<PAGE>
 
                                                                     Exhibit 4.1



                                 CENTOCOR, INC.

                                       TO

                    UNITED STATES TRUST COMPANY OF NEW YORK

                                    TRUSTEE



                                   INDENTURE



                         DATED AS OF FEBRUARY 20, 1998



              4 3/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2005

                                       1
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                               TABLE OF CONTENTS

<TABLE>
ARTICLE I
<S>                                                                            <C>
Definitions                                                                     1
            SECTION 1.1.  DEFINITIONS.........................................  1

ARTICLE II

Issue, Description, Execution, Registration and Exchange of Debentures          9
            SECTION 2.1.  DESIGNATION AMOUNT AND ISSUE OF DEBENTURES..........  9
            SECTION 2.2.  FORM OF DEBENTURES..................................  9
            SECTION 2.3.  DATE AND DENOMINATION OF DEBENTURES; PAYMENTS
                          INTEREST............................................ 10
            SECTION 2.4.  EXECUTION OF DEBENTURES............................. 12
            SECTION 2.5.  EXCHANGE AND REGISTRATION OF TRANSFER OF
                          DEBENTURES; RESTRICTIONS ON TRANSFER; DEPOSITARY.... 12
            SECTION 2.6.  MUTILATED, DESTROYED, LOST OR STOLEN DEBENTURES..... 20
            SECTION 2.7.  TEMPORARY DEBENTURES................................ 21
            SECTION 2.8.  CANCELLATION OF DEBENTURES PAID, ETC................ 21
            SECTION 2.9.  CUSIP NUMBERS....................................... 22

ARTICLE III

Redemption of Debentures                                                       22
            SECTION 3.1.  REDEMPTION PRICES................................... 22
            SECTION 3.2.  NOTICE OF REDEMPTION; SELECTION OF DEBENTURES....... 22
            SECTION 3.3.  PAYMENT OF DEBENTURES CALLED FOR REDEMPTION......... 24
            SECTION 3.4.  CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION....... 24
            SECTION 3.5.  REDEMPTION AT OPTION OF HOLDERS..................... 25

ARTICLE IV

Subordination of Debentures                                                    27
            SECTION 4.1.  AGREEMENT OF SUBORDINATION.......................... 27
            SECTION 4.2.  PAYMENTS TO DEBENTUREHOLDERS........................ 27
            SECTION 4.3.  SUBROGATION OF DEBENTURES........................... 30
            SECTION 4.4.  AUTHORIZATION TO EFFECT SUBORDINATION............... 31
            SECTION 4.5.  NOTICE TO TRUSTEE................................... 31
            SECTION 4.6.  TRUSTEE'S RELATION TO SENIOR OBLIGATIONS............ 32
            SECTION 4.7.  NO IMPAIRMENT OF SUBORDINATION...................... 32
            SECTION 4.8.  CERTAIN CONVERSIONS NOT DEEMED PAYMENT.............. 32
            SECTION 4.9.  ARTICLE APPLICABLE TO PAYING AGENTS................. 33
</TABLE>

                                       2
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            SECTION 4.10.  SENIOR OBLIGATIONS ENTITLED TO RELY............... 33
            SECTION 4.11.  RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
                           LIQUIDATING AGENT................................. 33

ARTICLE V

Particular Covenants of the Company                                           34
            SECTION 5.1.   PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST........ 34
            SECTION 5.2.   MAINTENANCE OF OFFICE OR AGENCY................... 34
            SECTION 5.3.   APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S
                           OFFICE............................................ 35
            SECTION 5.4.   PROVISIONS AS TO PAYING AGENT..................... 35
            SECTION 5.5.   EXISTENCE......................................... 36
            SECTION 5.6.   MAINTENANCE OF PROPERTIES......................... 36
            SECTION 5.7.   PAYMENT OF TAXES AND OTHER CLAIMS................. 36
            SECTION 5.8.   RULE 144A INFORMATION REQUIREMENT................. 37
            SECTION 5.9.   STAY, EXTENSION AND USURY LAWS.................... 37
            SECTION 5.10.  COMPLIANCE CERTIFICATE............................ 37

ARTICLE VI

Debentureholders' Lists and Reports by the Company and the Trustee            38
            SECTION 6.1.   DEBENTUREHOLDERS' LISTS........................... 38
            SECTION 6.2.   PRESERVATION AND DISCLOSURE OF LISTS.............. 38
            SECTION 6.3.   REPORTS BY TRUSTEE................................ 39
            SECTION 6.4.   REPORTS BY COMPANY................................ 39

ARTICLE VII

Remedies of the Trustee and Debentureholders on an Event of Default           39
            SECTION 7.1.   EVENTS OF DEFAULT................................. 39
            SECTION 7.2.   PAYMENTS OF DEBENTURES ON DEFAULT; SUIT
                           THEREFOR.......................................... 41
            SECTION 7.3.   APPLICATION OF MONIES COLLECTED BY TRUSTEE........ 43
            SECTION 7.4.   PROCEEDINGS BY DEBENTUREHOLDER.................... 43
            SECTION 7.5.   PROCEEDINGS BY TRUSTEE............................ 44
            SECTION 7.6.   REMEDIES CUMULATIVE AND CONTINUING................ 44
            SECTION 7.7.   DIRECTION OF PROCEEDINGS AND WAIVER OF
                           DEFAULTS BY MAJORITY OF DEBENTUREHOLDERS.......... 45
            SECTION 7.8.   NOTICE OF DEFAULTS................................ 45
            SECTION 7.9.   UNDERTAKING TO PAY COSTS.......................... 45

ARTICLE VIII

Concerning the Trustee                                                        46
            SECTION 8.1.   DUTIES AND RESPONSIBILITIES OF TRUSTEE............ 46
</TABLE>

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            SECTION 8.2.   RELIANCE ON DOCUMENTS, OPINIONS, ETC.............. 48
            SECTION 8.3.   NO RESPONSIBILITY FOR RECITALS, ETC............... 49
            SECTION 8.4.   TRUSTEE, PAYING AGENTS, CONVERSION AGENTS OR
                           REGISTRAR MAY OWN DEBENTURES...................... 49
            SECTION 8.5.   MONIES TO BE HELD IN TRUST........................ 49
            SECTION 8.6.   COMPENSATION, EXPENSES AND INDEMNITY OF TRUSTEE... 49
            SECTION 8.7.   OFFICERS' CERTIFICATE AS EVIDENCE................. 50
            SECTION 8.8.   CONFLICTING INTERESTS OF TRUSTEE.................. 50
            SECTION 8.9.   ELIGIBILITY OF TRUSTEE............................ 50
            SECTION 8.10.  RESIGNATION OR REMOVAL OF TRUSTEE................. 50
            SECTION 8.11.  ACCEPTANCE BY SUCCESSOR TRUSTEE................... 52
            SECTION 8.12.  SUCCESSION BY MERGER, ETC......................... 52
            SECTION 8.13.  PREFERENTIAL COLLECTION OF CLAIMS................. 53
            SECTION 8.14.  TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE
                           COMPANY........................................... 53


ARTICLE IX

Concerning the Debentureholders                                               53
            SECTION 9.1.   ACTION BY DEBENTUREHOLDERS........................ 53
            SECTION 9.2.   PROOF OF EXECUTION BY DEBENTUREHOLDERS............ 54
            SECTION 9.3.   WHO ARE DEEMED ABSOLUTE OWNERS.................... 54
            SECTION 9.4.   COMPANY-OWNED DEBENTURES DISREGARDED.............. 54
            SECTION 9.5.   REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND...... 55

ARTICLE X

Debentureholders' Meetings                                                    55
            SECTION 10.1.  PURPOSE OF MEETINGS............................... 55
            SECTION 10.2.  CALL OF MEETINGS BY TRUSTEE....................... 56
            SECTION 10.3.  CALL OF MEETINGS BY COMPANY OR DEBENTUREHOLDERS... 56
            SECTION 10.4.  QUALIFICATIONS FOR VOTING......................... 56
            SECTION 10.5.  REGULATIONS....................................... 56
            SECTION 10.6.  VOTING............................................ 57
            SECTION 10.7.  NO DELAY OF RIGHTS BY MEETING..................... 57

ARTICLE XI

Supplemental Indentures                                                       58
            SECTION 11.1.  SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
                           DEBENTUREHOLDERS.................................. 58
            SECTION 11.2.  SUPPLEMENTAL INDENTURES WITH CONSENT OF
                           DEBENTUREHOLDERS.................................. 59
</TABLE>

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            SECTION 11.3.  EFFECT OF SUPPLEMENTAL INDENTURE.................. 60
            SECTION 11.4.  NOTATION ON DEBENTURES............................ 60
            SECTION 11.5.  EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO
                           BE FURNISHED TO TRUSTEE........................... 61

ARTICLE XII

Consolidation, Merger, Sale, Conveyance and Lease                             61
            SECTION 12.1.  COMPANY MAY CONSOLIDATE ETC. ON CERTAIN TERMS..... 61
            SECTION 12.2.  SUCCESSOR CORPORATION TO BE SUBSTITUTED........... 61
            SECTION 12.3.  OPINION OF COUNSEL TO BE GIVEN TRUSTEE............ 62

ARTICLE XIII

Satisfaction and Discharge of Indenture                                       62
            SECTION 13.1.  DISCHARGE OF INDENTURE............................ 62
            SECTION 13.2.  DEPOSITED MONIES TO BE HELD IN TRUST BY TRUSTEE... 63
            SECTION 13.3.  PAYING AGENT TO REPAY MONIES HELD................. 63
            SECTION 13.4.  RETURN OF UNCLAIMED MONIES........................ 63
            SECTION 13.5.  REINSTATEMENT..................................... 63

ARTICLE XIV

Immunity of Incorporators, Stockholders, Officers and Directors               64
            SECTION 14.1.  INDENTURE AND DEBENTURES SOLELY CORPORATE
                           OBLIGATIONS....................................... 64

ARTICLE XV

Conversion of Debentures
            SECTION 15.1.  RIGHT TO CONVERT.................................. 64
            SECTION 15.2.  EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF
                           COMMON STOCK ON CONVERSION; NO ADJUSTMENT FOR
                           INTEREST OR DIVIDENDS............................. 65
            SECTION 15.3.  CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES........ 66
            SECTION 15.4.  CONVERSION PRICE.................................. 67
            SECTION 15.5.  ADJUSTMENT OF CONVERSION PRICE.................... 67
            SECTION 15.6.  EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER
                           OR SALE........................................... 75
            SECTION 15.7.  TAXES ON SHARES ISSUED............................ 76
</TABLE>

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<S>                                                                           <C>
            SECTION 15.8.  RESERVATION OF SHARES; SHARES TO BE FULLY PAID;
                           COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS; LISTING
                           OF COMMON STOCK..................................  77
            SECTION 15.9.  RESPONSIBILITY OF TRUSTEE........................  77
            SECTION 15.10. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS.......  78

ARTICLE XVI
Miscellaneous Provisions                                                      79
            SECTION 16.1.  PROVISIONS BINDING ON COMPANY'S SUCCESSORS.......  79
            SECTION 16.2.  OFFICIAL ACTS BY SUCCESSOR CORPORATION...........  79
            SECTION 16.3.  ADDRESSES FOR NOTICES, ETC.......................  79
            SECTION 16.4.  GOVERNING LAW....................................  80
            SECTION 16.5.  EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT;
                           CERTIFICATES TO TRUSTEE..........................  80
            SECTION 16.6.  LEGAL HOLIDAYS...................................  80
            SECTION 16.7.  TRUST INDENTURE ACT..............................  80
            SECTION 16.8.  NO SECURITY INTEREST CREATED.....................  81
            SECTION 16.9.  BENEFITS OF INDENTURE............................  81
            SECTION 16.10. TABLE OF CONTENTS, HEADINGS, ETC.................  81
            SECTION 16.11. AUTHENTICATING AGENT.............................  81
            SECTION 16.12. EXECUTION IN COUNTERPARTS........................  82

EXHIBIT A  FORM OF DEBENTURE................................................ A-1
EXHIBIT B  ACCREDITED INVESTOR LETTER....................................... B-1
</TABLE>

                                       6
<PAGE>
 
                                   INDENTURE

          INDENTURE, dated as of February 20, 1998, between Centocor, Inc., a
Pennsylvania corporation (hereinafter sometimes called the "Company," as more
fully set forth in Section 1.1), and United States Trust Company of New York, a
bank and trust company organized under the New York Banking Law, as trustee
hereunder (hereinafter sometimes called the "Trustee," as more fully set forth
in Section 1.1).

                                  WITNESSETH:

          WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 4 3/4% Convertible Subordinated Debentures due 2005
(hereinafter sometimes called the "Debentures"), in an aggregate principal
amount not to exceed $460,000,000 and, to provide the terms and conditions upon
which the Debentures are to be authenticated, issued and delivered, the Company
has duly authorized the execution and delivery of this Indenture; and

          WHEREAS, the Debentures, the certificate of authentication to be borne
by the Debentures, a form of assignment, a form of option to elect repayment
upon a Fundamental Change, and a form of conversion notice to be borne by the
Debentures are to be substantially in the forms hereinafter provided for; and

          WHEREAS, all acts and things necessary to make the Debentures, when
executed by the Company and authenticated and delivered by the Trustee or a duly
authorized authenticating agent, as in this Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute these presents a
valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Debentures have in
all respects been duly authorized.

                    NOW THEREFORE THIS INDENTURE WITNESSETH:

That in order to declare the terms and conditions upon which the Debentures are,
and are to be, authenticated, issued and delivered, and in consideration of the
premises and of the purchase and acceptance of the Debentures by the holders
thereof, the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the
Debentures (except as otherwise provided below) as follows:

                                   ARTICLE I

                                  DEFINITIONS

     SECTION 1.1.   DEFINITIONS.  The terms defined in this Section 1.1 (except
as herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1.  All other
terms used in this Indenture that are defined in the Trust Indenture

                                       1
<PAGE>
 
Act or which are by reference therein defined in the Securities Act (except as
herein otherwise expressly provided or unless the context otherwise requires)
shall have the meanings assigned to such terms in said Trust Indenture Act and
in said Securities Act as in force at the date of the execution of this
Indenture. The words "herein," "hereof," "hereunder" and words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or
other Subdivision. The terms defined in this Article include the plural as well
as the singular.

          AFFILIATE:  The term "Affiliate" of any specified Person shall mean
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.

          BOARD OF DIRECTORS:  The term "Board of Directors" shall mean the
Board of Directors of the Company or a committee of such Board duly authorized
to act for it hereunder.

          BUSINESS DAY:  The term "Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which the banking
institutions in The City of New York or the city in which the Corporate Trust
Office is located are authorized or obligated by law or executive order to close
or be closed.

          CLOSING PRICE:  The term "Closing Price" shall have the meaning
specified in Section 15.5(h)(1).

          COMMISSION:  The term "Commission" shall mean the Securities and
Exchange Commission.

          COMMON STOCK:  The term "Common Stock" shall mean the common stock,
par value $.01 per share, of the Company, as it exists on the date of this
Indenture, or any other class or classes of capital stock of the Company
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 Company
and which are not subject to redemption by the Company; provided that if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such
reclassifications.

          COMPANY:  The term "Company" shall mean Centocor, Inc., a Pennsylvania
corporation, having its principal office at 200 Great Valley Parkway, Malvern,
PA 19355-1307 and subject to the provisions of Article XII, shall include its
successors and assigns.

                                       2
<PAGE>
 
          CONVERSION PRICE:  The term "Conversion Price" shall have the meaning
specified in Section 15.4.

          CORPORATE TRUST OFFICE:  The term "Corporate Trust Office" or other
similar term, shall mean the principal corporate trust 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 770 Broadway, New York, New York 10003, Attention: Corporate Trust
Department.

          CUSTODIAN:  The term "Custodian" shall mean United States Trust
Company of New York, as custodian with respect to the Debentures in global form,
or any successor entity thereto.

          DEBENTURE OR DEBENTURES:  The terms "Debenture" or "Debentures" shall
mean any Debenture or Debentures, as the case may be, authenticated and
delivered under this Indenture, including the Global Debenture.

          DEBENTUREHOLDER OR HOLDER:  The terms "Debentureholder" or "holder" as
applied to any Debenture, or other similar terms (but excluding the term
"beneficial holder"), shall mean any Person in whose name at the time a
particular Debenture is registered on the Debenture registrar's books.

          DEBENTURE REGISTER:  The term "Debenture register" shall have the
meaning specified in Section 2.5.

          DEFAULT:  The term "default" shall mean any event that is, or after
notice or passage of time, or both, would be, an Event of Default.

          DEPOSITARY:  The term "Depositary" shall mean, with respect to the
Debentures issuable or issued in whole or in part in global form, the person
specified in Section 2.5(d) as the Depositary with respect to such Debentures,
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.

          DESIGNATED SENIOR OBLIGATIONS:  The term "Designated Senior
Obligations" shall mean Senior Obligations in which the instrument creating or
evidencing the same or the assumption or guarantee thereof (or related
agreements or documents to which the Company is a party) expressly provides that
such Senior Obligations shall be "Designated Senior Obligations" for purposes of
this Indenture (provided that such instrument, agreement or other document may
place limitations and conditions on the right of such Senior Obligations to
exercise the rights of Designated Senior Obligations).  If any payment made to
any holder of any Designated Senior Obligations or its Representative with
respect to such Designated Senior Obligations is rescinded or must otherwise be
returned by such holder or Representative upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, the reinstated Indebtedness of the
Company

                                       3
<PAGE>
 
arising as a result of such rescission or return shall constitute Designated
Senior Obligations effective as of the date of such rescission or return.

          EXCHANGE ACT:  The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder, as in effect from time to time.

          EVENT OF DEFAULT:  The term "Event of Default" shall mean any event
specified in Section 7.1(a), (b), (c), (d) or (e).

          FUNDAMENTAL CHANGE:  The term "Fundamental Change" shall mean the
occurrence of any transaction or event in connection with which all or
substantially all of the outstanding Common Stock shall be exchanged for, be
converted into, be acquired for, or constitute in all material respects solely
the right to receive, consideration which is not all or substantially all common
stock which is (or, upon consummation of or immediately following such
transaction or event, 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 (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise).

          INDEBTEDNESS:  The term "Indebtedness" shall mean, with respect to any
Person, and without duplication, (a) all indebtedness, obligations and other
liabilities (contingent or otherwise) of such Person for borrowed money
(including obligations of the Company in respect of overdrafts, foreign exchange
contracts, currency exchange agreements, interest rate protection agreements,
and any loans or advances from banks, whether or not evidenced by notes or
similar instruments, and all commitment, stand by and other fees due and payable
to financial institutions with respect to credit facilities available to such
Person) or evidenced by bonds, debentures, notes or similar instruments (whether
or not the recourse of the lender is to the whole of the assets of such Person
or to only a portion thereof) (other than any account payable or other accrued
current liability or obligation incurred in the ordinary course of business in
connection with the obtaining of materials or services);

          (b) all reimbursement obligations and other liabilities (contingent or
otherwise) of such Person with respect to letters of credit, bank guarantees or
bankers' acceptances;

          (c) all obligations and liabilities (contingent or otherwise) in
respect of leases of real or personal property or other assets of such Person
required, in conformity with generally accepted accounting principles, to be
accounted for as capitalized lease obligations on the balance sheet of such
Person and all obligations and other liabilities (contingent or otherwise) under
any lease or related document (including a purchase agreement) in connection
with the lease of real property which provides that such Person is contractually
obligated to purchase or cause a third party to purchase the leased property and
thereby guarantee a minimum residual value of the leased property to the lessor
and the obligations of such Person under such lease or related document to
purchase or to cause a third party to purchase such leased property;

                                       4
<PAGE>
 
          (d) all obligations of such Person (contingent or otherwise) with
respect to an interest rate or other swap, cap or collar agreement or other
similar instrument or agreement or foreign currency hedge, exchange, purchase or
similar instrument or agreement;

          (e) all direct or indirect guaranties or similar agreements by such
Person in respect of, and obligations or liabilities (contingent or otherwise)
of such Person to purchase or otherwise acquire or otherwise assure a creditor
against loss in respect of indebtedness, obligations or liabilities of another
Person of the kind described in clauses (a) through (d);

          (f) any indebtedness or other obligations described in clauses (a)
through (e) secured by any mortgage, pledge, lien or other encumbrance existing
on property which is owned or held by such Person, regardless of whether the
indebtedness or other obligation secured thereby shall have been assumed by such
Person; and (g) any and all deferrals, renewals, extensions and refundings of,
or amendments, modifications or supplements to, any indebtedness, obligation or
liability of the kind described in clauses (a) through (f).

          INDENTURE:  The term "Indenture" shall mean this instrument as
originally executed or, if amended or supplemented as herein provided, as so
amended or supplemented.

          INITIAL PURCHASER:  The term "Initial Purchaser" shall mean Morgan
Stanley & Co. Incorporated.

          INSTITUTIONAL ACCREDITED INVESTOR:  The term "Institutional Accredited
Investor" shall mean an institutional "accredited investor" within the meaning
of Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

          LIQUIDATED DAMAGES:  The term "Liquidated Damages" shall have the
meaning specified in Section 2(f) of the Registration Rights Agreement.

          NON-U.S. PERSON:  The term Non-U.S. Person shall mean a person other
than a U.S. Person (as defined in Regulation S).

          OFFICERS' CERTIFICATE:  The term "Officers' Certificate," when used
with respect to the Company, shall mean a certificate signed by both (a) the
President or Chief Executive Officer or any Executive or Senior Vice President
or any Vice President (whether or not designated by a number or numbers or word
or words added before or after the title "Vice President") and (b) by the
Treasurer or any Assistant Treasurer or Secretary or any Assistant Secretary of
the Company.

          OPINION OF COUNSEL:  The term "Opinion of Counsel" shall mean an
opinion in writing signed by legal counsel, who may be an employee of or counsel
to the Company, or other counsel reasonably acceptable to the Trustee.

          OUTSTANDING:  The term "outstanding," when used with reference to
Debentures, shall, subject to the provisions of Section 9.4, mean, as of any
particular time, all Debentures authenticated and delivered by the Trustee under
this Indenture, except:

                                       5
<PAGE>
 
          (a) Debentures theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;

          (b) Debentures, or portions thereof, (i) for the redemption of which
monies in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or (ii) which shall
have been otherwise defeased in accordance with Article XIII;

          (c) Debentures in lieu of which, or in substitution for which, other
Debentures shall have been authenticated and delivered pursuant to the terms of
Section 2.6; and

          (d) Debentures converted into Common Stock pursuant to Article XV and
Debentures deemed not outstanding pursuant to Article III.

          PAYMENT BLOCKAGE NOTICE:  The term "Payment Blockage Notice" shall
have the meaning specified in Section 4.2.

          PERSON:  The term "Person" shall mean a corporation, an association, a
partnership, a limited liability company, an individual, a joint venture, a
joint stock company, a trust, an unincorporated organization or a government or
an agency or a political subdivision thereof.

          PORTAL MARKET:  The term "The Portal Market" shall mean The Private
Offerings, Resales and Trading through Automated Linkages Market operated by the
National Association of Securities Dealers, Inc. or any successor thereto.

          PURCHASE AGREEMENT:  The term "Purchase Agreement" shall mean the
Purchase Agreement dated February 13, 1998 (as the same may be amended from time
to time by the parties thereto) by and between the Company and the Initial
Purchaser.

          PREDECESSOR DEBENTURE:  The term "Predecessor Debenture" of any
particular Debenture shall mean every previous Debenture evidencing all or a
portion of the same debt as that evidenced by such particular Debenture; and,
for the purposes of this definition, any Debenture authenticated and delivered
under Section 2.6 in lieu of a lost, destroyed or stolen Debenture shall be
deemed to evidence the same debt as the lost, destroyed or stolen Debenture that
it replaces.

          QIB:  The term "QIB" shall mean a "qualified institutional buyer" as
defined in Rule 144A.

          REGISTRATION RIGHTS AGREEMENT:  The term "Registration Rights
Agreement" shall mean that certain Registration Rights Agreement, dated as of
February 13, 1998, between the Company and the Initial Purchaser, as amended
from time to time in accordance with its terms, a copy of which is attached as
Exhibit C hereto.

                                       6
<PAGE>
 
          REGULATION S:  The term "Regulation S" shall mean Regulation S as
promulgated under the Securities Act.

          REPRESENTATIVE:  The term "Representative" shall mean the (a)
indenture trustee or other trustee, agent or representative for any Senior
Obligations or (b) with respect to any Senior Obligations that do not have any
such trustee, agent or other representative, (i) in the case of such Senior
Obligations issued pursuant to an agreement providing for voting arrangements as
among the holders or owners of such Senior Obligations, any holder or owner of
such Senior Obligations acting with the consent of the required persons
necessary to bind such holders or owners of such Senior Obligations and (ii) in
the case of all other such Senior Obligations, the holder or owner of such
Senior Obligations.

