[Exhibit "A"]* ALLSTATE FINANCIAL CORPORATION

Issuer

and

**_________________________________, as Indenture Trustee


INDENTURE

Dated as of September 14, 1998


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

$4,961,000.00

10% Convertible Subordinated Notes















     *Delete  upon  execution  of the Form of  Indenture  by the  Issuer and the
Trustee, if named herein.

**Insert upon execution of the Form of Indenture.


TABLE OF CONTENTS
     PAGE
ARTICLE 1   DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . .    8
     SECTION 1.1  Certain Terms Defined. . . . . . . . . . . . . . . . . .    8

ARTICLE 2   ISSUE, EXECUTION, FORM AND REGISTRATION OF SECURITIES. . . . .
     SECTION 2.1  Authentication and Delivery of Securities. . . . . . . . .
     SECTION 2.2  Execution of Securities. . . . . . . . . . . . . . . . . .
     SECTION 2.3  Certificate of Authentication. . . . . . . . . . . . . . .
     SECTION 2.4  Form, Denomination and Date of Securities; Payments of
     Interest in Cash. . . . . . .
     SECTION 2.5  Registration, Transfer and Exchange;
        Paying Agent and Conversion Agent. .
     SECTION 2.6  Mutilated, Defaced, Destroyed, Lost and Stolen
     Securities . . . . . . . . . . . . . . . . . . . . . . . .
     SECTION 2.7  Cancellation of Securities; Disposition Thereof. . . . . .
     SECTION 2.8  Temporary Securities . . . . . . . . . . . . . . . . . . .

ARTICLE 3   COVENANTS OF THE ISSUER. . . . . . . . . . . . . . . . . . . . .
     SECTION 3.1  Payment of Principal and Interest. . . . . . . . . . . . .
     SECTION 3.2  Offices for Payments, Etc. . . . . . . . . . . . . . . . .
     SECTION 3.3  Appointment To Fill a Vacancy in Office of Trustee . . . .
     SECTION 3.4  Paying Agents. . . . . . . . . . . . . . . . . . . . . . .
     SECTION 3.5  Officers' Certificates as to Default and as to
     Compliance . . . . . . . . . . . . . . . . . . . . . . . .
     SECTION 3.6  Indebtedness. . . . . . . . . . . . . . . . . . .  .
     SECTION 3.7  Books.. . . . . . . . . . . . . .
     SECTION 3.8  Limitation on Dividends. . . . . . . . . . . . . . . . . . . .
     SECTION 3.9  Limitations on Liens. .  . . . . . . . . . . . . . . . . . . .
     SECTION 3.10  Line of Business . . . . . . . . . . . . . . . . . .
     SECTION 3.11  Payments for Consent .  . . . . . . . . . . . . . . . . . . .
     SECTION 3.12  Limitations of Sale and Leaseback Transactions  . . . . . . .
     SECTION 3.13 Limitation on Dividends and 
        Other Payment Restrictions Effecting Subsidiaries. . . . . . . . . . .
     SECTION 3.14  Authorized Indebtedness to Consolidated Tangible New Worth.
     SECTION 3.15  Net Non-Earning Assets Over Average Assets. . . .  . 
     SECTION 3.16  Earnings to Debt Coverage. . . . . . . . . . . . . . 
     SECTION 3.17  Limitation on Transactions with Related Person. . . .
      SECTION 3.18  Fundamental Modification. . . . . . . . . . . . . . 
     SECTION 3.19   Maintenance of Properties, Etc.. . . . . . . . . . . . . .
     SECTION 3.20  Comply with Material Agreements. . . . . . . . . . . 
     SECTION 3.21  ERISA. . . . . . . . . . . . . . . . . . . .
     SECTION 3.22  Use of Proceeds. . . . . . . . . . . . .
     SECTION 3.23  Issuance of Common Stock on Conversion. . . . . . . . . . . .
     SECTION 3.24  Performance of Covenants. . . . . . . . . . . . .

ARTICLE 4   SECURITYHOLDERS' LISTS AND REPORTS BY THE ISSUER AND
THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . .
     SECTION 4.1  Issuer To Furnish Trustee Information as to Names and
        Addresses of Securityholders . . . . . . . . . . . . . . .
     SECTION 4.2  Preservation and Disclosure of Securityholders' Lists. . .
     SECTION 4.3  Reports by the Issuer. . . . . . . . . . . . . . . . . . .


ARTICLE 5   REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT
OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . .
     SECTION 5.1  Event of Default Defined; Acceleration of Maturity;
     Waiver of Default. . . . . . . . . . . . . . . . . . . . .
     SECTION 5.2  Collection of Indebtedness by Trustee; Trustee May Prove
     Indebtedness . . . . . . . . . . . . . . . . . . . . . . .
     SECTION 5.3  Application of Proceeds. . . . . . . . . . . . . . . . . .
     SECTION 5.4  Suits for Enforcement. . . . . . . . . . . . . . . . . . .
     SECTION 5.5  Restoration of Rights on Abandonment of Proceedings. . . .
     SECTION 5.6  Limitations on Suits by Securityholders. . . . . . . . . .
     SECTION 5.7  Unconditional Right of Securityholders To Institute
     Certain Suits. . . . . . . . . . . . . . . . . . . . . . .
     SECTION 5.8  Powers and Remedies Cumulative; Delay or Omission Not
     Waiver of Default. . . . . . . . . . . . . . . . . . . . .
     SECTION 5.9  Control by Securityholders . . . . . . . . . . . . . . . .
     SECTION 5.10  Waiver of Past Defaults . . . . . . . . . . . . . . . . .
     SECTION 5.11  Trustee to Give Notice of Default, But May Withhold in
     Certain Circumstances . . . . . . . . . . . . . . . . . .
     SECTION 5.12  Right of Court To Require Filing of Undertaking To Pay
     Costs . . . . . . . . . . . . . . . . . . . . . . . . . .

ARTICLE 6   CONCERNING THE TRUSTEE . . . . . . . . . . . . . . . . . . . . .
     SECTION 6.1  Duties and Responsibilities of the Trustee; During
     Default; Prior to Default. . . . . . . . . . . . . . . . .
     SECTION 6.2  Certain Rights of the Trustee. . . . . . . . . . . . . . .
     SECTION 6.3  Trustee Not Responsible for Recitals, Disposition of
     Securities or Application of Proceeds Thereof. . . . . . .
     SECTION 6.4  Trustee and Agents May Hold Securities;
     Collections, Etc.. . . . . . . . . . . . . . . . . . . . .

     SECTION 6.5  Moneys Held by Trustee . . . . . . . . . . . . . . . . . .
     SECTION 6.6  Compensation and Indemnification of Trustee and Its Prior
     Claim. . . . . . . . . . . . . . . . . . . . . . . . . . .
     SECTION 6.7  Right of Trustee to Rely on Officers' Certificate, Etc.. .
     SECTION 6.8  Persons Eligible for Appointment as Trustee. . . . . . . .
     SECTION 6.9  Resignation and Removal; Appointment of Successor
     Trustee . . . . . . . . . . . . . . . . . . . . . . . . .
     SECTION 6.10  Acceptance of Appointment by Successor Trustee. . . . . .
     SECTION 6.11  Merger, Conversion, Consolidation or Succession to
Business of Trustee . . . . . . . . . . . . . . . . . . .

     SECTION 6.12  Intervention in Litigation . . . . . . . . . . . . . . .

ARTICLE 7   CONCERNING THE SECURITYHOLDERS . . . . . . . . . . . . . . . . .
     SECTION 7.1  Evidence of Action Taken by Securityholders. . . . . . . .
     SECTION 7.2  Proof of Execution of Instruments and of Holding of
     Securities . . . . . . . . . . . . . . . . . . . . . . . .
     SECTION 7.3  Holders To Be Treated as Owners. . . . . . . . . . . . . .
     SECTION 7.4  Securities Owned by Issuer Deemed Not Outstanding. . . . .
     SECTION 7.5  Right of Revocation of Action Taken. . . . . . . . . . . .

ARTICLE 8   SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . . . . .
     SECTION 8.1  Supplemental Indentures Without Consent of
     Securityholders. . . . . . . . . . . . . . . . . . . . . .
     SECTION 8.2  Supplemental Indentures with Consent of Securityholders. .
     SECTION 8.3  Effect of Supplemental Indenture . . . . . . . . . . . . .
     SECTION 8.4  Documents To Be Given to Trustee . . . . . . . . . . . . .
     SECTION 8.5  Notation on Securities in Respect of Supplemental
     Indentures . . . . . . . . . . . . . . . . . . . . . . . .

ARTICLE 9  SATISFACTION AND DISCHARGE OF INDENTURE;
     UNCLAIMED MONEYS. . . .
     SECTION 9.1  Defeasance and Redemption. . . . . . . . .
     SECTION 9.2  Return of Money Held by Trustee and Paying Agent Unclaimed for
        One Year. . . . . . . . . . . . . . . . . . . . . . . .

ARTICLE 10  MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . .
     SECTION 10.1  Incorporators, Shareholders, Officers and Directors of
     Issuer Exempt from Individual Liability . . . . . . . . .
     SECTION 10.2  Provisions of Indenture for the Sole Benefit of Parties
     and Securityholders . . . . . . . . . . . . . . . . . . .
     SECTION 10.3  Successors and Assigns of Issuer Bound by Indenture . . .
     SECTION 10.4  Notices and Demands on Issuer, Trustee and
     Securityholders . . . . . . . . . . . . . . . . . . . . .
     SECTION 10.5  Compliance Certificates and Opinions of Counsel;
        Statements To Be Contained Therein. . . . . . . . . . . .
     SECTION 10.6  Payments Due on Saturdays, Sundays and Holidays . . . . .
     SECTION 10.7  Applicable Law; Virginia Law To Govern.. . . . . . . . . .
     SECTION 10.8  Counterparts. . . . . . . . . . . . . . . . . . . . . . .
     SECTION 10.9  Effect of Headings . . . . . . . . . . . . . . . . . . .
     SECTION 10.10  Usurious Interest. . . . . . . . . . . .
     SECTION 10.11  Value of Securities..........
     SECTION 10.12 Directors. . . . . . . . . . . . . . .

ARTICLE 11 CONVERSION. . . . . . . . . . . . . . . . . . . .
     SECTION 11.1  Conversion Privilege. . . . . . . . . . .
     SECTION 11.2 Notice Of Conversion. . . . . . . . . . . . . . . . . . .
     SECTION 11.3Issuance And Reservation Of Common Stock . . . . . . . .  . .
     SECTION 11.4 Cancellation Of Converted Securities.. . . . . . . . . . .
     SECTION 11.5 Adjustments Of Conversion Price And  Number Of Shares
        Of Common Stock. . .
     SECTION 11.6Reorganizations And Asset Sales. . . . .
     SECTION 11.7 Notice Of Adjustment. . . . . . . . . . . .
     SECTION 11.8 Notice Of Certain Transactions. . . . . . . .
     SECTION 11.9 Registration. . . . . . . . . . . . . .
    SECTION 11.10 Indemnification. . . . . . . . . . . .
    SECTION 11.11 Disclaimer by the Trustee. . . . . . . . . . . . . . .
     SECTION 11.12 Waiver; Amendment. . . . . . . . . .

ARTICLE 12  REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDERS
UPON A FUNDAMENTAL CHANGE . . . . . . . . . . . . . . . . . . .
     SECTION 12.1  Repurchase Upon a Fundamental Change. . . . . . . . . . .
     SECTION 12.2  Notices, Etc.. . . . . . . . . . . . . . . .
     SECTION 12.3  Exercising Repurchase Right. . . . . . . . . . . .
     SECTION 12.4  Certain Definitions. . . . . . . . . . . .

ARTICLE 13  SUBORDINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .
     SECTION 13.1  Subordination Provisions. . . . . . . . . . . . . . .
     SECTION 13.2  Payments. . . . . . . . . . . . . . . . .
     SECTION 13.3  Limitation on Acceleration. . . . . . . . . . . . .
     SECTION 13.4  Prior Payment of Senior Indebtedness in Bankruptcy, Etc..
     SECTION 13.5  Trustee to Effect Subordination. . . . . . . . . . . . . 
     SECTION 13.6  Subrogation. . . . . . . . . . . .
     SECTION 13.7  Notice to the Trustee. . . . . . . . . . . . . . . . . . .
     SECTION 13.8  Reliance on Judicial Order or Certificate of
        Liquidating Agent. . . . . . . . . .
     SECTION 13.9  Trustee's Relation to Senior Indebtedness . . . . . . . .  .
     SECTION 13.10  Miscellaneous . . . .  . . . . . . .
     SECTION 13.11  Conversion Rights. . . . . . . . . . . . . . . . . .

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



THIS INDENTURE,  dated as of September 14, 1998 by and among Allstate  Financial
Corporation,  a  Virginia  corporation  (the  "Issuer")  and  __**_________,   a
__________  corporation and not in its individual capacity but solely as Trustee
(the "Trustee").

W I T N E S S E T H :

WHEREAS,  the Issuer has duly  authorized  the  issuance of its 10%  Convertible
Subordinated Notes Due September 30, 2003 (the "Securities"); and

WHEREAS, the Securities and the Trustee's certificate of authentication shall be
in substantially the following form:


[FORM OF FACE OF SECURITY]

THIS  SECURITY HAS NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS
AMENDED,  OR ANY  STATE  SECURITIES  ACT,  AND  MAY NOT BE  TRANSFERRED  WITHOUT
REGISTRATION UNDER SUCH ACTS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
THAT SUCH  REGISTRATION  IS NOT REQUIRED AND THE DELIVERY TO THE ISSUER,  OR THE
TRUSTEE,  IF  APPOINTED,  OF AN  INVESTMENT  LETTER  IN  SUBSTANTIALLY  THE FORM
ATTACHED TO THE INDENTURE AS EXHIBIT "A".

No.  $

ALLSTATE FINANCIAL CORPORATION
10% Convertible Subordinated Notes Due September 30, 2003
Date: September 14, 1998
Arlington, Virginia

     Allstate Financial Corporation,  (the "Issuer") a Virginia corporation, for
value received hereby promises to pay to , or registered assigns,  the principal
sum of Dollars at the Issuer's office or agency for said purposes,  on September
30,  2003,  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  quarterly on September 30, December 31, March 31 and
June 30  (each  an  "Interest  Payment  Date")  of each  year,  commencing  with
September 30, 1998, on said principal sum in like coin or currency at 10% simple
interest  per  annum at said  office  or agency  from the most  recent  Interest
Payment Date to which  interest on the Securities has been paid or duly provided
for unless the date hereof is a date through which interest on the Securities is
paid or duly  provided  for,  in which case from the date of this  Security,  or
unless no interest  has been paid or duly  provided  for on the  Securities,  in
which case from the date of issuance.  To the extent lawful, the Issuer promises
to pay interest on any interest  payment due but unpaid on such unpaid principal
amount at a rate of 14% per annum.







The interest so payable on any Interest  Payment Date will,  except as otherwise
provided in the  Indenture  referred to on the  reverse  hereof,  be paid to the
Person in whose name this  Security  is  registered  at the close of business on
September  15,  December  15,  March 15 or June 15 whether or not a Business Day
(each an "Interest  Record Date") next  preceding  such  Interest  Payment Date,
whether or not such day is a Business  Day;  PROVIDED that interest may be paid,
at the option of the Issuer, by mailing a check therefor payable on the Interest
Payment Date to the registered Holder entitled thereto at his last address as it
appears on the Security register.

     If interest on the Securities is in default, the Issuer (or the Trustee, if
one is appointed as specified on the reverse side hereof),  prior to the payment
of interest,  will establish a special  record date (the "Special  Record Date")
for such payment,  which Special Record Date shall be not more than fifteen (15)
nor less than ten (10) days prior to the date of the proposed  payment.  Payment
of such defaulted  interest shall then be made by check,  as provided herein and
in the  Indenture,  mailed  or  remitted  to the  persons  in  whose  names  the
Securities  are  registered  on the  Special  Record  Date at the  addresses  or
accounts of such persons shown on the Security register.

Interest on this  Security  will be  calculated  on the basis of a 360-day year,
consisting of twelve 30-day months.

     The interest  rate paid or payable on the  Securities  shall not exceed the
maximum rate of interest in accordance with applicable law.

Reference is hereby made to the further provisions of this Security set forth on
the reverse hereof and in the Indenture,  which further provisions shall for all
purposes have the same effect as if set forth in this place.

