchange of this Security, that portion of accrued but unpaid Contingent
Interest, if any, Liquidated Damages, if any, and Additional Amounts, if any, to
the Exchange Date with respect to the exchanged portion of this Security shall
be deemed canceled, extinguished and forfeited through the delivery of the
Common Shares (together with any cash


                                      A-8

<PAGE>

payment in lieu of fractional shares) in exchange for the portion of this
Security being exchanged pursuant to the terms hereof.

10.      CONTINGENT INTEREST

              (a) The Company will pay Contingent Interest ("CONTINGENT
INTEREST") to the Holders of the Securities in respect of any six-month interest
period from June 15 to December 14 or December 15 to June 14 commencing on or
after June 15, 2008 for which the average Trading Price of a Security for the
applicable five Trading Day reference period equals or exceeds 120% of $1,000
per $1,000 Principal Amount of Securities as of the day immediately preceding
the first day of the applicable six-month interest period. The "five Trading Day
reference period" means the five Trading Days ending on the second Trading Day
immediately preceding the relevant six-month interest period. For any six-month
interest period in respect of which Contingent Interest is payable, the
Contingent Interest payable on each Security shall equal 0.185% of the Principal
Amount of the Security.

         Any Contingent Interest will be payable on the June 15 or December 15
(each a "CONTINGENT INTEREST PAYMENT DATE") immediately following the relevant
six-month interest period to the Persons in whose names the Securities are
registered at the close of business on the June 1 or December 1 (each a
"CONTINGENT INTEREST RECORD DATE") immediately preceding the applicable
Contingent Interest Payment Date, except that Contingent Interest payable upon
redemption or repurchase will be paid to the Person to whom the Principal Amount
is payable unless the Redemption Date or Repurchase Date or Fundamental Change
Repurchase Date, as the case may be, is a Contingent Interest Payment Date.
Contingent Interest will be computed on the basis of a 360-day year composed of
twelve 30-day months.

         Upon determination that Holders will be entitled to receive Contingent
Interest which may become payable, the Company shall notify the Holders. In
connection with providing such notice, the Company will issue a press release
and publish a notice containing information regarding the Contingent Interest
determination in a newspaper of general circulation in The City of New York or
publish such information on the Company's then existing Web site or through such
other public medium as the Company shall determine.

              (b) Except as otherwise specified with respect to the Securities,
any Contingent Interest on any Security that is payable, but is not punctually
paid or duly provided for, on any Contingent Interest Payment Date (herein
called "DEFAULTED CONTINGENT INTEREST") shall forthwith cease to be payable to
the Holder thereof on the relevant Contingent Interest Record Date by virtue of
having been such Holder, and such Defaulted Contingent Interest may be paid by
the Company as provided for in Section 12.02 of the Indenture.

              (c) Contingent Interest shall cease to accrue on the Securities
after declaration of acceleration of the Securities as provided in Section 6.02
of the Indenture.

11.      EXCHANGE ARRANGEMENT ON CALL FOR REDEMPTION

         Any Securities called for redemption, unless surrendered for exchange
before the close of business on the last Trading Day prior to 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


                                       A-9

<PAGE>

more investment bankers or other purchasers who may agree with the Company or
the Guarantor to purchase such Securities from the Holders, to exchange them for
Common Shares and to make payment for such Securities to the Trustee in trust
for such Holders.

12.      DENOMINATIONS; TRANSFER; EXCHANGE

         The Securities are in registered form, without coupons, in
denominations of $1,000 of Principal Amount 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 Repurchase Notice or Fundamental Change
Repurchase 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
notice of Securities to be redeemed.

13.      PERSONS DEEMED OWNERS

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

14.      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 six months,
PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being required
to make any such return, shall in the event that the Securities are no longer
held in global form, at the expense of the Company cause to be published once in
a newspaper of general circulation in The City of New York or mail to each such
Holder notice that such money or securities remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication or mailing, any unclaimed money or securities then remaining
will be returned to the Company. 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.

15.      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 of the Securities
at the time outstanding and (ii) certain Defaults and Events of Defaults may be
waived with the consent of the Holders of a majority in aggregate Principal
Amount of the Securities at the time outstanding. Subject to certain exceptions
set forth in the Indenture, without the consent of any Holder, the Company, the
Guarantor and the Trustee may amend the Indenture or the Securities to cure any
ambiguity, defect or inconsistency, or to provide for the assumption of the
Company's or the Guarantor's obligations to the Holders of the Securities in
case of a merger or consolidation or sale of all or substantially all of the
Company's


                                      A-10

<PAGE>

or the Guarantor's assets; to provide for uncertificated Securities in addition
to or in place of certificated Securities; or to make any change that does not
adversely affect the rights of any Holder or to comply with any requirement of
the SEC in connection with the qualification of the Indenture under the TIA.