          RESPONSIBLE OFFICER:  The term "Responsible Officer," when used with
respect to the Trustee, shall mean any managing director, vice president,
assistant vice president, assistant treasurer, assistant secretary or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Indenture, and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.

          REPURCHASE DATE:  The term "Repurchase Date" shall have the meaning
specified in Section 3.5.

          RESTRICTED SECURITIES:  The term "Restricted Securities" shall have
the meaning specified in Section 2.5.

          RULE 144A:  The term "Rule 144A" shall mean Rule 144A as promulgated
under the Securities Act.

          SECURITIES ACT:  The term "Securities Act" shall mean the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder,
as in effect from time to time.

          SENIOR OBLIGATIONS:  The term "Senior Obligations" shall mean the
principal of, premium, if any, interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim in any such
proceeding) and rent payable on or in connection with, and all fees, costs,
expenses and other amounts accrued or due on or in connection with, Indebtedness
of the Company, whether outstanding on the date of this Indenture or thereafter
created, incurred, assumed, guaranteed or in effect guaranteed by the Company
(including all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to, the foregoing), unless in the case of any
particular Indebtedness the instrument creating or evidencing the same or the
assumption or guarantee thereof expressly provides that such Indebtedness shall
not be senior in right of payment to the Debentures or expressly provides that
such Indebtedness is "pari passu" or "junior" to the Debentures.
Notwithstanding the foregoing, the term Senior Obligations

                                       7
<PAGE>
 
shall not include the outstanding principal amount of the Company's 6 3/4%
Convertible Subordinated Debentures due 2001 or any Indebtedness of the Company
to any subsidiary of the Company, all of the outstanding voting stock of which
is owned, directly or indirectly, by the Company. If any payment made to any
holder of any Senior Obligations or its Representative with respect to such
Senior Obligations is rescinded or must otherwise be returned by such holder or
Representative upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, the reinstated Indebtedness of the Company arising as a result of
such rescission or return shall constitute Senior Obligations effective as of
the date of such rescission or return.

          SUBSIDIARY:  The term "Subsidiary" shall mean, with respect to any
Person, (i) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of capital stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other subsidiaries
of that Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or managing general partner of which is such Person or a
subsidiary of such Person or (b) the only general partners of which are such
Person or one or more subsidiaries of such Person (or any combination thereof).

          TRADING DAY:  The term "Trading Day" shall have the meaning specified
in Section 15.5(h)(5).

          TRIGGER EVENT:  The term "Trigger Event" shall have the meaning
specified in Section 15.5(d).

          TRUST INDENTURE ACT:  The term "Trust Indenture Act" shall mean the
Trust Indenture Act of 1939, as amended, as it was in force at the date of
execution of this Indenture, except as provided in Sections 11.3 and 15.6;
provided, however, that in the event the Trust Indenture Act of 1939 is amended
after the date hereof, the term "Trust Indenture Act" shall mean, to the extent
required by such amendment, the Trust Indenture Act of 1939 as so amended.

          TRUSTEE:  The term "Trustee" shall mean United States Trust Company of
New York, and its successors and any corporation resulting from or surviving any
consolidation or merger to which it or its successors  be a party and any
successor trustee at the time serving as successor trustee hereunder.

          The definitions of certain other terms are as specified in Sections
2.5 and 3.5 and Article XV.

                                       8
<PAGE>
 
                                   ARTICLE II

     ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF DEBENTURES

     SECTION 2.1.   DESIGNATION AMOUNT AND ISSUE OF DEBENTURES.  The Debentures
shall be designated as "4 3/4% Convertible Subordinated Debentures due 2005."
Debentures not to exceed the aggregate principal amount of $460,000,000 (except
pursuant to Sections 2.5, 2.6, 3.3, 3.5 and 15.2 hereof), upon the execution of
this Indenture, or from time to time thereafter, may be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Debentures to or upon the written order of the
Company, signed by its (a) Chief Executive Officer, President, any Executive or
Senior Vice President or any Vice President (whether or not designated by a
number or numbers or word or words added before or after the title "Vice
President") and (b) Treasurer or Assistant Treasurer or its Secretary or any
Assistant Secretary, without any further action by the Company hereunder.

          In authenticating any Debentures, the Trustee shall be entitled to
receive prior to the first authentication of any Debentures, and shall be fully
protected in relying upon, unless and until such documents have been superseded
or revoked:

          (1) an Officers' Certificate setting forth the form or forms and terms
     of the Debentures, stating that the form or forms and terms of the
     Debentures have been, or will be when established in accordance with such
     procedures as shall be referred to therein, established in compliance with
     this Indenture; and

          (2) an Opinion of Counsel substantially to the effect that the form or
     forms and terms of the Debentures have been, or will be when established in
     accordance with such procedures as shall be referred to therein,
     established in compliance with this Indenture and that the supplemental
     indenture, to the extent applicable, and Debentures have been duly
     authorized and, if executed and authenticated in accordance with the
     provisions of the Indenture and delivered to and duly paid for by the
     purchasers thereof on the date of such opinion, would be entitled to the
     benefits of the Indenture and would be valid and binding obligations of the
     Company, enforceable against the Company in accordance with their
     respective terms, subject to bankruptcy, insolvency, reorganization,
     receivership, moratorium and other similar laws affecting creditors' rights
     generally, general principles of equity, and such other matters as shall be
     specified therein.

     SECTION 2.2.   FORM OF DEBENTURES.  The Debentures and the Trustee's
certificate of authentication to be borne by such Debentures shall be
substantially in the form set forth in Exhibit A, which is incorporated in and
made a part of this Indenture.

          Any of the Debentures may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same  may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law

                                       9
<PAGE>
 
or with any rule or regulation made pursuant thereto or with any rule or
regulation of any securities exchange or automated quotation system on which the
Debentures may be listed, or to conform to usage.

          Any Debenture in global form shall represent such of the outstanding
Debentures as shall be specified therein and shall provide that it shall
represent the aggregate amount of outstanding Debentures from time to time
endorsed thereon and that the aggregate amount of outstanding Debentures
represented thereby may from time to time be increased or reduced to reflect
transfers or exchanges permitted hereby.  Any endorsement of a Debenture in
global form to reflect the amount of any increase or decrease in the amount of
outstanding Debentures represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in such manner and upon written
instructions given by the holder of such Debentures in accordance with this
Indenture.  Payment of principal of and interest and premium, if any, on any
Debenture in global form shall be made to the holder of such Debenture.

          The terms and provisions contained in the form of Debenture attached
as Exhibit A hereto shall constitute, and are hereby expressly made, a part of
this Indenture and the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.

     SECTION 2.3.   DATE AND DENOMINATION OF DEBENTURES; PAYMENTS OF INTEREST.
The Debentures shall be issuable in registered form without coupons in
denominations of $1,000 principal amount and integral multiples thereof. Every
Debenture shall be dated the date of its authentication and shall bear interest
from the applicable date in each case as specified on the face of the form of
Debenture attached as Exhibit A hereto. Interest on the Debentures shall be
computed on the basis of a 360-day year comprised of twelve (12) 30-day months
and shall be payable semi-annually on each of February 15 and August 15 of each
year.

          The Person in whose name any Debenture (or its Predecessor Debenture)
is registered on the Debenture register at the close of business on any record
date with respect to any interest payment date shall be entitled to receive the
interest payable on such interest payment date, except (i) that the interest
payable upon redemption (unless the date of redemption is an interest payment
date) will be payable to the person to whom principal is payable and (ii) as set
forth in the next succeeding sentence.  In the case of any Debenture (or portion
thereof) which is converted into Common Stock of the Company during the period
from (but excluding) a record date for any interest payment date to (but
excluding) such interest payment date either (i) if such Debenture (or portion
thereof) has been called for redemption on a redemption date which occurs during
such period, or is to be redeemed in connection with a Fundamental Change on a
Repurchase Date which occurs during such period, the Company shall not be
required to pay interest on such interest payment date in respect of any such
Debenture (or portion thereof) except to the extent required to be paid upon
redemption of such Debenture or portion thereof pursuant to Section 3.3 or 3.5
hereof or (ii) if otherwise, any such Debenture (or portion thereof) submitted
for conversion during such period shall be accompanied by New York Clearing
House funds equal to the interest payable on such interest payment date on the
principal amount so

                                      10
<PAGE>
 
converted.  Interest may, as the Company shall specify to the paying agent in
writing by each record date, be paid either (i) by check mailed to the address
of the person entitled thereto as it appears in the Debenture register (provided
that a holder of Debentures with an aggregate principal amount in excess of
$2,000,000 shall, at the written election of such holder, be paid by wire
transfer in immediately available funds) or (ii) by transfer to an account
maintained by such person located in the United States; provided, however, that
payments to the Depositary will be made by wire transfer of immediately
available funds to the account of the Depositary or its nominee.  The term
"record date" with respect to any interest payment date shall mean the February
1 or August 1 preceding said February 15 or August 15, respectively.

          Any interest on any Debenture which is payable, but is not punctually
paid or duly provided for, on any said February 15 or August 15 (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Debentureholder
on the relevant record date by virtue of his having been such Debentureholder;
and such Defaulted Interest shall be paid by the Company, at its election in
each case, as provided in clause (1) or (2) below:

               (1) The Company may elect to make payment of any Defaulted
     Interest to the Persons in whose names the Debentures (or their respective
     Predecessor Debentures) are registered at the close of business on a
     special record date for the payment of such Defaulted Interest, which shall
     be fixed in the following manner.  The Company shall notify the Trustee in
     writing of the amount of Defaulted Interest to be paid on each Debenture
     and the date of the payment (which shall be not less than twenty-five (25)
     days after the receipt by the Trustee of such notice, unless the Trustee
     shall consent to an earlier date), and at the same time the Company shall
     deposit with the Trustee an amount of money equal to the aggregate amount
     to be paid in respect of such Defaulted Interest or shall make arrangements
     satisfactory to the Trustee for such deposit prior to the date of the
     proposed payment, such money when deposited to be held in trust for the
     benefit of the Persons entitled to such Defaulted Interest as in this
     clause provided. Thereupon the Trustee shall fix a special record date for
     the payment of such Defaulted Interest which shall be not more than fifteen
     (15) days and not less than ten (10) days prior to the date of the proposed
     payment, and not more than ten (10) days after the receipt by the Trustee
     of the notice of the proposed payment, the Trustee shall promptly notify
     the Company of such special record date and, in the name and at the expense
     of the Company, shall cause notice of the proposed payment of such
     Defaulted Interest and the special record date therefor to be mailed,
     first-class postage prepaid, to each Debentureholder at his address as it
     appears in the Debenture register, not less than ten (10) days prior to
     such special record date. Notice of the proposed payment of such Defaulted
     Interest and the special record date therefor having been so mailed, such
     Defaulted Interest shall be paid to the Persons in whose names the
     Debentures (or their respective Predecessor Debentures) were registered at
     the close of business on such special record date and shall no longer be
     payable pursuant to the following clause (2) of this Section 2.3.

                                      11
<PAGE>
 
                    (2)  The Company may make payment of any Defaulted Interest
     in any other lawful manner not inconsistent with the requirements of any
     securities exchange or automated quotation system on which the Debentures
     may be listed or designated for issuance, and upon such notice as may be
     required by such exchange or automated quotation system, if, after written
     notice given by the Company to the Trustee of the proposed payment pursuant
     to this clause, such manner of payment shall be deemed practicable by the
     Trustee.

     SECTION 2.4.   EXECUTION OF DEBENTURES.  The Debentures shall be signed in
the name and on behalf of the Company by the facsimile signature of its Chief
Executive Officer or President or any Executive or Senior Vice President or any
Vice President (whether or not designated by a number or numbers or word or
words added before or after the title "Vice President") and attested by the
facsimile signature of its Secretary or any of its Assistant Secretaries or
Treasurer or any of its Assistant Treasurers (which may be printed, engraved or
otherwise reproduced thereon, by facsimile or otherwise).  Only such Debentures
as shall bear thereon a certificate of authentication substantially in the form
set forth on the form of Debenture attached as Exhibit A hereto, manually
executed by the Trustee (or an authenticating agent appointed by the Trustee as
provided by Section 16.11), shall be entitled to the benefits of this Indenture
or be valid or obligatory for any purpose.  Such certificate by the Trustee (or
such an authenticating agent) upon any Debenture executed by the Company shall
be conclusive evidence that the Debenture so authenticated has been duly
authenticated and delivered hereunder and that the holder is entitled to the
benefits of this Indenture.

               In case any officer of the Company who shall have signed any of
the Debentures shall cease to be such officer before the Debentures so signed
shall have been authenticated and delivered by the Trustee, or disposed of by
the Company, such Debentures nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Debentures had not ceased to be
such officer of the Company; and any Debenture may be signed on behalf of the
Company by such persons as, at the actual date of the execution of such
Debenture, shall be the proper officers of the Company, although at the date of
the execution of this Indenture any such person was not such an officer.

     SECTION 2.5.   EXCHANGE AND REGISTRATION OF TRANSFER OF DEBENTURES;
                    RESTRICTIONS ON TRANSFER; DEPOSITARY.

               (a)  The Company shall cause to be kept at the Corporate Trust
Office a register (the register maintained in such office and in any other
office or agency of the Company designated pursuant to Section 5.2 being herein
sometimes collectively referred to as the "Debenture register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Debentures and of transfers of Debentures. The
Debenture register shall be in written form or in any form capable of being
converted into written form within a reasonably prompt period of time. The
Trustee is hereby appointed "Debenture registrar" for the purpose of registering
Debentures and transfers of Debentures as herein provided. The Company may
appoint one or more co-registrars in accordance with Section 5.2.

                                      12
<PAGE>
 
          Upon surrender for registration of transfer of any Debenture to the
Debenture registrar or any co-registrar, and satisfaction of the requirements
for such transfer set forth in this Section 2.5, the Company shall execute, and
the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Debentures of any authorized
denominations and of a like aggregate principal amount and bearing such
restrictive legends as may be required by this Indenture.

          Debentures may be exchanged for other Debentures of any authorized
denominations and of a like aggregate principal amount, upon surrender of the
Debentures to be exchanged at any such office or agency maintained by the
Company pursuant to Section 5.2.  Whenever any Debentures are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Debentures which the Debentureholder making the exchange is
entitled to receive bearing registration numbers not contemporaneously
outstanding.

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

          All Debentures presented or surrendered for registration of transfer
or for exchange, redemption or conversion shall (if so required by the Company
or the Debenture registrar) be duly endorsed, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company, and
the Debentures shall be duly executed by the Debentureholder thereof or his
attorney duly authorized in writing.

          No service charge shall be made for any registration of transfer or
exchange of Debentures, but the Company may require payment of a sum sufficient
to cover any tax, assessment or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Debentures.

          Neither the Company nor the Trustee nor any Debenture registrar or any
Company registrar shall be required to exchange or register a transfer of (a)
any Debentures for a period of fifteen (15) days next preceding any selection of
Debentures to be redeemed or (b) any Debentures or portions thereof called for
redemption pursuant to Section 3.2 or (c) any Debentures or portion thereof
surrendered for conversion pursuant to Article XV or (d) any Debentures or
portions thereof tendered for redemption (and not withdrawn) pursuant to Section
3.5.

          (b) So long as the Debentures are eligible for book-entry settlement
with the Depositary, or unless otherwise required by law, all Debentures that
upon initial issuance are beneficially owned by QIBs and all Debentures that are
beneficially owned by Non-U.S. Persons as a result of a sale or transfer after
initial issuance will be represented by one or more Debentures in global form
registered in the name of the Depositary or the nominee of the Depositary (each,
a "Global Debenture"), except as otherwise specified below.  The transfer and

                                      13
<PAGE>
 
exchange of beneficial interests in any such Global Debenture shall be effected
through the Depositary in accordance with this Indenture and the procedures of
the Depositary therefor.  The Trustee shall make appropriate endorsements to
reflect increases or decreases in the principal amounts of any such Global
Debenture as set forth on the face of the Debenture ("Principal Amount") to
reflect any such transfers.  Except as provided below, beneficial owners of a
Global Debenture shall not be entitled to have certificates registered in their
names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered holders of such
Debentures in global form.

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

          Upon any sale or transfer of a Debenture to an Institutional
Accredited Investor (other than pursuant to a registration statement that has
been declared effective under the Securities Act), such Institutional Accredited
Investor shall, prior to such sale or transfer, furnish to the Company and the
Trustee a signed letter containing representations and agreements relating to
restrictions on transfer substantially in the form set forth in Exhibit B to
this Indenture.

          Any Debenture 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 Debentures to be tradeable on The Portal Market or as may be required
for the Debentures to be tradeable on any other 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 Debentures
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
Debentures are subject.

                                      14
<PAGE>
 
          (d) Every Debenture that bears or is required under this Section
2.5(d) to bear the legend set forth in this Section 2.5(d) (together with any
Common Stock issued upon conversion of the Debentures and required to bear the
legend set forth in Section 2.5(e), collectively, the "Restricted Securities")
shall be subject to the restrictions on transfer set forth in this Section
2.5(d) (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 Restricted Security, by such holder's acceptance
thereof, agrees to be bound by all such restrictions on transfer. As used in
Sections 2.5(d) and 2.5(e), the term "transfer" encompasses any sale, pledge,
transfer or other disposition whatsoever of any Restricted Security.

          Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
certificate evidencing such Debenture (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any, issued upon
conversion thereof, which shall bear the legend set forth in Section 2.5(e), if
applicable) shall bear a legend in substantially the following form, unless such
Debenture 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:

     THE DEBENTURE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN
     REGISTERED UNDER THE U.S. 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. BY ITS ACQUISITION HEREOF,
     THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
     INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
     SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
     INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER
     THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C)
     IT IS NOT A U.S. PERSON AND IS ACQUIRING THE DEBENTURE EVIDENCED
     HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL NOT,
     PRIOR TO 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), RESELL OR OTHERWISE
     TRANSFER THE DEBENTURE EVIDENCED HEREBY OR THE COMMON STOCK
     ISSUABLE UPON CONVERSION OF SUCH DEBENTURE EXCEPT (A) TO
     CENTOCOR, INC. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
     STATES TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
     144A UNDER THE SECURITIES ACT) IN COMPLIANCE WITH RULE 144A UNDER
     THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
     INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
     501(A)(1), (2), (3), OR (7) UNDER THE SECURITIES

                                      15
<PAGE>
 
     ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE UNITED STATES
     TRUST COMPANY OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
     APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
     AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE
     DEBENTURE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE
     OBTAINED FROM SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS
     APPLICABLE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH
     RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
     FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
     (IF AVAILABLE), OR (F) 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); (3)
     PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE
     2(F) ABOVE), IT WILL FURNISH TO THE UNITED STATES TRUST COMPANY
     OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE)
     AND THE COMPANY, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
     INFORMATION AS SUCH TRUSTEE AND THE COMPANY 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 (4) AGREES
     THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE DEBENTURE
     EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT
     TO CLAUSE 2(F) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF
     THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE DEBENTURE
     EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
     APPLICABLE TO SALES OF THE DEBENTURE EVIDENCED HEREBY UNDER RULE
     144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISIONS) THE
     HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
     HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
     CERTIFICATE TO THE UNITED STATES TRUST COMPANY OF NEW YORK, AS
     TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED
     TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER
     WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH
     TRANSFER, FURNISH TO THE UNITED STATES TRUST COMPANY OF NEW YORK,
     AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
     CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUCH
     TRUSTEE AND THE COMPANY 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

                                      16
<PAGE>
 
     REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
     UPON THE EARLIER OF THE TRANSFER OF THE DEBENTURE EVIDENCED
     HEREBY PURSUANT TO CLAUSE 2(F) ABOVE OR UPON ANY TRANSFER OF THE
     DEBENTURE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES
     ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS
     "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
     THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
     ACT.

          Any Debenture (or security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired in
accordance with their terms or as to which the conditions for removal of the
foregoing legend set forth therein have been satisfied may, upon surrender of
such Debenture for exchange to the Debenture registrar in accordance with the
provisions of this Section 2.5, be exchanged for a new Debenture or Debentures,
of like tenor and aggregate principal amount, which shall not bear the
restrictive legend required by this Section 2.5(d).

          Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in Section 2.5(c) and in this Section 2.5(d)), a Debenture
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.

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

          If at any time the Depositary for a Debenture in global form notifies
the Company that it is unwilling or unable to continue as Depositary for such
Debenture, the Company may appoint a successor Depositary with respect to such
Debenture. 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 Debentures, will authenticate and deliver,
Debentures in certificated form, in aggregate principal amount equal to the
principal amount of such Debenture in global form, in exchange for such
Debenture in global form.

          If a Debenture in certificated form is issued in exchange for any
portion of a Debenture in global form after the close of business at the office
or agency where such exchange occurs on any record date and before the opening
of business at such office or agency on the next succeeding interest payment
date, interest will not be payable on such interest payment date in

                                      17
<PAGE>
 
respect of such Debenture, but will be payable on such interest payment date,
subject to the provisions of Section 2.3, only to the person to whom interest in
respect of such portion of such Debenture in global form is payable in
accordance with the provisions of this Indenture.

          Debentures in certificated form issued in exchange for all or a part
of a Debenture in global form pursuant to this Section 2.5 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 Debentures in certificated form to the persons in whose names such
Debentures in certificated form are so registered.

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

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

     THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER
     THE U.S. 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
     COMMON STOCK EVIDENCED

                                      18
<PAGE>
 
     HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
     SUCCESSOR PROVISION), (1) IT WILL NOT RESELL OR OTHERWISE
     TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO
     CENTOCOR, INC. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
     STATES TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
     144A UNDER THE SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C)
     INSIDE THE UNITED STATES 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
     BOSTON EQUISERVE LLP, 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 STOCK EVIDENCED HEREBY (THE FORM OF WHICH
     LETTER CAN BE OBTAINED FROM SUCH TRANSFER AGENT OR A SUCCESSOR
     TRANSFER AGENT, AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN
     COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
     TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
     SECURITIES ACT (IF AVAILABLE) OR (F) 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(F) ABOVE), IT WILL FURNISH TO BOSTON
     EQUISERVE LLP, AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT,
     AS APPLICABLE) AND THE COMPANY, SUCH CERTIFICATIONS, LEGAL
     OPINIONS OR OTHER INFORMATION AS SUCH TRANSFER AGENT AND THE
     COMPANY 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 STOCK
     EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT
     TO CLAUSE 1(F) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF
     THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE
     TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY PURSUANT TO CLAUSE
     1(F) ABOVE OR UPON ANY TRANSFER OF THE COMMON STOCK EVIDENCED
     HEREBY AFTER 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). AS USED HEREIN,
     THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
     GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

                                      19
<PAGE>
 
          Any such Common Stock as to which such restrictions on transfer shall
have expired in accordance with their terms or as to which the conditions for
removal of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.5(e).

          (f) Any Debenture or Common Stock issued upon the conversion or
exchange of a Debenture that, prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or any
successor provision), is purchased or owned by the Company or any Affiliate
thereof may not be resold by 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 Debentures or Common Stock, as the case may be, no longer being
"restricted securities" (as defined under Rule 144).

     SECTION 2.6.   MUTILATED, DESTROYED, LOST OR STOLEN DEBENTURES.  In case
any Debenture shall become mutilated or be destroyed, lost or stolen, the
Company in its discretion may execute, and upon its written request the Trustee
or an authenticating agent appointed by the Trustee shall authenticate and make
available for delivery, a new Debenture, bearing a number not contemporaneously
outstanding, in exchange and substitution for the mutilated Debenture, or in
lieu of and in substitution for the Debenture so destroyed, lost or stolen.  In
every case the applicant for a substituted Debenture shall furnish to the
Company, to the Trustee and, if applicable, to such authenticating agent such
security or indemnity as may be required by them to save each of them harmless
for any loss, liability, cost or expense caused by or connected with such
substitution, and, in every case of destruction, loss or theft, the applicant
shall also furnish to the Company, to the Trustee and, if applicable, to such
authenticating agent evidence to their satisfaction of the destruction, loss or
theft of such Debenture and of the ownership thereof.

          Following receipt by the Company, the Trustee and, if applicable, such
authenticating agent, as the case may be, of satisfactory security or indemnity
and evidence, as described in the preceding paragraph, the Trustee or such
authenticating agent may authenticate any such substituted Debenture and make
available for delivery such Debenture.  Upon the issuance of any substituted
Debenture, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses connected therewith.  In case any Debenture which has matured or
is about to mature or has been called for redemption or has been tendered for
redemption (and not withdrawn) or is about to be converted into Common Stock
shall become mutilated or be destroyed, lost or stolen, the Company may, instead
of issuing a substitute Debenture, pay or authorize the payment of or convert or
authorize the conversion of the same (without surrender thereof except in the
case of a mutilated Debenture), as the case may be, if the applicant for such
payment or conversion shall furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent such security or indemnity as may be
required by them to save each of them

                                      20
<PAGE>
 
harmless for any loss, liability, cost or expense caused by or connected with
such substitution, and, in case of destruction, loss or theft, evidence
satisfactory to the Company, the Trustee and, if applicable, any paying agent or
conversion agent of the destruction, loss or theft of such Debenture and of the
ownership thereof.