THIS  SECURITY HAS NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS
AMENDED,  OR ANY  STATE  SECURITIES  ACT,  AND  MAY NOT BE  TRANSFERRED  WITHOUT
REGISTRATION UNDER SUCH ACTS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
THAT SUCH  REGISTRATION  IS NOT REQUIRED AND THE DELIVERY TO THE ISSUER,  OR THE
TRUSTEE,  IF  APPOINTED,  OF AN  INVESTMENT  LETTER  IN  SUBSTANTIALLY  THE FORM
ATTACHED TO THE INDENTURE AS EXHIBIT "A".


IN WITNESS  WHEREOF,  the Issuer has caused this  Security  to be duly  executed
under its corporate seal.

[Seal]                        ALLSTATE FINANCIAL CORPORATION

By: _____________________________________

Its: _____________________________________


[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Securities described in the within-mentioned Indenture.

Dated:



                                  , as Trustee

By: ____________________________________
Authorized Signatory] **



*Not  applicable  until such time, if any,  that a Trustee is appointed.  Delete
upon execution of Form of Indenture  attached hereto as Exhibit "A" in the event
a Trustee is named.

**Insert upon execution of the Form of Indenture  attached as Exhibit "A" hereto
by the Issuer and the Trustee to be named therein.




[FORM OF REVERSE OF SECURITY]

ALLSTATE FINANCIAL CORPORATION
10% Convertible Subordinated Notes Due September 30, 2003

*[NOTWITHSTANDING ANYTHING SET FORTH IN THIS NOTE TO THE CONTRARY, THE ISSUER IS
NOT REQUIRED TO APPOINT A TRUSTEE  UNLESS THE HOLDERS OF A MAJORITY IN PRINCIPAL
AMOUNT OF THE  SECURITIES  THEN  OUTSTANDING  SHALL  REQUEST AN  APPOINTMENT  IN
WRITING  OF U.S.  TRUST  COMPANY  OF  TEXAS,  N.A.  OR SUCH  OTHER  PERSON AS IS
QUALIFIED  UNDER THE TRUST  INDENTURE  ACT AND IS  REASONABLY  ACCEPTABLE TO THE
HOLDERS OF A MAJORITY IN PRINCIPAL  AMOUNT OF THE SECURITIES  THEN  OUTSTANDING.
UNTIL SUCH APPOINTMENT,  ANY REFERENCE TO THE TRUSTEE SHALL BE GIVEN NO FORCE OR
EFFECT AND THE ISSUER SHALL ACT AS REGISTRAR,  PAYING AGENT AND CONVERSION AGENT
AND ANY NOTICE TO BE GIVEN, OR ACTION TO BE TAKEN BY THE TRUSTEE MAY BE GIVEN OR
TAKEN BY HOLDERS OF A MAJORITY OF THE PRINCIPAL AMOUNT OF OUTSTANDING SECURITIES
UNLESS ANY APPLICABLE PROVISION HEREOF OR OF THE INDENTURE EXPRESSLY SPECIFIES A
DIFFERENT  PERCENTAGE  OF  HOLDERS.  UNTIL THE  APPOINTMENT  OF A  TRUSTEE,  THE
INDENTURE AND SUBSCRIPTION  AGREEMENT WILL CONSTITUTE A LOAN AGREEMENT AMONG THE
ISSUER AND THE EACH OF THE HOLDERS OF THE  SECURITIES.  PRIOR TO THE APPOINTMENT
OF A TRUSTEE,  THIS SECURITY REQUIRES NO CERTIFICATE OF AUTHENTICATION  BUT WILL
NOT BE VALID UNLESS MANUALLY SIGNED BY AN AUTHORIZED OFFICER OF THE ISSUER.]

This  Security  is one of a duly  authorized  issue  of debt  securities  of the
Issuer, limited to the aggregate principal amount of $4,961,000, issued or to be
issued   pursuant  to  an  indenture  dated  as  of  September  14,  1998,  (the
"Indenture"), duly executed and delivered by the Issuer to **______________,  as
Trustee (herein called the "Trustee"). The terms of the Securities include those
set forth in the  indenture  attached  hereto as Exhibit "A" (the  "Indenture"),
which is incorporated  herein by reference thereto.  Reference is hereby made to
the Indenture and all indentures  supplemental  thereto for a description of the
rights, limitations of rights, obligations,  duties and immunities thereunder of
the Trustee, the Issuer and the Holders (the words "Holders" or "Holder" meaning
the registered holders or registered  holder) of the Securities.  The Securities
are general unsecured obligations of the Issuer.  Capitalized terms used in this
Security  and not  defined  herein  shall  have  the  meaning  set  forth in the
Indenture.

In case an Event of Default (as defined in the  Indenture)  shall have  occurred
and  be  continuing,  the  principal  and  interest  in  respect  of  all of the
Securities  then  outstanding  may be declared due and payable in the manner and
with the effect, and subject to the conditions,  provided in the Indenture.  The
Indenture provides that the Holders of 50% in aggregate  principal amount of the
Securities  then  outstanding,  by notice to the  Trustee,  may on behalf of the
Holders of all of the Securities, waive any existing Default or Event of Default
and its consequences under the Indenture except a continuing Default or Event of
Default in the  payment of  interest  or premium  on, or the  principal  of, the
Securities or the Repurchase Price or in respect of a covenant or provision that
cannot be  modified  or  amended  without  the  consent  of all  Holders  of the
Securities.  Any such consent or waiver by the Holder of this  Security  (unless
revoked as provided in the Indenture)  shall be conclusive and binding upon such
Holder and upon all future  Holders and owners of this Security and any Security
which may be issued in exchange  or  substitution  therefor,  whether or not any
notation thereof is made upon this Security or such other Securities.

The  Indenture  permits  the Issuer  and the  Trustee,  with the  consent of the
Holders of not less than 50% in aggregate  principal amount of the Securities 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 this  Indenture  or of any  supplemental
indenture  or  modifying  in  any  manner  the  rights  of  the  Holders  of the
Securities;  PROVIDED that no such  supplemental  indenture  shall,  without the
consent of each Holder affected  thereby (with respect to any Securities held by
a non-consenting  Securityholder)  (i) reduce the principal amount of Securities
whose  Holders must consent to an amendment,  supplement or waiver,  (ii) reduce
the  principal  of or change the fixed  maturity  of any  Security  or alter the
provisions  with respect to the mandatory  repurchase of the  Securities,  (iii)
reduce the rate of or change the time for payment of  interest on any  Security,
(iv)  waive a Default or Event of Default  in the  payment  of  principal  of or
premium,  if  any,  or  interest  on the  Securities  (except  a  rescission  of
acceleration  of the  Securities  by the  Holders  of at  least  a  majority  in
aggregate  principal amount of the then  outstanding  Securities and a waiver of
the payment default that resulted from such  acceleration  other than as arising
from Article 11 or Article  12),  (v) make any  Security  payable in money other
than that stated in the  Securities,  (vi) make any change in the  provisions of
the  Indenture  relating to waivers of past Defaults or the rights of Holders of
Securities to receive  payments of principal of or interest on the Securities or
of the  Repurchase  Price,  (vii)  waive a mandatory  repurchase  payment or any
provisions related thereto with respect to any Security,  as provided in Article
12 including a reduction in the Repurchase Price,  (viii) make any change in any
provision  of the  Security  relating  to  conversion  which is  adverse  to the
holders,  or  (ix)  make  any  change  in the  foregoing  amendment  and  waiver
provisions.

No reference herein to the Indenture and no provision of this Security or of the
Indenture  shall  alter or  impair  the  obligations  of the  Issuer,  which are
absolute  and  unconditional,  to pay the  principal of and the interest on this
Security  (including the Repurchase Price) at the place, times, and rate, and in
the currency, herein prescribed.

The Securities are issuable only as registered Securities without coupons.

The  Securities are  subordinated  in right of payment to certain senior secured
creditors of the Issuer.  To the extent  provided in the  Indenture,  the Senior
Lenders must be paid before the Securities  may be paid. The Issuer agrees,  and
each Security Holder by accepting a Security agrees,  to the  subordination  and
authorizes the Issuer and the Trustee, as the case may be, to give it effect.

The Securities are in registered form only without coupons in  denominations  of
$1,000 and whole multiples of $1,000.

At the office or agency of the Issuer  referred to on the face hereof and in the
manner and subject to the limitations provided in the Indenture,  Securities may
be  exchanged  for a like  aggregate  principal  amount of  Securities  of other
authorized denominations.

Upon due  presentment  for  registration  of  transfer  of this  Security at the
above-mentioned  office or agency of the Issuer, a new Security or Securities of
authorized denominations,  for a like aggregate principal amount, will be issued
to the transferee as provided in the Indenture.  No service charge shall be made
for any such transfer, but the Issuer may require payment of a sum sufficient to
cover any tax or other  governmental  charge  that may be  imposed  in  relation
thereto.  The registrar of the  Securities  may require the holder,  among other
things, to furnish  appropriate  endorsements and transfer  documents and to pay
any taxes and fees required by law or permitted by the Indenture. Such registrar
need not exchange or register the transfer of any Securities that is required to
be repurchased after a Fundamental Change.

     As  provided  in the  Indenture,  the  Securities  may not be  redeemed  or
defeased,  except at their maturity,  by the Issuer, but only repurchased at the
Repurchase Price.

     Upon the occurrence of a Fundamental  Change,  the holder of a Security may
require the Issuer to repurchase the Security at the Repurchase Price.

A holder of a Security  may  convert it into  Common  Stock of the Issuer at any
time before the close of business on September 30, 2003. The initial  conversion
price is $6.50 per share,  subject to adjustment in certain events. To determine
the  number of  shares  issuable  upon  conversion  of a  Security,  divide  the
principal  amount  to be  converted  by the  conversion  price in  effect on the
conversion  date. On  conversion  no payment or adjustment  for interest will be
made. The Issuer will deliver a check for any fractional share.

     To convert a Security a holder must (1)  complete  and sign the  conversion
notice on the back of the  Security,  (2) surrender the Security to a Conversion
Agent, (3) furnish  appropriate  endorsements and transfer documents if required
by the Registrar or Conversion Agent, and (4) pay any transfer or similar tax if
required.  A holder may convert a portion of a Security if the portion is $1,000
or a whole multiple of $1,000.

The Issuer,  the Trustee and any  authorized  agent of the Issuer or the Trustee
may deem and treat the  registered  Holder hereof as the absolute  owner of this
Security (whether or not this Security shall be overdue and  notwithstanding any
notation of  ownership  or other  writing  hereon made by anyone  other than the
Issuer or the Trustee or any authorized agent of the Issuer or the Trustee), for
the purpose of receiving payment of, or on account of, the principal hereof, the
Repurchase  Price,  and subject to the  provisions on the face hereof,  interest
hereon and for all other  purposes,  and  neither the Issuer nor the Trustee nor
any  authorized  agent of the Issuer or the  Trustee  shall be  affected  by any
notice to the contrary.

No recourse shall be had for the payment of the Repurchase Price,  principal of,
premium,  if any, or the interest on this Security,  for any claim based hereon,
or otherwise in respect  hereof,  or based on or in respect of the  Indenture or
any  indenture  supplemental  thereto,  against any  incorporator,  shareholder,
officer,  employee or director,  as such, past, present or future, of the Issuer
or Trustee or of any  successor  corporation,  either  directly  or through  the
Issuer or any  successor  corporation,  whether  by virtue of any  constitution,
statute or rule of law or by the  enforcement  of any  assessment  or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.

If a Trustee is  appointed  after the  issuance of this  Security,  any Security
issued  after such  appointment  will not be valid  until  authenticated  by the
manual signature of the Trustee or authenticating agent.

If a Trustee is appointed, such Trustee may make loans to, accept deposits from,
and perform  services for the Issuer and its  affiliates,  and my otherwise deal
with the Issuer or its affiliates, as if it were not the Trustee.

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



ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to:
------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
==============================================================================
------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)

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

CONVERSION NOTICE

To convert this Security into Common Stock of Allstate, check the box:

To convert only part of this Security, state the amount: $________________

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

------------------------------------------------------------------------------
(insert other person's soc. sec. or tax I.D. no.)
==============================================================================
------------------------------------------------------------------------------
(Print or type other person's name, address and zip code)

Date: ________________________              ____________________________________
Your Signature

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

Signature Guaranty

                                   ------------------------------------
Notice: Signature must be guaranteed by an
"Eligible Guarantor Institution" as defined
by Securities Exchange Act Rule 17Ad-15.

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


NOW, THEREFORE:

In  consideration  of the  premises and the  purchase of the  Securities  by the
Holders thereof,  the Issuer and the Trustee mutually covenant and agree for the
equal and proportionate  benefit of the respective  Holders from time to time of
the Securities as follows:

ARTICLE 1

DEFINITIONS

SECTION 1.1 CERTAIN  TERMS  DEFINED.  The  following  terms (except as otherwise
expressly  provided or unless the context  otherwise  clearly  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 which are defined in the Trust Indenture Act of 1939 ("TIA"),  as
amended,  or the definitions of which in the Securities Act of 1933, as amended,
are  referred to in the TIA (except as herein  otherwise  expressly  provided or
unless the context otherwise  requires) have the meanings assigned to such terms
in  said  TIA  and in  said  Securities  Act as in  force  at the  date  of this
Indenture.  The words  "HEREIN,"  "HEREOF"  and  "HEREUNDER"  and other words of
similar  import  refer to this  Indenture  as a whole and not to any  particular
Article, Section or other subdivision. The terms defined in this Article include
the plural as well as the singular.

"Acceleration Date" has the meaning specified in Section 5.1.

"Acceleration Notice" has the meaning specified in Section 5.1.

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

"Agent"  means  IBJ  Schroeder  Bank & Trust  Company,  as agent  for the  Banks
pursuant  to the Loan  Agreement  and any  successor  thereto  and,  if the Loan
Agreement does not provide for an agent or representative of the Senior Lenders,
the term  "Agent"  shall refer to the Senior  Lenders (or any agent,  trustee or
other representative acting on their behalf).

"Allowed Transaction" has the meaning specified in Section 12.4(c).


     "Authorized  Indebtedness" shall include all Indebtedness of the Issuer and
its Subsidiaries, excluding warehouse lines of credit drawn or undrawn.

     "Average Assets" shall mean all Property of the Issuer and its Subsidiaries
averaged over the period of the previous five consecutive fiscal quarters ending
on the date of such fifth prior quarter.

     "Banks"  means the  lenders  who are from time to time  parties to the Loan
Agreement.

     "Board Of  Directors"  means the Board of  Directors  of the  Issuer or any
committee of such Board duly authorized to act hereunder.



     "Cash  Equivalent"  means  (a)  securities  issued  or  directly  and fully
guaranteed  or  insured  by the  United  States  of  America  or any  agency  or
instrumentality  thereof  (provided that the full faith and credit of the United
States of  America  is  pledged  in  support  thereof),  (b) time  deposits  and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic  commercial bank of recognized  standing having capital and surplus
in excess of $350 million and  commercial  paper issued by others rated at least
A-2 or the equivalent  thereof by Standard & Poor's  Corporation or at least P-2
or the equivalent  thereof by Moody's Investors  Service,  Inc. and in each case
maturing within one year after the date of acquisition,  or (c) as defined under
GAAP.

     "Change of Shares" has the meaning as specified in Section 11.5.

     "Commission" means the U.S. Securities and Exchange Commission.

     "Common Stock" shall mean the common stock, no par value, of the Issuer.

     "Common Stock Distribution" has the meaning specified in Section 11.5.

     "Consolidated"  means  the  consolidated  results  of the  Issuer  and  its
Subsidiaries as determined in accordance with GAAP.

     "Consolidated  Interest  Expense" shall mean with respect to the Issuer for
any period, the interest expense of the Issuer and its consolidated Subsidiaries
(other than interest expense related to Indebtedness that is not recourse to the
Issuer and its  Subsidiaries  or to  Indebtedness  of any  Subsidiary  whose net
income is not included in Consolidated Net Income of the Issuer) for such period
as determined in accordance with GAAP consistently applied.

     "Consolidated  Net Income" shall mean for any period the gross  revenues of
the Issuer and its Subsidiaries on a consolidated basis for such period less all
expenses and other proper charges  (including taxes on income),  determined on a
consolidated  basis in accordance  with GAAP,  but  excluding any  extraordinary
item.