16.      DEFAULTS AND REMEDIES

         Under the Indenture, Events of Default include (i) the Company defaults
in the payment of the Principal Amount, Redemption Price, Purchase Price or a
Fundamental Change Purchase Price on any Security when the same becomes due and
payable at its Stated Maturity, upon redemption, upon declaration, when due for
repurchase by the Company or otherwise, and such default continues for 10 days;
(ii) the Company defaults in the payment of Liquidated Damages, if any,
Contingent Interest, if any, or Additional Amounts, if any, and such default
continues for 30 days; (iii) failure of the Company or the Guarantor to perform
or comply with the provisions of Section 11.02 of the Indenture, and such
failure continues for a period of 20 days; (iv) the Company or the Guarantor
fails to comply with any of its agreements or covenants in this Security or the
Indenture (other than those referred to in clauses (i) through (iii) above) and
such failure continues for 90 days after receipt by the Company of a Notice of
Default; (v) certain events of bankruptcy or insolvency as set forth in the
Indenture; and (vi) the failure to keep the Guarantee in place. If an Event of
Default occurs and is continuing, the Trustee, or the Holders of at least 25% in
aggregate Principal Amount of the Securities at the time outstanding, may
declare all the Securities to be due and payable immediately. Certain events of
bankruptcy or insolvency are Events of Default which will result in the
Securities being declared due and payable immediately upon the occurrence of
such Events of Default.

         Holders 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 reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in aggregate Principal Amount of the
Securities at the time outstanding may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders notice of any continuing
Default (except a Default in payment of amounts specified in clause (i) and (ii)
above) if it determines that withholding notice is in their interests.

17.      TRUSTEE DEALINGS WITH THE COMPANY

         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, the Guarantor or their
Affiliates and may otherwise deal with the Company, the Guarantor or their
Affiliates with the same rights it would have if it were not Trustee.

18.      NO RECOURSE AGAINST OTHERS

         A director, officer, employee or stockholder, as such, of the Company
or the Guarantor shall not have any liability for any obligations of the Company
or the Guarantor under the Securities, the Guarantee 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 Holder waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Securities.


                                      A-11

<PAGE>

19.      AUTHENTICATION

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

20.      ABBREVIATIONS

         Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TENANT (=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).

21.      REGISTRATION RIGHTS AGREEMENT

         The Holders of Restricted Securities are entitled to the benefits of
the Registration Rights Agreement dated as of June 10, 2003 among the Guarantor,
the Company and the Initial Purchaser.

22.      GOVERNING LAW

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

23.      INDENTURE TO CONTROL

         In case of any conflict between the provisions of this Security and the
Indenture, the provisions of the Indenture shall control.

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

                  Nabors Industries, Inc.
                  515 West Greens Road, Suite 1200
                  Houston, Texas  77067
                  Attention:  Legal Department


                                      A-12

<PAGE>

                          [FORM OF NOTATION ON SECURITY

                             RELATING TO GUARANTEE]

                  Guarantor (which term includes any successor Person in such
capacity under the Indenture), has fully, unconditionally and absolutely
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture, the due and punctual payment of the Principal
Amount, Liquidated Damages, if any, Contingent Interest, if any, and Additional
Amounts, if any, on these Securities and all other amounts due and payable under
the Indenture and these Securities by the Company.

         The obligations of the Guarantor to the Holders of Securities and to
the Trustee pursuant to the Guarantee and the Indenture are expressly set forth
in Article 10 of the Indenture and reference is hereby made to the Indenture for
the precise terms of the Guarantee.

                                        Guarantor:

                                        NABORS INDUSTRIES LTD.


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


                                      A-13

<PAGE>


                            [FORM OF EXCHANGE NOTICE]

                                 EXCHANGE NOTICE
                               THE EXCHANGE AGENT



To:      Nabors Industries, Inc.
         Nabors Industries Ltd.
         c/o Exchange Agent

         The undersigned registered holder of this Security hereby irrevocably
exercises the option to exchange this Security, or portion hereof (which is
$1,000 Principal Amount (as defined in the Indenture to which this Security is
subject) or an integral multiple thereof) below designated, for Common Shares of
Nabors Industries Ltd. in accordance with the terms of the Indenture referred to
in this Security, and directs that the shares issuable and deliverable upon such
exchange, together with any check in payment for fractional shares and any
Securities representing any unexchanged Principal Amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Security not exchanged are to
be issued in the name of a Person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto.

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

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

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



-----------------------------------------------------
(Name)


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


-----------------------------------------------------
(City, State and Zip Code)

Please print name and address

                          Principal Amount to be exchanged
                          (if less than all):
                          $_________,000
                          Social Security or Other Taxpayer
                          Identification Number: ____________


                                      A-14

<PAGE>

                            [FORM OF EXCHANGE NOTICE]

                                   CONFIRMING
                                 EXCHANGE NOTICE
                            TO BE SENT TO THE COMPANY



To:      Nabors Industries, Inc.
         Nabors Industries Ltd.

                  The undersigned registered holder of this Security hereby
irrevocably exercises the option to exchange this Security, or portion hereof
(which is $1,000 Principal Amount (as defined in the Indenture to which this
Security is subject) or an integral multiple thereof) below designated, for
Common Shares of Nabors Industries Ltd. in accordance with the terms of the
Indenture referred to in this Security, and directs that the shares issuable and
deliverable upon such exchange, together with any check in payment for
fractional shares and any Securities representing any unexchanged Principal
Amount hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares or any portion of this
Security not exchanged are to be issued in the name of a Person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.