          Every substitute Debenture issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any Debenture is destroyed, lost or
stolen shall constitute an additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Debenture shall be found at any
time, and shall be entitled to all the benefits of (but shall be subject to all
the limitations set forth in) this Indenture equally and proportionately with
any and all other Debentures duly issued hereunder. To the extent permitted by
law, all Debentures shall be held and owned upon the express condition that the
foregoing provisions are exclusive with respect to the replacement or payment or
conversion of mutilated, destroyed, lost or stolen Debentures and shall preclude
any and all other rights or remedies notwithstanding any law or statute existing
or hereafter enacted to the contrary with respect to the replacement or payment
or conversion of negotiable instruments or other securities without their
surrender.

     SECTION 2.7.   TEMPORARY DEBENTURES.  Pending the preparation of Debentures
in certificated form, the Company may execute and the Trustee or an
authenticating agent appointed by the Trustee shall, upon the written request of
the Company, authenticate and deliver temporary Debentures (printed or
lithographed).  Temporary Debentures shall be issuable in any authorized
denomination, and substantially in the form of the Debentures in certificated
form, but with such omissions, insertions and variations as may be appropriate
for temporary Debentures, all as may be determined by the Company.  Every such
temporary Debenture shall be executed by the Company and authenticated by the
Trustee or such authenticating agent upon the same conditions and in
substantially the same manner, and with the same effect, as the Debentures in
certificated form. Without unreasonable delay the Company will execute and
deliver to the Trustee or such authenticating agent Debentures in certificated
form (other than in the case of Debentures in global form) and thereupon any or
all temporary Debentures (other than any such Debenture in global form) may be
surrendered in exchange therefor, at each office or agency maintained by the
Company pursuant to Section 5.2 and the Trustee or such authenticating agent
shall authenticate and make available for delivery in exchange for such
temporary Debentures an equal aggregate principal amount of Debentures in
certificated form.  Such exchange shall be made by the Company at its own
expense and without any charge therefor.  Until so exchanged, the temporary
Debentures shall in all respects be entitled to the same benefits and subject to
the same limitations under this Indenture as Debentures in certificated form
authenticated and delivered hereunder.

     SECTION 2.8.   CANCELLATION OF DEBENTURES PAID, ETC.  All Debentures
surrendered for the purpose of payment, redemption, conversion, exchange or
registration of transfer, shall, if surrendered to the Company or any paying
agent or any Debenture registrar or any conversion agent, be surrendered to the
Trustee and promptly canceled by it, or, if surrendered to the Trustee, shall be
promptly canceled by it, and no Debentures shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture.  The
Trustee shall return such

                                      21
<PAGE>
 
canceled Debentures to the Company.  If the Company shall acquire any of the
Debentures, such acquisition shall not operate as a redemption or satisfaction
of the indebtedness represented by such Debentures unless and until the same are
delivered to the Trustee for cancellation.

     SECTION 2.9.   CUSIP NUMBERS.  The Company in issuing the Debentures 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
Debentureholders; provided that any such notice may state that no representation
is made as to the correctness of such numbers either as printed on the
Debentures or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Debentures,
and any such redemption shall not be affected by any defect in or omission of
such numbers.  The Company will promptly notify the Trustee in writing of any
change in the CUSIP numbers.

                                  ARTICLE III

                            REDEMPTION OF DEBENTURES

     SECTION 3.1.   REDEMPTION PRICES.  The Company may not redeem the
Debentures prior to February 21, 2001.  At any time on or after February 21,
2001, the Company, at its option, may redeem all or from time to time any part
of the Debentures on any date prior to maturity, upon notice as set forth in
Section 3.2, and at the optional redemption prices set forth in the form of
Debenture attached as Exhibit A hereto, together with accrued interest to, but
excluding, the date fixed for redemption.

     SECTION 3.2.   NOTICE OF REDEMPTION; SELECTION OF DEBENTURES.  In case the
Company shall desire to exercise the right to redeem all or, as the case may be,
any part of the Debentures pursuant to Section 3.1, it shall fix a date for
redemption and it or, at its written request received by the Trustee not fewer
than forty-five (45) days prior (or such shorter period of time as may be
acceptable to the Trustee) to the date fixed for redemption, the Trustee in the
name of and at the expense of the Company, shall mail or cause to be mailed a
notice of such redemption not less than thirty (30) nor more than sixty (60)
days prior to the date fixed for redemption to the holders of Debentures so to
be redeemed as a whole or in part at their last addresses as the same appear on
the Debenture register; provided that if the Company shall give such notice, it
shall also give written notice of the Debentures to be redeemed, to the Trustee.
Such mailing shall be by first class mail.  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 Debenture
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Debenture.

          Each such notice of redemption shall specify the aggregate principal
amount of Debentures to be redeemed, the CUSIP numbers, the date fixed for
redemption (which shall be a Business Day), the redemption price at which
Debentures are to be redeemed, the place or places of payment, that payment will
be made upon presentation and surrender of such

                                      22
<PAGE>
 
Debentures, that interest accrued to (but excluding) the date fixed for
redemption will be paid as specified in said notice, and that on and after said
date interest thereon or on the portion thereof to be redeemed will cease to
accrue.  Such notice shall also state the current Conversion Price and the date
on which the right to convert such Debentures or portions thereof into Common
Stock will expire.  If fewer than all the Debentures are to be redeemed, the
notice of redemption shall identify the Debentures to be redeemed (including
CUSIP numbers, if any).  In case any Debenture is to be redeemed in part only,
the notice of redemption shall state the portion of the principal amount thereof
to be redeemed and shall state that on and after the date fixed for redemption,
upon surrender of such Debenture, a new Debenture or Debentures in principal
amount equal to the unredeemed portion thereof will be issued.

          On or prior to the redemption date specified in the notice of
redemption given as provided in this Section 3.2, the Company will deposit with
the Trustee or with one or more paying agents (or, if the Company is acting as
its own paying agent, set aside, segregate and hold in trust as provided in
Section 5.4) an amount of money sufficient to redeem on the redemption date all
the Debentures (or portions thereof) so called for redemption (other than those
theretofore surrendered for conversion into Common Stock) at the appropriate
redemption price, together with accrued interest to (but excluding) the date
fixed for redemption; provided that if such payment is made on the redemption
date it must be received by the Trustee or paying agent, as the case may be, by
10:00 a.m. New York City time, on such date.  If any Debenture called for
redemption is converted pursuant hereto, any money deposited with the Trustee or
any paying agent or so segregated and held in trust for the redemption of such
Debenture shall be paid to the Company upon its written request, or, if then
held by the Company, shall be discharged from such trust.  Whenever any
Debentures are to be redeemed, the Company will give the Trustee written notice
in the form of an Officers' Certificate not fewer than forty-five (45) days (or
such shorter period of time as may be acceptable to the Trustee) prior to the
redemption date as to the aggregate principal amount of Debentures to be
redeemed.

          If fewer than all the Debentures are to be redeemed, the Trustee shall
select the Debentures or portions thereof of the Global Debenture or the
Debentures in certificated form to be redeemed (in principal amounts of $1,000
or integral multiples thereof), by lot, on a pro rata basis or by another method
the Trustee deems fair and appropriate.  If any Debenture selected for partial
redemption is converted in part after such selection, the converted portion of
such Debenture shall be deemed (so far as may be) to be the portion to be
selected for redemption.  The Debentures (or portions thereof) so selected shall
be deemed duly selected for redemption for all purposes hereof, notwithstanding
that any such Debenture is converted as a whole or in part before the mailing of
the notice of redemption.

          Upon any redemption of less than all Debentures, the Company and the
Trustee may (but need not) treat as outstanding any Debentures surrendered for
conversion during the period of fifteen (15) days next preceding the mailing of
a notice of redemption and may (but need not) treat as outstanding any Debenture
authenticated and delivered during such period in exchange for the unconverted
portion of any Debenture converted in part during such period.

                                      23
<PAGE>
 
     SECTION 3.3.  PAYMENT OF DEBENTURES CALLED FOR REDEMPTION.  If notice of
redemption has been given as above provided, the Debentures or portion of
Debentures with respect to which such notice has been given shall, unless
converted into Common Stock pursuant to the terms hereof, become due and payable
on the date fixed for redemption and at the place or places stated in such
notice at the applicable redemption price, together with interest accrued to
(but excluding) the date fixed for redemption, and on and after said date
(unless the Company shall default in the payment of such Debentures at the
redemption price, together with interest accrued to said date), interest on the
Debentures or portion of Debentures so called for redemption shall cease to
accrue and such Debentures shall cease after the close of business on the
Business Day next preceding the date fixed for redemption to be convertible into
Common Stock and, except as provided in Sections 8.5 and 13.4, to be entitled to
any benefit or security under this Indenture, and the holders thereof shall have
no right in respect of such Debentures except the right to receive the
redemption price thereof and unpaid interest to (but excluding) the date fixed
for redemption. On presentation and surrender of such Debentures at a place of
payment in said notice specified, the said Debentures or the specified portions
thereof shall be paid and redeemed by the Company at the applicable redemption
price, together with interest accrued thereon to (but excluding) the date fixed
for redemption; provided that, if the applicable redemption date is an interest
payment date, the semi-annual payment of interest becoming due on such date
shall be payable to the registered holders of such Debentures on the relevant
record date for such interest payment.

          Upon presentation of any Debenture redeemed in part only, the Company
shall execute and the Trustee shall authenticate and make available for delivery
to the holder thereof, at the expense of the Company, a new Debenture or
Debentures, of authorized denominations, in principal amount equal to the
unredeemed portion of the Debentures so presented.

          Notwithstanding the foregoing, the Company shall not mail any notice
of optional redemption during the continuance of a default in payment of
interest or premium on the Debentures.  If any Debenture called for redemption
shall not be so paid upon surrender thereof for redemption, the principal and
premium, if any, shall, until paid or duly provided for, bear interest from the
date fixed for redemption at the rate borne by the Debenture and such Debenture
shall remain convertible into Common Stock until the principal and premium, if
any, shall have been paid or duly provided for.

     SECTION 3.4.  CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.  In connection
with any redemption of Debentures, the Company may arrange (in lieu of
redemption) for the purchase and conversion of any Debentures by an agreement
with one or more investment bankers or other purchasers to purchase such
Debentures by paying to the Trustee in trust for the Debentureholders, on or
before the close of business on the date fixed for redemption, an amount not
less than the applicable redemption price, together with interest accrued to
(but excluding) the date fixed for redemption, of such Debentures.
Notwithstanding anything to the contrary contained in this Article III, the
obligation of the Company to pay the redemption price of such Debentures,
together with interest accrued to (but excluding) the date fixed for redemption,
shall be deemed to be satisfied and discharged to the extent such amount is so
paid by such purchasers.  If such an agreement is entered into, a copy of which
will be filed with the Trustee prior to the

                                      24
<PAGE>
 
date fixed for redemption, any Debentures not duly surrendered for conversion by
the holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, acquired by such purchasers from such holders and
(notwithstanding anything to the contrary contained in Article XV) surrendered
by such purchasers for conversion, all as of immediately prior to the close of
business on the date fixed for redemption (and the right to convert any such
Debentures shall be extended through such time), subject to payment of the above
amount as aforesaid.  At the written direction of the Company, the Trustee shall
hold and dispose of any such amount paid to it in the same manner as it would
monies deposited with it by the Company for the redemption of Debentures.
Without the Trustee's prior written consent, no arrangement between the Company
and such purchasers for the purchase and conversion of any Debentures shall
increase or otherwise affect any of the powers, duties, responsibilities or
obligations of the Trustee as set forth in this Indenture.

     SECTION 3.5.  REDEMPTION AT OPTION OF HOLDERS.

          (a) If there shall occur a Fundamental Change, then each
Debentureholder shall have the right, at such holder's option, to require the
Company to redeem all of such holder's Debentures, or any portion thereof that
is an integral multiple of $1,000 principal amount, that are outstanding on the
date (the "Repurchase Date") that is not more than thirty (30) days after the
date of the Company Notice (as defined in Section 3.5(b) below) of such
Fundamental Change (or, if such 30th day is not a Business Day, the next
succeeding Business Day).  Such repayment shall be made at a price equal to 100%
of the principal amount to be redeemed. The Company shall also pay to such
holders accrued interest on the redeemed Debentures to, but excluding, the
Repurchase Date; provided that, if such Repurchase Date is an interest payment
date, the semi-annual payment of interest becoming due on such date shall be
payable to the registered holders of such Debentures on the relevant record date
for such interest payment.

          Upon presentation of any Debenture redeemed in part only, the Company
shall execute and, upon the Company's written direction to the Trustee, the
Trustee shall authenticate and deliver to the holder thereof, at the expense of
the Company, a new Debenture or Debentures, of authorized denominations, in
principal amount equal to the unredeemed portion of the Debentures so presented.

          (b) On or before the tenth day after the occurrence of a Fundamental
Change, the Company, or, at its written request (which must be received by the
Trustee at least five (5) Business Days prior to the date the Trustee is
requested to give notice as described below), the Trustee in the name of and at
the expense of the Company, shall mail or cause to be mailed to all holders of
record on the date of the Fundamental Change a notice (the "Company Notice") of
the occurrence of such Fundamental Change and of the redemption right at the
option of the holders arising as a result thereof.  Such notice shall be mailed
in the manner and with the effect set forth in the first paragraph of Section
3.2.  The Company shall also deliver a copy of the Company Notice to the Trustee
at such time as it is mailed to Debentureholders.

                                      25
<PAGE>
 
          Each Company Notice shall specify the circumstances constituting the
Fundamental Change, the Repurchase Date, the price at which the Company shall be
obligated to redeem Debentures, the latest time on the Repurchase Date, which
shall be thirty (30) days after the date of the Company Notice, by which the
holder must exercise the redemption right (the "Fundamental Change Expiration
Time"), that the holder shall have the right to withdraw any Debentures
surrendered prior to the Fundamental Change Expiration Time, a description of
the procedure which a Debentureholder must follow to exercise such redemption
right and to withdraw any surrendered Debentures, the place or places where the
holder is to surrender such holder's Debentures, and the amount of interest
accrued on each Debenture to the Repurchase Date.

          No failure of the Company to give the foregoing notices and no defect
therein shall limit the Debentureholders' redemption rights or affect the
validity of the proceedings for the repurchase of the Debentures pursuant to
this Section 3.5.

          (c) For a Debenture to be so redeemed at the option of the holder, the
Company must receive at the office or agency maintained by the Company pursuant
to Section 5.2, such Debenture with the form entitled "Option to Elect Repayment
Upon A Fundamental Change" on the reverse thereof duly completed, together with
such Debentures duly endorsed for transfer, on or before the Fundamental Change
Expiration Time.  All questions as to the validity, eligibility (including time
of receipt) and acceptance of any Debenture for repayment shall be determined by
the Company, whose determination shall be final and binding absent manifest
error.

          (d) On or prior to the Repurchase Date, the Company will deposit with
the Trustee or with one or more paying agents (or, if the Company is acting as
its own paying agent, set aside, segregate and hold in trust as provided in
Section 5.4) an amount of money sufficient to repay on the Repurchase Date all
the Debentures to be repaid on such date at the appropriate redemption price,
together with accrued interest to (but excluding) the Repurchase Date; provided
that if such payment is made on the Repurchase Date it must be received by the
Trustee or paying agent, as the case may be, by 10:00 a.m. New York City time,
on such date.  Payment for Debentures surrendered for redemption (and not
withdrawn) prior to the Fundamental Change Expiration Time will be made promptly
(but in no event more than five (5) Business Days) following the Repurchase Date
by mailing checks for the amount payable to the holders of such Debentures
entitled thereto as they shall appear on the Debenture register of the Company.

          (e) In the case of a reclassification, change, consolidation, merger,
combination, sale or conveyance to which Section 15.6 applies, in which the
Common Stock of the Company is changed or exchanged as a result into the right
to receive stock, securities or other property or assets (including cash), which
includes shares of Common Stock of the Company or another person that are, or
upon issuance will be, traded on a United States national securities exchange or
approved for trading on an established automated over-the-counter trading market
in the United States and such shares constitute at the time such change or
exchange becomes effective in excess of 50% of the aggregate fair market value
of such stock, securities or other property or assets

                                      26
<PAGE>
 
(including cash), then the Person formed by such consolidation or resulting from
such merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture (accompanied by an Opinion of
Counsel that such supplemental indenture complies with the Trust Indenture Act
as in force at the date of execution of such supplemental indenture) modifying
the provisions of this Indenture relating to the right of holders of the
Debentures to cause the Company to repurchase the Debentures following a
Fundamental Change, including without limitation the applicable provisions of
this Section 3.5 and the definitions of Common Stock and Fundamental Change, as
appropriate, as determined in good faith by the Company, to make such provisions
apply to the common stock and the issuer thereof if different from the Company
and Common Stock of the Company (in lieu of the Company and the Common Stock of
the Company).

          (f) The Company will comply with the provisions of Rule 13e-4 and any
other tender offer rules under the Exchange Act to the extent then applicable in
connection with the redemption rights of the holders of Debentures in the event
of a Fundamental Change.


                                   ARTICLE IV

                          SUBORDINATION OF DEBENTURES

     SECTION 4.1.  AGREEMENT OF SUBORDINATION.  The Company covenants and
agrees, and each holder of Debentures issued hereunder by its acceptance thereof
likewise covenants and agrees, that all Debentures shall be issued subject to
the provisions of this Article IV; and each Person holding any Debenture,
whether upon original issue or upon transfer, assignment or exchange thereof,
accepts and agrees to be bound by such provisions.

          The payment of the principal of, premium, if any, and interest
(including Liquidated Damages, if any) on all Debentures (including, but not
limited to, the redemption price with respect to Debentures called for
redemption in accordance with Section 3.2 or submitted for redemption in
accordance with Section 3.5, as the case may be, as provided herein) issued
hereunder shall, to the extent and in the manner hereinafter set forth, be
subordinated and subject in right of payment to the prior payment in full of all
Senior Obligations and that the subordination is for the benefit of the holders
of Senior Obligations.

          No provision of this Article IV shall prevent the occurrence of any
default or Event of Default hereunder.

     SECTION 4.2.  PAYMENTS TO DEBENTUREHOLDERS.  No payment shall be made with
respect to the principal of, premium, if any, or interest (including Liquidated
Damages, if any) on the Debentures (including, but not limited to, the
redemption price with respect to the Debentures to be called for redemption in
accordance with Section 3.2 or submitted for redemption in accordance with
Section 3.5, as the case may be, as provided in this Indenture), except payments

                                      27
<PAGE>
 
and distributions made by the Trustee as permitted by the first or second
paragraph of Section 4.5, if:

          (a) a default in the payment of principal, premium, if any, interest,
rent or other obligations in respect of Senior Obligations occurs and is
continuing (a "Payment Default"), unless and until such Payment Default shall
have been cured or waived or shall have ceased to exist; or

          (b) a default, other than a Payment Default, on any Designated Senior
Obligations (a "Non-Payment Default") occurs and is continuing that then permits
holders of such Designated Senior Obligations to accelerate its maturity and the
Trustee receives a written notice of the default (a "Payment Blockage Notice")
from a holder of Designated Senior Obligations, a Representative of Designated
Senior Obligations or the Company.

          No Non-Payment Default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice.

          The Company may and shall resume payments on and distributions in
respect of the Debentures, including any past scheduled payments of the
principal of, premium, if any, and interest (including Liquidated Damages, if
any) on such Debentures to which the holders of the Debentures would have been
entitled but for the provisions of this Article IV:

          (1)  in the case of a Payment Default, on the date upon which such
               Payment Default is cured or waived or ceases to exist, and

          (2)  in the case of a Non-Payment Default, the earlier of (i) the date
               upon which such default is cured or waived or ceases to exist or
               (ii) 179 days after the Payment Blockage Notice is received by
               the Trustee if the maturity of such Designated Senior Obligations
               has not been accelerated and no Payment Default with respect to
               any Senior Obligations has occurred which has not been cured or
               waived or ceased to exist (in such event clause (1) above shall
               instead be applicable),

unless this Article IV otherwise prohibits the payment or distribution at the
time of such payment or distribution.

          Upon any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Obligations shall first be paid in full in cash or other payment
satisfactory to the holders of such Senior Obligations, or payment thereof in
accordance with its terms provided for in cash or other payment satisfactory to
the holders of such Senior Obligations

                                      28
<PAGE>
 
before any payment is made on account of the principal of, premium, if any, or
interest (including Liquidated Damages, if any) on the Debentures (except
payments made pursuant to Article XIII from monies deposited with the Trustee
pursuant thereto prior to commencement of proceedings for such dissolution,
winding up, liquidation or reorganization); and upon any such dissolution or
winding up or liquidation or reorganization of the Company or bankruptcy,
insolvency, receivership or other proceeding, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the holders of the Debentures or the Trustee
would be entitled, except for the provision of this Article IV, shall (except as
aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the holders of the Debentures or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior Obligations (pro rata
to such holders on the basis of the respective amounts of Senior Obligations
held by such holders, or as otherwise required by law or a court order) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Obligations
may have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Obligations in full, in cash or other payment
satisfactory to the holders of such Senior Obligations, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Obligations, before any payment or distribution is made to the holders of the
Debentures or to the Trustee.

          For purposes of this Article IV, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article IV with respect
to the Debentures to the payment of all Senior Obligations which may at the time
be outstanding; provided that the Senior Obligations are assumed by the new
corporation, if any, resulting from any reorganization or readjustment.  The
consolidation of the Company with, or the merger of the Company into, another
corporation or the liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided for in
Article XII shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 4.2 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article XII.

          In the event of the acceleration of the Debentures because of an Event
of Default, no payment or distribution shall be made to the Trustee or any
holder of Debentures in respect of the principal of, premium, if any, or
interest (including Liquidated Damages, if any) on the Debentures (including,
but not limited to, the redemption price with respect to the Debentures called
for redemption in accordance with Section 3.2 or submitted for redemption in
accordance with Section 3.5, as the case may be, as provided in the Indenture),
except payments and distributions made by the Trustee as permitted by the first
or second paragraph of Section 4.5, until all Senior Obligations have been paid
in full in cash or other payment satisfactory to the holders of Senior
Obligations or such acceleration is rescinded in accordance with the terms of

                                      29
<PAGE>
 
this Indenture.  If payment of the Debentures is accelerated because of an Event
of Default, the Company shall promptly notify holders of Senior Obligations of
the acceleration.

          In the event that, notwithstanding the foregoing provisions, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (including, without limitation, by way
of setoff or otherwise), prohibited by the foregoing provisions in this Section
4.2, shall be received by the Trustee or the holders of the Debentures before
all Senior Obligations are paid in full in cash or other payment satisfactory to
the holders of such Senior Obligations, or provision is made for such payment
thereof in accordance with its terms in cash or other payment satisfactory to
the holders of such Senior Obligations, such payment or distribution shall be
held in trust for the benefit of and shall be paid over or delivered to the
holders of Senior Obligations or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Obligations may have been issued, as their respective
interests may appear, as calculated by the Company, for application to the
payment of any Senior Obligations remaining unpaid to the extent necessary to
pay all Senior Obligations in full in cash or other payment satisfactory to the
holders of such Senior Obligations, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Obligations.

          Nothing in this Section 4.2 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 8.6.  This Section 4.2 shall be subject
to the further provisions of Section 4.5.

     SECTION 4.3.  SUBROGATION OF DEBENTURES.  Subject to the payment in full
of all Senior Obligations, the rights of the holders of the Debentures shall be
subrogated, to the extent of the payments or distributions made to the holders
of such Senior Obligations pursuant to the provisions of this Article IV
(equally and ratably with the holders of all indebtedness of the Company which
by its express terms is subordinated to other indebtedness of the Company to
substantially the same extent as the Debentures are subordinated and is entitled
to like rights of subrogation), to the rights of the holders of Senior
Obligations to receive payments or distributions of cash, property or securities
of the Company applicable to the Senior Obligations until the principal,
premium, if any, and interest (including Liquidated Damages, if any) on the
Debentures shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of the Senior Obligations of any cash,
property or securities to which the holders of the Debentures or the Trustee
would be entitled except for the provisions of this Article IV, and no payment
over pursuant to the provisions of this Article IV, to or for the benefit of the
holders of Senior Obligations by holders of the Debentures or the Trustee,
shall, as between the Company, its creditors other than holders of Senior
Obligations, and the holders of the Debentures, be deemed to be a payment by the
Company to or on account of the Senior Obligations; and no payments or
distributions of cash, property or securities to or for the benefit of the
holders of the Debentures pursuant to the subrogation provisions of this Article
IV, which would otherwise have been paid to the holders of Senior Obligations
shall be deemed to be a payment by the Company to or for the account of the
Debentures.  It is understood that the provisions of this Article IV are and are
intended solely for the purposes of defining the relative

                                      30
<PAGE>
 
rights of the holders of the Debentures, on the one hand, and the holders of the
Senior Obligations, on the other hand.