     "Consolidated  Net Worth" of the Issuer  means  consolidated  stockholders'
equity as determined in accordance with GAAP.

     "Consolidate Tangible Net Worth" shall include all equity of the Issuer and
its Subsidiaries,  less general  intangibles,  prepaid expenses and any deferred
tax asset.

     "Consolidated Tax Expense" shall mean, for the Issuer,  for any period, the
aggregate income tax expense of the Issuer and its Subsidiaries  determined on a
consolidated basis in accordance with GAAP,  excluding,  however, (a) the income
tax  expense  of the Issuer  attributed  to the net income of the Issuer and its
Subsidiaries  excluded from the calculation of Consolidated Net Income,  and (b)
the income tax expense of the Issuer  attributable  to a disposition  of assets,
the gain from  which is  excluded  from the  calculation  of  "Consolidated  Net
Income", but only to the extent such income tax expense does not exceed the cash
portion  of the  consideration  received  by the Issuer in  connection  with the
disposition of such assets.

     "Conversion  Agent"  means the  office or agency  where  securities  may be
presented for conversion.

     "Conversion Price" shall have the meaning set forth in Section 11.1.

     "Convertible Securities" shall have the meaning specified in Section 11.5.

     "Corporate  Trust  Office"  means the  office of the  Trustee  at which the
corporate  trust  business of the Trustee  shall,  at any  particular  time,  be
principally  administered,  which  office  is,  at the  date  as of  which  this
Indenture is dated, located at ____________________,  Attention: Corporate Trust
Department.

     "Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.

     "Default Rate" means 14% per annum compounded semiannually,  subject to the
Maximum Rate.

     "Disqualified  Capital Stock" means any Capital Stock that, by its terms or
by the terms of any  security  into which,  at the option of the  holder,  it is
convertible  or  exchangeable,  (a) is, or upon the happening of an event or the
passage of time would be, required to be redeemed or  repurchased,  including at
the option of the holder, in whole or in part, or (b) has, or upon the happening
of an event or the passage of time would have, a redemption  or similar  payment
due on or prior to the maturity date of the Securities.

     "Distributing Holder" shall have the meaning specified in Section 11.10.

"Distribution"  means any payment,  whether in cash, in kind,  securities or any
other property, but shall not include the issuance of Common Stock of the Issuer
upon the conversion of the Securities in accordance with the terms hereof.

     "EBIT"  (Earnings  Before  Interest and Taxes) means the  Consolidated  Net
Income for such  period,  adjusted to the extent  deducted in  calculating  such
Consolidated Net Income by adding back (without  duplication):  (a) Consolidated
Interest Expense, and (b) Consolidated Tax Expense.

     "Event" has the meaning specified in Section 13.4.

"Event Of Default" means any event or condition specified as such in Section 5.1
which shall have continued for the period of time, if any, therein designated.

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

     "Final Surrender Date" has the meaning specified in Section 12.3.

     "Fiscal  Year" means the annual  accounting  period  adopted by the Issuer,
which shall initially be the annual accounting period ending December 31 of each
year.

     "Fundamental Change" has the meaning specified in Section 12.4.

"GAAP"  shall  means  United  States of America  Generally  Accepted  Accounting
Principles  set  forth in the  opinions  and  pronouncements  of the  Accounting
Principles Board of the American  Institute of Certified Public  Accountants and
statements and pronouncements of the Financial  Accounting Standards Board or in
such other  statements  by such other entity as may be approved by a significant
segment  of the  accounting  profession,  as the same are in effect on the Issue
Date.

"Gross  Non-Earning  Assets"  means (a) gross finance  receivables  on which the
Issuer stops or should stop accruing  earned  discounts,  whether  classified as
such, as "other receivables", as "other assets", or in any other manner; and (b)
amounts  receivable  by the Issuer where the source of payment is expected to be
derived from legal proceedings or other collection  efforts instituted against a
client's   customer,   guarantors  and/or  third  parties,   regardless  of  how
classified. Gross Non-Earning Assets excludes goodwill and any investment by the
Issuer or its  Subsidiaries  in the equity of an entity (other than a present or
future  Subsidiary  or  Affiliate  of  the  Issuer),  which  the  Issuer  or its
Subsidiaries  may acquire  subsequent to the Issue Date,  even to the extent not
performing to its stated expectation.

     "Group of Persons" means any group of Persons of other  entities  acting in
concert as a  partnership  or other group within the meaning of Section 13(d) of
the Exchange Act.

"Guarantee"   means  a  guarantee  (other  than  by  endorsement  of  negotiable
instruments  for  collection  in the  ordinary  course of  business),  direct or
indirect,  in any manner (including,  without limitation,  letters of credit and
reimbursement  agreements  in  respect  thereof),  of  all or  any  part  of any
Indebtedness, and "Guaranteed" has a correlative meaning.

     "Holder"  "Securityholder"  or any other similar term means the  registered
holder of any Security.

"Incur" or "Incurred" means to, directly or indirectly,  create,  incur,  issue,
assume, guaranty or otherwise become liable with respect to.

"Indebtedness"  means,  with  respect to any Person,  without  duplication,  any
indebtedness of such Person,  whether or not contingent,  in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or  reimbursement  agreements in respect thereof) or representing the
balance  deferred  and unpaid of the purchase  price of any property  (including
pursuant to capital leases), except any such balance that constitutes an accrued
expense or less than sixty (60) days past due trade payable if and to the extent
any of the  foregoing  would appear as a liability  upon a balance sheet of such
Person  prepared in accordance  with GAAP, and also includes,  to the extent not
otherwise  included,  the Guarantee of items that would be included  within this
definition and all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right,  contingent or otherwise, to be secured
by) any Lien on any asset or property (including, without limitation,  leasehold
interests and any other tangible or intangible property) of such Person, whether
or not such  Indebtedness  is assumed by such  Person or is not  otherwise  such
Person's legal  liability,  PROVIDED that if the obligations so secured have not
been assumed in full by such Person or are  otherwise  not such  Person's  legal
liability  in full,  the amount of such  Indebtedness  for the  purposes of this
definition  shall be limited  to the  lesser of the amount of such  Indebtedness
secured by such Lien or the fair market value of the assets or property securing
such Lien.  Notwithstanding  the foregoing,  the term  "Indebtedness"  shall not
include  deferred  compensation  arrangements  that are not  evidenced by bonds,
notes,  debentures  or  similar  instruments,  nor  shall  Indebtedness  include
reserves  (cash or  otherwise)  or  credit  balances  held by the  Issuer or its
Subsidiaries  as security to be returned upon timely  fulfillment  of a client's
contractual obligations.

"Indenture"  means this  instrument as originally  executed and delivered or, if
amended or supplemented as herein provided, as so amended or supplemented.

     "Interest  Cost"  shall  mean,  for  any  period,   all  interest  and  all
amortization  of debt  discounted  and  expense on any  particular  Indebtedness
(including,  without  limitation,  payment in kind,  zero  coupon and other like
securities) for which such calculations are being made. Computations of Interest
Cost on a pro forma basis for Indebtedness having a variable interest rate shall
be calculated at the rate in effect on the date of any determination.

     "Interest  Payment  Date" has the meaning  specified in first  paragraph of
Form of Security herein.

"Interest Record Date" has the meaning specified in Section 2.4.

"Issue Date" means the date on which the Securities are originally  issued under
this Indenture.

"Issuer" means Allstate Financial Corporation, a Virginia corporation.

     "Issuer Notice" has the meaning specified in Section 12.2.

"Lien"  means,  with  respect  to any asset,  any  mortgage,  including  without
limitation any multiple indebtedness mortgage,  lien, pledge,  charge,  security
interest or  encumbrance  of any kind in respect of such  asset,  whether or not
filed,  recorded or otherwise  perfected  under  applicable  law  (including any
conditional  sale or other title  retention  agreement,  any lease in the nature
thereof,  any option or other  agreement to sell or give a security  interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction).

"Loan  Agreement"  means (a) that certain Amended and Restated  Revolving Credit
and Security Agreement dated as of May 17, 1997, among the Issuer, the Banks and
the Agent, as amended,  together with all documents  related thereto,  including
without limitation,  all promissory notes and security documents,  in each case,
as supplemented,  amended, restated or otherwise modified from time to time; and
(b) any and all agreements,  documents and instruments related to or incurred in
connection  with,  or  extending  the  maturity  of,  refinancing,  replacing or
restructuring   all  or  any  portion  of,  the  foregoing  or  the  Obligations
thereunder.

"Maximum Rate" has the meaning specified in Section 3.1

     "NASD" shall have the meaning specified in Section 11.5.

     "Nasdaq" shall have the meaning specified in Section 11.5.

     "Net Non-Earning  Assets" means Gross Non-Earning Assets less allowance for
credit losses (which shall include any reserve,  whether allocated to a specific
asset or generally).

     "Non-Payment Period" has the meaning specified in Section 13.3.

     "Obligations"  of  a  Person  mean  all  loans,   debts,   liabilities  and
obligations, of every kind, nature and description,  direct or indirect, secured
or unsecured,  joint, several, joint and several, absolute or contingent, due or
to become due, now existing or  hereinafter  arising,  contractual  or tortious,
liquidated  or  unliquidated,  owing by such Person at any time,  whether or not
evidenced  by any note,  agreement  or other  instrument.  This terms  includes,
without  limitation,  all  principal,  interest,  fees,  charges,  reimbursement
obligations in respect of letters of credit,  expenses,  attorneys' fees and any
other sum chargeable to such Person.

"Officers'  Certificate" means a certificate signed by the Chairman of the Board
of Directors or the President or any Vice  President  (whether or not designated
by a number or numbers or a word or words added  before or after the title "Vice
President") and by the Treasurer or the Secretary or any Assistant  Treasurer or
Secretary  of the Issuer and  delivered to the  Trustee.  Each such  certificate
shall include the statements provided for in Section 10.5.

     "Old Notes" means those certain  Convertible  Subordinated  Notes issued by
the Issuer  pursuant to that certain  Indenture  dated as of September 11, 1995,
State Street Bank and Trust Company, Trustee.

     "Operations Office" means with respect to the Trustee the office maintained
by the Trustee or an affiliate thereof for the payment of interest and principal
on the Securities.

"Opinion Of Counsel" means an opinion in writing signed by legal counsel who may
be an  employee  of or  counsel  to the  Issuer  or who  may  be  other  counsel
satisfactory  to the Trustee.  Each such opinion  shall  include the  statements
provided for in Section 10.5, if and to the extent required hereby.

     "Option" shall have the meaning specified in Section 11.5.

"Outstanding"  when used with  reference to  Securities,  means,  subject to the
provisions  of  Section  7.4,  as  of  any   particular   time,  all  Securities
authenticated and delivered by the Trustee under this Indenture, except:

(a)  Securities theretofore cancelled by the Issuer or the Trustee, as the case
may be, or delivered to such Persons for cancellation;

(b)  Securities, or any portion thereof, repurchased pursuant to Section 12.1
hereof.

(c)  Securities  in  substitution  for which  other  Securities  shall have been
delivered and  authenticated,  if there shall be a Trustee,  or which shall have
been paid,  pursuant to the terms of Section 2.6 (unless proof  satisfactory  to
the  Trustee is  presented  that any of such  Securities  is held by a Person in
whose  hands such  Security  is a legal,  valid and  binding  obligation  of the
Issuer).

"Paying Agent" has the meaning specified in Section 2.5.

"Payment Default" has the meaning specified in Section 5.1.

"Person" means an individual, a corporation,  a partnership,  an association,  a
trust or any other entity or  organization,  including a government or political
subdivision or an agency or instrumentality thereof.

"Principal"  wherever used with  reference to the  Securities or any Security or
any portion thereof,  shall be deemed to include the face amount of the Security
plus, when appropriate, the premium, if any.

"Property" of any Person means all types of real, personal, tangible, intangible
or mixed  property  owned by such  Person  whether or not  included  on the most
recent consolidated balance sheet of such Person in accordance with GAAP.

"Put Provision" means the right of the holder of Old Notes to require the Issuer
to purchase such Old Notes  pursuant to Article VII of the  indenture  issued in
connection with the Old Notes.

"Qualified  Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.

"Reference Period" with regard to any Person means the four full fiscal quarters
(or such lesser  period  during which such Person has been in  existence)  ended
immediately  preceding  any date  upon  which  any  determination  is to be made
pursuant to the terms of the Securities.

"Registerable Securities" shall have the meaning specified in Section 11.9.

"Related  Person"  means (a) any director or executive  officer of the Issuer or
any  Subsidiary,  (b) any  individual or other Person who directly or indirectly
holds 10% or more of any class of Capital Stock of the Issuer,  (c) any relative
of such  individual by blood,  marriage or adoption not more remote than a first
cousin,  and (d) any Affiliate of any of the  foregoing,  but shall not include,
with respect to the Issuer,  any  Subsidiary or with respect to any  Subsidiary,
any other Subsidiary or the Issuer.

"Repurchase Date" has the meaning specified in Section 12.3.

     "Repurchase Price" shall have the meaning set forth in Section 12.1 hereof.

     "Required  Lenders"  means  and  refers  to  the  "Required  Lenders",  the
"Required Banks" or any similar term under and as defined in the Loan Agreement.

"Responsible Officer" when used with respect to the Trustee means any officer in
its Corporate Trust Office, or any other assistant officer of the Trustee in its
Corporate  Trust  Office  customarily  performing  functions  similar  to  those
performed by the Persons who at the time shall be such  officers,  respectively,
or to  whom  any  corporate  trust  matter  is  referred  because  of his or her
knowledge of and familiarity with the particular subject.

     "Rights" shall have the meaning specified in Section 11.5.

"Security" or "Securities"  means any of the 10% Convertible  Subordinated Notes
Due September 30, 2003 authenticated and delivered under this Indenture.

"Securities Act" means the Securities Act of 1933, as amended.

     "Senior  Default  Notice" shall have the meaning  specified in Section 13.2
hereof.

     "Senior Event of Default" means and refers to each "Event of Default" under
and as defined in the Loan Agreement.

"Senior  Indebtedness"  means all  Obligations  of any kind of the Issuer to the
Senior  Lenders and/or the Agent from time to time under or pursuant to the Loan
Agreement including,  without limitation,  all principal and interest (including
all interest accruing after commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of the Issuer) accruing
thereon, charges,  expenses, fees and other sums chargeable to the Issuer by the
Senior Lenders and/or by the Agent under or pursuant to the Loan Agreement,  and
reimbursement,  indemnity  or other  Obligations  due and  payable to the Senior
Lenders  and/or  the  Agent  under or  pursuant  to the Loan  Agreement.  Senior
Indebtedness  shall  also  include  any  Obligation  of the Issuer  incurred  to
refinance  the  Senior  Indebtedness.  Senior  Indebtedness  shall  continue  to
constitute  Senior  Indebtedness,  notwithstanding  the fact  that  such  Senior
Indebtedness or any claim for such Senior Indebtedness is subordinated,  avoided
or disallowed under the Federal Bankruptcy Code or other applicable law.

     "Senior  Lenders" means  collectively,  the Banks and any other holder from
time to time of all or any portion of the Senior Indebtedness.

     "Significant  Subsidiary" means any Subsidiary of the Issuer that would, at
the time as of which any  determination  is being made, be deemed a "significant
subsidiary"  of the  Issuer  pursuant  to  the  definition  of  that  phrase  in
Regulation S-X, as promulgated by the SEC.

     "Subordinated Lending Agreements" means, collectively,  this Indenture, the
Securities  and all  agreements,  documents and  instruments  now or at any time
hereafter  executed and/or  delivered by the Issuer or any other Person to, with
or in favor of the  Securityholders in connection  therewith or related thereto,
as all of the  foregoing  now  exist  or may  hereafter  be  amended,  modified,
supplemented,  extended,  renewed,  restated or replaced in accordance  with the
terms of this Indenture.

"Subscription  Agreement"  means  the  subscription  agreement  dated  as  of  a
specified date in September  1998, by and among Allstate  Financial  Corporation
and the Securityholders.

     "Special Record Date" has the meaning  specified in paragraph 3 of the Form
of Securities herein.

     "Stated  Maturity" means the date which all remaining  unpaid principal and
interest of Indebtedness is due and payable pursuant to the terms of document(s)
evidencing such Indebtedness.

"Subsidiary"  means 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 any Person or one or more of the other
Subsidiaries of that Person or a combination thereof.