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


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

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


-----------------------------------------------------
(Name)


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

-----------------------------------------------------
(City, State and Zip Code)

Please print name and address

                            Principal Amount to be exchanged
                            (if less than all):
                            $_________,000
                            Social Security or Other Taxpayer
                            Identification Number: ____________


                                      A-15

<PAGE>

                       [FORM OF OPTION TO ELECT REPURCHASE

                           UPON A FUNDAMENTAL CHANGE]

To:      Nabors Industries, Inc.

         The undersigned registered holder of this Security hereby acknowledges
receipt of a notice from Nabors Industries, Inc. (the "COMPANY") as to the
occurrence of a Fundamental Change with respect to the Company and requests and
instructs the Company to repurchase this Security, or the portion hereof (which
is $1,000 Principal Amount (as defined in the Indenture to which this Security
is subject) or an integral multiple thereof) below designated, in accordance
with the terms of the Indenture referred to in this Security.

Dated:
                                          -------------------------------------
                                                        Signature(s)

                                           Principal Amount to be exchanged
                                           (if less than all):
                                           $_________,000
                                           Social Security or Other Taxpayer
                                           Identification Number: ____________


                                      A-16

<PAGE>

                                 TRANSFER NOTICE

                  This Transfer Notice relates to $__________ Principal Amount
(as defined in the Indenture to which the referenced Securities are subject) of
the Zero Coupon Senior Exchangeable Notes Due 2023 of Nabors Industries, Inc., a
Delaware corporation, held by ____________ (the "TRANSFEROR").

                (I) or (we) assign and transfer this Security to


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


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


-------------------------------------------------------------------------------
               (Insert assignee's social security or tax I.D. no.)

and irrevocably appoint _______________________________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.

Your Signature:
                ---------------------------------------------------------------
     (Sign exactly as your name appears on the other side of this Security)

         Date:
                ---------------------------------------------------------------

         Signature Guarantee:(3)
                               ------------------------------------------------

In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the date that is two years after the later of the
date of original issuance of such Securities and the last date, if any, on which
such Securities were owned by the Company or any Affiliate of the Company, the
undersigned confirms that such Securities are being transferred:

CHECK ONE BOX BELOW

              (1) [ ] to Nabors Industries, Inc.; or

              (2) [ ] pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or

              (3) [ ] pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or

              (4) [ ] pursuant to another available exemption from the
registration requirements of the Securities Act of 1933 provided by Rule 144
thereunder; or

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

3 Signature must be guaranteed by an "eligible guarantor institution" meeting
  the requirements of the Registrar which requirements include membership or
  participation in the Security Transfer Medallion Program ("STAMP") or such
  other "signature guarantee program" as may be determined by the Registrar in
  addition to or in substitution for, STAMP, all in accordance with the
  Securities Exchange Act of 1934, as amended.


                                      A-17

<PAGE>

              (5) [ ] pursuant to an effective registration statement under the
Securities Act of 1933.

                  Unless one of the boxes is checked, the Trustee will refuse to
                  register any of the Securities evidenced by this certificate
                  in the name of any person other than the registered holder
                  thereof; provided, however, that if box (3) or (4) is checked,
                  the Trustee may require, prior to registering any such
                  transfer of the Securities such legal opinions, certifications
                  and other information as it has reasonably requested to
                  confirm that such transfer is being made pursuant to an
                  exemption from, or in a transaction not subject to, the
                  registration requirements of the Securities Act of 1933.

                  Unless the box below is checked, the undersigned confirms that
                  such Security is not being transferred to an "affiliate" of
                  the Company as defined in Rule 144 under the Securities Act of
                  1933 (an "AFFILIATE"):

              (6) [ ] The transferee is an Affiliate of the Company.

                                       ----------------------------------------
                                       Signature


                                       ----------------------------------------
                                       Date


                                       ----------------------------------------
                                       Signature Guarantee(4)


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

4  Signature must be guaranteed by a commercial bank, trust company or member
   firm of the New York Stock Exchange.


                                      A-18

<PAGE>

              TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.

         The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.



Dated:                          -----------------------------------------------
                                [Signature of executive officer of purchaser]
                                 Name:
                                      -----------------------------------------
                                 Title:
                                      -----------------------------------------


                                      A-19

<PAGE>

              [FORM OF SCHEDULE FOR ENDORSEMENTS ON GLOBAL SECURITY
                     TO REFLECT CHANGES IN PRINCIPAL AMOUNT]

                                   SCHEDULE A

                 Changes to Principal Amount of Global Security

<TABLE>
<CAPTION>

                         PRINCIPAL AMOUNT OF SECURITIES BY
                         WHICH THIS GLOBAL SECURITY IS TO
                           BE REDUCED OR INCREASED, AND      REMAINING PRINCIPAL AMOUNT OF THIS
         DATE            REASON FOR REDUCTION OR INCREASE              GLOBAL SECURITY             NOTATION MADE BY
----------------------- ------------------------------------ ------------------------------------ --------------------
<S>                     <C>                                  <C>                                  <C>
</TABLE>


                                      A-20