          Nothing contained in this Article IV or elsewhere in this Indenture or
in the Debentures is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Obligations, and the holders of the
Debentures, the obligation of the Company, which is absolute and unconditional,
to pay to the holders of the Debentures the principal of, premium, if any, and
interest (including Liquidated Damages, if any) on the Debentures as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the holders of the Debentures
and creditors of the Company other than the holders of the Senior Obligations,
nor shall anything herein or therein prevent the Trustee or the holder of any
Debenture from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article IV of the holders of Senior Obligations in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.
 
     SECTION 4.4.  AUTHORIZATION TO EFFECT SUBORDINATION.  Each holder of a
Debenture by the holder's acceptance thereof authorizes and directs the Trustee
on the holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article IV and appoints the
Trustee to act as the holder's attorney-in-fact for any and all such purposes.
If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in the third paragraph of Section
7.2 hereof at least thirty (30) days before the expiration of the time to file
such claim, the holders of any Senior Obligations or their representatives are
hereby authorized to file an appropriate claim for and on behalf of the holders
of the Debentures.

     SECTION 4.5.  NOTICE TO TRUSTEE.  The Company shall give prompt written
notice in the form of an Officers' Certificate to a Responsible Officer of the
Trustee and to any paying agent of any fact known to the Company which would
prohibit the making of any payment of monies to or by the Trustee or any paying
agent in respect of the Debentures pursuant to the provisions of this Article
IV.  Notwithstanding the provisions of this Article IV or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts which would prohibit the making of any payment of monies to or by
the Trustee in respect of the Debentures pursuant to the provisions of this
Article IV, unless and until a Responsible Officer of the Trustee shall have
received written notice thereof at the Corporate Trust Office from the Company
(in the form of an Officers' Certificate) or a Representative or a holder or
holders of Senior Obligations or from any trustee thereof; and before the
receipt of any such written notice, the Trustee shall be entitled in all
respects to assume that no such facts exist; provided that if on a date not less
than two (2) Business Days prior to the date upon which by the terms hereof any
such monies may become payable for any purpose (including, without limitation,
the payment of the principal of, or premium, if any, or interest (including
Liquidated Damages, if any) on any Debenture) the Trustee shall not have
received, with respect to such monies, the notice provided for in this Section
4.5, then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to apply monies received to the

                                      31
<PAGE>
 
purpose for which they were received, and shall not be affected by any notice to
the contrary which may be received by it on or after such prior date.

          Notwithstanding anything in this Article IV to the contrary, nothing
shall prevent any payment by the Trustee to the Debentureholders of monies
deposited with it pursuant to Section 13.1, provided such deposit was not in
violation of this Article IV, and any such payment shall not be subject to the
provisions of Section 4.1 or 4.2.

          The Trustee shall be entitled to conclusively rely on the delivery to
it of a written notice by a Representative or a person representing himself or
herself to be a holder of Senior Obligations (or a trustee on behalf of such
holder) to establish that such notice has been given by a Representative or a
holder of Senior Obligations or a trustee on behalf of any such holder or
holders.  The Trustee shall not be required to make any payment or distribution
to or on behalf of a holder of Senior Obligations pursuant to this Article IV
unless it has received reasonably satisfactory evidence as to the amount of
Senior Obligations held by such person, the extent to which such person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such person under this Article IV.

     SECTION 4.6.  TRUSTEE'S RELATION TO SENIOR OBLIGATIONS.  The Trustee in
its individual capacity shall be entitled to all the rights set forth in this
Article IV in respect of any Senior Obligations at any time held by it, to the
same extent as any other holder of Senior Obligations, and nothing in Section
8.13 or elsewhere in this Indenture shall deprive the Trustee of any of its
rights as such holder.

          With respect to the holders of Senior Obligations, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article IV, and no implied covenants or
obligations with respect to the holders of Senior Obligations shall be read into
this Indenture against the Trustee.  The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Obligations.

     SECTION 4.7.  NO IMPAIRMENT OF SUBORDINATION.  No right of any present or
future holder of any Senior Obligations to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof with which any such holder may have or otherwise be charged.

     SECTION 4.8.  CERTAIN CONVERSIONS NOT DEEMED PAYMENT.  For the purposes of
this Article IV only, (1) the issuance and delivery of junior securities upon
conversion of Debentures in accordance with Article XV shall not be deemed to
constitute a payment or distribution on account of the principal of, premium, if
any, or interest (including Liquidated Damages, if any) on Debentures or on
account of the purchase or other acquisition of Debentures, and (2) the payment,
issuance or delivery of cash (except in satisfaction of fractional shares
pursuant to Section 15.3), property or securities (other than junior securities)
upon conversion of a Debenture

                                      32
<PAGE>
 
shall be deemed to constitute payment on account of the principal of, premium,
if any, or interest (including Liquidated Damages, if any) on such Debenture.
For the purposes of this Section 4.8, the term "junior securities" means (a)
shares of any stock of any class of the Company or (b) securities of the Company
that are subordinated in right of payment to all Senior Obligations that may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Debentures
are so subordinated as provided in this Article.  Nothing contained in this
Article IV or elsewhere in this Indenture or in the Debentures is intended to or
shall impair, as among the Company, its creditors (other than holders of Senior
Obligations) and the Debentureholders, the right, which is absolute and
unconditional, of the Holder of any Debenture to convert such Debenture in
accordance with Article XV.

     SECTION 4.9.   ARTICLE APPLICABLE TO PAYING AGENTS.  If at any time any
paying agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article shall
(unless the context otherwise requires) be construed as extending to and
including such paying agent within its meaning as fully for all intents and
purposes as if such paying agent were named in this Article in addition to or in
place of the Trustee; provided, however, that the first paragraph of Section 4.5
shall not apply to the Company or any Affiliate of the Company if it or such
Affiliate acts as paying agent.

          The Trustee shall not be responsible for the actions or inactions of
any other paying agents (including the Company if acting as its own paying
agent) and shall have no control of any funds held by such other paying agents.

     SECTION 4.10.  SENIOR OBLIGATIONS ENTITLED TO RELY.  The holders of Senior
Obligations (including, without limitation, Designated Senior Obligations) shall
have the right to rely upon this Article IV.

     SECTION 4.11.  RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT.  Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee and the Debentureholders shall be entitled to
conclusively rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, liquidating trustee,
custodian, receiver, assignee for the benefit of creditors, agent or other
person making such payment or distribution, delivered to the Trustee or to the
Debentureholders, for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the holders of Senior Obligations
and other indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.

                                      33
<PAGE>
 
                                   ARTICLE V

                      PARTICULAR COVENANTS OF THE COMPANY

     SECTION 5.1.   PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.  The Company
covenants and agrees that it will pay or cause to be paid the principal of and
premium, if any (including upon redemption pursuant to Article III), and
interest (including Liquidated Damages, if any) on each of the Debentures at the
places, at the respective times and in the manner provided herein and in the
Debentures.  Each installment of interest on the Debentures due on any semi-
annual interest payment date may be paid either (i) by check mailed to the
address of the person entitled thereto as it appears in the Debenture register;
provided that the holder of Debentures with an aggregate principal amount in
excess of $2,000,000 shall, at the written election of such holder, be paid by
wire transfer in immediately available funds; or (ii) by transfer to an account
maintained by such person located in the United States; provided, however, that
payments to the Depositary will be made by wire transfer of immediately
available funds to the account of Depositary or its nominee.

     SECTION 5.2.   MAINTENANCE OF OFFICE OR AGENCY.  The Company will maintain
an office or agency in The Borough of Manhattan, The City of New York, where the
Debentures may be surrendered for registration of transfer or exchange or for
presentation for payment or for conversion or redemption and where notices and
demands to or upon the Company in respect of the Debentures and this Indenture
may be served.  The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency not
designated or appointed by the Trustee.  If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office or the office or
agency of the Trustee in The Borough of Manhattan, The City of New York (which
shall initially be located at 770 Broadway, New York, New York 10003).

          The Company may also from time to time designate co-registrars and one
or more other offices or agencies where the Debentures may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations.  The Company will give prompt written notice of any such
designation or rescission and of any change in the location of any such other
office or agency.

          The Company hereby initially designates the Trustee as paying agent,
Debenture registrar, Custodian and conversion agent and each of the Corporate
Trust Office of the Trustee and the office or agency of the Trustee in The
Borough of Manhattan, The City of New York (which shall initially be located at
770 Broadway, New York, New York 10003), shall be considered as one such office
or agency of the Company for each of the aforesaid purposes.

          So long as the Trustee is the Debenture registrar, the Trustee agrees
to mail, or cause to be mailed, the notice set forth in Section 8.10(a) and, if
requested by the Company, the notice set forth in the third paragraph of Section
8.11. If co-registrars have been appointed in

                                      34
<PAGE>
 
accordance with this Section, the Trustee shall mail such notices only to the
Company and the holders of Debentures it can identify from its records.

     SECTION 5.3.   APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE.  The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.

     SECTION 5.4    PROVISIONS AS TO PAYING AGENT.

          (a)  If the Company shall appoint a paying agent other than the
Trustee, or if the Trustee shall appoint such a paying agent, it will cause such
paying agent to execute and deliver to the Trustee an instrument in which such
agent shall agree with the Trustee, subject to the provisions of this Section
5.4:

               (1)  that it will hold all sums held by it as such agent for the
     payment of the principal of and premium, if any, or interest (including
     Liquidated Damages, if any) on the Debentures (whether such sums have been
     paid to it by the Company or by any other obligor on the Debentures) in
     trust for the benefit of the holders of the Debentures;

               (2)  that it will give the Trustee written notice of any failure
     by the Company (or by any other obligor on the Debentures) to make any
     payment of the principal of and premium, if any, or interest (including
     Liquidated Damages, if any) on the Debentures when the same shall be due
     and payable; and

               (3)  that at any time during the continuance of an Event of
     Default, upon request of the Trustee, it will forthwith pay to the Trustee
     all sums so held in trust.

          The Company shall, on or before each due date of the principal of,
premium, if any, or interest (including Liquidated Damages, if any) on the
Debentures, deposit with the paying agent a sum sufficient to pay such
principal, premium, if any, or interest (including Liquidated Damages, if any),
and (unless such paying agent is the Trustee) the Company will promptly notify
the Trustee of any failure to take such action; provided that if such deposit is
made on the due date, such deposit shall be received by the paying agent by
10:00 a.m. New York City time, on such date.

          (b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Debentures, set aside, segregate
and hold in trust for the benefit of the holders of the Debentures a sum
sufficient to pay such principal, premium, if any, or interest (including
Liquidated Damages, if any) so becoming due and will notify the Trustee in
writing of any failure to take such action and of any failure by the Company (or
any other obligor under the Debentures) to make any payment of the principal of,
premium, if any, or interest (including Liquidated Damages, if any) on the
Debentures when the same shall become due and payable.

                                      35
<PAGE>
 
          (c)  Anything in this Section 5.4 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Company or any paying agent hereunder
as required by this Section 5.4, such sums to be held by the Trustee upon the
trusts herein contained and upon such payment by the Company or any paying agent
to the Trustee, the Company or such paying agent shall be released from all
further liability with respect to such sums.

          (d)  Anything in this Section 5.4 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 5.4 is subject to
Sections 13.3 and 13.4.

          The Trustee shall not be responsible for the actions of any other
paying agents (including the Company if acting as its own paying agent) and
shall have no control of any funds held by such other paying agents.

     SECTION 5.5.   EXISTENCE.  Subject to Article XII, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence and rights (charter and statutory); provided, however, that
the Company shall not be required to preserve any such right if the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company.

     SECTION 5.6.   MAINTENANCE OF PROPERTIES.  The Company will cause all
properties used or useful in the conduct of its business to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business.

     SECTION 5.7.   PAYMENT OF TAXES AND OTHER CLAIMS.  The Company will pay or
discharge, or cause to be paid or discharged, before the same become delinquent,
(i) all taxes, assessments and governmental charges levied or imposed upon the
Company or upon the income, profits or property of the Company, (ii) all claims
for labor, materials and supplies which, if unpaid, might by law become a lien
or charge upon the property of the Company and (iii) all stamps and other
duties, if any, which may be imposed by the United States or any political
subdivision thereof or therein in connection with the issuance, transfer,
exchange or conversion of any Debentures or with respect to this Indenture;
provided, however, in the case of clauses (i) and (ii), the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim (A) if the failure to do so will not, in the
aggregate, have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business or operations of the Company, (B) if the
amount, applicability or validity thereof is

                                      36
<PAGE>
 
being contested in good faith by appropriate proceedings or (C) in connection
with any transfer or exchange of Debentures under Section 2.5.

     SECTION 5.8.   RULE 144A INFORMATION REQUIREMENT.  Within the period prior
to the expiration of the holding period applicable to sales thereof under Rule
144(k) under the Securities Act (or any successor provision), the Company
covenants and agrees that it shall, during any period in which it is not subject
to Section 13 or 15(d) under the Exchange Act, make available to any holder or
beneficial holder of Debentures or any Common Stock issued upon conversion
thereof (other than a holder or beneficial holder of Debentures or any Common
Stock issued upon conversion thereof that is an Affiliate of the Company) which
continue to be Restricted Securities in connection with any sale thereof and any
prospective purchaser of Debentures or such Common Stock from such holder or
beneficial holder, the information required pursuant to Rule 144A(d)(4) under
the Securities Act upon the request of any holder or beneficial holder of the
Debentures or such Common Stock and it will take such further action as any
holder or beneficial holder of such Debentures or such Common Stock may
reasonably request, all to the extent required from time to time to enable such
holder or beneficial holder to sell its Debentures or Common Stock without
registration under the Securities Act within the limitation of the exemption
provided by Rule 144A, as such Rule may be amended from time to time.  Upon the
request of any holder or any beneficial holder of the Debentures or such Common
Stock, the Company will deliver to such holder a written statement as to whether
it has complied with such requirements.

     SECTION 5.9.   STAY, EXTENSION AND USURY LAWS.  The Company covenants (to
the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal of, premium,
if any, or interest (including Liquidated Damages, if any) on the Debentures as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law has been enacted.

     SECTION 5.10.  COMPLIANCE CERTIFICATE.  The Company shall deliver to the
Trustee, within one hundred twenty (120) days after the end of each fiscal year
of the Company, a certificate signed by either the principal executive officer,
principal financial officer or principal accounting officer of the Company,
stating whether or not to the best knowledge of the signer thereof the Company
is in default in the performance and observance of any of the terms, provisions
and conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and status thereof of which
the signer may have knowledge.

                                      37
<PAGE>
 
          The Company will deliver to a Responsible Officer of the Trustee,
promptly upon becoming aware of any default in the performance or observance of
any covenant, agreement or condition contained in this Indenture, or any Event
of Default, an Officers' Certificate identifying with particularity such default
or Event of Default and further stating what action the Company has taken, is
taking or proposes to take with respect thereto.

          Any notice required to be given under this Section 5.10 shall be
delivered to the Trustee at its Corporate Trust Office.

                                  ARTICLE VI
                                  ----------

      DEBENTUREHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE

     SECTION 6.1.   DEBENTUREHOLDERS' LISTS.  In the event the Company serves as
the Debenture registrar, the Company covenants and agrees that it will furnish
or cause to be furnished to the Trustee, semiannually, not more than five (5)
days after each February 1 and August 1 in each year beginning with August 1,
1998, and at such other times as the Trustee may request in writing, within
thirty (30) days after receipt by the Company of any such request (or such
lesser time as the Trustee may reasonably request in order to enable it to
timely provide any notice to be provided by it hereunder), a list in such form
as the Trustee may reasonably require of the names and addresses of the holders
of Debentures as of a date not more than five (5) days (or such other date as
the Trustee may reasonably request in order to so provide any such notices)
prior to the time such information is furnished.  The foregoing list shall be
furnished by the Trustee to the Company in the event that the Trustee is acting
as the sole Debenture registrar.

     SECTION 6.2.   PRESERVATION AND DISCLOSURE OF LISTS.

          (a)  The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders of
Debentures contained in the most recent list furnished to it as provided in
Section 6.1 or maintained by the Trustee in its capacity as Debenture registrar
or co-registrar in respect of the Debentures, if so acting.  The Trustee may
destroy any list furnished to it as provided in Section 6.1 upon receipt of a
new list so furnished.

          (b)  The rights of Debentureholders to communicate with other holders
of Debentures with respect to their rights under this Indenture or under the
Debentures, and the corresponding rights and duties of the Trustee, shall be as
provided by the Trust Indenture Act.

          (c)  Every Debentureholder, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of holders of Debentures
made pursuant to the Trust Indenture Act.

                                      38
<PAGE>
 
     SECTION 6.3.  REPORTS BY TRUSTEE

          (a)  Within sixty (60) days after August 15 of each year commencing
with the year 1998, the Trustee shall transmit to holders of Debentures such
reports dated as of August 15 of the year in which such reports are made
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto.

          (b)  A copy of such report shall, at the time of such transmission to
holders of Debentures, be filed by the Trustee with each stock exchange and
automated quotation system upon which the Debentures are listed and with the
Company.  The Company will notify the Trustee in writing within a reasonable
time when the Debentures are listed on any stock exchange or automated quotation
system.

     SECTION 6.4.   REPORTS BY COMPANY.  The Company shall file with the Trustee
(and the Commission if at any time after the Indenture becomes qualified under
the Trust Indenture Act), and transmit to holders of Debentures, such
information, documents and other reports and such summaries thereof, as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant to such Act, whether or not the Debentures are governed by
such Act; provided that any such information, documents or reports required to
be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
shall be filed with the Trustee within fifteen (15) days after the same is so
required to be filed with the Commission. 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 information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to conclusively rely exclusively on
Officers' Certificates).

                                  ARTICLE VII

                 REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
                            ON AN EVENT OF DEFAULT

     SECTION 7.1.   EVENTS OF DEFAULT. In case one or more of the following
Events of Default (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) shall have occurred and be
continuing:

          (a)  default in the payment of any installment of interest (including
Liquidated Damages, if any) upon any of the Debentures as and when the same
shall become due and payable, and continuance of such default for a period of
thirty (30) days, whether or not such payment is permitted under Article IV
hereof; or

                                      39
<PAGE>
 
          (b)  default in the payment of the principal of or premium, if any, on
any of the Debentures as and when the same shall become due and payable either
at maturity or in connection with any redemption pursuant to Article III, by
acceleration or otherwise, whether or not such payment is permitted under
Article IV hereof; or

          (c)  failure on the part of the Company to observe or perform any
other of the covenants or agreements on the part of the Company in the
Debentures or in this Indenture (other than a covenant or agreement a default in
whose performance or whose breach is elsewhere in this Section 7.1 specifically
dealt with), which failure has continued for a period of sixty (60) days after
the date on which written notice of such failure, requiring the Company to
remedy the same, shall have been given to the Company by the Trustee, or to the
Company and a Responsible Officer of the Trustee by the holders of at least
twenty-five percent (25%) in aggregate principal amount of the Debentures at the
time outstanding determined in accordance with Section 9.4; or
                                        
          (d)  the Company shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of the
property of the Company, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors; or

          (e)  an involuntary case or other proceeding shall be commenced
against the Company seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
the property of the Company, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of ninety (90) consecutive days;

          then, and in each and every such case (other than an Event of Default
specified in Section 7.1 (d) or (e) with respect to the Company), unless the
principal of all of the Debentures shall have already become due and payable,
either the Trustee or the holders of not less than twenty-five percent (25%) in
aggregate principal amount of the Debentures then outstanding hereunder
determined in accordance with Section 9.4, by notice in writing to the Company
(and to the Trustee if given by Debentureholders), may declare the principal of
and premium, if any, on all the Debentures and the interest accrued thereon
(including Liquidated Damages, if any) to be due and payable immediately, and
upon any such declaration the same shall become and shall be immediately due and
payable, anything in this Indenture or in the Debentures contained to the
contrary notwithstanding. If an Event of Default specified in Section 7. 1(d) or
(e) with respect to the Company occurs, the principal of all the Debentures and
the interest accrued thereon (including Liquidated Damages, if any) shall be
immediately and automatically due and payable without necessity of further
action on the part of the Trustee or the Debentureholders. This provision,
however, is subject to the conditions that if, at any time

                                      40
<PAGE>
 
after the principal of the Debentures shall have been so declared due and
payable, and before any judgment or decree for the payment of the monies due
shall have been obtained or entered as hereinafter provided, the Company shall
pay or shall deposit with the Trustee a sum sufficient to pay all matured
installments of interest upon (including Liquidated Damages, if any) all
Debentures and the principal of and premium, if any, on any and all Debentures
which shall have become due otherwise than by acceleration and amounts due to
the Trustee pursuant to Section 8.6, and if any and all defaults under this
Indenture, other than the nonpayment of principal of and premium, if any, and
accrued interest on (including Liquidated Damages, if any) Debentures which
shall have become due by acceleration, shall have been cured or waived pursuant
to Section 7.7, then and, in every such case, the holders of a majority in
aggregate principal amount of the Debentures then outstanding, by written notice
to the Company and to the Trustee, may waive all defaults or Events of Default
and rescind and annul such declaration and its consequences; but no such waiver
or rescission and annulment shall extend to or shall affect any subsequent
default or Event of Default, or shall impair any right consequent thereon. The
Company shall notify, in writing, a Responsible Officer of the Trustee, promptly
upon becoming aware thereof, of any Event of Default.

          In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such waiver or rescission and annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the holders of Debentures, and the Trustee shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the holders of Debentures, and the Trustee
shall continue as though no such proceeding had been taken.

     SECTION 7.2.   PAYMENTS OF DEBENTURES ON DEFAULT; SUIT THEREFOR. In the
event that the Trustee or the holders of not less than twenty-five percent (25%)
in aggregate principal amount of the Debentures then outstanding hereunder
determined in accordance with Section 9.4 have declared the principal of and
premium, if any, on all the Debentures and the interest accrued thereon
(including Liquidated Damages, if any) to be due and payable immediately in
accordance with Section 7.1, and the Company shall have failed promptly to pay
such amounts, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any actions or proceedings at law
or in equity for the collection of the sums so due and unpaid (including such
further amounts as shall be sufficient to cover the reasonably incurred costs
and expenses of collection, including reasonable compensation to the Trustee,
its agents, attorneys, custodians, nominees and counsel, and any expenses or
liabilities incurred by the Trustee hereunder other than through its negligence
or bad faith), and may prosecute any such action or proceeding to judgment or
final decree, and may enforce any such judgment or final decree against the
Company or any other obligor on the Debentures and collect in the manner
provided by law out of the property of the Company or any other obligor on the
Debentures wherever situated the monies adjudged or decreed to be payable.

          In the case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Debentures
under Title 11 of the

                                      41
<PAGE>
 
United States Code, or any other applicable law, or in case a receiver, assignee
or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of the Company or
such other obligor, the property of the Company or such other obligor, or in the
case of any other judicial proceedings relative to the Company or such other
obligor upon the Debentures, or to the creditors or property of the Company or
such other obligor, the Trustee, irrespective of whether the principal of the
Debentures 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
pursuant to the provisions of this Section 7.2, shall be entitled and empowered,
by intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal, premium, if any, and interest
(including Liquidated Damages, if any) owing and unpaid in respect of the
Debentures, and, in case of any judicial proceedings, to file such proofs of
claim and other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements, and advances of the Trustee, its agents,
and counsel) and of the Debentureholders allowed in such judicial proceedings
relative to the Company or any other obligor on the Debentures, its or their
creditors, or its or their property, and to collect and receive any monies or
other property payable or deliverable on any such claims, and to distribute the
same after the deduction of any amounts due the Trustee under Section 8.6; and
any receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
custodian or similar official in any such judicial proceeding, is hereby
authorized by each of the Debentureholders to make such payments to the Trustee
as administrative expenses associated with any such proceeding, and, in the
event that the Trustee shall consent to the making of such payments directly to
the Debentureholders, to pay to the Trustee any amount due it for reasonable
compensation, expenses, advances and disbursements of the Trustee and its
agents, including counsel fees incurred by it up to the date of such
distribution and any other amounts due to the Trustee under Section 8.6 hereof.
To the extent that such payment of reasonable compensation, expenses, advances
and disbursements of the Trustee, its agents, and counsel, and any other amounts
due to the Trustee under Section 8.6 hereof out of the estate in any such
proceedings shall be denied for any reason, payment of the same shall be secured
by a lien on, and shall be paid out of, any and all distributions, dividends,
monies, securities and other property which the holders of the Debentures may be
entitled to receive in such proceedings, whether in liquidation or under any
plan of reorganization or arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Debentureholder any plan or reorganization, arrangement,
adjustment or composition affecting the Debentureholder or the rights of any
Debentureholder thereof, or to authorize the Trustee to vote in respect of the
claim of any Debentureholder in any such proceeding.