     "Time of Determination" has the meaning specified in Section 11.5.

"Trustee" means the entity identified as "Trustee" in the first paragraph hereof
and,  subject to the provisions of Article Six, shall also include any successor
trustee.

     "Voting  Shares"  means all  outstanding  shares  of any  class of  classes
(however  designated) of Capital Stock of the Issuer  entitled to vote generally
in the election of members of the Board of Directors of the Issuer.

ARTICLE 2

ISSUE, EXECUTION, FORM AND
REGISTRATION OF SECURITIES

SECTION  2.1  AUTHENTICATION  AND  DELIVERY  OF  SECURITIES.  Securities  in  an
aggregate  principal  amount not in excess of  $4,961,000  (except as  otherwise
provided in Section  2.6) may be executed by the Issuer.  If there is no Trustee
appointed as provided herein, the Securities shall not be authenticated, but the
execution  and delivery  thereof by the Issuer shall make them valid and binding
Obligations of the Issuer, enforceable in accordance with their terms, the terms
of this Indenture and the terms of the  Subscription  Agreement.  Such execution
and delivery shall be conclusive evidence that the Security so executed has been
duly  executed and  delivered  hereunder  and that the Holder is entitled to the
benefits of this Indenture.  If a Trustee is appointed,  Securities issued after
such   appointment   may  be  executed   and   delivered   to  the  Trustee  for
authentication,  and a  responsible  officer  of  the  Trustee  shall  thereupon
authenticate and deliver said Securities to the Issuer or upon the written order
of the  Issuer,  signed by the  Chairman of the Board of  Directors  or any Vice
Chairman  of the Board of  Directors,  or its  President  or any Vice  President
(whether  or not  designated  by a number or  numbers  or a word or words  added
before or after the title "Vice President").

SECTION 2.2  EXECUTION OF SECURITIES.  The Securities shall be signed on
behalf of the  Issuer by its  Chairman  of the  Board of  Directors  or any Vice
Chairman  of the  Board of  Directors  or its  President  or any Vice  President
(whether  or not  designated  by a number or  numbers  or a word or words  added
before or after the title "Vice  President").  Such signatures may be the manual
or, if a Trustee has been appointed,  facsimile signatures of the present or any
future such  officers.  The seal of the Issuer may be in the form of a facsimile
thereof  if a  Trustee  has  been  appointed,  and  may be  impressed,  affixed,
imprinted or otherwise  reproduced on the  Securities.  Typographical  and other
minor  errors  or  defects  in any  such  reproduction  of the  seal or any such
signature shall not affect the validity or  enforceability of any Security which
has been duly authenticated and delivered by the Trustee.

In case  any such  officer  of the  Issuer  who  shall  have  signed  any of the
Securities shall cease to be such officer before the Security so signed shall be
authenticated  and  delivered by the Trustee or disposed of by the Issuer,  such
Security  nevertheless  may be  authenticated  and  delivered  or disposed of as
though the Person who signed such  Security had not ceased to be such officer of
the  Issuer;  and any  Security  may be signed  on behalf of the  Issuer by such
Persons as, at the actual date of the execution of such  Security,  shall be the
proper  officers  of the  Issuer,  although  at the  date of the  execution  and
delivery of this Indenture any such Person was not such officer.

SECTION 2.3  CERTIFICATE OF AUTHENTICATION.  After the appointment of a
Trustee, and the authentication of the Securities, only such Securities as shall
bear  thereon  a  certificate  of  authentication   substantially  in  the  form
hereinabove  recited,  executed by the Trustee by manual signature of one of its
authorized  signatories,  shall be entitled to the benefits of this Indenture or
be valid or obligatory for any purpose. Such certificate by the Trustee upon any
Security  executed by the Issuer shall be conclusive  evidence that the Security
so authenticated has been duly  authenticated  and delivered  hereunder and that
the Holder is entitled to the benefits of this Indenture.

SECTION 2.4  FORM, DENOMINATION AND DATE OF SECURITIES;
PAYMENTS OF INTEREST IN CASH.  The Securities and the Trustee's certificates of
authentication  shall be substantially in the form recited above. The Securities
shall be issuable as registered  securities without coupons and in denominations
provided for in the form of Security  above  recited.  The  Securities  shall be
numbered,  lettered, or otherwise  distinguished in such manner or in accordance
with such plans as the officers of the Issuer  executing  the same may determine
with the approval of the Trustee.

Any of the  Securities  may be issued with  appropriate  insertions,  omissions,
substitutions  and  variations,  and may have imprinted or otherwise  reproduced
thereon such legend or legends,  not  inconsistent  with the  provisions of this
Indenture,  as may be  required  to  comply  with any law or with  any  rules or
regulations  pursuant  thereto,  or with the rules of any  securities  market in
which the Securities are admitted to trading, or to conform to general usage.

Each Security shall be dated the date of its authentication, shall bear interest
from the applicable date and shall be payable on the dates specified on the face
of the form of Security recited above.

The Person in whose name any Security is  registered at the close of business on
any  Interest  Record Date with  respect to any  Interest  Payment Date shall be
entitled to receive the interest,  if any, payable on such Interest Payment Date
notwithstanding  any  transfer or exchange of such  Security  subsequent  to the
Interest Record Date and prior to such Interest  Payment Date,  except if and to
the extent the Issuer  shall  default in the payment of the interest due on such
Interest  Payment Date, in which case such  defaulted  interest shall be paid to
the Persons in whose names outstanding Securities are registered at the close of
business on a subsequent record date (which shall be not less than five Business
Days prior to the date of payment of such defaulted interest)  established after
arrangements for payment  reasonably  satisfactory to the Trustee have been made
by the  Issuer  by notice  given by mail by or on  behalf  of the  Issuer to the
Holders of Securities  not less than 15 days preceding  such  subsequent  record
date.  The term  "Interest  Record  Date" as used with  respect to any  Interest
Payment Date (except a date for payment of  defaulted  interest)  shall mean the
15th day of the month next  preceding the month in which such  interest  payment
date falls, whether or not such Interest Record Date is a Business Day.

SECTION 2.5  REGISTRATION, TRANSFER AND EXCHANGE; PAYING AGENT
AND  CONVERSION  AGENT.  The  Issuer  will  keep at each  office or agency to be
maintained for the purpose as provided in Section 3.2 a register or registers in
which,  subject to such  reasonable  regulations  as it may  prescribe,  it will
register,  and will  register  the transfer  of,  Securities  as in this Article
provided, except that any transfers shall be subject to the restriction on their
transfer as set forth on the form of security. Such register shall be in written
form in the  English  language or in any other form  capable of being  converted
into such form within a reasonable  time. At all reasonable  times such register
or registers shall be open for inspection by the Trustee.

Upon due  presentation for registration of transfer of any Security at each such
office or agency,  the Issuer shall execute and the Trustee  shall  authenticate
(if there is a Trustee) and deliver in the name of the transferee or transferees
a new Security or Securities in authorized  denominations  for a like  aggregate
principal amount.

Any Security or  Securities  may be exchanged  for a Security or  Securities  in
other  Authorized  Denominations,   in  an  equal  aggregate  principal  amount.
Securities to be exchanged  shall be  surrendered at each office or agency to be
maintained  by the Issuer for the purpose as provided  in Section  3.2,  and the
Issuer shall execute and the Trustee shall  authenticate (if there is a Trustee)
and  deliver  in  exchange   therefor  the  Security  or  Securities  which  the
Securityholder making the exchange shall be entitled to receive, bearing numbers
not contemporaneously outstanding.

All Securities presented for registration of transfer, exchange or payment shall
(if so  required  by the  Issuer  or the  Trustee)  be duly  endorsed  by, or be
accompanied  by  a  written  instrument  or  instruments  of  transfer  in  form
satisfactory  to the Issuer and the Trustee duly  executed by, the Holder or his
attorney duly authorized in writing.

The Issuer may  require  payment of a sum  sufficient  to cover any tax or other
governmental  charge  that may be imposed in  connection  with any  exchange  or
registration of transfer of Securities.  No service charge shall be made for any
such exchange or registration transaction.

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

The Issuer shall maintain an office or agency where  Securities may be presented
for payment  ("Paying  Agent") and an office or agency where  Securities  may be
presented  for  Conversion  ("Conversion  Agent").  The Issuer  shall notify the
Trustee  and the  Holders of the name and  address of any such  Paying  Agent or
Conversion Agent not a party to this Indenture.

SECTION 2.6  MUTILATED, DEFACED, DESTROYED, LOST AND STOLEN
SECURITIES. In case any temporary or definitive Security shall become mutilated,
defaced or be apparently destroyed, lost or stolen, the Issuer in its discretion
may execute and  deliver,  and the Trustee  shall  authenticate  and deliver (if
applicable), a new Security bearing a number not contemporaneously  outstanding,
in exchange and substitution for the mutilated or defaced  Security,  or in lieu
of or in substitution for the Security so apparently destroyed,  lost or stolen.
In every case the  applicant  for a  substitute  Security  shall  furnish to the
Issuer and to the  Trustee,  if  applicable,  and any agent of the Issuer or the
Trustee  such  security  or  indemnity  agreement  or bond as may be  reasonably
required by them to indemnify  and defend and to save each of them harmless and,
in every case of destruction,  loss or theft,  evidence to their satisfaction of
the apparent  destruction,  loss or theft of such  Security and of the ownership
thereof.

Upon the  issuance of any  substitute  Security,  the Issuer and the Trustee may
require the payment of a sum  sufficient to cover any tax or other  governmental
charge that may be imposed in relation thereto and any other expenses (including
the reasonable  fees and expenses of the Issuer or the Trustee,  as the case may
be) connected  therewith.  In case any Security which has matured or is about to
mature shall become  mutilated or defaced or be  apparently  destroyed,  lost or
stolen,  the  Issuer  may,  instead  of issuing a  substitute  Security,  pay or
authorize the payment of the same with written direction to the Trustee (without
surrender thereof except in the case of a mutilated or defaced Security), if the
applicant  for such payment  shall  furnish to the Issuer and to the Trustee and
any agent of the Issuer or the Trustee such  security or indemnity  (including a
bond) as any of them may reasonably require to save each of them harmless and in
every  case of  apparent  destruction,  loss or theft the  applicant  shall also
furnish to the Issuer and the Trustee and any agent of the Issuer or the Trustee
evidence to their reasonable  satisfaction of the apparent destruction,  loss or
theft of such Security and of the ownership thereof.

Every substitute  Security issued pursuant to the provisions of this Section 2.6
by virtue of the fact that any Security is apparently destroyed,  lost or stolen
shall constitute an additional  contractual obligation of the Issuer, whether or
not the  apparently  destroyed,  lost or  stolen  Security  shall be at any time
enforceable by anyone and shall be entitled to all the benefits of (but shall be
subject to all the  limitations of rights set forth in) this  Indenture  equally
and  proportionately  with any and all other Securities duly  authenticated  and
delivered hereunder.

SECTION 2.7  CANCELLATION OF SECURITIES; DISPOSITION THEREOF.  All
Securities  surrendered for payment,  registration  of transfer or exchange,  if
surrendered  to the Issuer or any agent of the Issuer or the  Trustee,  shall be
delivered  to  the  Issuer,  or if  there  is a  Trustee,  to  the  Trustee  for
cancellation.  All  such  surrendered  Securities  shall  be  cancelled,  and if
cancelled  by  the  Trustee  shall  be  disposed  of  in  accordance   with  its
regulations.  No Securities  shall be issued in lieu thereof except as expressly
permitted  by any of the  provisions  of this  Indenture.  If the  Issuer  shall
acquire  any  of  the  Securities,  such  acquisition  shall  not  operate  as a
satisfaction of the Indebtedness represented by such Securities unless and until
it  cancels  the  Securities  or the  same  are  delivered  to the  Trustee  for
cancellation.

SECTION 2.8  TEMPORARY SECURITIES.  Pending the preparation of definitive
Securities, the Issuer may execute and deliver and the Trustee, if there be one,
shall  authenticate and deliver  temporary  Securities  (printed,  lithographed,
typewritten or otherwise  reproduced,  in each case in form  satisfactory to the
Trustee).  Temporary  Securities  shall be  issuable  as  registered  securities
without coupons, of any authorized  denomination,  and substantially in the form
of the definitive Securities but with such omissions,  insertions and variations
as may be appropriate for temporary Securities,  all as may be determined by the
Issuer with the  concurrence  of the Trustee.  Temporary  Securities may contain
such reference to any provisions of this Indenture as may be appropriate.  Every
temporary  Security shall be executed by the Issuer and be  authenticated by the
Trustee,  if appointed,  upon the same conditions and in substantially  the same
manner, and with like effect, as the definitive Securities. Without unreasonable
delay the Issuer shall execute and shall  furnish,  at its expenses,  definitive
Securities  and thereupon  temporary  Securities  may be surrendered in exchange
therefor  without charge at each office or agency to be maintained by the Issuer
for the purpose pursuant to Section 3.2, and the Trustee shall  authenticate and
deliver in exchange for such  temporary  Securities a like  aggregate  principal
amount of definitive Securities of authorized denominations. Until so exchanged,
the  temporary  Securities  shall be  entitled to the same  benefits  under this
Indenture as definitive  Securities.  Neither the Issuer nor the Trustee, as the
case may be shall be obligated to issue  definitive  Securities  until it or the
Issuer or the  Trustee,  as  appropriate  shall  have  received  such  temporary
Securities.

ARTICLE 3

COVENANTS OF THE ISSUER

SECTION 3.1  PAYMENT OF PRINCIPAL AND INTEREST.  The Issuer covenants
and  agrees  that it will  duly  and  punctually  pay or  cause  to be paid  the
Repurchase  Price,  if  applicable,  principal  of and  interest on, each of the
Securities at the place or places, at the respective times as required by and in
the manner provided in the  Securities.  An installment of principal or interest
or of the Repurchase Price shall be considered paid on the date it is due if the
Trustee  or  Paying  Agent  holds  on  that  date  sums  sufficient  to pay  the
installment  or Repurchase  Price.  Anything  herein or in the Securities to the
contrary  notwithstanding,  the  obligation  of the  Issuer  hereunder  shall be
subject to the  limitation  that payments of interest to the Holder shall not be
required to the extent that the receipt of any such payment by such Holder would
be contrary to the  provisions  of law  applicable to the Issuer which limit the
maximum  rate of  interest  which may be charged  or  collected  by the  Holder,
including as set forth in Section 10.10 (the "Maximum Rate").

SECTION 3.2  OFFICES FOR PAYMENTS, ETC.  So long as any of the Securities
remain  outstanding,  the Issuer will maintain at such place in the  continental
United  States and at such other  place,  if any,  as may be  designated  by the
Issuer,  the  following:  (a) an office or agency  where the  Securities  may be
presented  for  registration  of transfer,  for exchange and for  conversion  as
provided in this Indenture and (b) an office or agency where notices and demands
to or upon the Issuer in respect of the  Securities or of this  Indenture may be
served.  The Issuer will  initially  maintain  such offices or agencies with the
corporate  secretary at the Issuer's  principal  place of business in Arlington,
Virginia and the  Operations  office of the Trustee in  ___________.  The Issuer
will give to the Trustee  written  notice of the  location of any such office or
agency and of any change of location  thereof.  In case the Issuer shall fail to
maintain  any such  office or agency  or shall  fail to give such  notice of the
location or of any change in the location thereof, presentations and demands may
be made and notices may be served at the Corporate Trust Office.

SECTION 3.3  APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE.
The Issuer,  whenever  necessary to avoid or fill a vacancy in the office of the
Trustee, will appoint, in the manner provided in Section 6.9, a Trustee, so that
there  shall at all  times  be a  Trustee  hereunder  after a  Trustee  has been
appointed.

SECTION 3.4 PAYING  AGENTS.  Whenever  the Issuer  shall  appoint a Paying Agent
other than the Trustee or itself, 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 3.4:

(a) that it will hold all sums  received  by it as such agent for the payment of
the Repurchase Price,  principal of or interest on the Securities  (whether such
sums  have  been  paid  to it by the  Issuer  or by  any  other  obligor  on the
Securities)  in trust for the benefit of the Holders of the Securities or of the
Trustee; and

(b) that it will give the Trustee notice of any failure by the Issuer (or by any
other obligor on the  Securities) to make any payment of the  Repurchase  Price,
principal  of or  interest  on the  Securities  when the  same  shall be due and
payable.

The  Issuer  will,  at  least  one  Business  Day  prior to each due date of the
Repurchase Price,  principal of or interest on the Securities,  deposit with the
Paying  Agent a sum  which  is in  immediately  available  funds on the due date
sufficient to pay such Repurchase Price,  principal or interest and (unless such
Paying Agent is the Trustee) the Issuer will promptly  notify the Trustee of any
failure to take such action.

If the Issuer shall act as its own Paying Agent,  it will, on or before each due
date of the Repurchase  Price,  principal of or interest on the Securities,  set
aside,  segregate  and hold in  trust  for the  benefit  of the  Holders  of the
Securities a sum sufficient to pay such Repurchase Price,  principal or interest
so becoming  due. The Issuer,  or Paying  Agent which is not the  Trustee,  will
promptly notify the Trustee in writing of any failure to take such action.

The Issuer  initially  appoints the Trustee as Paying  Agent,  if the Trustee is
appointed, as provided herein.

SECTION  3.5  OFFICERS'  CERTIFICATES  AS TO DEFAULT AND AS TO  COMPLIANCE.  The
Issuer will, so long as any of the Securities are outstanding:

(a) deliver to the  Trustee,  forthwith  upon  becoming  aware of any default or
defaults in the performance of any covenant, agreement or condition contained in
this Indenture  (including  notice of any event which with the giving of notice,
lapse of time or both  would  become  an  Event of  Default  under  Section  5.1
hereof), an Officers' Certificate specifying such default or defaults; and

(b) deliver to the  Trustee  within 90 days after the end of each Fiscal Year of
the Issuer beginning with the Fiscal Year ending December 31, 1998, an Officers'
Certificate, to the effect that:

(i) a diligent  review of the  activities  of the  Issuer  and its  Subsidiaries
during such year and of  performance  under this  Indenture  has been made under
such officers' supervision, and

(ii) to the best of such officers'  knowledge,  based on such review, the Issuer
has fulfilled all its obligations under this Indenture  throughout such year, or
if  there  has  been a  default  in the  fulfillment  of  any  such  obligation,
specifying each such default known to them and the nature and status thereof.

SECTION 3.6  INDEBTEDNESS.  Subject to Article 5, the Issuer will pay punctually
and  discharge  when due and payable any  Indebtedness  heretofore  or hereafter
incurred or assumed by it and  discharge,  perform  and  observe the  covenants,
provisions and  conditions to be discharged,  performed and observed on the part
of the Issuer in connection  therewith,  or in connection  with any agreement or
other instrument relating thereto.

SECTION 3.7 BOOKS.  The Issuer will keep at all times proper books of record and
account in which full, true and correct entries will be made of its transactions
in accordance with Generally Accepted Accounting Principles.

     SECTION 3.8  LIMITATION ON  DIVIDENDS.  The Issuer shall not, and shall not
permit any of its Subsidiaries,  directly or indirectly, (a) for a period of two
years subsequent to the Issue Date, and (b) subsequent to the period  commencing
two years  following  the Issue  Date,  should an Event of  Default  exist or be
caused by such a payment, distribution,  purchase, redemption or retirement, (c)
to declare or pay any dividend on, or make any distribution on or in respect of,
or purchase, redeem of otherwise acquire or retire for value any of the Issuer's
Capital Stock.

SECTION 3.9 LIMITATIONS ON LIENS. The Issuer shall not, and shall not permit any
of its Subsidiaries,  directly or indirectly, to create, incur, assume or suffer
to exist  any Lien on any of their  respective  assets  now  owned or  hereafter
acquired,  or any income or profits  therefrom  or assign or convey any right to
receive income therefrom, except as required or permitted in the Loan Agreement.

     SECTION  3.10 LINE OF  BUSINESS.  Neither  the Issuer nor its  Subsidiaries
shall substantially change the nature of the business in which each is presently
engaged as  disclosed  in the  Issuer's  annually  report on Form 10-KSB for the
fiscal year ended December 31, 1997, nor except as specifically permitted hereby
or in the Loan  Agreement,  purchase or invest,  directly or indirectly,  in any
assets or property  other than in the ordinary  course of business for assets or
properties  which  were  useful  in,  necessary  for  and  are to be used in its
business as presently  conducted.  Neither the Issuer nor its Subsidiaries shall
permit any future  Subsidiary or Affiliate to engage in any business  other than
the marketing and development of the business of the Issuer and its Subsidiaries
outside the  commonwealth  of Virginia or the marketing and  development  of the
business  or  programs  offered  by  banks  and  other  financial  institutions.
Notwithstanding the above, the Issuer and its Subsidiaries shall be permitted to
expand its business into that of commercial  finance in the  continental  United
States.

SECTION 3.11 PAYMENTS FOR CONSENT. The Issuer shall not, nor shall it permit any
Subsidiary  to,   directly  or   indirectly,   pay  or  cause  to  be  paid  any
consideration,  whether by way of interest,  fee or otherwise,  to any Holder of
the  Securities  for or as an inducement to any consent,  waiver or amendment of
any terms or provisions of the Securities  unless such  consideration is offered
to be paid or  agreed  to be paid to all  Holders  of the  Securities  which  so
consent,  waive or agree in the time frame set forth in  solicitation  documents
relating to such consent, waiver or agreement.

SECTION 3.12  LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS.
The Issuer shall not, and shall not permit any of its  Subsidiaries to, directly
or indirectly, enter into any sale and leaseback transaction,  provided that the
Issuer or any  Subsidiaries  may enter into a sale and leaseback  transaction if
the net proceeds of such sale and  leaseback  transaction  are at least equal to
the fair market value of such property (such  determination of fair market value
in the case of a sale and leaseback transaction, being evidenced by a resolution
of the Board of Directors  of the Issuer set forth in an  Officers'  Certificate
delivered to the Trustee).

SECTION 3.13  LIMITATION ON DIVIDENDS AND OTHER PAYMENT
RESTRICTIONS  AFFECTING  SUBSIDIARIES.  Except as set forth  herein,  the Issuer
shall not permit any Subsidiary  thereof to,  directly or indirectly,  create or
otherwise  cause  or  suffer  to  exist  or  become   effective  any  consensual
encumbrance or restriction of any kind on the ability of any such  Subsidiary to
(a) pay dividends or make any other  distributions  to Issuer or any  Subsidiary
thereof on its Capital Stock, (b) pay any Indebtedness owed to the Issuer or any
Subsidiary  thereof,  (c) make loans or advances to the Issuer or any Subsidiary
thereof,  or (d) transfer any of its  properties  or assets to the Issuer or any
Subsidiary thereof.

     SECTION 3.14  AUTHORIZED INDEBTEDNESS TO CONSOLIDATED TANGIBLE
NET WORTH.  The Issuer shall not permit its  Authorized  Indebtedness  as of any
date to exceed the product obtained by multiplying its Consolidated Tangible Net
Worth as of such date by three.

     SECTION 3.15  NET NON-EARNING ASSETS OVER AVERAGE ASSETS.  The
Issuer  shall not, on the last day of any fiscal  quarter of the Issuer,  permit
the percentage  arrived at by dividing Net Non-Earning  Assets by Average Assets
to be more than the following percent during each of the following periods:

PERIOD                                       PERCENTAGE

October 1, 1998 through March 31, 1999                 20%
April 1, 1998 through September 30, 1999                    15%
October 1, 1999 through September 30, 2000             12%
October 1, 2000 and thereafter                         8%

     SECTION  3.16  EARNINGS  TO DEBT  COVERAGE.  On the last day of each fiscal
quarter  commencing  with the fiscal quarter ended September 30, 1998, the ratio
of (A) EBIT to (B) total  interest  expense  for (w) the  fiscal  quarter  ended
September 30, 1998,  (x) the two fiscal  quarters ended December 31, 1998 (taken
as one accounting  period),  (y) the three fiscal  quarters ended March 31, 1999
(taken as one accounting period), and (z) the four fiscal quarters (taken as one
accounting  period) ended on the last day of each fiscal quarter commencing with
the fiscal quarter ended June 30, 1999, shall not be less than 1.5:1.

SECTION 3.17  LIMITATION ON TRANSACTIONS WITH RELATED PERSONS.
Neither the Issuer nor any Subsidiary will,  directly or indirectly,  enter into
or suffer to exist any transaction or series of related transactions  (including
the sale,  purchase,  exchange or lease of assets,  property or services) with a
Related  Person of the  Issuer (a  "Related  Person  Transaction")  unless  such
Related Person  Transaction or series of Related Person  Transactions  (a) is on
terms that are no less  favorable  to the Issuer  than would be  available  in a
comparable  transaction  with an unrelated  party,  (b) if such  Related  Person
Transaction  or series of Related Person  Transaction  involves in the aggregate
payments in excess of  $1,000,000,  the Issuer's  Board of Directors  determines
that such Related Person  Transaction  or series of Related Person  Transactions
complies  with  clause  (a)  above  and such  determination  is  evidenced  by a
resolution of the Board of Directors of the Issuer or (c) if such Related Person
Transaction  or  series  of  Related  Person  Transactions  is  approved  by the
affirmative  vote of over 50% of the shares  represented at an annual or special
meeting of  stockholders  of the Issuer  without  taking  into  account for this
purpose the vote of any stockholder  who is an executive  officer of director of
the Issuer or any Subsidiary or any Affiliate of any such  executive  officer or
director.  Notwithstanding  anything to the contrary  contained herein, the term
Related Party Transaction shall not include any transaction or series of related
transactions  to  which  the  Issuer  or any  Subsidiary  is a party on the date
hereof,  including this Indenture, or any transaction to which the Issuer or any
Subsidiary is obligated on, the date hereof to become a party; provided that any
such  transaction  that was required by applicable law to have been disclosed in
any SEC report  was  disclosed  in an SEC  report  filed on or prior to the date
hereof.

SECTION 3.18  FUNDAMENTAL MODIFICATION.  The Issuer shall not, and shall
not permit any of its  Subsidiaries  to, make any modification in its, or their,
as the case  may be,  articles  of  incorporation,  by-laws  or any  other  such
documents  or  agreements  which  would  have a material  adverse  effect on the
ability  of the  Issuer  to  perform  its  obligations  under  the terms of this
Indenture.

SECTION 3.19  MAINTENANCE OF PROPERTIES, ETC.  The Issuer shall, and shall
cause each of its Subsidiaries  to, maintain its material  properties and assets
in  working  order  and  condition  and make all  necessary  repairs,  renewals,
replacements,  additions,  betterments and improvements  thereto,  all as may be
necessary  so that  the  business  carried  on in  connection  therewith  may be
conducted in the usual and customary manner.

The Issuer shall,  and shall cause each of its  Subsidiaries  to,  maintain with
insurers  that are  financially  sound and  reputable  such  insurance as may be
required  by law and such  other  insurance,  to such  extent and  against  such
hazards and  liabilities,  as is customarily  maintained by companies  similarly
situated with like properties.

The Issuer shall, and shall cause each of its Subsidiaries to, do or cause to be
done all  things  necessary  to  preserve  and keep in full force and effect its
existence,  rights  and  franchises,  except  to the  extent  permitted  by this
Indenture  and except in such cases where the Board of Directors  determines  in
good faith that failure to do so would not have a material adverse effect on the
business,  earnings,  properties,  assets,  financial  condition  or  results of
operation of the Issuer and its Subsidiaries.

The Issuer  shall,  and shall cause each of its  Subsidiaries  to, comply in all
material respects with all statutes,  laws, ordinances,  or government rules and
regulations to which it is subject.

The Issuer  shall,  and shall  cause each of its  Subsidiaries  to, pay prior to
delinquency all taxes,  assessments and governmental  levies except as contested
in good faith and by appropriate proceedings.

SECTION 3.20 COMPLY WITH MATERIAL AGREEMENTS.  The Issuer shall, and shall cause
each of its  Subsidiaries  to, comply in all material  respect with all material
agreements,  indentures,  mortgages or documents  binding on it or affecting its
properties or business.

     SECTION 3.21  ERISA.     The Issuer shall:

(a) at all times,  make prompt payment of all  contributions  required under all
plans and required to meet the minimum funding  standard set forth in ERISA with
respect to its plans;

(b) notify the Trustee immediately of any fact,  including,  but not limited to,
any reportable  event arising in connection  with any of its plans,  which might
constitute  grounds for  termination  thereof by the Pension  Benefit  Guarantee
Corporation or for the  appointment by the  appropriate  United States  District
Court of a trustee  to  administer  such Plan,  together  with a  statement,  if
requested by Agent, as to reason therefor and the action, if any, proposed to be
taken with respect thereto; and

(c)  furnish  to the  Trustee  or the  holder  of  fifty  percent  (50%)  of the
Securities,  upon such request by the Trustee or such Holders,  such  additional
information concerning any of its plans as may be reasonably requested.

SECTION  3.22 USE OF PROCEEDS.  Cash  proceeds  from the sale of the  Securities
shall be used solely to purchase Old Notes pursuant to the Put Provision.

SECTION 3.23  ISSUANCE OF COMMON STOCK ON CONVERSION.     The Issuer
covenants  that it will reserve  sufficient  Common Stock for issuance  upon the
conversion of the  Securities.  The Issuer will,  in accordance  with Article 11
hereof,  promptly issue  certificates for shares of Common Stock upon compliance
by any Securityholder with the requirements thereof.

     SECTION 3.24  PERFORMANCE OF COVENANTS.  The Issuer  covenants that it will
faithfully   perform  at  all  times  any  and  all   covenants,   undertakings,
stipulations  and  provisions  contained in this  Indenture and in any and every
Security executed,  authenticated and delivered hereunder. The Issuer represents
and  warrants  that it is duly  authorized  to issue the  Securities  authorized
hereby and to execute this Indenture and otherwise perform all acts and sign all
documents in connection therewith;  that all action on its part for the issuance
of the Securities and the execution and delivery of this Indenture has been duly
and effectively  taken,  and that the Securities in the hands of the holders and
owners thereof are and will be valid and  enforceable  obligations  according to
their terms and the terms of this Indenture.

ARTICLE 4

SECURITYHOLDERS' LISTS AND REPORTS
BY THE ISSUER AND THE TRUSTEE

SECTION 4.1 ISSUER TO FURNISH  TRUSTEE  INFORMATION AS TO NAMES AND ADDRESSES OF
SECURITYHOLDERS.  The Issuer  covenants and agrees that it will furnish or cause
to be furnished to the Trustee a list in such form as the Trustee may reasonably
require of the names and addresses of the Holders of the Securities:

(a)  semi-annually  and not more than 15 days  after  each  record  date for the
payment of interest on the  Securities,  as  hereinabove  specified,  as of such
record date; and

(b) at such other times as the  Trustee  may request in writing,  within 30 days
after  receipt by the  Issuer of any such  request as of a date not more than 15
days prior to the time such information is furnished;

provided  that if and so long as the Trustee  shall be the  Security  registrar,
such list shall not be required to be furnished.

SECTION 4.2  PRESERVATION AND DISCLOSURE OF SECURITYHOLDERS'
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
Securities  contained  in the most  recent list  furnished  to it as provided in
Section 4.1 or maintained by the Trustee in its capacity as Security  registrar,
if so acting.  The Trustee may destroy any list  furnished  to it as provided in
Section 4.1 upon receipt of a new list so furnished.

(b)  The  Security  register  maintained  by the  Trustee  as  register  will be
available for  inspection by any Holder or its attorney in writing during normal
business hours.

SECTION 4.3         REPORTS BY THE ISSUER.  The Issuer covenants:

(a) to file with the  Commission,  and within 15 days after the Issuer files the
same with the Commission,  file with the Trustee,  and mail or furnish copies to
the Trustee and cause the Trustee to mail to the Holders at their  addresses  as
set forth in the register of the Securities, copies of the annual reports and of
the information, documents, and other reports (or copies of such portions of any
of the  foregoing  as the  Commission  may  from  time  to  time  by  rules  and
regulations  prescribe)  which  the  Issuer  may be  required  to file  with the
Commission  pursuant to Section 13 or Section 15(d) of the Exchange Act or which
the Issuer would be required to file with the  Commission if the Issuer then had
a class of securities registered under the Exchange Act;

          (b) As soon as available and in any event within  forty-five (45) days
after the end of the first,  second and third  quarter of each Fiscal Year,  the
Issuer will deliver the consolidated  unaudited  balance sheet of the Issuer and
its  Subsidiaries  as at the end of such  quarter and the  related  consolidated
unaudited  statements  of  income,  stockholders  equity and cash flows for such
quarter  and for the  portion of the Fiscal  Year ended with such  quarter.  The
financial  statements  required  hereunder  shall in each  instance set forth in
comparative form the  corresponding  figures as at the end of the  corresponding
quarter of the preceding Fiscal Year.