          All rights of action and of asserting claims under this Indenture, or
under any of the Debentures, may be enforced by the Trustee without the
possession of any of the Debentures, or the production thereof at any trial or
other proceeding relative thereto, and any such suit or proceeding instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents, attorneys, custodians, nominees and counsel, be for the ratable
benefit of the holders of the Debentures.

                                      42
<PAGE>
 
          In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Debentures, and it shall not be necessary to make any holders of the
Debentures parties to any such proceedings.

     SECTION 7.3.   APPLICATION OF MONIES COLLECTED BY TRUSTEE.  Any monies
collected by the Trustee pursuant to this Article VII shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Debentures, and stamping
thereon the payment, if only partially paid, and upon surrender thereof, if
fully paid:

          FIRST:   To the payment of all amounts due the Trustee under Section
8.6;

          SECOND:  Subject to the provisions of Article IV, in case the
principal of the outstanding Debentures shall not have become due and be unpaid,
to the payment of interest on (including Liquidated Damages, if any) the
Debentures in default in the order of the maturity of the installments of such
interest, such payments to be made ratably to the persons entitled thereto;

          THIRD:   Subject to the provisions of Article IV, in case the
principal of the outstanding Debentures shall have become due, by declaration or
otherwise, and be unpaid to the payment of the whole amount then owing and
unpaid upon the Debentures for principal and premium, if any, and interest
(including Liquidated Damages, if any); and in case such monies shall be
insufficient to pay in full the whole amounts so due and unpaid upon the
Debentures, then to the payment of such principal and premium, if any, and
interest (including Liquidated Damages, if any) without preference or priority
of principal and premium, if any, over interest (including Liquidated Damages,
if any), or of interest (including Liquidated Damages, if any) over principal
and premium, if any, or of any installment of interest over any other
installment of interest, or of any Debenture over any other Debenture, ratably
to the aggregate of such principal and premium, if any, and accrued and unpaid
interest; and

          FOURTH:  Subject to the provisions of Article IV, to the payment of
the remainder, if any, to the Company or any other person lawfully entitled
thereto.

     SECTION 7.4.   PROCEEDINGS BY DEBENTUREHOLDER. No holder of any Debenture
shall have any right by virtue of or by availing of any provision of this
Indenture to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Indenture, or for the appointment of a
receiver, trustee, liquidator, custodian or other similar official, or for any
other remedy hereunder, unless such holder previously shall have given to the
Trustee written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, and unless also the holders of not less than twenty-five
percent (25%) in aggregate principal amount of the Debentures then outstanding
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for sixty (60)
days after its receipt of such notice, request and

                                      43
<PAGE>
 
offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding and no direction inconsistent with such written
request shall have been given to the Trustee pursuant to Section 7.7; it being
understood and intended, and being expressly covenanted by the taker and holder
of every Debenture with every other taker and holder and the Trustee, that no
one or more holders of Debentures shall have any right in any manner whatever by
virtue of or by availing of any provision of this Indenture to affect, disturb
or prejudice the rights of any other holder of Debentures, or to obtain or seek
to obtain priority over or preference to any other such holder, or to enforce
any right under this Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all holders of Debentures (except as
otherwise provided herein). For the protection and enforcement of this Section
7.4, each and every Debentureholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.

          Notwithstanding any other provision of this Indenture and any
provision of any Debenture, the right of any holder of any Debenture to receive
payment of the principal of and premium, if any (including upon redemption
pursuant to Article III), and accrued interest on (including Liquidated Damages,
if any) such Debenture, on or after the respective due dates expressed in such
Debenture or in the event of redemption, shall not be impaired or affected
without the consent of such holder.
                                        
          Anything in this Indenture or the Debentures to the contrary
notwithstanding, the holder of any Debenture, without the consent of either the
Trustee or the holder of any other Debenture, in its own behalf and for its own
benefit, may enforce, and may institute and maintain any proceeding suitable to
enforce, its rights of conversion as provided herein.

     SECTION 7.5.   PROCEEDINGS BY TRUSTEE. In case of an Event of Default the
Trustee may, in its discretion, proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any of such rights, either by
suit in equity or by action at law or by proceeding in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture,
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.

     SECTION 7.6.   REMEDIES CUMULATIVE AND CONTINUING.  Except as provided in
Section 2.6, all powers and remedies given by this Article VII to the Trustee or
to the Debentureholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any thereof or of any other powers and remedies
available to the Trustee or the holders of the Debentures, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture, and no delay or omission
of the Trustee or of any holder of any of the Debentures to exercise any right
or power accruing upon any default or Event of Default occurring and continuing
as aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or any acquiescence therein; and, subject to the
provisions of Section 7.4, every power and remedy given by this Article VII or
by law to the

                                      44
<PAGE>
 
Trustee or to the Debentureholders may be exercised from time to time, and as
often as shall be deemed expedient, by the Trustee or by the Debentureholders.

     SECTION 7.7.   DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY
OF DEBENTUREHOLDERS.  The holders of a majority in aggregate principal amount of
the Debentures at the time outstanding determined in accordance with Section 9.4
shall have the right to direct in writing the time, method, and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee; provided, however, that (a) such
direction shall not be in conflict with any rule of law or with this Indenture,
(b) the Trustee may take any other action deemed proper by the Trustee which is
not inconsistent with such direction and (c) the Trustee may decline to take any
action that would benefit some Debentureholders to the detriment of other
Debentureholders.  The holders of a majority in aggregate principal amount of
the Debentures at the time outstanding determined in accordance with Section 9.4
may on behalf of the holders of all of the Debentures waive any past default or
Event of Default hereunder and its consequences except (i) a default in the
payment of interest or premium, if any, on, or the principal of, the Debentures
which has not been cured pursuant to the provisions of Section 7.1, (ii) a
failure by the Company to convert any Debentures into Common Stock, (iii) a
default in the payment of redemption price pursuant to Article III or (iv) a
default in respect of a covenant or provisions hereof which under Article XI
cannot be modified or amended without the consent of the holders of all
Debentures then outstanding.  Upon any such waiver, the Company, the Trustee and
the holders of the Debentures shall be restored to their former positions and
rights hereunder; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.  Whenever
any default or Event of Default hereunder shall have been waived as permitted by
this Section 7.7, said default or Event of Default shall for all purposes of the
Debentures and this Indenture be deemed to have been cured and to be not
continuing; but no such waiver shall extend to any subsequent or other default
or Event of Default or impair any right consequent thereon.

     SECTION 7.8.   NOTICE OF DEFAULTS. The Trustee shall, within ninety (90)
days after a Responsible Officer of the Trustee has actual knowledge of the
occurrence of a default, mail to all Debentureholders, as the names and
addresses of such holders appear upon the Debenture register, notice of all
defaults actually known to a Responsible Officer, unless such defaults shall
have been cured or waived before the giving of such notice; provided that,
except in the case of default in the payment of the principal of, or premium, if
any, or interest (including Liquidated Damages, if any) on any of the
Debentures, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determine
that the withholding of such notice is in the interests of the Debentureholders.

     SECTION 7.9.   UNDERTAKING TO PAY COSTS. All parties to this Indenture
agree, and each holder of any Debenture by such holder's acceptance thereof
shall be deemed to have agreed, that any court may, in its discretion, require,
in any suit for the enforcement of any right or remedy under this Indenture, or
in any suit against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such

                                      45
<PAGE>
 
suit and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; provided that the provisions of this Section 7.9 (to the
extent permitted by law) shall not apply to any suit instituted by the Trustee,
to any suit instituted by any Debentureholder, or group of Debentureholders,
holding in the aggregate more than ten percent (10%) in principal amount of the
Debentures at the time outstanding determined in accordance with Section 9.4, or
to any suit instituted by any Debentureholder for the enforcement of the payment
of the principal of or premium, if any, or interest (including Liquidated
Damages, if any) on any Debenture on or after the due date expressed in such
Debenture or to any suit for the enforcement of the right to convert any
Debenture in accordance with the provisions of Article XV.


                                 ARTICLE VIII

                            CONCERNING THE TRUSTEE

     SECTION 8.1.   DUTIES AND RESPONSIBILITIES OF TRUSTEE.  The Trustee, prior
to the occurrence of an Event of Default with respect to the Debentures and
after the curing of all Events of Default with respect to the Debentures which
may have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture.  In case an Event of Default with
respect to the Debentures has occurred (which has not been cured or waived) the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.

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

          (a)  prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have occurred:

               (1)  the duties and obligations of the Trustee shall be
     determined solely by the express provisions of this Indenture and the Trust
     Indenture Act, and the Trustee shall not be liable except for the
     performance of such duties and obligations as are specifically set forth in
     this Indenture and no implied covenants or obligations shall be read into
     this Indenture and the Trust Indenture Act against the Trustee; and

               (2)  in the absence of bad faith and willful misconduct on the
     part of the Trustee, the Trustee may conclusively rely, as to the truth of
     the statements and the correctness of the opinions expressed therein, upon
     any certificates or opinions furnished to the Trustee and conforming to the
     requirements of this Indenture; but, in the case of any such certificates
     or opinions which by any provisions hereof are specifically required

                                      46
<PAGE>
 
     to be furnished to the Trustee, the Trustee shall be under a duty to
     examine the same to determine whether or not they conform to the
     requirements of this Indenture;

          (b)  the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Officers of the Trustee, unless the
Trustee was negligent in ascertaining the pertinent facts;

          (c)  the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the written
direction of the holders of not less than a majority in principal amount of the
Debentures at the time outstanding determined as provided in Section 9.4
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture with respect to the Debentures;

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

          (e)  the Trustee shall not be liable in respect of any payment (as to
the correctness of amount, entitlement to receive or any other matters relating
to payment) or notice effected by the Company or any paying agent or any records
maintained by any co-registrar with respect to the Debentures;

          (f)  if any party fails to deliver a notice relating to an event the
fact of which, pursuant to this Indenture, requires notice to be sent to the
Trustee, the Trustee may conclusively rely on its failure to receive such notice
as reason to act as if no such event occurred;

          (g)  in no event shall the Trustee be liable for the selection of
investments or for investment losses incurred thereon or for losses incurred as
a result of the liquidation of any such investment prior to its stated maturity
or the failure of the party directing such investment to provide timely written
investment direction, and the Trustee shall have no obligation to invest or
reinvest any amounts held hereunder in the absence of such written investment
direction; and

          (h)  in the event that the Trustee is also acting as Custodian,
Debenture registrar, paying agent, conversion agent or transfer agent hereunder,
the rights and protections afforded to the Trustee pursuant to this Article VIII
shall also be afforded to such Custodian, Debenture registrar, paying agent,
conversion agent or transfer agent.

          None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or adequate indemnity against such risk or liability is
not assured to it.

                                      47
<PAGE>
 
     SECTION 8.2.   RELIANCE ON DOCUMENTS, OPINIONS, ETC. Except as otherwise
provided in Section 8.1:

          (a)  the Trustee may conclusively rely and shall be fully protected in
acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, note, debenture, coupon or other paper or
document believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties and the Trustee need not investigate
any fact or matter stated in the document;

          (b)  any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the Secretary or an Assistant Secretary of the Company;

          (c)  before the Trustee acts or refrains from acting, the Trustee may
consult with counsel and require an Opinion of Counsel and any advice or Opinion
of Counsel shall be full and complete authorization and protection in respect of
any action taken or omitted by it hereunder in good faith and in accordance with
such advice or Opinion of Counsel;

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

          (e)  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 or
other paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney;

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

          (g)  before the Trustee acts or refrains from acting, it may require
an Officers' Certificate and the Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such Officer's Certificate.

                                      48
<PAGE>
 
     SECTION 8.3.  NO RESPONSIBILITY FOR RECITALS, ETC.  The recitals contained
herein and in the Debentures (except in the Trustee's certificate of
authentication) shall be taken as the statements of the Company, and the Trustee
assumes no responsibility for the correctness of the same.  The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Debentures.  The Trustee shall not be accountable for the use or application by
the Company of any Debentures or the proceeds of any Debentures authenticated
and delivered by the Trustee in conformity with the provisions of this
Indenture.

     SECTION 8.4.  TRUSTEE, PAYING AGENTS, CONVERSION AGENTS OR REGISTRAR MAY
OWN DEBENTURES.  The Trustee, any paying agent, any conversion agent or
Debenture registrar, in its individual or any other capacity, may become the
owner or pledgee of Debentures with the same rights it would have if it were not
Trustee, paying agent, conversion agent or Debenture registrar.

     SECTION 8.5.  MONIES TO BE HELD IN TRUST.  Subject to the provisions of
Section 13.4 and Section 4.2, all monies received by the Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received.  Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law.  The Trustee
shall be under no liability for interest on any money received by it hereunder
except as may be agreed from time to time by the Company and the Trustee.

     SECTION 8.6.  COMPENSATION, EXPENSES AND INDEMNITY OF TRUSTEE.  The
Company covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to, reasonable compensation for all services rendered
by it hereunder in any capacity (which shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust) as mutually
agreed to in writing between the Company and the Trustee, and the Company will
pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence, willful misconduct, recklessness or
bad faith.  Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents, accountants, experts and
counsel and any taxes or other expenses incurred by a trust created pursuant to
Section 13.1 hereof.  The Company also covenants to indemnify the Trustee (or
any officer, director, agent or employee of the Trustee) in any capacity under
this Indenture  and any other documents and transactions entered into in
connection herewith and to hold them harmless against, any loss, liability or
expense incurred without negligence, willful misconduct, recklessness, or bad
faith on the part of the Trustee or such officers, directors, agents or
employees, as the case may be, to the extent arising out of or in connection
with the acceptance or administration of this trust, including the reasonable
costs and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of its powers or duties in
any capacity hereunder.  The obligations of the Company under this Section 8.6
to compensate or indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall be secured by a lien prior to that of
the Debentures upon all property and funds held or collected by the Trustee as
such, except funds held in trust

                                      49
<PAGE>
 
for the benefit of the holders of particular Debentures.   The Trustee's right
to receive payment of any amounts due under this Section 8.6 shall not be
subordinate to any other liability or indebtedness of the Company (even though
the Debentures may be so subordinated).  The obligation of the Company under
this Section shall survive the satisfaction and discharge of this Indenture and
the earlier removal or resignation of the Trustee.

          When the Trustee and its agents and any authenticating agent incur
expenses or render services after an Event of Default specified in Section
7.1(d) or (e) with respect to the Company occurs, the expenses (including the
reasonable fees and expenses of its agents and counsel) and the compensation for
the services shall be preferred over the status of the Debentureholders in a
proceeding under any bankruptcy, insolvency or other law and are intended to
constitute expenses of administration under any bankruptcy, insolvency or other
law.  The Company's obligations under this Section 8.6 and any claim arising
hereunder shall survive the resignation and removal of any Trustee, the
discharge of the Company's obligations pursuant to Article XIII and any
rejection or termination under any bankruptcy, insolvency or other law.

     SECTION 8.7.   OFFICERS' CERTIFICATE AS EVIDENCE.  Whenever in the
administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
omitting any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may, in the absence of negligence,
willful misconduct, recklessness, or bad faith on the part of the Trustee, be
deemed to be conclusively proved and established by an Officers' Certificate
delivered to the Trustee.

     SECTION 8.8.   CONFLICTING INTERESTS OF TRUSTEE.  If the Trustee has or
shall acquire a conflicting interest within the meaning of the Trust Indenture
Act, the Trustee shall either eliminate such interest or resign, to the extent
and in the manner provided by, and subject to the provisions of, the Trust
Indenture Act and this Indenture.

     SECTION 8.9.   ELIGIBILITY OF TRUSTEE.  There shall at all times be a
Trustee hereunder which shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000 (or if such Person 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).  If such person publishes reports of condition at least annually,
pursuant to law or to the requirements of any supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.  If at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.

     SECTION 8.10.  RESIGNATION OR REMOVAL OF TRUSTEE.
 
          (a)  The Trustee may at any time resign by giving written notice of
such resignation to the Company and to the holders of Debentures.  Upon
receiving such notice of

                                      50
<PAGE>
 
resignation, the Company shall promptly appoint a successor trustee by written
instrument, in duplicate, executed by order of the Board of Directors, one copy
of which instrument shall be delivered to the resigning Trustee and one copy to
the successor trustee.  If no successor trustee shall have been so appointed and
have accepted appointment sixty (60) days after the mailing of such notice of
resignation to the Debentureholders, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee, or
any Debentureholder who has been a bona fide holder of a Debenture or Debentures
for at least six (6) months may, subject to the provisions of Section 7.9, on
behalf of himself and all others similarly situated, petition any such court for
the appointment of a successor trustee.  Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.

          (b)  In case at any time any of the following shall occur:

               (1)  the Trustee shall fail to comply with Section 8.8 after
     written request therefor by the Company or by any Debentureholder who has
     been a bona fide holder of a Debenture or Debentures for at least six (6)
     months; or

               (2)  the Trustee shall cease to be eligible in accordance with
     the provisions of Section 8.9 and shall fail to resign after written
     request therefor by the Company or by any such Debentureholder; or

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

then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to the
provisions of Section 7.9, any Debentureholder who has been a bona fide holder
of a Debenture or Debentures for at least six (6) months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
trustee; provided that if no successor Trustee shall have been appointed and
have accepted appointment sixty (60) days after either the Company or the
Debentureholders has removed the Trustee, the Trustee so removed may petition
any court of competent jurisdiction for an appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it  deem proper and
prescribe, remove the Trustee and appoint a successor trustee.

          (c)  The holders of a majority in aggregate principal amount of the
Debentures at the time outstanding may at any time remove the Trustee and
nominate a successor trustee which shall be deemed appointed as successor
trustee unless within ten (10) days after notice to the Company of such
nomination the Company objects thereto, in which case the Trustee so removed or
any Debentureholder, upon the terms and conditions and otherwise as in Section

                                      51
<PAGE>
 
8.10(a) provided, may petition any court of competent jurisdiction for an
appointment of a successor trustee.

          (d)  Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.11.

     SECTION 8.11.  ACCEPTANCE BY SUCCESSOR TRUSTEE.  Any successor trustee
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, the trustee ceasing to act shall,
upon payment of any and all amounts then due and owing to it hereunder, execute
and deliver an instrument transferring to such successor trustee all the rights
and powers of the trustee so ceasing to act.  Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers.  Any trustee ceasing to act shall, nevertheless, retain a
lien upon all property and funds held or collected by such trustee as such,
except for funds held in trust for the benefit of holders of particular
Debentures, to secure any amounts then due it hereunder.

          No successor trustee shall accept appointment as provided in this
Section 8.11 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.

          Upon acceptance of appointment by a successor trustee as provided in
this Section 8.11, the Company (or the former trustee, at the written direction
and at the expense of the Company) shall mail or cause to be mailed notice of
the succession of such trustee hereunder to the holders of Debentures at their
addresses as they shall appear on the Debenture register.  If the Company fails
to mail such notice within ten (10) days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Company.

     SECTION 8.12.  SUCCESSION BY MERGER, ETC.  Any corporation into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee (including any trust created
by this Indenture), shall be the successor to the Trustee hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that in the case of any corporation succeeding to all
or substantially all of the corporate trust business of the Trustee such
corporation shall be qualified under the provisions of Section 8.8 and eligible
under the provisions of Section 8.9.

                                      52
<PAGE>
 
          In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Debentures shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor trustee or authenticating agent
appointed by such predecessor trustee, and deliver such Debentures so
authenticated; and in case at that time any of the Debentures shall not have
been authenticated, any successor to the Trustee or an authenticating agent
appointed by such successor trustee may authenticate such Debentures either in
the name of any predecessor trustee hereunder or in the name of the successor
trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Debentures or in this Indenture provided that the
certificate of the Trustee shall have; provided, however, that the right to
adopt the certificate of authentication of any predecessor Trustee or
authenticate Debentures in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.

     SECTION 8.13.  PREFERENTIAL COLLECTION OF CLAIMS.  If and when the Trustee
shall be or become a creditor of the Company (or any other obligor upon the
Debentures), the Trustee shall be subject to the provisions of the Trust
Indenture Act regarding the collection of the claims against the Company (or any
such other obligor).

     SECTION 8.14.  TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE COMPANY.
Any application by the Trustee for written instructions from the Company (other
than with regard to any action proposed to be taken or omitted to be taken by
the Trustee that affects the rights of the holders of the Debentures or holders
of Senior Obligations under this Indenture, including, without limitation, under
Article IV hereof) may, at the option of the Trustee, set forth in writing any
action proposed to be taken or omitted by the Trustee under this Indenture and
the date on and/or after which such action shall be taken or such omission shall
be effective.  The Trustee shall not be liable for any action taken by, or
omission of, the Trustee in accordance with a proposal included in such
application on or after the date specified in such application (which date shall
not be less than three (3) Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to any earlier date) unless prior to taking any such action
(or the effective date in the case of an omission), the Trustee shall have
received written instructions in response to such application specifying the
action to be taken or omitted.

                                  ARTICLE IX

                        CONCERNING THE DEBENTUREHOLDERS

     SECTION 9.1.   ACTION BY DEBENTUREHOLDERS. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Debentures may take any action (including the making of any demand
or request, the giving of any notice, consent or waiver or the taking of any
other action), the fact that at the time of taking any such action, the holders
of such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by
Debentureholders in person or by agent or proxy appointed in writing, or (b) by
the record of the holders of Debentures

                                      53
<PAGE>
 
voting in favor thereof at any meeting of Debentureholders duly called and held
in accordance with the provisions of Article X, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of
Debentureholders.  Whenever the Company or the Trustee solicits the taking of
any action by the holders of the Debentures, the Company or the Trustee may fix
in advance of such solicitation, a date as the record date for determining
holders entitled to take such action.  The record date shall be not more than
fifteen (15) days prior to the date of commencement of solicitation of such
action.

     SECTION 9.2.   PROOF OF EXECUTION BY DEBENTUREHOLDERS.  Subject to the
provisions of Sections 8.1, 8.2 and 10.5, proof of the execution of any
instrument by a Debentureholder or its agent or proxy shall be sufficient if
made in accordance with such reasonable rules and regulations as may be
prescribed by the Trustee or in such manner as shall be satisfactory to the
Trustee.  The holding of Debentures shall be proved by the registry of such
Debentures or by a certificate of the Debenture registrar.

          The record of any Debentureholders' meeting shall be proved in the
manner provided in Section 10.6.

     SECTION 9.3.   WHO ARE DEEMED ABSOLUTE OWNERS.  Subject to Section 2.3, the
Company, the Trustee, any paying agent, any conversion agent and any Debenture
registrar may deem the person in whose name such Debenture shall be registered
upon the Debenture register to be, and  may treat it as, the absolute owner of
such Debenture (whether or not such Debenture shall be overdue and
notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the principal of, premium, if
any, and interest on such Debenture, for conversion of such Debenture and for
all other purposes; and neither the Company nor the Trustee nor any paying agent
nor any conversion agent nor any Debenture registrar shall be affected by any
notice to the contrary.  All such payments so made to any holder for the time
being, or upon his order, shall be valid, and, to the extent of the sum or sums
so paid, effectual to satisfy and discharge the liability for monies payable
upon any such Debenture.

     SECTION 9.4.   COMPANY-OWNED DEBENTURES DISREGARDED. In determining whether
the holders of the requisite aggregate principal amount of Debentures have
concurred in any direction, consent, waiver or other action under this
Indenture, Debentures which are owned by the Company or any other obligor on the
Debentures or any Affiliate of the Company or any other obligor on the
Debentures shall be disregarded and deemed not to be outstanding for the purpose
of any such determination; provided that for the purposes of determining whether
the Trustee shall be protected in relying on any such direction, consent, waiver
or other action only Debentures which a Responsible Officer actually knows are
so owned shall be so disregarded. Debentures so owned which have been pledged in
good faith may be regarded as outstanding for the purposes of this Section 9.4
if the pledgee shall establish to the satisfaction of the Trustee the pledgee's
right to vote such Debentures and that the pledgee is not the Company, any other
obligor on the Debentures or any Affiliate of the Company or any such other
obligor. In the case of a dispute as to such right, any decision by the Trustee
taken upon the advice of counsel shall

                                      54
<PAGE>
 
be full protection to the Trustee.  Upon request of the Trustee, the Company
shall furnish to the Trustee promptly an Officers' Certificate listing and
identifying all Debentures, if any, known by the Company to be owned or held by
or for the account of any of the above described persons; and, subject to
Section 8.1, the Trustee shall be entitled to accept such Officers' Certificate
as conclusive evidence of the facts therein set forth and of the fact that all
Debentures not listed therein are outstanding for the purpose of any such
determination.