          (c) As soon as  available  and in any event  within  ninety  (90) days
after the end of each Fiscal Year, the Issuer will deliver (i) the  consolidated
balance sheet of the Issuer and its  Subsidiaries as at the end of such year and
the related  consolidated  statements of income,  stockholders'  equity and cash
flows for such  Fiscal  Year;  and (ii) a report with  respect to the  financial
statements  from its  independent  public  accountants,  which  report  shall be
unqualified as to going concern and scope of audit and shall state that (A) such
consolidated  financial  statements  present fairly the  consolidated  financial
position of the Issuer and its  Subsidiaries  as of the dates  indicated and the
results of the operations and cash flow for the periods  indicated in conformity
with GAAP and (B) that the  examination by such  accountants in connection  with
such  consolidated  financial  statements  has  been  made  in  accordance  with
generally accepted auditing standards.

(d) to cause the  Issuer's  annual  report to its  common  stockholders  and any
quarterly  or other  financial  reports  furnished  to its  common  stockholders
generally  to be filed with the Trustee and mailed,  no later than the date such
materials are mailed or made available to the Issuer's  common  stockholders  to
the Holders at their addresses as set forth in the register of Securities;

(e) If the Issuer is not subject to the requirements of such Section 13 or 15(d)
of the Exchange Act, the Issuer shall nevertheless  continue to prepare and file
with the  Trustee  annual and  quarterly  financial  statements,  including  any
Securities  thereto (and with respect to annual reports,  a copy of an auditors'
report  by  an  accounting  firm  of  established  national  reputation)  and  a
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations",  comparable  to that which  would have been  required  to appear in
annual or quarterly  reports filed under Section 13 or 15(d) of the Exchange Act
to be so filed with the SEC for public availability and the Trustee to be mailed
to the  Holders  within 90 days after the end of the  Issuer's  Fiscal  Year and
within 45 days after the end of each of the first three  quarters of each Fiscal
Year.  In either  case,  the Issuer  shall  continue  to furnish  Holders of the
Securities  with   substantially   the  same  quarterly  and  annual   financial
information with respect to the Issuer as provided in the Issuer's  consolidated
financial statements, including the Securities thereto, for the year ended 1997;

(f) The Issuer shall  provide the Trustee with a sufficient  number of copies of
all reports and other documents and information that the Trustee may be required
to deliver to the Holders of the Securities under this Section 4.3.


ARTICLE 5

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT

SECTION 5.1  EVENT OF DEFAULT DEFINED; ACCELERATION OF MATURITY;
WAIVER  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)  failure to pay duly and  punctually  any  installment  of  interest  on the
Securities as and when the same becomes due and payable,  and the continuance of
such default for thirty (30) calendar days; or

(b) failure to pay duly and  punctually  all or any part of the principal on the
Securities,  or the Repurchase Price of any Security, as and when the same shall
become due and payable, either at maturity, upon acceleration or otherwise; or

(c) failure on the part of the Issuer  duly to observe or perform any  covenants
or agreements on the part of the Issuer contained in the Securities  (other than
as provided for in (a) and (b) above),  in this Indenture,  in the  Subscription
Agreement,  or any related documents,  and the continuance of such failure for a
period  of 30 days  after  the  date on which  written  notice  specifying  such
failure,  stating  that such notice is a "Notice of Event of Default"  hereunder
and  demanding  that the Issuer  remedy the same,  is given to the Issuer by the
Trustee  or to the  Issuer  and the  Trustee  by the  Holders of at least 50% in
aggregate principal amount of the Securities at the time outstanding; or

(d) default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any  Indebtedness for money
borrowed  by the Issuer or any of its  Subsidiaries  (or the payment of which is
Guaranteed by the Issuer or any of its Subsidiaries), which default is caused by
a failure  to pay due  principal  or  interest  on such  Indebtedness  after any
applicable grace period (a "Payment  Default"),  and the principal amount of any
such  Indebtedness,  together  with  the  principal  amount  of any  other  such
Indebtedness  under which there has been and is  continuing  a Payment  Default,
aggregates $500,000 or more; or

(e) default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any  Indebtedness for money
borrowed  by the Issuer or any of its  Subsidiaries  (or the payment of which is
Guaranteed by the Issuer or any of its  Subsidiaries),  which default results in
the  acceleration  of such  Indebtedness  prior to its express  maturity and the
principal amount of any such Indebtedness, together with the principal amount of
any other such  Indebtedness  under  which  there has been and is  continuing  a
Payment  Default  or the  maturity  of  which  has been so  accelerated  and not
rescinded, aggregates $500,000 or more; or

(f)  failure by the  Issuer or any of its  Subsidiaries  to pay final  judgments
(other  than any  judgment  as to which a  reputable  insurance  the  Issuer has
accepted  coverage  without a reservation  of rights)  aggregating  in excess of
$500,000,  which  judgments  are not stayed or  discharged  within 30 days after
their entry; or

(g) a court having  jurisdiction  in the premises  shall enter a decree or order
for relief in respect of the Issuer or any of its Subsidiaries in an involuntary
case under any  applicable  bankruptcy,  insolvency  or other similar law now or
hereafter in effect, or appointing a receiver, liquidator,  assignee, custodian,
trustee,  sequestrator  (or  similar  official)  of  the  Issuer  or  any of its
Subsidiaries or for any substantial part of the property of the Issuer or any of
its Subsidiaries or ordering the winding up or liquidation of the affairs of the
Issuer or any of its Subsidiaries and such decree or order shall remain unstayed
and in effect for a period of 30 consecutive days; or

(h) the Issuer or any of its Subsidiaries  shall commence a voluntary case under
any applicable  bankruptcy,  insolvency or other similar law now or hereafter in
effect,  or consent to the entry of an order for relief in an  involuntary  case
under any such law,  or consent to the  appointment  or taking  possession  by a
receiver,  liquidator,  assignee,  custodian,  trustee, sequestrator (or similar
official) of the Issuer or any of its  Subsidiaries or for any substantial  part
of the property of the Issuer or any of its  Subsidiaries,  or the Issuer or any
of its  Subsidiaries  shall  make any  general  assignment  for the  benefit  of
creditors; or

(i) the  Issuer  does not pay,  or shall be  unable  to pay,  or shall  admit in
writing its inability to pay its debts as such debts become due;

then, and in each and every such case (other than an Event of Default  specified
in clause (g) or (h) above relating to the Issuer),  unless the principal of all
of the Securities shall have already become due and payable,  either the Trustee
or the  Holders  of not  less  than 50% in  aggregate  principal  amount  of the
Securities then outstanding  hereunder,  by notice in writing to the Issuer (and
to the Trustee if given by  Securityholders)  (the "Acceleration  Notice"),  may
declare  all the  Securities  and the  accrued  interest  thereon  to be due and
payable immediately (the "Acceleration  Date"). If an Event of Default specified
in clause (g) or (h) above relating to the Issuer occurs, all the Securities and
the accrued  interest  thereon shall be immediately  due and payable without any
declaration or other act on the part of the Trustee or any Securityholder.  If a
notice  pursuant  to this  Section  5.1 should be given or sent,  then,  for all
purposes under this Indenture,  the Issuer, the Holders and the Trustee shall be
deemed to have received a Senior Default Notice  simultaneously  with the giving
or sending of that notice hereunder.

SECTION 5.2  COLLECTION OF INDEBTEDNESS BY TRUSTEE; TRUSTEE MAY
PROVE INDEBTEDNESS.  The Issuer covenants that (a) in case default shall be made
in the payment of any installment of interest on any of the Securities when such
interest  shall  have  become  due and  payable,  and such  default  shall  have
continued  for a period of 30 days,  or (b) in case default shall be made in the
payment of all or any part of the  Repurchase  Price or  principal of any of the
Securities  when the same  shall  have  become  due and  payable,  whether  upon
maturity or upon any  requirement  herein of payment or otherwise,  -- then upon
demand by the  Trustee the Issuer will pay to the Trustee for the benefit of the
Holders of the  Securities  the whole amount that then shall have become due and
payable on all such Securities for the Repurchase Price,  principal or interest,
as the case may be (with  interest to the date of such  payment upon the overdue
principal and, to the extent that payment of such interest is enforceable  under
applicable law, on overdue installments of interest at the Default Rate); and in
addition thereto,  such further amount as shall be sufficient to cover the costs
and expenses of  collection,  including such amounts as shall be due the Trustee
and each predecessor Trustee under Section 6.6.

Until such  demand is made by the  Trustee,  the  Issuer may pay the  Repurchase
Price,  the  principal  of and  interest  on the  Securities  to the  registered
Holders, whether or not the Securities be overdue.

In case the Issuer  shall fail  forthwith  to pay such amounts upon such demand,
the  Trustee,  in its own name and as  trustee  of an  express  trust,  shall be
entitled and empowered to institute any action or proceeding at law or in equity
for the  collection  of the sums so due and  unpaid and may  prosecute  any such
action or  proceeding  to  judgment  or final  decree,  and may enforce any such
judgment or final decree against the Issuer or other obligor upon the Securities
and collect in the manner  provided by law out of the  Property of the Issuer or
other obligor upon the  Securities,  wherever  situated,  the moneys adjudged or
decreed to be payable.

In case there shall be pending  proceedings  relative to the Issuer or any other
obligor  upon the  Securities  under  Title 11 of the United  States Code or any
other applicable  Federal or state bankruptcy,  insolvency or other similar 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  Issuer or the  property  of the  Issuer or such other
obligor, or in case of any judicial  proceedings relative to the Issuer or other
obligor upon the  Securities,  or to the  creditors or property of the Issuer or
such other obligor,  the Trustee,  irrespective  of whether the principal of the
Securities shall then be due and payable as therein  expressed or by declaration
or otherwise and  irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 5.2, shall be entitled and empowered,
by intervention in such proceedings or otherwise:

(a) to file and prove a claim or claims for the whole  amount of  principal  and
interest owing and unpaid in respect of the  Securities,  and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee  (including any claim for reasonable  compensation to the Trustee
and each  predecessor  Trustee,  and  their  respective  agents,  attorneys  and
counsel, and for reimbursement of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor  Trustee,  except as a result
of negligence or bad faith) and of the  Securityholders  allowed in any judicial
proceedings  relative to the Issuer or other obligor upon the Securities,  or to
the creditors or Property of the Issuer or such other obligor;

(b) unless  prohibited by applicable law and  regulations,  to vote on behalf of
the Holders of the Securities in any election of a trustee or a standby  trustee
in arrangement,  reorganization,  liquidation or other  bankruptcy or insolvency
proceedings or Person performing  similar  functions in comparable  proceedings;
and

(c) to collect and receive any moneys or other  Property  payable or deliverable
on any such claims,  and to distribute all amounts  received with respect to the
claims  of the  Securityholders  and of the  Trustee  on their  behalf;  and any
trustee, receiver, or liquidator,  custodian or other similar official is hereby
authorized by each of the Securityholders to make payments to the Trustee,  and,
in the event that the Trustee shall  consent to the making of payments  directly
to the  Securityholders,  to pay to the Trustee such amounts as shall be due the
Trustee, and each predecessor Trustee under Section 6.6.

Nothing herein  contained  shall be deemed to authorize the Trustee to authorize
or consent to or vote for or accept or adopt on behalf of any Securityholder any
plan or  reorganization,  arrangement,  adjustment or composition  affecting the
Securities or the rights of any Holder  thereof,  or to authorize the Trustee to
vote in  respect  of the  claim of any  Securityholder  in any  such  proceeding
except,  as  aforesaid,  to vote for the election of a trustee in  bankruptcy or
similar Person.

All rights of action and of asserting claims under this Indenture,  or under any
of the Securities,  may be enforced by the Trustee without the possession of any
of the  Securities or the production  thereof on any trial or other  proceedings
relative thereto,  and any such action or proceedings  instituted by the Trustee
shall be  brought  in its own  name as  trustee  of an  express  trust,  and any
recovery of judgment, subject to the payment of the expenses,  disbursements and
compensation  of the  Trustee,  each  predecessor  Trustee and their  respective
agents and  attorneys,  shall be for the  ratable  benefit of the Holders of the
Securities in respect of which such judgment has been sought.

In any proceedings  brought by the Trustee (and also 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
Securities,  and it shall not be necessary to make any Holders of the Securities
parties to any such proceedings.

SECTION 5.3  APPLICATION OF PROCEEDS.  Any moneys collected by the Trustee
pursuant to this Article shall be applied in the following  order at the date or
dates fixed by the Trustee:

     FIRST:  To the payment of all amounts due the Trustee and each  predecessor
Trustee  under  Section 6.6 or if there be no  Trustee,  to the  Noteholders  as
reimbursements for the costs and expenses of the proceedings;

SECOND:  In case the principal or the Repurchase  Price of the Securities  shall
not have  become and be then due and  payable,  to the  payment of  interest  in
default in the order of the maturity of the installments of such interest,  with
interest (to the extent that such  interest  has been  collected by the Trustee)
upon the overdue  installments  of  interest  at the  Default  Rate borne by the
Securities,  such payments to be made ratably to the Persons  entitled  thereto,
without discrimination or preference;

THIRD:  In case the principal or Repurchase  Price of the Securities  shall have
become and shall be then due and  payable,  to the  payment of the whole  amount
then  owing  and  unpaid  upon  all the  Securities  for the  Repurchase  Price,
principal and interest,  with interest upon the overdue  principal,  and (to the
extent that such  interest  has been  collected  by the  Trustee)  upon  overdue
installments  of interest at the Default  Rate borne by the  Securities;  and in
case such moneys  shall be  insufficient  to pay in full the whole amount so due
and unpaid upon the Securities,  then to the payment of such  Repurchase  Price,
principal  and  interest,  without  preference  or  priority of  principal  over
interest, or of interest over principal,  or of any installment of interest over
any other  installment of interest,  or of any Security over any other Security,
ratably to the aggregate of such principal and accrued and unpaid interest; and


          Whenever  moneys are to be applied  pursuant to this Section 5.3, such
moneys  shall be applied at such  times,  and from time to time,  as the Trustee
shall  determine,  having due regard for the amount of such moneys available for
application,  the likelihood of additional  moneys  becoming  available for such
application in the future,  and potential  expenses  relating to the exercise of
any remedy or right  conferred  on the Trustee by this  Indenture.  Whenever the
Trustee  shall  apply  such  moneys,  it shall fix the date  (which  shall be an
Interest  Payment Date unless it shall deem an earlier date more  suitable) upon
which such application is to be made, and upon such date interest on the amounts
of  principal to be paid on such date shall cease to accrue.  The Trustee  shall
give such notice as it may deem  appropriate  of the deposit with it of any such
moneys  and of the  fixing  of any such  date.  Whenever  the  principal  of and
interest on all  Securities  have been paid in full under the provisions of this
Section 5.3 and all  expenses  and charges of the  Trustee  have been paid,  any
balance  remaining in the Trust Estate shall be paid as provided in Section 10.3
of this Indenture.

SECTION 5.4  SUITS FOR ENFORCEMENT.  In case an Event of Default has
occurred,  has  not  been  waived  and is  continuing,  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 at law or in
equity or 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 5.5  RESTORATION OF RIGHTS ON ABANDONMENT OF
PROCEEDINGS. In case the Trustee shall have proceeded to enforce any right under
this Indenture and such  proceedings  shall have been  discontinued or abandoned
for any reason,  then and in every such case the Issuer and the Trustee shall be
restored  respectively to their former positions and rights  hereunder,  and all
rights,  remedies and powers of the Issuer, the Trustee and the  Securityholders
shall continue as though no such proceedings had been taken.

SECTION 5.6  LIMITATIONS ON SUITS BY SECURITYHOLDERS.  If there is a
Trustee,  Holder shall have any right by virtue or by availing of any  provision
of this  Indenture to institute  any action or proceeding at law or in equity or
in bankruptcy or otherwise upon or under or with respect to this  Indenture,  or
for the  appointment  of a trustee,  receiver,  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 25% in  aggregate  principal  amount of the  Securities
then  outstanding  shall have made written request upon the Trustee to institute
such action or  proceeding  in its own name as trustee  hereunder and shall have
offered to the Trustee such  reasonable  indemnity as it may require against the
costs,  expenses  and  liabilities  to be  incurred  therein or thereby  and the
Trustee  for 30 days after its  receipt  of such  notice,  request  and offer of
indemnity  shall have failed to institute any such action or proceedings  and no
direction  inconsistent  with such written  request shall have been given to the
Trustee  pursuant to Section 5.9; it being  understood  and intended,  and being
expressly  covenanted by the taker and Holder of every Security with every other
taker and  Holder and the  Trustee,  that no one or more  Holders of  Securities
shall  have any right in any manner  whatever  by virtue or by  availing  of any
provision of this  Indenture to affect,  disturb or prejudice  the rights of any
other  Holder of  Securities,  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 Securities.  For the protection and enforcement
of the  provisions  of this Section 5.6, each and every  Securityholder  and the
Trustee  shall be entitled  to such  relief as can be given  either at law or in
equity.

SECTION 5.7  UNCONDITIONAL RIGHT OF SECURITYHOLDERS TO
INSTITUTE CERTAIN SUITS.  Notwithstanding  any other provision in this Indenture
and any provision of any Security, the right of any Holder to receive payment of
the Repurchase  Price, of principal of and interest on such Security on or after
the  respective due dates  expressed in such Security,  or to institute suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of such Holder.

SECTION 5.8  POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION
NOT WAIVER OF DEFAULT.  No right or remedy herein  conferred upon or reserved to
the Trustee or to the  Securityholders  is intended to be exclusive of any other
right or remedy,  and every right and remedy shall,  to the extent  permitted by
law,  be  cumulative  and in  addition  to every  other  right and remedy  given
hereunder or now or thereafter  existing at law or in equity or  otherwise.  The
assertion or employment of any right or remedy  hereunder,  or otherwise,  shall
not prevent the  concurrent  assertion or  employment  of any other  appropriate
right or remedy.

No delay or omission  of the  Trustee or of any Holder to exercise  any right or
power  accruing upon any 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 Event of Default or an  acquiescence  therein;  and subject to Section 5.6,
every power and remedy  given by this  Indenture  or by law to the Trustee or to
the  Securityholders  may be exercised  from time to time,  as often as shall be
deemed expedient, by the Trustee or by the Securityholders.

SECTION 5.9  CONTROL BY SECURITYHOLDERS.  The Holders of 50% in
aggregate  principal amount of the Securities at the time outstanding shall have
the right to direct the time, method, and place of conducting any proceeding for
any remedy available to the Trustee,  or exercising any trust or power conferred
on the Trustee by this  Indenture;  PROVIDED  that such  direction  shall not be
otherwise  than in accordance  with law and the  provisions  of this  Indenture;
PROVIDED,  FURTHER, that the Trustee is provided with reasonable indemnification
by the Holders prior to taking such action; and PROVIDED, FURTHER, that (subject
to the provisions of Section 6.1) the Trustee shall have the right to decline to
follow any such  direction  if the  Trustee,  being  advised by  counsel,  shall
determine that the action or proceeding so directed may not lawfully be taken or
if the Trustee in good faith by its board of directors,  the executive committee
or a trust  committee of directors or Responsible  Officers of the Trustee shall
determine that the action or proceeding so directed would involve the Trustee in
any  financial  or other  liability  or if the  Trustee in good  faith  shall so
determine  that the  actions or  forbearances  specified  in or pursuant to such
direction  shall be  unduly  prejudicial  to the  interests  of  Holders  of the
Securities not joining in the giving of said direction, it being understood that
(subject to Section 6.1) the Trustee shall have no duty to ascertain  whether or
not such actions or forbearances are unduly prejudicial to such Holders.

Nothing  in  this  Indenture  shall  impair  the  right  of the  Trustee  in its
discretion  to take any action  deemed  proper by the  Trustee  and which is not
inconsistent with such direction by Securityholders.

SECTION 5.10  WAIVER OF PAST DEFAULTS.  The Holders of 50% in aggregate
principal  amount of the  Securities at the time  outstanding,  by notice to the
Issuer and the Trustee, may on behalf of all Holders, upon providing the Trustee
with reasonable  indemnity with respect to any action that might be taken by the
Holders not so consenting,  provide forbearances,  waive any default or Event of
Default  (excluding  the failure to pay the  Repurchase  Price or to perform its
obligations  under  Article  11)  hereunder  and  its  consequences  under  this
Indenture including  acceleration,  except a default in the payment of principal
of or interest on any of the  Securities.  In the case of any such  waiver,  the
Issuer, the Trustee and the Holders of the Securities shall be restored to their
former positions and rights  hereunder,  respectively;  but no such waiver shall
extend  to any  subsequent  or other  default  or impair  any  right  consequent
thereon.

Upon any such waiver,  such  default  shall cease to exist and be deemed to have
been cured and not to have occurred,  and any Event of Default arising therefrom
shall be deemed to have been cured,  and not to have  occurred for every purpose
of this  Indenture;  but no such waiver shall extend to any  subsequent or other
default or Event of Default or impair any right consequent thereon.

SECTION 5.11  TRUSTEE TO GIVE NOTICE OF DEFAULT, BUT MAY
WITHHOLD IN CERTAIN CIRCUMSTANCES.  The Trustee shall transmit to the
Securityholders,  as the  names  and  addresses  of such  Holders  appear on the
registry books,  notice by mail of all defaults  actually known to a Responsible
Officer of the Trustee,  such notice to be transmitted  within 90 days after the
occurrence thereof, unless such defaults shall have been cured before the giving
of such  notice  (the term  "default"  or  "defaults"  for the  purposes of this
Section  5.11 being hereby  defined to mean any event or condition  which is, or
with  notice  or  lapse of time or both  would  become,  an  Event of  Default);
PROVIDED that,  except in the case of default in the payment of the principal of
or  interest  on any of the  Securities,  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  determines  that the withholding of such notice is in the
interests of the Securityholders.

SECTION 5.12  RIGHT OF COURT TO REQUIRE FILING OF UNDERTAKING TO
PAY  COSTS.  All  parties  to this  Indenture  agree,  and  each  Holder  by its
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, suffered
or omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking  to pay the  costs of such  suit,  and that  such  court  may in its
discretion  assess  reasonable  costs,  including  reasonable  attorneys'  fees,
against  any party  litigant  in such suit,  having due regard to the merits and
good  faith of the  claims or  defenses  made by such  party  litigant;  but the
provisions  of this Section 5.12 shall not apply to any suit  instituted  by the
Trustee,   to  any  suit   instituted   by  any   Securityholder   or  group  of
Securityholders  holding in the aggregate  more than 25% in aggregate  principal
amount  of  the  Securities  outstanding,  or to  any  suit  instituted  by  any
Securityholder  for  the  enforcement  of the  payment  of the  principal  of or
interest on any Security on or after the due date expressed in such Security.

ARTICLE 6

CONCERNING THE TRUSTEE

SECTION 6.1  DUTIES AND RESPONSIBILITIES OF THE TRUSTEE; DURING
DEFAULT;  PRIOR TO DEFAULT. The Trustee,  prior to the occurrence of an Event of
Default and after the curing or waiving of all Events of Default  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  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  man would  exercise or use under
the circumstances in the conduct of his 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 such Events of Default which may have occurred:

(i) the duties and obligations of the Trustee shall be determined  solely by the
express provisions of this Indenture, 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 against the Trustee; and

(ii) in the  absence of bad faith 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  statements,  certificates  or  opinions
furnished to the Trustee and conforming to the  requirements  of this Indenture;
but in the case of any such  statements,  certificates  or opinions which by any
provision hereof are specifically  required to be furnished to the Trustee,  the
Trustee  shall be under a duty to examine the same to  determine  whether 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 Responsible Officers of the Trustee, unless it shall
be proved that 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 direction of the Holders
of not less than fifty  percent (50%) in principal  amount of the  Securities at
the time  outstanding  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;

(d) the  Trustee  shall not be  charged  with  knowledge  of an Event of Default
unless a  Responsible  Officer of the  Trustee  obtains  written  notice of such
default; and

(e)  whether or not therein  expressly  so  provided,  every  provision  of this
Indenture  relating to the conduct or  affecting  the  liability of or affording
protection  to the Trustee  shall be subject to the  provisions  of this Section
6.1.

None of the provisions  contained in this Indenture,  whether or not there shall
have occurred and be continuing,  an Event of Default, shall require the Trustee
to expend  or risk its own  funds or  otherwise  incur  any  financial  or other
liability in the  performance  of any of its duties or in the exercise of any of
its rights or powers,  if repayment of such funds or adequate  indemnity against
such liability is not assured to the reasonable satisfaction of the Trustee.

SECTION 6.2  CERTAIN RIGHTS OF THE TRUSTEE.  Subject to Section 6.1:

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

(b) any request, direction, order or demand of the Issuer 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 Issuer;

(c) the Trustee may  consult  with  counsel and any advice or Opinion of Counsel
shall be full and complete authorization and protection in respect of any action
taken,  suffered  or  omitted to be taken 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 trusts or
powers vested in it by this Indenture at the request,  order or direction of any
of the Securityholders pursuant to the provisions of this Indenture, unless such
Securityholders  shall have offered to the Trustee  reasonable  security  and/or
indemnity  against the costs,  expenses and liabilities  which might be incurred
therein or thereby;

(e) the  Trustee  shall not be liable for any  action  taken or omitted by it in
good faith and believed by it to be authorized or within the discretion,  rights
or powers conferred upon it by this Indenture;

(f)  prior to the  occurrence  of an Event of  Default  hereunder  and after the
curing or waiving of all Events of Default which may have occurred,  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,  consent, order, approval,  appraisal,  bond, debenture,  note, coupon,
security, or other paper or document unless requested in writing so to do by the
Holders  of not less  than a  majority  in  aggregate  principal  amount  of the
Securities  then  outstanding;  PROVIDED that if the payment within a reasonable
time to the Trustee of the costs,  expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this  Indenture,  the Trustee  may require  reasonable  indemnity  against  such
expenses or liabilities as a condition to proceeding; the reasonable expenses of
every such examination shall be paid by the Issuer or, if paid by the Trustee or
any predecessor trustee, shall be repaid by the Issuer upon demand;

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

(h) the Trustee makes no  representation  as to the validity or adequacy of this
Indenture or the Securities. It shall not be accountable for the Issuers' use of
the proceeds from the sale of the  Securities,  and it shall not be  responsible
for any  statement  in the  Securities,  other than its  authentication.  Except
required by Section 14.6 of this Indenture, the Trustee shall not be responsible
for any recording,  re-recording,  filing or refiling of this Indenture or other
document to perfect the Trust Estate's security interest in any collateral.  The
Trustee shall not be bound to ascertain or inquire as to the  performance of the
obligations  of the Issuer under this  Indenture.  The Trustee may  nevertheless
require  the  Issuer  to  furnish  information   regarding  performance  of  its
obligations hereunder, but is not obligated to do so.

(i) The Trustee shall have the right, but shall not be required,  to demand,  in
respect of the authentication of any Securities, the withdrawal of any cash, the
release of any  property,  or any action  whatsoever  within the purview of this
Indenture,   any   showings,   certificates,   opinions,   appraisals  or  other
information, or corporate or partnership action or evidence thereof, in addition
to that by the terms  hereof  required,  as a  condition  of such  action by the
Trustee as are deemed desirable for the purpose of establishing the right of the
Issuer to the authentication of any Securities,  the withdrawal of any cash, the
release of any property or the taking of any other action by the Trustee;

(j) The  Trustee  shall not be required to give any bond or surety in respect of
the execution of its trusts and powers  hereunder or otherwise in respect to the
premises;

(k)  The  permissive  right  of the  Trustee  to do  things  enumerated  in this
Indenture  shall  not be  construed  as a duty,  and the  Trustee  shall  not be
answerable for other than its  negligence or willful  misconduct in the exercise
of its rights and powers during the continuance of an Event of Default;

(l)  Notwithstanding  the  effective  date of this  Indenture or anything to the
contrary  in  this   Indenture,   the  Trustee   shall  have  no   liability  or
responsibility  for any act or event  relating to this  Indenture  which  occurs
prior to the date the  Trustee  formally  becomes a party to this  Indenture  by
executing this Indenture and commencing acting as Trustee hereunder; and

(m) The  Trustee  shall not be  liable  for  incidental,  indirect,  special  or
consequential damages in connection with or arising out of this Indenture.

SECTION 6.3 TRUSTEE NOT RESPONSIBLE  FOR RECITALS,  DISPOSITION OF SECURITIES OR
APPLICATION  OF  PROCEEDS  THEREOF.  The  recitals  contained  herein and in the
Securities, except the Trustee's certificates of authentication,  shall be taken
as the statements of the Issuer,  and the Trustee assumes no responsibility  for
the  correctness  of the same.  The Trustee  makes no  representation  as to the
validity or  sufficiency  of this  Indenture or of the  Securities.  The Trustee
shall not be accountable  for the use or application by the Issuer of any of the
Securities or of the proceeds  thereof.  The Trustee shall not be accountable or
responsible for any information, statement or recital in any prospectus, private
offering  memorandum or any other disclosure material prepared or distributed in
connection with the distribution of the Securities.

SECTION 6.4  TRUSTEE AND AGENTS MAY HOLD SECURITIES;
COLLECTIONS,  ETC. The Trustee or any agent of the Issuer or the Trustee, in its
individual or any other capacity,  may become the owner or pledgee of Securities
with the same rights it would have if it were not the Trustee or such agent and,
subject to the TIA and Section 6.13, if operative,  may otherwise  deal with the
Issuer and receive,  collect,  hold and retain  collections from the Issuer with
the same rights it would have if it were not the Trustee or such agent.

SECTION 6.5  MONEYS HELD BY TRUSTEE.  Subject to the provisions of Section
10.6 hereof,  all moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be  segregated  from other funds  except to the extent  required by
mandatory  provisions of law. Neither the Trustee nor any agent of the Issuer or
the Trustee shall be under any liability for interest on any moneys  received by
it hereunder.

SECTION 6.6  COMPENSATION AND INDEMNIFICATION OF TRUSTEE AND
ITS PRIOR CLAIM. The Issuer covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to,  reasonable  compensation  (which
shall not be limited by any provision of law in regard to the  compensation of a
trustee of an  express  trust)  and the  Issuer  covenants  and agrees to pay or
reimburse  the Trustee  and each  predecessor  Trustee  upon its request for all
reasonable  expenses,  (including,  without  limitation,  expenses  incurred  in
connection with notices and other  communications to Holders)  disbursements and
advances  incurred or made by or on behalf of it 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 agents and other  Persons
not regularly in its employ) except any such expense, disbursement or advance as
may arise  from its  negligence  or bad  faith.  The Issuer  also  covenants  to
indemnify the Trustee, and each predecessor trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on  its  part,   arising  out  of  or  in  connection  with  the  acceptance  or
administration  of  this  Indenture  or the  trusts  hereunder  and  its  duties
hereunder,  including  the costs and  expenses of  defending  itself  against or
investigating  any claim of liability in the premises.  The  obligations  of the
Issuer under this Section 6.6 to  compensate  and indemnify the Trustee and each
predecessor  trustee and to pay or  reimburse  the Trustee and each  predecessor
trustee for expenses,  disbursements  and advances shall  constitute  additional
indebtedness  hereunder and shall survive the satisfaction and discharge of this
Indenture.  Such additional  indebtedness shall be a senior claim to that of the
Securities upon all Property and funds held or collected by the Trustee as such,
except  funds  held in  trust  for the  benefit  of the  Holders  of  particular
Securities, and the Securities are hereby subordinated to such senior claim. The
Trustee and Issuer shall enter into a Fee  Agreement  acceptable  to the Trustee
and Issuer.

SECTION 6.7  RIGHT OF TRUSTEE TO RELY ON OFFICERS' CERTIFICATE, ETC.
Subject to Section  6.1,  whenever in the  administration  of the trusts of this
Indenture  the Trustee  shall deem it necessary  or  desirable  that a matter be
proved or  established  prior to taking or  suffering  or  omitting  any  action
hereunder,  such matter  (unless  other  evidence  in respect  thereof be herein
specifically  prescribed)  may,  in the  absence of bad faith on the part of the
Trustee,  be deemed to be  conclusively  proved and  established by an Officers'
Certificate  delivered to the Trustee,  and such certificate,  in the absence of
bad faith on the part of the Trustee,  shall be full warrant and  protection  to
the Trustee for any action taken, suffered or omitted by it under the provisions
of this Indenture upon the faith thereof.