     SECTION 9.5.   REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND.  At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Debentures specified in this Indenture in connection
with such action, any holder of a Debenture which is shown by the evidence to be
included in the Debentures the holders of which have consented to such action
may, by filing written notice with the Trustee at its Corporate Trust Office and
upon proof of holding as provided in Section 9.2, revoke such action so far as
concerns such Debenture.  Except as aforesaid, any such action taken by the
holder of any Debenture shall be conclusive and binding upon such holder and
upon all future holders and owners of such Debenture and of any Debentures
issued in exchange or substitution therefor, irrespective of whether any
notation in regard thereto is made upon such Debenture or any Debenture issued
in exchange or substitution therefor.

                                   ARTICLE X

                          DEBENTUREHOLDERS' MEETINGSV

     SECTION 10.1.  PURPOSE OF MEETINGS.  A meeting of Debentureholders may be
called at any time and from time to time pursuant to the provisions of this
Article X for any of the following purposes:

                    (1)  to give any notice to the Company or to the Trustee or
     to give any directions to the Trustee permitted under this Indenture, or to
     consent to the waiving of any default or Event of Default hereunder and its
     consequences, or to take any other action authorized to be taken by
     Debentureholders pursuant to any of the provisions of Article VII;

                    (2)  to remove the Trustee and nominate a successor trustee
     pursuant to the provisions of Article VIII;

                    (3)  to consent to the execution of an indenture or
     indentures supplemental hereto pursuant to the provisions of Section 11.2;
     or

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

                                      55
<PAGE>
 
     SECTION 10.2.  CALL OF MEETINGS BY TRUSTEE.  The Trustee may, at the
expense of the Company, at any time call a meeting of Debentureholders to take
any action specified in Section 10.1, to be held at such time and at such place
as the Trustee shall determine.  Notice of every meeting of the
Debentureholders, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting and the
establishment of any record date pursuant to Section 9.1, shall be mailed to
holders of Debentures at their addresses as they shall appear on the Debenture
register.  Such notice shall also be mailed to the Company.  Such notices shall
be mailed not less than twenty (20) nor more than ninety (90) days prior to the
date fixed for the meeting.

          Any meeting of Debentureholders shall be valid without notice if the
holders of all Debentures then outstanding are present in person or by proxy or
if notice is waived before or after the meeting by the holders of all Debentures
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.

     SECTION 10.3.  CALL OF MEETINGS BY COMPANY OR DEBENTUREHOLDERS.  In case at
any time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least ten percent (10%) in aggregate principal amount of the
Debentures then outstanding, shall have requested the Trustee to call a meeting
of Debentureholders, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have
mailed the notice of such meeting within twenty (20) days after receipt of such
request, then the Company or such Debentureholders may determine the time and
the place for such meeting and  call such meeting to take any action authorized
in Section 10.1, by mailing notice thereof as provided in Section 10.2.

     SECTION 10.4.  QUALIFICATIONS FOR VOTING.  To be entitled to vote at any
meeting of Debentureholders a person shall (a) be a holder of one or more
Debentures on the record date pertaining to such meeting or (b) be a person
appointed by an instrument in writing as proxy by a holder of one or more
Debentures.  The only persons who shall be entitled to be present or to speak at
any meeting of Debentureholders shall be the persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee and its counsel
and any representatives of the Company and its counsel.

     SECTION 10.5.  REGULATIONS.  Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Debentureholders, in regard to proof of the holding
of Debentures and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall think fit.

          The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Debentureholders as provided in Section 10.3, in which case the
Company or the Debentureholders calling the

                                      56
<PAGE>
 
meeting, as the case may be, shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected
by vote of the holders of a majority in principal amount of the Debentures
represented at the meeting and entitled to vote at the meeting.

          Subject to the provisions of Section 9.4, at any meeting each
Debentureholder or proxyholder shall be entitled to one vote for each $1,000
principal amount of Debentures held or represented by such holder; provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Debenture challenged as not outstanding and ruled by the chairman of the meeting
to be not outstanding.  The chairman of the meeting shall have no right to vote
other than by virtue of Debentures held by such chairman or instruments in
writing as aforesaid duly designating such chairman as the proxy to vote on
behalf of other Debentureholders.  Any meeting of Debentureholders duly called
pursuant to the provisions of Section 10.2 or 10.3 may be adjourned from time to
time by the holders of a majority of the aggregate principal amount of
Debentures represented at the meeting, whether or not constituting a quorum, and
the meeting may be held as so adjourned without further notice.

     SECTION 10.6.  VOTING.  The vote upon any resolution submitted to any
meeting of Debentureholders shall be by written ballot on which shall be
subscribed the signatures of the holders of Debentures or of their
representatives by proxy and the principal amount of the Debentures held or
represented by them.  The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting.  A
record in duplicate of the proceedings of each meeting of Debentureholders shall
be prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said
notice was mailed as provided in Section 10.2.  The record shall show the
principal amount of the Debentures voting in favor of or against any resolution.
The record shall be signed and verified by the affidavits of the permanent
chairman and secretary of the meeting and one of the duplicates shall be
delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.

          Any record so signed and verified shall be conclusive evidence of the
matters therein stated.

     SECTION 10.7.  NO DELAY OF RIGHTS BY MEETING.  Nothing in this Article X
contained shall be deemed or construed to authorize or permit, by reason of any
call of a meeting of Debentureholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise of
any right or rights conferred upon or reserved to the Trustee or to the
Debentureholders under any of the provisions of this Indenture or of the
Debentures.

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<PAGE>
 
                                  ARTICLE XI

                            SUPPLEMENTAL INDENTURES

     SECTION 11.1.  SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF DEBENTUREHOLDERS.
The Company, when authorized by the resolutions of the Board of Directors, and
the Trustee, at the Company's expense, may from time to time and at any time
enter into an indenture or indentures supplemental hereto to supplement or amend
this Indenture for one or more of the following purposes:

          (a)  to make provision with respect to the conversion rights of the
holders of Debentures pursuant to the requirements of Section 15.6 and the
redemption obligations of the Company pursuant to the requirements of Section
3.5(e);

          (b)  subject to Article IV, to convey, transfer, assign, mortgage or
pledge to the Trustee as security for the Debentures, any property or assets;

          (c)  to evidence the succession of another corporation to the Company,
or successive successions, and the assumption by the successor corporation of
the covenants, agreements and obligations of the Company pursuant to Article
XII;

          (d)  to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the holders of Debentures, and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided, however, that in
respect of any such additional covenant, restriction or condition such
supplemental indenture may provide for a particular period of grace after
default (which period  may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default;

          (e)  to provide for the issuance under this Indenture of Debentures in
coupon form (including Debentures registrable as to principal only) and to
provide for exchangeability of such Debentures with the Debentures issued
hereunder in fully registered form and to make all appropriate changes for such
purpose;

          (f)  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; or to make such other changes or provisions in regard to matters or
questions arising under this Indenture which shall not materially adversely
affect the rights of the holders of the Debentures;

                                      58
<PAGE>
 
          (g)  to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Debentures; or

          (h)  to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the Trust Indenture Act, or under any similar federal statute
hereafter enacted.

          Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture, the Trustee
is hereby authorized to join with the Company in the execution of any such
supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.

          Any supplemental indenture authorized by the provisions of this
Section 11.1 may be executed by the Company and the Trustee without the consent
of the holders of any of the Debentures at the time outstanding, notwithstanding
any of the provisions of Section 11.2.

          Notwithstanding any other provision of the Indenture or the
Debentures, the Registration Rights Agreement and the obligation to pay
Liquidated Damages thereunder may be amended, modified or waived in accordance
with the provisions of the Registration Rights Agreement.

     SECTION 11.2.  SUPPLEMENTAL INDENTURES WITH CONSENT OF DEBENTUREHOLDERS.
With the consent (evidenced as provided in Article IX) of the holders of not
less than a majority in aggregate principal amount of the Debentures at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may, at the Company's expense, from time to time and
at any time enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, amending or changing in any manner or
eliminating any of the provisions of this Indenture or any supplemental
indenture or of modifying in any manner the rights of the holders of the
Debentures; provided, however, that no such supplemental indenture shall (i)
extend the fixed maturity of any Debenture, or reduce the rate or extend the
time of payment of interest thereon, or reduce the principal amount thereof or
premium, if any, thereon, or reduce any amount payable on redemption thereof, or
impair the right of any Debentureholder to institute suit for the payment
thereof, or make the principal thereof or interest or premium, if any, thereon
payable in any coin or currency other than that provided in the Debentures, or
modify the provisions of this Indenture with respect to the subordination of the
Debentures in a manner adverse to the Debentureholders in any material respect,
or change the obligation of the Company to redeem any Debenture upon the
happening of a Fundamental Change in a manner adverse to the holder of
Debentures, or impair the right to convert the Debentures into Common Stock
subject to the terms set forth herein including Section 15.6, in each case,
without the consent of the holder of each Debenture so affected, or

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<PAGE>
 
(ii) reduce the aforesaid percentage of Debentures, the holders of which are
required to consent to any such supplemental indenture, without the consent of
the holders of all Debentures then outstanding.

          Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence of the consent of Debentureholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.

          It shall not be necessary for the consent of the Debentureholders
under this Section 11.2 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall approve
the substance thereof.

     SECTION 11.3.  EFFECT OF SUPPLEMENTAL INDENTURE.  Any supplemental
indenture executed pursuant to the provisions of this Article XI shall comply
with the Trust Indenture Act, as then in effect; provided that this Section 11.3
shall not require such supplemental indenture or the Trustee to be qualified
under the Trust Indenture Act prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act, nor shall it constitute any admission
or acknowledgment by any party to such supplemental indenture that any such
qualification is required prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act.  Upon the execution of any supplemental
indenture pursuant to the provisions of this Article XI, this Indenture shall be
and be deemed to be modified and amended in accordance therewith and the
respective rights, limitation of rights; obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Debentures
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.

     SECTION 11.4.  NOTATION ON DEBENTURES.  Debentures authenticated and
delivered after the execution of any supplemental indenture pursuant to the
provisions of this Article XI may bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture.  If the
Company or the Trustee shall so determine, new Debentures so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any
modification of this Indenture contained in any such supplemental indenture may,
at the Company's expense, be prepared and executed by the Company, authenticated
by the Trustee (or an authenticating agent duly appointed by the Trustee
pursuant to Section 16.11) and delivered in exchange for the Debentures then
outstanding, upon surrender of such Debentures then outstanding.

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<PAGE>
 
     SECTION 11.5.  EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE
FURNISHED TO TRUSTEE.  Prior to entering into any supplemental indenture, the
Trustee may request an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article XI.


                                  ARTICLE XII

               CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

     SECTION 12.1.  COMPANY MAY CONSOLIDATE ETC. ON CERTAIN TERMS.  Subject to
the provisions of Section 12.2 and notwithstanding anything to the contrary in
this Indenture, the Company shall not consolidate with or merge with or into any
other Person (whether or not affiliated with the Company), or sell, convey or
lease all or substantially all of its assets or properties to any Person unless
the Person formed by such consolidation or into which the Company is merged or
the Person which acquires by conveyance or transfer or which leases the assets
or properties of the Company substantially as an entirety shall be a corporation
organized under the laws of the United States of America, any state thereof or
the District of Columbia.  Further, upon any such consolidation, merger, sale,
conveyance or lease, the due and punctual payment of the principal of and
premium, if any, and interest (including Liquidated Damages, if any) on all of
the Debentures, according to their terms, and the due and punctual performance
and observance of all of the covenants and conditions of this Indenture to be
performed by the Company, shall be expressly assumed by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee by
the corporation (if other than the Company) formed by such consolidation, or
into which the Company shall have been merged, or by the corporation which shall
have acquired or leased such property, and such supplemental indenture shall
provide for the applicable conversion rights set forth in Section 15.6.

     SECTION 12.2.  SUCCESSOR CORPORATION TO BE SUBSTITUTED.  In case of any
such consolidation, merger, sale, conveyance or lease and upon the assumption by
the successor corporation, by supplemental indenture, executed and delivered to
the Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and premium, if any, and interest on all of the
Debentures and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party of the first part.  Such
successor corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of Centocor, Inc. any or all of the Debentures
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee; and, upon the order of such successor corporation
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver,
or cause to be authenticated and delivered, any Debentures which previously
shall have been signed and delivered by the officers of the Company to the
Trustee for authentication, and any Debentures which such successor corporation
thereafter shall cause to be signed and delivered to the Trustee for that
purpose.  All

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<PAGE>
 
the Debentures so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Debentures theretofore or thereafter issued
in accordance with the terms of this Indenture as though all of such Debentures
had been issued at the date of the execution hereof.  In the event of any such
consolidation, merger, sale, conveyance or lease, the person named as the
"Company" in the first paragraph of this Indenture or any successor which shall
thereafter have become such in the manner prescribed in this Article XII may be
dissolved, wound up and liquidated at any time thereafter and such person shall
be released from its liabilities as obligor and maker of the Debentures and from
its obligations under this Indenture.

          In case of any such consolidation, merger, sale, conveyance or lease,
such changes in phraseology and form (but not in substance) may be made in the
Debentures thereafter to be issued as may be appropriate.

     SECTION 12.3.  OPINION OF COUNSEL TO BE GIVEN TRUSTEE.  The Trustee shall
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, conveyance or lease and any
such assumption complies with the provisions of this Article XII.


                                 ARTICLE XIII

                    SATISFACTION AND DISCHARGE OF INDENTURE

     SECTION 13.1.  DISCHARGE OF INDENTURE.  When (a) the Company delivers to
the Trustee for cancellation all Debentures theretofore authenticated (other
than any Debentures which have been destroyed, lost or stolen and in lieu of or
in substitution for which other Debentures shall have been authenticated and
delivered) and not theretofore canceled, or (b) all the Debentures not
theretofore canceled or delivered to the Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption, and the
Company deposits with the Trustee, in trust, funds sufficient to pay at maturity
or upon redemption of all of the Debentures (other than any Debentures which
shall have been mutilated, destroyed, lost or stolen and in lieu of or in
substitution for which other Debentures shall have been authenticated and
delivered) not theretofore canceled or delivered to the Trustee for
cancellation, including principal and premium, if any, and interest due or to
become due to such date of maturity or redemption date, as the case may be,
accompanied by a verification report, as to the sufficiency of the deposited
amount, from an independent certified accountant or other financial professional
satisfactory to the Trustee, and if the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company, then this Indenture shall
cease to be of further effect (except as to (i) remaining rights of registration
of transfer, substitution and exchange and conversion of Debentures, (ii) rights
hereunder of Debentureholders to receive payments of principal of and premium,
if any, and interest on, the Debentures and the other rights, duties and
obligations of Debentureholders, as beneficiaries hereof with respect to the
amounts, if any, so deposited with the Trustee, (iii) the rights,

                                      62
<PAGE>
 
obligations and immunities of the Trustee hereunder and (iv) the obligations of
the Company under Section 8.6), and the Trustee, on written demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel as
required by Section 16.5 and at the cost and expense of the Company, shall
execute proper instruments acknowledging satisfaction of and discharging this
Indenture; the Company, however, hereby agreeing to reimburse the Trustee for
any costs or expenses thereafter reasonably and properly incurred by the Trustee
and to compensate the Trustee for any services thereafter reasonably and
properly rendered by the Trustee in connection with this Indenture or the
Debentures.

     SECTION 13.2.  DEPOSITED MONIES TO BE HELD IN TRUST BY TRUSTEE.  Subject to
Section 13.4, all monies deposited with the Trustee pursuant to Section 13.1,
provided such deposit was not in violation of Article IV, shall be held in trust
for the sole benefit of the Debentureholders and shall not be subject to the
subordination provisions of Article IV, and such monies shall be applied by the
Trustee to the payment, either directly or through any paying agent (including
the Company if acting as its own paying agent), to the holders of the particular
Debentures for the payment or redemption of which such monies have been
deposited with the Trustee, of all sums due and to become due thereon for
principal and interest and premium, if any.

     SECTION 13.3.  PAYING AGENT TO REPAY MONIES HELD.  Upon the satisfaction
and discharge of this Indenture, all monies then held by any paying agent of the
Debentures (other than the Trustee) shall, upon written request of the Company,
be repaid to it or paid to the Trustee, and thereupon such paying agent shall be
released from all further liability with respect to such monies.

     SECTION 13.4.  RETURN OF UNCLAIMED MONIES.  Subject to the requirements of
applicable law, any monies deposited with or paid to the Trustee for payment of
the principal of, premium, if any, or interest (including Liquidated Damages, if
any) on Debentures and not applied but remaining unclaimed by the holders of
Debentures for two years after the date upon which the principal of, premium, if
any, or interest (including Liquidated Damages, if any) on such Debentures, as
the case may be, shall have become due and payable, shall be repaid to the
Company by the Trustee on written demand and all liability of the Trustee shall
thereupon cease with respect to such monies; and the holder of any of the
Debentures shall thereafter look only to the Company for any payment which such
holder may be entitled to collect unless an applicable abandoned property law
designates another Person.

     SECTION 13.5.  REINSTATEMENT.  If the Trustee or the paying agent is unable
to apply any money in accordance with Section 13.2 by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Debentures shall be revived and reinstated as though no
deposit had occurred pursuant to Section 13.1 until such time as the Trustee or
the paying agent is permitted to apply all such money in accordance with Section
13.2; provided, however, that if the Company makes any payment of interest on or
principal of any Debenture following the reinstatement of its obligations, the
Company shall be subrogated to the rights of

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<PAGE>
 
the holders of such Debentures to receive such payment from the money held by
the Trustee or paying agent.


                                  ARTICLE XIV

        IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

     SECTION 14.1.  INDENTURE AND DEBENTURES SOLELY CORPORATE OBLIGATIONS.  No
recourse for the payment of the principal of or premium, if any, or interest
(including Liquidated Damages, if any) on any Debenture, or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in this Indenture or in any
supplemental indenture or in any Debenture, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, employee, agent, officer, or director or subsidiary, as such, past,
present or future, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the
Debentures.


                                   ARTICLE XV

                            CONVERSION OF DEBENTURES

     SECTION 15.1.  RIGHT TO CONVERT.  Subject to and upon compliance with the
provisions of this Indenture, including without limitation Article IV, the
holder of any Debenture shall have the right, at its option, at any time after
ninety (90) days following the latest date of original issuance thereof through
the close of business on February 15, 2005 (except that, with respect to any
Debenture or portion of a Debenture which shall be called for redemption, such
right shall terminate, except as provided in Section 15.2 or Section 3.4, at the
close of business on the fifth Business Day next preceding the date fixed for
redemption of such Debenture or portion of a Debenture unless the Company shall
default in payment due upon redemption thereof) to convert the principal amount
of any such Debenture, or any portion of such principal amount which is $1,000
or an integral multiple thereof, into that number of fully paid and non-
assessable shares of Common Stock (as such shares shall then be constituted)
obtained by dividing the principal amount of the Debenture or portion thereof
surrendered for conversion by the Conversion Price in effect at such time, by
surrender of the Debenture so to be converted in whole or in part in the manner
provided, together with any required funds, in Section 15.2. A Debenture in
respect of which a holder is exercising its option to require redemption upon a
Fundamental Change pursuant to Section 3.5 may be converted only if such holder
withdraws its election to exercise in accordance with Section 3.5.  A holder of
Debentures is not entitled to any rights of a holder of Common Stock until such
holder has converted its Debentures to Common Stock, and only

                                      64
<PAGE>
 
to the extent such Debentures are deemed to have been converted to Common Stock
under this Article XV.

     SECTION 15.2.  EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK
ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS.  In order to exercise
the conversion privilege with respect to any Debenture in certificated form, the
holder of any such Debenture to be converted in whole or in part shall surrender
such Debenture, duly endorsed, at an office or agency maintained by the Company
pursuant to Section 5.2, accompanied by the funds, if any, required by the
penultimate paragraph of this Section 15.2, and shall give written notice of
conversion in the form provided on the Debentures (or such other notice which is
acceptable to the Company) to the office or agency at which the holder elects to
convert such Debenture or the portion thereof specified in said notice. Such
notice shall also state the name or names (with address or addresses) in which
the certificate or certificates for shares of Common Stock which shall be
issuable on such conversion shall be issued, and shall be accompanied by
transfer taxes, if required pursuant to Section 15.7.  Each such Debenture
surrendered for conversion shall, unless the shares issuable on conversion are
to be issued in the same name as the registration of such Debenture, be duly
endorsed by, or be accompanied by instruments of transfer in form satisfactory
to the Company duly executed by, the holder or such holder's duly authorized
attorney.

          In order to exercise the conversion privilege with respect to any
interest in a Debenture in global form, the holder must complete the appropriate
instruction form for conversion pursuant to the Depository's book-entry
conversion program, deliver by book-entry delivery an interest in such Debenture
in global form, furnish appropriate endorsements and transfer documents if
required by the Company or the Trustee or conversion agent, and pay the funds,
if any, required by this Section 15.2 and any transfer taxes if required
pursuant to Section 15.7.

          As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Debentureholder (as if such transfer were a transfer of the
Debenture or Debentures (or portion thereof) so converted), the Company shall
issue and shall deliver to such holder at the office or agency maintained by the
Company for such purpose pursuant to Section 5.2, a certificate or certificates
for the number of full shares of Common Stock issuable upon the conversion of
such Debenture or portion thereof in accordance with the provisions of this
Article and a check or cash in respect of any fractional interest in respect of
a share of Common Stock arising upon such conversion, as provided in Section
15.3. In case any Debenture of a denomination greater than $1,000 shall be
surrendered for partial conversion, and subject to Section 2.3, the Company
shall execute and the Trustee shall authenticate and deliver to the holder of
the Debenture so surrendered, at the Company's expense, a new Debenture or
Debentures in authorized denominations in an aggregate principal amount equal to
the unconverted portion of the surrendered Debenture.

                                      65
<PAGE>
 
          Each conversion shall be deemed to have been effected as to any such
Debenture (or portion thereof) on the date on which the requirements set forth
above in this Section 15.2 have been satisfied as to such Debenture (or portion
thereof), and the person in whose name any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become on said date the holder of record of the shares represented thereby;
provided, however, that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the person in whose name
the certificates are to be issued as the record holder thereof for all purposes
on the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such Debenture shall be surrendered.

          Any Debenture or portion thereof surrendered for conversion during the
period from (but excluding) a record date for any interest payment date to (but
excluding) such interest payment date shall (unless such Debenture or portion
thereof being converted shall have been called for redemption on a redemption
date which occurs during such period) be accompanied by payment, in New York
Clearing House funds or other funds acceptable to the Company, of an amount
equal to the interest otherwise payable on such interest payment date on the
principal amount being converted; provided, however, that no such payment need
be made if there shall exist at the time of conversion a default in the payment
of interest on the Debentures. Except as provided above in this Section 15.2, no
payment or other adjustment shall be made for interest accrued on any Debenture
converted or for dividends on any shares issued upon the conversion of such
Debenture as provided in this Article.

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

     SECTION 15.3.  CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES.  No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon conversion of Debentures.  If more than one Debenture shall be surrendered
for conversion at one time by the same holder, the number of full shares which
shall be issuable upon conversion shall be computed on the basis of the
aggregate principal amount of the Debentures (or specified portions thereof to
the extent permitted hereby) so surrendered.  If any fractional share of stock
would be issuable upon the conversion of any Debenture or Debentures, the
Company shall make an adjustment and payment therefor in cash at the Current
Market Price (as defined below) thereof to the holder of Debentures.  The
current market price of a share of Common Stock shall be the Closing Price on
the last Business Day immediately preceding the day on which the Debentures (or
specified portions thereof) are deemed to have been converted.

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<PAGE>
 
     SECTION 15.4.  CONVERSION PRICE.  The conversion price shall be as
specified in the form of Debenture (herein called the "Conversion Price")
attached as Exhibit A hereto, subject to adjustment as provided in this Article
XV.

     SECTION 15.5.  ADJUSTMENT OF CONVERSION PRICE.  The Conversion Price shall
be adjusted from time to time by the Company as follows:

          (a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price in effect at the opening of business on the date
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination. The
Company will not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company.  If any dividend or distribution of
the type described in this Section 15.5(a) is declared but not so paid or made,
the Conversion Price shall again be adjusted to the Conversion Price which would
then be in effect if such dividend or distribution had not been declared.

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

                                      67
<PAGE>
 
such rights or warrants are not so issued, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such date
fixed for the determination of stockholders entitled to receive such rights or
warrants had not been fixed.  In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of Common Stock at less
than such Current Market Price, and in determining the aggregate offering price
of such shares of Common Stock, there shall be taken into account any
consideration received by the Company for such rights or warrants, the value of
such consideration, if other than cash, to be determined in good faith by the
Board of Directors.

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

          (d) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock shares of any class of capital stock of the
Company (other than any dividends or distributions to which Section 15.5(a)
applies) or evidences of its indebtedness or assets (including securities, but
excluding any rights or warrants referred to in Section 15.5(b), and excluding
any dividend or distribution (x) paid exclusively in cash or (y) referred to in
Section 15.5(a) (any of the foregoing hereinafter in this Section 15.5(d) called
the "Securities")), then, in each such case (unless the Company elects to
reserve such Securities for distribution to the Debentureholders upon the
conversion of the Debentures so that any such holder converting Debentures will
receive upon such conversion, in addition to the shares of Common Stock to which
such holder is entitled, the amount and kind of such Securities which such
holder would have received if such holder had converted its Debentures into
Common Stock immediately prior to the Record Date (as defined in Section 15.5(h)
for such distribution of the Securities), the Conversion Price shall be reduced
so that the same shall be equal to the price determined by multiplying the
Conversion Price in effect on the Record Date with respect to such distribution
by a fraction of which the numerator shall be the Current Market Price per share
of the Common Stock on such Record Date less the fair market value (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive, and described in a resolution of the Board of Directors) on the
Record Date of the portion of the Securities so distributed applicable to one
share of Common Stock and the denominator shall be the Current Market Price per
share of the Common Stock, such reduction to become effective immediately prior
to the opening of business on the day following such Record Date; provided,
however, that in the event the fair market value (as so determined) of the
portion of the Securities so distributed applicable to one share of Common Stock
is equal to or greater than the Current Market Price of the Common Stock on the
Record Date, in lieu of the foregoing adjustment, adequate provision shall be
made so that each Debentureholder shall have the right to receive upon
conversion the amount of Securities such

                                      68
<PAGE>
 
holder would have received had such holder converted each Debenture on the
Record Date. In the event that such dividend or distribution is not so paid or
made, the Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such dividend or distribution had not been
declared.  If the Board of Directors determines the fair market value of any
distribution for purposes of this Section 15.5(d) by reference to the actual or
when issued trading market for any securities, it must in doing so consider the
prices in such market over the same period used in computing the Current Market
Price of the Common Stock.

          Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"):  (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 15.5 (and no adjustment to the Conversion Price under
this Section 15.5 will be required) until the occurrence of the earliest Trigger
Event, whereupon such rights and warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to the Conversion
Price shall be made under this Section 15.5(d). If any such right or warrant,
including any such existing rights or warrants distributed prior to the date of
this Indenture, are subject to events, upon the occurrence of which such rights
or warrants become exercisable to purchase different securities, evidences of
indebtedness or other assets, then the date of the occurrence of any and each
such event shall be deemed to be the date of distribution and record date with
respect to new rights or warrants with such rights (and a termination or
expiration of the existing rights or warrants without exercise by any of the
holders thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of the
type described in the preceding sentence) with respect thereto that was counted
for purposes of calculating a distribution amount for which an adjustment to the
Conversion Price under this Section 15.5 was made, (1) in the case of any such
rights or warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder or holders
of Common Stock with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all holders of Common Stock as of
the date of such redemption or repurchase, and (2) in the case of such rights or
warrants which shall have expired or been terminated without exercise by any
holders thereof, the Conversion Price shall be readjusted as if such rights and
warrants had not been issued.

          Notwithstanding the foregoing, in the event that the Company shall
distribute rights or warrants to subscribe for additional shares of the Common
Stock (other than rights or warrants described in Section 15.5(b)), pro rata to
holders of Common Stock, the Company may, in lieu of making any adjustment
pursuant to this Section 15.5(d), make proper provision so that each holder of a
Debenture who converts such Debenture (or any portion thereof) after the record
date for such distribution shall be entitled to receive upon such conversion, in
addition to the shares

                                      69
<PAGE>
 
of Common Stock issuable upon such conversion (the "Conversion Shares"), a
number of rights or warrants to be determined as follows:  (i) if such
conversion occurs on or prior to the date for the distribution to the holders of
such rights or warrants of separate certificates evidencing such rights or
warrants (the "Distribution Date"), the same number of rights or warrants to
which a holder of a number of shares of Common Stock equal to the number of
Conversion Shares is entitled at the time of such conversion in accordance with
the terms and provisions of and applicable to such rights or warrants; and (ii)
if such conversion occurs after the Distribution Date, the same number of rights
or warrants to which a holder of the number of shares of Common Stock into which
the principal amount of the Debenture so converted was convertible immediately
prior to the Distribution Date would have been entitled on the Distribution Date
in accordance with the terms and provisions of, and applicable to such rights or
warrants.

          For purposes of this Section 15.5(d) and Sections 15.5(a) and (b), any
dividend or distribution to which this Section 15.5(d) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights or warrants (and
any Conversion Price reduction required by this Section 15.5(d) with respect to
such dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights or
warrants (and any further Conversion Price reduction required by Sections
15.5(a) and (b) with respect to such dividend or distribution shall then be
made), except (A) the Record Date of such dividend or distribution shall be
substituted as "the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution" and "the date fixed for such
determination" within the meaning of Sections 15.5(a) and (b) and (B) any shares
of Common Stock included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such determination"
within the meaning of Section 15.5(a).

          (e) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding (x) any quarterly cash dividend
on the Common Stock to the extent the aggregate cash dividend per share of
Common Stock in any fiscal quarter does not exceed the greater of (A) the amount
per share of Common Stock of the next preceding quarterly cash dividend on the
Common Stock to the extent that such preceding quarterly dividend did not
require any adjustment of the Conversion Price pursuant to this Section 15.5(e)
(as adjusted to reflect subdivisions or combinations of the Common Stock), and
(B) 3.75% of the arithmetic average of the Closing Price (determined as set
forth in Section 15.5(h)) during the ten (10) Trading Days (as defined in
Section 15.5(h)) 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 Company, whether voluntary or involuntary),
then, in such case, the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on such Record Date by a fraction of
which the numerator shall be the Current Market Price of the Common Stock on the
Record Date less the amount of cash so distributed (and not excluded as provided
above) applicable to one share of Common Stock and the denominator shall be such

                                      70
<PAGE>
 
Current Market Price of the Common Stock, such reduction to be effective
immediately prior to the opening of business on the day following the Record
Date; provided, however, that in the event the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price of the Common Stock on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each
Debentureholder shall have the right to receive upon conversion the amount of
cash such holder would have received had such holder converted each Debenture on
the Record Date. In the event that such dividend or distribution is not so paid
or made, the Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such dividend or distribution had not been
declared.  If any adjustment is required to be made as set forth in this Section
15.5(e) 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 15.5(e)
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.

          (f) In case a tender or exchange offer made by the Company or any
Subsidiary for all or any portion of the Common Stock (other than tender or
exchange offers for less than fifteen percent (15%) of the outstanding shares of
Common Stock of the Company) shall expire and such tender or exchange offer (as
amended upon the expiration thereof) shall require the payment to stockholders
of consideration per share of Common Stock having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors) that as of the last
time (the "Expiration Time") tenders or exchanges may be made pursuant to such
tender or exchange offer (as it may be amended) that exceeds the Current Market
Price of the Common Stock on the Trading Day next succeeding the Expiration
Time, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the Expiration Time by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding (including any tendered or exchanged
shares) on the Expiration Time multiplied by the Current Market Price of the
Common Stock on the Trading Day next succeeding the Expiration Time and the
denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) on the Expiration
Time and the Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time, such reduction to become effective immediately
prior to the opening of business on the day following the Expiration Time. In
the event that the Company is obligated to purchase shares pursuant to any such
tender or exchange offer, but the Company is permanently prevented by applicable
law from effecting any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such tender or exchange offer had not been made.

                                      71
<PAGE>
 
          (g) In case of a tender or exchange offer made by a person other than
the Company or any Subsidiary for an amount which increases the offeror's
ownership of Common Stock to more than twenty-five percent (25%) of the Common
Stock outstanding and shall involve the payment by such person of consideration
per share of Common Stock having a fair market value (as determined by the Board
of Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors) at the last time (the "Offer Expiration
Time") tenders or exchanges may be made pursuant to such tender or exchange
offer (as it shall have been amended) that exceeds the Current Market Price of
the Common Stock on the Trading Day next succeeding the Offer Expiration Time,
and in which, as of the Offer Expiration Time the Board of Directors is not
recommending rejection of the offer, the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the Offer Expiration Time by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) on the Offer Expiration Time
multiplied by the Current Market Price of the Common Stock on the Trading Day
next succeeding the Offer Expiration Time and the denominator shall be the sum
of (x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Offer Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to as the
"Accepted Purchased Shares") and (y) the product of the number of shares of
Common Stock outstanding (less any Accepted Purchased Shares) on the Offer
Expiration Time and the Current Market Price of the Common Stock on the Trading
Day next succeeding the Offer Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day following the
Offer Expiration Time. In the event that such person is obligated to purchase
shares pursuant to any such tender or exchange offer, but such person is
permanently prevented by applicable law from effecting any such purchases or all
such purchases are rescinded, the Conversion Price shall again be adjusted to be
the Conversion Price which would then be in effect if such tender or exchange
offer had not been made.  Notwithstanding the foregoing, the adjustment
described in this Section 15.5(g) shall not be made if, as of the Offer
Expiration Time, the offering documents with respect to such offer disclose a
plan or intention to cause the Company to engage in any transaction described in
Article XII; provided, however, that if such transaction is not consummated
within twelve (12) months of the Offer Expiration time, the adjustment described
in this Section 15.5(g) shall be made.

          (h) For purposes of this Section 15.5, the following terms shall have
the meaning indicated:

               (1) "Closing Price" with respect to any securities on any day
     shall mean the closing sale price regular way on such day or, in case no
     such sale takes place on such day, the average of the reported closing bid
     and asked prices, regular way, in each case on the New York Stock Exchange,
     or, if such security is not listed or admitted to trading on such Exchange,
     on the principal national security exchange or quotation system on which
     such security is quoted or listed or admitted to trading, or, if not quoted
     or listed or admitted to trading on any national securities exchange or
     quotation system, the

                                      72
<PAGE>
 
     average of the closing bid and asked prices of such security on the over-
     the-counter market on the day in question as reported by the National
     Quotation Bureau Incorporated, or a similar generally accepted reporting
     service, or if not so available, in such manner as furnished by any New
     York Stock Exchange member firm selected from time to time by the Board of
     Directors for that purpose, or a price determined in good faith by the
     Board of Directors or, to the extent permitted by applicable law, a duly
     authorized committee thereof, whose determination shall be conclusive.

               (2) "Current Market Price" shall mean the average of the daily
     Closing Prices per share of Common Stock for the ten (10) consecutive
     Trading Days immediately prior to the date in question; provided, however,
     that (1) if the "ex" date (as hereinafter defined) for any event (other
     than the issuance or distribution or Fundamental Change requiring such
     computation) that requires an adjustment to the Conversion Price pursuant
     to Section 15.5(a), (b), (c), (d), (e), (f) or (g) occurs during such ten
     (10) consecutive Trading Days, the Closing Price for each Trading Day prior
     to the "ex" date for such other event shall be adjusted by multiplying such
     Closing Price by the same fraction by which the Conversion Price is so
     required to be adjusted as a result of such other event, (2) if the "ex"
     date for any event (other than the issuance, distribution or Fundamental
     Change requiring such computation) that requires an adjustment to the
     Conversion Price pursuant to Section 15.5(a), (b), (c), (d), (e), (f) or
     (g) occurs on or after the "ex" date for the issuance or distribution
     requiring such computation and prior to the day in question, the Closing
     Price for each Trading Day on and after the "ex" date for such other event
     shall be adjusted by multiplying such Closing Price by the reciprocal of
     the fraction by which the Conversion Price is so required to be adjusted as
     a result of such other event, and (3) if the "ex" date for the issuance,
     distribution or Fundamental Change requiring such computation is prior to
     the day in question, after taking into account any adjustment required
     pursuant to clause (1) or (2) of this proviso, the Closing Price for each
     Trading Day on or after such "ex" date shall be adjusted by adding thereto
     the amount of any cash and the fair market value (as determined by the
     Board of Directors or, to the extent permitted by applicable law, a duly
     authorized committee thereof in a manner consistent with any determination
     of such value for purposes of Section 15.5(d), (f) or (g), whose
     determination shall be conclusive and described in a resolution of the
     Board of Directors or such duly authorized committee thereof, as the case
     may be) of the evidences of indebtedness, shares of capital stock or assets
     being distributed applicable to one share of Common Stock as of the close
     of business on the day before such "ex" date. For purposes of any
     computation under Section 15.5(f) or (g), the Current Market Price of the
     Common Stock on any date shall be deemed to be the average of the daily
     Closing Prices per share of Common Stock for such day and the next two
     succeeding Trading Days; provided, however, that if the "ex" date for any
     event (other than the tender or exchange offer requiring such computation)
     that requires an adjustment to the Conversion Price pursuant to Section
     15.5(a), (b), (c), (d), (e), (f) or (g) occurs on or after the Expiration
     Time or Offer Expiration Time, as the case may be, for the tender or
     exchange offer requiring such computation and prior to the day in question,
     the Closing Price for. each Trading Day on and after the "ex" date for such
     other event shall be adjusted by multiplying such

                                      73
<PAGE>
 
     Closing Price by the reciprocal of the fraction by which the Conversion
     Price is so required to be adjusted as a result of such other event. For
     purposes of this paragraph, the term "ex" date, (1) when used with respect
     to any issuance or distribution, means the first date on which the Common
     Stock trades regular way on the relevant exchange or in the relevant market
     from which the Closing Price was obtained without the right to receive such
     issuance or distribution, (2) when used with respect to any subdivision or
     combination of shares of Common Stock, means the first date on which the
     Common Stock trades regular way on such exchange or in such market after
     the time at which such subdivision or combination becomes effective, and
     (3) when used with respect to any tender or exchange offer means the first
     date on which the Common Stock trades regular way on such exchange or in
     such market after the Offer Expiration Time of such offer.

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

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

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

          (i)  The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 15.5(a), (b), (c), (d), (e), (f) or (g)
as the Board of Directors considers to be advisable to avoid or diminish any
income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.

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

                                      74
<PAGE>
 
the reduction at least fifteen (15) days prior to the date the reduced
Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period during which it will be in effect.

          (j) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) in such price; provided, however, that any adjustments which by reason of
this Section 15.5(j) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.  All calculations under this
Article XV shall be made by the Company and shall be made to the nearest cent or
to the nearest one-hundredth (1/100) of a share, as the case may be.  No
adjustment need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest.  To the extent the
Debentures become convertible into cash, assets, property or securities (other
than capital stock of the Company), no adjustment need be made thereafter as to
the cash, assets, property or such securities.  Interest will not accrue on the
cash.

          (k) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Trustee and any conversion agent other than
the Trustee an Officers' Certificate setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.  Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Price
to the holder of each Debenture at his last address appearing on the Debenture
register provided for in Section 2.5 of this Indenture within twenty (20) days
after execution thereof.  Failure to deliver such notice shall not affect the
legality or validity of any such adjustment.

          (l) In any case in which this Section 15.5 provides that an adjustment
shall become effective immediately after a record date for an event, the Company
may defer until the occurrence of such event (i) issuing to the holder of any
Debenture converted after such record date and before the occurrence of such
event the additional shares of Common Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the Common Stock
issuable upon such conversion before giving effect to such adjustment and (ii)
paying to such holder any amount in cash in lieu of any fraction pursuant to
Section 15.3.

          (m) For purposes of this Section 15.5, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock.  The Company will not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.

     SECTION 15.6.  EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
If any of the following events occur, namely (i) any reclassification or change
of the outstanding shares of Common Stock (other than a subdivision or
combination to which Section 15.5(c) applies), (ii)

                                      75
<PAGE>
 
any consolidation, merger or combination of the Company with another corporation
as a result of which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to or in
exchange for such Common Stock, or (iii) any sale or conveyance of the
properties and assets of the Company as, or substantially as, an entirety to any
other corporation as a result of which holders of Common Stock shall be entitled
to receive stock, securities or other property or assets (including cash) with
respect to or in exchange for such Common Stock, then the Company or the
successor or purchasing corporation, as the case may be, shall execute with the
Trustee a supplemental indenture (which shall comply with the Trust Indenture
Act as in force at the date of execution of such supplemental indenture)
providing that such Debenture shall be convertible into 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, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of such Debentures (assuming, for such purposes,
a sufficient number of authorized shares of Common Stock available to convert
all such Debentures) immediately prior to such reclassification, change,
consolidation, merger, combination, sale or conveyance assuming such holder of
Common Stock did not exercise his rights of election, if any, as to the kind or
amount of securities, cash or other property receivable upon such consolidation,
merger, statutory exchange, sale or conveyance (provided that, if the kind or
amount of securities, cash or other property receivable upon such consolidation,
merger, statutory exchange, sale or conveyance is not the same for each share of
Common Stock in respect of which such rights of election shall not have been
exercised ("nonelecting share")), then for the purposes of this Section 15.6 the
kind and amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance for each non-
electing share shall be deemed to be the kind and amount so receivable per share
by a plurality of the non-electing shares. Such supplemental indenture shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article.

          The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Debentures, at its address appearing on
the Debenture register provided for in Section 2.5 of this Indenture, within
twenty (20) days after execution thereof. Failure to deliver such notice shall
not affect the legality or validity of such supplemental indenture.

          The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.

          If this Section 15.6 applies to any event or occurrence, Section 15.5
shall not apply.

     SECTION 15.7.  TAXES ON SHARES ISSUED.  The issue of stock certificates on
conversions of Debentures shall be made without charge to the converting
Debentureholder for any tax in respect of the issue thereof.  The Company shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of stock in any name other than that
of the holder of any Debenture converted, and the Company shall not be required

                                      76
<PAGE>
 
to issue or deliver any such stock certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.

     SECTION 15.8.  RESERVATION OF SHARES; SHARES TO BE FULLY PAID; COMPLIANCE
WITH GOVERNMENTAL REQUIREMENTS; LISTING OF COMMON STOCK.  The Company shall
provide, free from preemptive rights, out of its authorized but unissued shares
or shares held in treasury, sufficient shares of Common Stock to provide for the
conversion of the Debentures from time to time as such Debentures are presented
for conversion.

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

          The Company covenants that all shares of Common Stock which may be
issued upon conversion of Debentures will upon issue be fully paid and non-
assessable by the Company.

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

          The Company further covenants that if at any time the Common Stock
shall be listed on the Nasdaq National Market or any other national securities
exchange or automated quotation system the Company will, if permitted by the
rules of such exchange or automated quotation system, list and keep listed, so
long as the Common Stock shall be so listed on such exchange or automated
quotation system, all Common Stock issuable upon conversion of the Debentures;
provided, however, that if rules of such exchange or automated quotation system
permit the Company to defer the listing of such Common Stock until the first
conversion of the Debentures into Common Stock in accordance with the provisions
of this Indenture, the Company covenants to list such Common Stock issuable upon
conversion of the Debentures in accordance with the requirements of such
exchange or automated quotation system at such time.

     SECTION 15.9.  RESPONSIBILITY OF TRUSTEE.  The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Debentures to determine the Conversion Price or whether any facts
exist which may require any adjustment of the Conversion Price, or with respect
to the nature or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same.  The Trustee and any other
conversion agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities or
property, which may at any time be issued or delivered

                                      77
<PAGE>
 
upon the conversion of any Debenture; and the Trustee and any other conversion
agent make no representations with respect thereto.  Neither the Trustee nor any
conversion agent shall be responsible for any failure of the Company to issue,
transfer or deliver any shares of Common Stock or stock certificates or other
securities or property or cash upon the surrender of any Debenture for the
purpose of conversion or to comply with any of the duties, responsibilities or
covenants of the Company contained in this Article.  Without limiting the
generality of the foregoing, neither the Trustee nor any conversion agent shall
be under any responsibility to determine the correctness of any provisions
contained in any supplemental indenture entered into pursuant to Section 15.6
relating either to the kind or amount of shares of stock or securities or
property (including cash) receivable by Debentureholders upon the conversion of
their Debentures after any event referred to in such Section 15.6 or to any
adjustment to be made with respect thereto, but, subject to the provisions of
Section 8.1, may accept as conclusive evidence of the correctness of any such
provisions, and shall be fully protected in relying upon, the Officers'
Certificate (which the Company shall be obligated to file with the Trustee prior
to the execution of any such supplemental indenture) with respect thereto.

     SECTION 15.10. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS.  In case:

          (a) the Company shall declare a dividend (or any other distribution)
on its Common Stock that would require an adjustment in the Conversion Price
pursuant to Section 15.5; or

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

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

          (d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;

the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Debentures at his address appearing on the Debenture register provided
for in Section 2.5 of this Indenture, as promptly as possible but in any event
at least fifteen (15) days prior to the applicable date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined, or (y) the date
on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is

                                      78
<PAGE>
 
expected to become effective or occur, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such dividend, distribution,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up.


                                  ARTICLE XVI

                            MISCELLANEOUS PROVISIONS

     SECTION 16.1.  PROVISIONS BINDING ON COMPANY'S SUCCESSORS.  All the
covenants, stipulations, promises and agreements by the Company contained in
this Indenture shall bind its successors and assigns whether so expressed or
not.

     SECTION 16.2.  OFFICIAL ACTS BY SUCCESSOR CORPORATION.  Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.

     SECTION 16.3.  ADDRESSES FOR NOTICES, ETC.  Any notice or demand which by
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the holders of Debentures on the Company shall be deemed to
have been sufficiently given or made, for all purposes, if given or served by
being deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to Centocor, Inc., 200 Great Valley Parkway, Malvern, PA 19355-1307,
Attention:  Chief Financial Officer. Any notice, direction, request or demand
hereunder to or upon the Trustee shall be deemed to have been sufficiently given
or made, for all purposes, if given or served by being deposited postage prepaid
by registered or certified mail in a post office letter box addressed to the
Trustee, whose office is, at the date as of which this Indenture is dated,
located at 114 West 47th Street, New York, New York 10036-1532, Attention:
Corporate Trust Department.

          The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.

          Any notice or communication mailed to a Debentureholder shall be
mailed to him by first class mail, postage prepaid, at his address as it appears
on the Debenture register and shall be sufficiently given to him if so mailed
within the time prescribed.

          Failure to mail a notice or communication to a Debentureholder or any
defect in it shall not affect its sufficiency with respect to other
Debentureholders. If a notice or

                                      79
<PAGE>
 
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.

     SECTION 16.4.  GOVERNING LAW.  This Indenture and each Debenture shall be
deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of the State of New
York.

     SECTION 16.5.  EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT;
CERTIFICATES TO TRUSTEE.  Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee (i) an Officers' Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating
that, in the opinion of such counsel, all such conditions precedent have been
complied with and (iii) any other certificate that, under the Trust Indenture
Act, the Trustee may reasonably require.

          Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (1) a statement that the person
making such certificate or opinion has read such covenant or condition; (2) a
brief statement as to the nature and scope of the examination or investigation
upon which the statement or opinion contained in such certificate or opinion is
based:  (3) a statement that, in the opinion of such person, he or she has made
such examination or investigation as is necessary to enable such person to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and (4) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been complied with.

     SECTION 16.6.  LEGAL HOLIDAYS.  In any case where the date of maturity of
interest on or principal of the Debentures or the date fixed for redemption of
any Debenture will not be a Business Day, then payment of such interest on or
principal of the Debentures need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the date of maturity or the date fixed for redemption, and no interest shall
accrue for the period from and after such date.

     SECTION 16.7.  TRUST INDENTURE ACT.  This Indenture is hereby made subject
to, and shall be governed by, the provisions of the Trust Indenture Act required
to be part of and to govern indentures qualified under the Trust Indenture Act;
provided, however, that, unless otherwise required by law, notwithstanding the
foregoing, this Indenture and the Debentures issued hereunder shall not be
subject to the provisions of subsections (a)(1), (a)(2), and (a)(3) of Section
314 of the Trust Indenture Act as now in effect or as hereafter amended or
modified; provided, further, that this Section 16.7 shall not require this
Indenture or the Trustee to be qualified under the Trust Indenture Act prior to
the time such qualification is in fact required under the terms of the Trust
Indenture Act, nor shall it constitute any admission or acknowledgment by any
party to such supplemental indenture that any such qualification is required
prior to the time such qualification is in fact required under the terms of the
Trust Indenture Act. If any provision

                                      80
<PAGE>
 
hereof limits, qualifies or conflicts with another provision hereof which is
required to be included in an indenture qualified under the Trust Indenture Act,
such required provision shall control.

     SECTION 16.8.  NO SECURITY INTEREST CREATED.  Nothing in this Indenture or
in the Debentures, expressed or implied, shall be construed to constitute a
security interest under the Uniform Commercial Code or similar legislation, as
now or hereafter enacted and in effect, in any jurisdiction where property of
the Company or its subsidiaries is located.

     SECTION 16.9.  BENEFITS OF INDENTURE.  Nothing in this Indenture or in the
Debentures, expressed or implied, shall give to any Person, other than the
parties hereto, any paying agent, any authenticating agent, any Debenture
registrar and their successors hereunder, the holders of Debentures and the
holders of Senior Obligations, any benefit or any legal or equitable right,
remedy or claim under this Indenture.

     SECTION 16.10. TABLE OF CONTENTS, HEADINGS, ETC.  The table of contents and
the titles and headings of the articles and sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.

     SECTION 16.11. AUTHENTICATING AGENT.  The Trustee may appoint an
authenticating agent which shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Debentures in connection
with the original issuance thereof and transfers and exchanges of Debentures
hereunder, including under Sections 2.4, 2.5, 2.6, 2.7, 3.3 and 3.5, as fully to
all intents and purposes as though the authenticating agent had been expressly
authorized by this Indenture and those Sections to authenticate and deliver
Debentures. For all purposes of this Indenture, the authentication and delivery
of Debentures by the authenticating agent shall be deemed to be authentication
and delivery of such Debentures "by the Trustee" and a certificate of
authentication executed on behalf of the Trustee by an authenticating agent
shall be deemed to satisfy any requirement hereunder or in the Debentures for
the Trustee's certificate of authentication.  Such authenticating agent shall at
all times be a person eligible to serve as trustee hereunder pursuant to Section
8.9.

          Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section 16.11, without the execution or filing of any paper or any further act
on the part of the parties hereto or the authenticating agent or such successor
corporation.

          Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any authenticating agent by giving written notice
of termination to such authenticating agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or

                                      81
<PAGE>
 
in case at any time any authenticating agent shall cease to be eligible under
this Section, the Trustee shall either promptly appoint a successor
authenticating agent or itself assume the duties and obligations of the former
authenticating agent under this Indenture, and upon such appointment of a
successor authenticating agent, if made, shall give written notice of such
appointment of a successor authenticating agent to the Company and shall mail
notice of such appointment of a successor authenticating agent to all holders of
Debentures as the names and addresses of such holders appear on the Debenture
register.

          The Trustee agrees to pay to the authenticating agent from time to
time reasonable compensation for its services (to the extent pre-approved by the
Company in writing), and the Trustee shall be entitled to be reimbursed for such
pre-approved payments, subject to Section 8.6.

          The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 16.11
shall be applicable to any authenticating agent.

     SECTION 16.12. EXECUTION IN COUNTERPARTS.  This Indenture may be executed
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.

                                      82
<PAGE>
 
IN WITNESS WHEREOF, the parties hereto have caused this indenture to be duly
executed.


                              CENTOCOR, INC.


                              By: ___________________________________
                                    Name:  David P. Holveck
                                    Title: Chief Executive Officer


                              UNITED STATES TRUST COMPANY
                              OF NEW YORK, as Trustee


                              By: ___________________________________
                                    Name:
                                    Title:
<PAGE>
 
                                   EXHIBIT A


[For Global Debenture only:

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY," WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY FOR THE CERTIFICATES)
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DEPOSITARY AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. (OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

THE DEBENTURE (OR ITS PREDECESSOR) NOT BEEN REGISTERED UNDER THE U.S. 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.  BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE DEBENTURE
EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL NOT, PRIOR
TO 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), RESELL OR OTHERWISE TRANSFER THE DEBENTURE EVIDENCED HEREBY OR THE
COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH DEBENTURE EXCEPT (A) TO CENTOCOR,
INC. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
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
THE UNITED STATES TRUST COMPANY OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE,
AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE DEBENTURE EVIDENCED
HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE

                                      A-1
<PAGE>
 
OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE),
OR (F) 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); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE 2(F) ABOVE), IT WILL FURNISH THE UNITED STATES TRUST COMPANY OF NEW YORK,
AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE AND THE COMPANY), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUCH TRUSTEE  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 (4) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THE DEBENTURE EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A
TRANSFER PURSUANT TO CLAUSE 2(F) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.  IN CONNECTION WITH ANY TRANSFER OF THE DEBENTURE EVIDENCED HEREBY
PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
DEBENTURE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISIONS) THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE UNITED STATES TRUST COMPANY OF NEW YORK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE).  IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE UNITED STATES TRUST COMPANY
OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE AND THE COMPANY),
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUCH TRUSTEE AND THE
COMPANY 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. THIS LEGEND WILL BE REMOVED
UPON THE EARLIER OF THE TRANSFER OF THE DEBENTURE EVIDENCED HEREBY PURSUANT TO
CLAUSE 2(F) ABOVE OR UPON ANY TRANSFER OF THE DEBENTURES EVIDENCED HEREBY UNDER
RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION).  AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

                                      A-2
<PAGE>
 
                                 CENTOCOR, INC.

               4 3/4% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2005

No:  _______                                                    CUSIP:  ________

     CENTOCOR, INC., a corporation duly organized and validly existing under the
laws of the Commonwealth of Pennsylvania (herein called the "Company"), which
term includes any successor corporation under the Indenture referred to on the
reverse hereof, for value received, hereby promises to pay to
___________________________________ or registered assigns, the principal sum of
________________ ($____________) on February 15, 2005, at the office or agency
of the Company maintained for that purpose in accordance with the terms of the
Indenture, or, at the option of the holder of this Debenture, at the Corporate
Trust Office, in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts, and to pay interest, semi-annually on February 15 and August 15, of each
year, commencing August 15, 1998, on said principal sum at said office or
agency, in like coin or currency, at the rate per annum of 4 3/4% from February
20, 1998 and thereafter to maturity from the February 15 or August 15, as the
case may be, next preceding the date of this Debenture to which interest has
been paid or duly provided for, unless the date hereof is a date to which
interest has been paid or duly provided for, in which case from the date of this
Debenture, or unless no interest has been paid or duly provided for on the
Debentures, in which case from February 20, 1998, until payment of said
principal sum has been made or duly provided for. Notwithstanding the foregoing,
if the date hereof is after any February 1 or August 1, as the case may be, and
before the following February 15 or August 15, this Debenture shall bear
interest from such February 15 or August 15; provided, however, that if the
Company shall default in the payment of interest due on such February 15 or
August 15, then this Debenture shall bear interest from the next preceding
February 15 or August 15, to which interest has been paid or duly provided for
or, if no interest has been paid or duly provided for on such Debenture, from
February 20, 1998. The interest payable on the Debenture pursuant to the
Indenture on any February 15 or August 15 will be paid to the person entitled
thereto as it appears in the Debenture register at the close of business on the
record date, which shall be the February 1 or August 1, (whether or not a
Business Day) preceding such February 15 or August 15, as provided in the
Indenture; provided that any such interest not punctually paid or duly provided
for shall be payable as provided in the Indenture.  Interest  may, at the option
of the Company, be paid either (i) by check mailed to the registered address of
such person (provided that the holder of Debentures with an aggregate principal
amount in excess of $2,000,000 shall, at the written election of such holder, be
paid by wire transfer in immediately available funds) or (ii) by transfer to an
account maintained by such person located in the United States.

          Reference is made to the further provisions of this Debenture set
forth on the reverse hereof, including, without limitation, provisions
subordinating the payment of principal of and premium, if any, and interest on
the Debentures to the prior payment in full of all Senior Obligations, as
defined in the Indenture, and provisions giving the holder of this Debenture the

                                      A-3
<PAGE>
 
right to convert this Debenture into Common Stock of the Company on the terms
and subject to the limitations referred to on the reverse hereof and as more
fully specified in the Indenture. Such further provisions shall for all purposes
have the same effect as though fully set forth at this place.

          This Debenture shall be deemed to be a contract made under the laws of
the State of New York, and for all purposes shall be construed in accordance
with and governed by the laws of said State.

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

          IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed under its corporate seal to be affixed or imported hereon.

                              CENTOCOR, INC.


                              BY: ________________________________
                                      Name:
                                      Title:


                              Attest: ____________________________
                                      Name:
                                      Title:

Dated:  ______________________

                                     A-4
 
<PAGE>
 
TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Debentures described in the within-named Indenture.

UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee

By:  _____________________________________
      Authorized Signatory


By:  _____________________________________
      As Authenticating Agent
      (if different from Trustee)

                                      A-5
<PAGE>
 
                        [FORM OF REVERSE OF DEBENTURE]

                                CENTOCOR, INC.

              4 3/4% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2005

          This Debenture is one of a duly authorized issue of Debentures of the
Company, designated as its 4 3/4% Convertible Subordinated Debentures due 2005
(herein called the "Debentures"), limited to the aggregate principal amount of
$460,000,000 all issued or to be issued under and pursuant to an Indenture dated
as of February 20, 1998 (herein called the "Indenture"), between the Company and
United States Trust Company of New York, as trustee (herein called the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Debentures.

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

          The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Debentures at the time outstanding, evidenced
as in the Indenture provided, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of any supplemental indenture or modifying in any manner the
rights of the holders of the Debentures; provided, however, that no such
supplemental indenture shall (i) extend the fixed maturity of any Debenture, or
reduce the rate or extend the time of payment of interest thereon, or reduce the
principal amount thereof or premium, if any, thereon, or reduce any amount
payable on redemption thereof, or impair the right of any Debentureholder to
institute suit for the payment thereof, or make the principal thereof or
interest or premium, if any, thereon payable in any coin or currency other than
that provided in the Debenture, or modify the provisions of the Indenture with
respect to the subordination of the Debentures in a manner adverse to the
Debentureholders in any material respect, or change the obligation of the
Company to make redemption of any Debenture upon the happening of a Fundamental
Change in a manner adverse to the holder of the Debentures, or impair the right
to convert the Debentures into Common Stock subject to the terms set forth in
the Indenture, including Section 15.6 thereof, in each case, without the consent
of the holder of each Debenture so affected or (ii) reduce the aforesaid
percentage of Debentures, the holders of which are required to consent to any
such supplemental indenture, without the consent of the holders of all
Debentures then outstanding.  It is also provided in the Indenture that the
holders of a majority in aggregate principal amount of the Debentures at the
time outstanding, determined in accordance with Section 9.4 of the Indenture,
may on behalf of the holders of all of the

                                      A-6
<PAGE>
 
Debentures waive any past default or Event of Default under the Indenture and
its consequences except a default in the payment of interest (including
Liquidated Damages, if any) or any premium on or the principal of any of the
Debentures which has not been cured in accordance with the Indenture, a default
in the payment of redemption price pursuant to Article III of the Indenture or a
failure by the Company to convert any Debentures into Common Stock of the
Company or a default in respect of a covenant or provisions of the Indenture
which under Article XI of the Indenture cannot be modified or amended without
the consent of the holders of all Debentures then outstanding.  Any such consent
or waiver by the holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all future
holders and owners of this Debenture and any Debentures which may be issued in
exchange or substitute hereof, irrespective of whether or not any notation
thereof is made upon this Debenture or such other Debentures.

          The indebtedness evidenced by the Debentures is, to the extent and in
the manner provided in the Indenture, expressly subordinate and subject in right
of payment to the prior payment in full of all Senior Obligations of the
Company, as defined in the Indenture, and this Debenture is issued subject to
the provisions of the Indenture with respect to such subordination. Each holder
of this Debenture, by accepting the same, agrees to and shall be bound by such
provisions and authorizes the Trustee on its behalf to take such action as may
be necessary or appropriate to effectuate the subordination so provided and
appoints the Trustee his attorney-in-fact for such purpose.

          No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium and interest (including Liquidated Damages, if any) on this Debenture at
the place, at the respective times, at the rate and in the coin or currency
herein prescribed.

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

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

          The Debentures will not be redeemable at the option of the Company
prior to February 21, 2001. At any time on or after February 21, 2001, and prior
to maturity, the Debentures may be redeemed at the option of the Company as a
whole, or from time to time in part, upon mailing a notice of such redemption
not less than thirty (30) days prior to the date fixed for redemption to the
holders of Debentures at their last registered addresses, all as provided

                                      A-7
<PAGE>
 
in the Indenture, at the following optional redemption prices (expressed as
percentages of the principal amount), together in each case with accrued
interest (including Liquidated Damages, if any) to, but excluding, the date
fixed for redemption:

          If redeemed during the period beginning February 21, 2001 and ending
on February 14, 2002, at a redemption price of 102.714%, and if redeemed during
the 12-month period beginning February 15:

          YEAR      REDEMPTION PRICE

          2002 .....102.036%
          2003 .....101.357%
          2004 .....100.679%
 
and 100% at February 15, 2005; provided that if the date fixed for redemption is
February 15 or August 15, then the interest payable on such date shall be paid
to the holder of record on the next preceding February 1 or August 1,
respectively.

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

          If a Fundamental Change (as defined in the Indenture) occurs at any
time prior to February 15, 2005, the Debentures will be redeemable on the 30th
day after notice thereof at the option of the holder at a redemption price equal
to 100% of the principal amount of the Debenture (or portion thereof) redeemed,
together with accrued interest to (but excluding) the date of redemption;
provided that if such Repurchase Date is February 15 or August 15, then the
interest payable on such date shall be paid to the holder of record of the
Debenture on the preceding February 1 or August 1, respectively.  The Company
shall mail to all holders of record of the Debentures a notice of the occurrence
of a Fundamental Change and of the redemption right arising as a result thereof
on or before the 10th day after the occurrence of such Fundamental Change.  For
a Debenture to be so repaid at the option of the holder, the Company must
receive at the office or agency maintained by the Company in accordance with the
terms of the Indenture, such Debenture with the form entitled "Option to Elect
Repayment Upon a Fundamental Change" on the reverse thereof duly completed,
together with such Debentures duly endorsed for transfer, on or before the 30th
day after the date of such notice (or if such 30th day is not a Business Day,
the next succeeding Business Day).

          Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time after ninety (90) days following the latest
date of original issuance thereof through the close of business on February 15,
2005, or, as to all or any portion hereof called for redemption, prior to the
close of business on the fifth Business Day next preceding the date fixed for
redemption (unless the Company shall default in payment due upon redemption
thereof), to convert the principal hereof or any portion of such principal which
is $1,000 or an integral multiple thereof into that number of shares of the
Company's Common Stock, as said shares shall

                                      A-8
<PAGE>
 
be constituted at the date of conversion, obtained by dividing the principal
amount of this Debenture or portion thereof to be converted by the Conversion
Price of $49.261 or such Conversion Price as adjusted from time to time as
provided in the Indenture, upon surrender of this Debenture, together with any
required funds and a conversion notice as provided in the Indenture, to the
Company at the office or agency maintained by the Company in accordance with the
terms of the Indenture, or at the option of such holder, the Corporate Trust
Office, and, unless the shares issuable on conversion are to be issued in the
same name as this Debenture, duly endorsed by, or accompanied by instruments of
transfer in form satisfactory to the Company duly executed by, the holder or by
his duly authorized attorney. No adjustment in respect of interest or dividends
will be made upon any conversion; provided, however, that if this Debenture
shall be surrendered for conversion during the period from (but excluding) a
record date for any interest payment date to (but excluding) such interest
payment date, this Debenture (unless it or the portion being converted shall
have been called for redemption during such period) must be accompanied by an
amount, in New York Clearing House funds or other funds acceptable to the
Company, equal to the interest payable on such interest payment date on the
principal amount being converted. No fractional shares will be issued upon any
conversion, but an adjustment in cash will be made, as provided in the
Indenture, in respect of any fraction of a share which would otherwise be
issuable upon the surrender of any Debenture or Debentures for conversion.

          Any Debentures called for redemption, unless surrendered for
conversion on or before the close of business on the fifth Business Day prior to
the date fixed for redemption, may be deemed to be purchased from the holder of
such Debentures at an amount equal to the applicable redemption price, together
with accrued interest (including Liquidated Damages, if any) to (but excluding)
the date fixed for redemption, by one or more investment bankers or other
purchasers who may agree with the Company to purchase such Debentures from the
holders thereof and convert them into Common Stock of the Company and to make
payment for such Debentures as aforesaid to the Trustee in trust for such
holders.

          Upon due presentment for registration of transfer of this Debenture at
the office or agency of the Company maintained for that purpose in accordance
with the terms of the Indenture, or at the option of the holder of this
Debenture, at the Corporate Trust Office, a new Debenture or Debentures of
authorized denominations for an equal aggregate principal amount will be issued
to the transferee in exchange thereof, subject to the limitations provided in
the Indenture, without charge except for any tax or other governmental charge
imposed in connection therewith.

          The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Debenture registrar may deem and treat the
registered holder hereof as the absolute owner of this Debenture (whether or not
this Debenture shall be overdue and notwithstanding any notation of ownership or
other writing hereon made by anyone other than the Company or any Debenture
registrar), for the purpose of receiving payment hereof, or on account hereof,
for the conversion hereof and for all other purposes, and neither the Company
nor the Trustee nor any other authenticating agent nor any paying agent nor any
other conversion agent nor any Debenture registrar shall be affected by any
notice to the contrary. All payments

                                      A-9
<PAGE>
 
made to or upon the order of such registered holder shall, to the extent of the
sum or sums paid, satisfy and discharge liability for monies payable on this
Debenture.

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

              THE INDENTURE AND THE DEBENTURES SHALL BE GOVERNED
                      BY AND CONSTRUED IN ACCORDANCE WITH
                       THE LAWS OF THE STATE OF NEW YORK

     Terms used in this Debenture and defined in the Indenture are used herein
as therein defined.

                                     A-10
<PAGE>
 
                                 ABBREVIATIONS

The following abbreviations, when used in the inscription of the face of this
Debenture, shall be construed as though they were written out in full according
to applicable laws or regulations:

--------------------------------------------------------------------------------
TEN COM-    as tenants in common               UNIF GIFT MIN ACT --
                                               ____________________ Custodian
                                                      (Cust)
 
                                               ____________________
                                                      (Minor)
--------------------------------------------------------------------------------
TEN ENT-    as tenants by the entireties   
--------------------------------------------------------------------------------
JT TEN-     as joint tenants with right of     under Uniform Gifts to Minors Act
            survivorship and not as tenants   
            in common                          ____________________
                                                      (State)
--------------------------------------------------------------------------------

                   ADDITIONAL ABBREVIATIONS MAY ALSO BE USED
                         THOUGH NOT IN THE ABOVE LIST.

                                     A-11
<PAGE>
 
                               CONVERSION NOTICE


To:  CENTOCOR, INC.

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

Dated:  ___________________             ______________________________________
 
                                        ______________________________________
                                        Signature(s)

                                        Signature(s) must be guaranteed by a
                                        commercial bank or trust company or a
                                        member firm of a major stock exchange if
                                        shares of Common Stock are to be issued,
                                        or Debentures to be delivered, other
                                        than to and in the name of the
                                        registered holder.


                                        ________________________________________
                                        Signature Guarantee

                                     A-12
<PAGE>
 
          Fill in for registration of shares of Common Stock if to be issued,
and Debentures if to be delivered, 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 Converted
(if less than all):  $____________

Social Security or Other Taxpayer
Identification Number:

                                     A-13
<PAGE>
 
                           OPTION TO ELECT REPAYMENT
                           UPON A FUNDAMENTAL CHANGE


TO:       CENTOCOR, INC.

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


Dated: __________________________   __________________________________________

                                    __________________________________________  
                                    Signature(s)

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

                                    Principal amount to be Redeemed (if less
                                    than all):
 
                                         $_____________


                                    ____________________________________________
                                    Social Security or Other Taxpayer
                                    Identification Number

                                     A-14
<PAGE>
 
                                  ASSIGNMENT

          For value received ___________________________ hereby sell(s),
assign(s) and transfer(s) unto ___________________________ (Please insert social
security or other Taxpayer Identification Number of assignee) the within
Debenture, and hereby irrevocably constitutes and appoints
_________________________ attorney to transfer the said Debenture on the books
of the Company, with full power of substitution in the premises.

          In connection with any transfer of the Debenture within the period
prior to the expiration of the holding period applicable to sales thereof under
Rule 144(k) under the Securities Act (or any successor provision) (other than
any transfer pursuant to a registration statement that has been declared
effective under the Securities Act), the undersigned confirms that such
Debenture is being transferred:

[_]  To Centocor, Inc. or a subsidiary thereof, or

[_]  Inside the United States to a "qualified institutional buyer" (as defined
     in Rule 144A under the Securities Act) in compliance with Rule 144A under
     the Securities Act; or

[_]  Inside the United States 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 the Trustee a signed letter containing
     certain representations and agreements relating to the restrictions on
     transfer of the Debenture evidenced hereby; or

[_]  Outside the United States in compliance with Rule 904 under the Securities
     Act; or

[_]  Pursuant to the exemption from registration provided by Rule 144 under the
     Securities Act (if available);

and unless the box below is checked, the undersigned confirms that such
Debenture is not being transferred to an "affiliate" of the Company as defined
in Rule 144 under the Securities Act of 1933, as amended (an "Affiliate").

[_]  The transferee is an Affiliate of the Company.

Dated:

                                     A-15
<PAGE>
 
                                   ____________________________________________
                                   Signature(s)

                                   Signature(s) must be guaranteed by a
                                   commercial bank or trust company or a member
                                   firm of a major stock exchange if shares of
                                   Common Stock are to be issued, or Debentures
                                   to be delivered, other than to or in the name
                                   of the registered holder.

                                   _____________________________________________

                                   Signature Guarantee


NOTICE:  The signature on the conversion notice, the option to elect repayment
upon a Fundamental Change or the assignment must correspond with the name as
written upon the face of the Debenture in every particular without alteration or
enlargement or any change whatever.

                                     A-16
<PAGE>
 
                                   EXHIBIT B


Centocor, Inc.
200 Great Valley Parkway
Malvern, PA 19355-1307

Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036

Ladies/Gentlemen:

          We are delivering this letter in connection with an offering of 4 3/4%
Convertible Subordinated Debentures due 2005 (the "Debentures), which are
convertible into shares of Common Stock, $.01 par value (the "Common Stock"), of
Centocor, Inc., a Pennsylvania corporation (the "Company"), all as described in
the Offering Memorandum (the "Offering Memorandum") relating to the Offering.

          We hereby confirm that:

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

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

 .    in the event that we purchase any Debentures, we will acquire Debentures
     having a minimum principal amount of not less than $100,000 for our own
     account or for any separate account for which we are acting;

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

 .    we are not acquiring Debentures with a view to distribution thereof or
     with any present intention of offering or selling Debentures or the Common
     Stock issuable upon conversion

                                      B-1
<PAGE>
 
     thereof, except as permitted below; provided that the disposition of our
     property and property of any accounts for which we are acting as fiduciary
     shall remain at all times within our control; and

 .    we have received a copy of the Offering Memorandum and acknowledge that we
     have had access to such financial and other information, and have been
     afforded the opportunity to ask such questions of representatives of the
     Company and receive answers thereto, as we deem necessary in connection
     with our decision to purchase Debentures.

          We understand that the Debentures are being offered in a transaction
not involving any public offering within the United States within the meaning of
the Securities Act and that the Debentures and the shares of Common Stock
issuable upon conversion thereof have not been registered under the Securities
Act, and we agree, on our own behalf and on behalf of each account for which we
acquire any Debentures, that if in the future we decide to resell or otherwise
transfer such Debentures or the Common Stock issuable upon conversion thereof,
such Debentures or Common Stock  may be resold or otherwise transferred only (i)
to the Company or any subsidiary thereof, or (ii) inside the United States to a
person who is a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) in a transaction meeting the requirements of Rule 144A, or
(iii) inside the United States to an Institutional Accredited Investor that,
prior to such transfer, furnishes to the Trustee or transfer agent for such
securities a signed letter containing certain representations and agreements
relating to the restrictions on transfer of such securities (the form of which
letter can be obtained from such Trustee or transfer agent), or (iv) outside the
United States in a transaction meeting the requirements of Rule 904 under the
Securities Act, or (v) pursuant to the exemption from registration provided by
Rule 144 under the Securities Act (if applicable), or (vi) 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), and in
each case, in accordance with any applicable securities laws of any State of the
United States or any other applicable jurisdiction and in accordance with the
legends set forth on the Debentures or the Common Stock issuable upon conversion
thereof, as the case may be. We further agree to provide any person purchasing
any of the Debentures or the Common Stock issuable upon conversion thereof other
than pursuant to clause (vi) above from us a notice advising such purchaser that
resales of such securities are restricted as stated herein. We understand that
the Trustee or transfer agent for the Debentures and the Common Stock will not
be required to accept for registration of transfer any Debentures or any shares
of Common Stock issued upon conversion of the Debentures except upon
presentation of evidence satisfactory to the Company that the foregoing
restrictions on transfer have been complied with. We further understand that any
Debentures and any certificates representing Common Stock will be in the form of
definitive physical certificates and that such certificates will bear a legend
reflecting the substance of this paragraph other than certificates representing
Common Stock transferred pursuant to clause (vi) above.

          We acknowledge that the Company, others and you will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you

                                      B-2
<PAGE>
 
promptly in writing if any of our representations or warranties herein ceases to
be accurate and complete.

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

                                   

                                    _______________________________________
                                    (Name of Purchaser)


                                    By:   _________________________________
          
                                    Name: _________________________________
                                    
                                    Title:_________________________________
                              
                                    Address:_______________________________

                                      B-3