SECTION 6.8  PERSONS ELIGIBLE FOR APPOINTMENT AS TRUSTEE.  The
Trustee  hereunder  shall at all  times be a  corporation  organized  and  doing
business  under  the laws of the  United  States of  America  or of any State or
territory or of the District of Columbia  having a combined  capital and surplus
of at least $50,000,000 (or being a member of a bank holding system with such an
aggregate combined capital and surplus), and which is authorized under such laws
to exercise  corporate trust powers and is subject to supervision or examination
by Federal,  State,  territorial  or District  of  Columbia  authority.  If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid  supervising or examining  authority,  then
for the purposes of this  Section 6.8, the combined  capital and surplus of such
corporation  shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.  Neither the Issuer nor any
Person directly or indirectly controlling, controlled by or under common control
with the Issuer may serve as Trustee hereunder.  In case at any time the Trustee
shall cease to be eligible in  accordance  with the  provisions  of this Section
6.8,  the Trustee  shall  resign  immediately  in the manner and with the effect
specified in Section 6.9.

SECTION 6.9  RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR
TRUSTEE.  The  Trustee  may  resign at any time by so  notifying  the  Issuer in
writing,  such  resignation to be effective upon the  appointment of a successor
Trustee.  The Holders of a majority in principal  amount of the Securities  then
outstanding  may remove the Trustee by so  notifying  the Trustee in writing and
may appoint a successor  Trustee with the Issuer's  consent  which consent shall
not be unreasonably withheld. The Issuer may remove the Trustee if:

(a)  the Trustee fails to comply with Section 6.8;

(b)  the Trustee is adjudged a bankrupt or an insolvent;

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

(d)  the Trustee becomes incapable of acting.

If the  Trustee  resigns or is  removed or if a vacancy  exists in the office of
Trustee  for any reason (the  Trustee in such event being  referred to herein as
the retiring  Trustee),  the Issuer shall promptly  appoint a successor  Trustee
that is reasonably  acceptable to the Holders of a majority in principal  amount
of the Securities. Within one year after the successor Trustee takes office, the
Holders  of a majority  in  principal  amount of the  Securities  may  appoint a
successor Trustee to replace the successor Trustee appointed by the Issuer.

A successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Issuer. Immediately after that, the retiring Trustee
shall  transfer  all  property  held by it as Trustee to the  successor  Trustee
(subject  to the senior  claim  provided  in Section 6.6 and upon being paid the
compensation  due to it in  Section  6.6),  the  resignation  or  removal of the
retiring Trustee shall become  effective,  and the successor  Trustee shall have
all the  rights,  powers  and duties of the  Trustee  under  this  Indenture.  A
successor Trustee shall mail notice of its succession to each Securityholder.

If a successor  Trustee  does not take office  within 30 days after the retiring
Trustee resigns or is removed,  the retiring Trustee,  the Issuer or the Holders
of at least 25% in  principal  amount of the  Securities  then  outstanding  may
petition any court of competent  jurisdiction for the appointment of a successor
Trustee.

If the Trustee fails to qualify under the TIA, if this Indenture and the Trustee
are required to be so qualified,  any  Securityholder  may petition any court of
competent  jurisdiction  for the removal of the Trustee and the appointment of a
successor Trustee.

Notwithstanding  replacement  of the Trustee  pursuant to this  Section 6.9, the
Issuer's  obligations  under  Section 6.6 shall  continue for the benefit of the
retiring Trustee.

SECTION 6.10  ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE.
Any  successor  trustee  appointed as provided in Section 6.9 shall  execute and
deliver to the Issuer 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 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 Issuer or of the successor trustee, the trustee ceasing to act shall upon
being  paid the  amounts  due it  under  Section  6.6 pay over to the  successor
trustee  all  moneys at the time held by it  hereunder  and  shall  execute  and
deliver an instrument  transferring  to such successor  trustee all such rights,
powers, duties and obligations.  Upon request of any such successor trustee, the
Issuer  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 prior claim
upon all  Property  or funds  held or  collected  by such  trustee to secure any
amounts then due it pursuant to the provisions of Section 6.6.

No successor  trustee shall accept  appointment as provided in this Section 6.10
unless at the time of such acceptance such successor  trustee shall be qualified
under the  provisions  of the TIA and eligible  under the  provisions of Section
6.9. No Trustee under this Indenture  shall be personally  liable for any action
or omission of any successor trustee.

SECTION 6.11 MERGER,  CONVERSION,  CONSOLIDATION  OR  SUCCESSION  TO BUSINESS OF
TRUSTEE.  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 the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder,  PROVIDED that such corporation shall be
qualified  under the TIA and  eligible  under the  provisions  of  Section  6.8,
without the  execution  or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.

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

SECTION  6.13  INTERVENTION  IN  LITIGATION.  In any judicial  proceedings  with
respect  to the  Securities  to which  the  Issuer is a party  the  Trustee  may
intervene  on behalf of  Holders  and  shall,  subject  to  Section  6.2 of this
Indenture,  intervene if  requested  in writing by Holders  owning not less than
fifty  percent  (50%)  in  aggregate   principal   amount  of  Securities   then
Outstanding.

ARTICLE 7

CONCERNING THE SECURITYHOLDERS

SECTION 7.1  EVIDENCE OF ACTION TAKEN BY SECURITYHOLDERS.  Any
request,  demand,  authorization,  direction,  notice,  consent, waiver or other
action provided by this Indenture to be given or taken by Securityholders may be
embodied in and evidenced by one or more  instruments of  substantially  similar
tenor  signed by such  Securityholders  in Person or by agent duly  appointed in
writing;  and, except as herein otherwise expressly provided,  such action shall
become  effective  when such  instrument  or  instruments  are  delivered to the
Trustee.  Proof of execution of any  instrument or of a writing  appointing  any
such agent shall be sufficient for any purpose of this Indenture and (subject to
Sections 6.1 and 6.2)  conclusive in favor of the Trustee and the Issuer if made
in the manner provided in this Article.

SECTION 7.2 PROOF OF  EXECUTION  OF  INSTRUMENTS  AND OF HOLDING OF  SECURITIES.
Subject  to  Sections  6.1  and  6.2,  the  execution  of  any  instrument  by a
Securityholder  or his  agent or proxy may be  proved  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 holdings of Securities shall
be proved by the Security register or by a certificate of the registrar thereof.

SECTION  7.3 HOLDERS TO BE TREATED AS OWNERS.  The  Issuer,  the Trustee and any
agent of the Issuer or the  Trustee  may deem and treat the Person in whose name
any Security  shall be  registered  upon the  Security  register as the absolute
owner of such  Security  (whether  or not such  Security  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 Repurchase Price, principal
of and,  subject to the provisions of this Indenture,  interest on such Security
and for all other purposes; and neither the Issuer nor the Trustee nor any agent
of the Issuer or the Trustee  shall be  affected by any notice to the  contrary.
All such payments so made to any such Person, 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 moneys payable upon any such Security.

SECTION 7.4  SECURITIES OWNED BY ISSUER DEEMED NOT OUTSTANDING.
In determining  whether the Holders of the requisite  aggregate principal amount
of  Securities  have  concurred in any  direction,  consent or waiver under this
Indenture,  Securities which are owned by the Issuer or any other obligor on the
Securities or by any Person directly or indirectly  controlling or controlled by
or under direct or indirect  common control with the Issuer or any other obligor
on the  Securities  (other than any Holder of Securities  on the Issuance  Date)
shall be  disregarded  and deemed not to be  outstanding  for the purpose of any
such  determination,  except  that for the  purpose of  determining  whether the
Trustee shall be protected in relying on any such  direction,  consent or waiver
only Securities which the Responsible  Officer actually knows are so owned shall
be so disregarded.  "Actual  knowledge" means the fact of knowing without a duty
to investigate. Securities so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee  establishes to the  satisfaction  of the
Trustee the pledgee's  right so to act with respect to such  Securities and that
the pledgee is not the Issuer or any other  obligor upon the  Securities  or any
Person  directly or indirectly  controlling  or controlled by or under direct or
indirect  common  control with the Issuer or any other obligor of the Securities
(other than any holder of the  Securities  on the Issuance  Date).  In case of a
dispute as to such  right,  the advice of counsel  shall be full  protection  in
respect of any decision made by the Trustee in accordance with such advice. Upon
request of the  Trustee,  the Issuer  shall  furnish to the Trustee  promptly an
Officers'  Certificate listing and identifying all Securities,  if any, known by
the  Issuer  to be  owned  or  held by or for the  account  of any of the  above
described Persons; and, subject to Section 6.1, the Trustee shall be entitled to
accept such Officers'  Certificate  as conclusive  evidence of the facts therein
set forth.

SECTION 7.5  RIGHT OF REVOCATION OF ACTION TAKEN.  At any time prior to
(but not after) the  evidencing  to the Trustee,  as provided in Section 7.1, of
the taking of any action by the Holders of the percentage in aggregate principal
amount of the  Securities  specified in this  Indenture in connection  with such
action,  any  Holder of a Security  the  serial  number of which is shown by the
evidence to be included  among the serial  numbers of the Securities the Holders
of which have  consented  to such action may,  by filing  written  notice at the
Corporate  Trust  Office and upon proof of holding as provided in this  Article,
revoke such action so far as concerns such  Security.  Except as aforesaid,  any
such action taken by the Holder of any Security  shall be conclusive and binding
upon such Holder and upon all future  Holders and owners of such Security and of
any Securities  issued in exchange or  substitution  therefor,  irrespective  of
whether or not any  notation in regard  thereto is made upon any such  Security.
Any action taken by the Holders of the percentage in aggregate  principal amount
of the  Securities  specified in this  Indenture in connection  with such action
shall be  conclusively  binding upon the Issuer,  the Trustee and the Holders of
all the Securities.

ARTICLE 8

SUPPLEMENTAL INDENTURES

SECTION 8.1  SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
SECURITYHOLDERS.  The Issuer,  when  authorized  by a resolution of its Board of
Directors,  and the  Trustee may from time to time and at any time enter into an
indenture or  indentures  supplemental  heretofore  one or more of the following
purposes:

(a)  to cure any ambiguity, defect or inconsistency;

(b)  to provide for uncertificated Securities in addition to or in place of
certificated Securities;

(c)  to provide for the assumption of the Issuer's obligations hereunder to the
Holders in the case of a merger or consolidation pursuant to Article Nine
hereof; or

(d) to make any change that would provide any  additional  rights or benefits to
the Holders or that does not adversely  affect the legal rights hereunder of any
Holder.

(e) to make any change that would be required to qualify this Indenture under
the TIA; and

(f) to make any change that does not adversely affect the rights of any Holder.

The  Trustee  is  hereby  authorized  to  join  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,  assignment,  mortgage or pledge of any property  thereunder,  but the
Trustee  shall not be  obligated to enter into any such  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 8.1 may
be executed  without the consent of the Holders of any of the  Securities at the
time outstanding, notwithstanding any of the provisions of Section 8.2.

SECTION 8.2  SUPPLEMENTAL INDENTURES WITH CONSENT OF
SECURITYHOLDERS.  With the consent  (evidenced as provided in Article  Seven) of
the Holders of not less than a majority  in  aggregate  principal  amount of the
Securities at the time outstanding  (including  consents  obtained in connection
with a tender  offer or exchange  offer for the  Securities),  the Issuer,  when
authorized by a resolution of the Board of Directors,  and the Trustee may, from
time to time and at any time, enter into an indenture or indentures supplemental
hereto for the purpose of adding any  provisions to or changing in any manner or
eliminating  any of the  provisions  of this  Indenture  or of any  supplemental
indenture  or of  modifying  in any  manner  the  rights of the  Holders  of the
Securities;  PROVIDED that no such  supplemental  indenture  shall,  without the
consent of each Holder affected  thereby (with respect to any Securities held by
a non-consenting Securityholder),  (i) reduce the principal amount of Securities
whose  Holders must consent to an amendment,  supplement or waiver,  (ii) reduce
the  principal  of or change the fixed  maturity  of any  Security  or alter the
provisions  with respect to the mandatory  repurchase of the  Securities,  (iii)
reduce the rate of or change the time for payment of  interest on any  Security,
(iv)  waive a Default or Event of Default  in the  payment  of  principal  of or
premium,  if  any,  or  interest  on the  Securities  (except  a  rescission  of
acceleration  of the  Securities  by the  Holders  of at  least  a  majority  in
aggregate  principal amount of the then  outstanding  Securities and a waiver of
the payment default that resulted from such acceleration,  other than as arising
from Article 11 or Article  12),  (v) make any  Security  payable in money other
than that stated in the  Securities,  (vi) make any change in the  provisions of
the  Indenture  relating to waivers of past Defaults or the rights of Holders of
Securities to receive  payments of principal of or interest on the Securities or
of the  Repurchase  Price,  (vii)  waive a mandatory  repurchase  payment or any
provisions related thereto with respect to any Security,  as provided in Article
12, including a reduction in the Repurchase Price, (viii) make any change in any
provision  of the  Security  relating  to  conversion  which is  adverse  to the
holders,  or  (ix)  make  any  change  in the  foregoing  amendment  and  waiver
provisions.

The Issuer may, but shall not be obligated to, fix a record date for the purpose
of  determining  the Holders  entitled to consent to any indenture  supplemental
hereto.  If a record date is fixed,  then those Persons who were Holders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled  to consent to such  supplemental  indenture  or to revoke any  consent
previously given,  whether or not such Persons continue to be Holders after such
record date.  No such consent  shall be valid or effective for more than 90 days
after such record date.

Upon the  request of the Issuer  accompanied  by a copy of a  resolution  of the
Board of Directors  certified by the Secretary or an Assistant  Secretary of the
Issuer  authorizing the execution of any such supplemental  indenture,  and upon
the  filing  with  the  Trustee  of  evidence  of the  consent  of the  required
Securityholders  and other  documents,  if any,  required  by Section  7.1,  the
Trustee  shall  join  with the  Issuer  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  Securityholders  under this
Section  8.2  to  approve  the  particular  form  of any  proposed  supplemental
indenture,  but it  shall  be  sufficient  if such  consent  shall  approve  the
substance thereof.

Promptly  after the execution by the Issuer and the Trustee of any  supplemental
indenture  pursuant to the provisions of this Section 8.2, the Issuer shall mail
a notice  thereof by  first-class  mail to the  Holders of  Securities  at their
addresses  as they shall  appear on the  registry  books of the Issuer,  setting
forth in general terms the substance of such supplemental indenture. Any failure
of the Issuer to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.

SECTION 8.3  EFFECT OF SUPPLEMENTAL INDENTURE.  Upon the execution of
any supplemental  indenture  pursuant to the provisions  hereof,  this Indenture
shall be and be deemed to be modified and amended in  accordance  therewith  and
the respective rights, limitations of rights, obligations, duties and immunities
under this  Indenture of the Trustee,  the Issuer and the Holders of  Securities
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 8.4  DOCUMENTS TO BE GIVEN TO TRUSTEE.  In connection with the
execution and delivery of any  supplemental  indenture  pursuant to this Article
Eight,  the Trustee  shall  receive an Officers'  Certificate  and an Opinion of
Counsel and, subject to the provisions of Sections 6.1 and 6.2, may rely thereon
as conclusive  evidence that any such supplemental  indenture  complies with the
applicable  provisions  of this  Indenture.  The  Opinion of  Counsel  delivered
pursuant to this  Section  8.4 shall  include a  statement  that the  execution,
delivery and performance of such supplemental  indenture by the Issuer shall not
result in a breach  or  violation  of,  or  constitute  a  default  under,  this
Indenture.  Subject to Section  6.1,  the  Trustee may  conclusively  rely on an
Opinion of Counsel with respect to the effect a supplemental indenture will have
on a Holder under Section 8.1(d).

SECTION 8.5  NOTATION ON SECURITIES IN RESPECT OF SUPPLEMENTAL
INDENTURES.  Securities  authenticated  and delivered after the execution of any
supplemental  indenture  pursuant to the  provisions  of this Article may bear a
notation in form  approved by the Trustee as to any matter  provided for by such
supplemental  indenture  or as to any action taken at any such  meeting.  If the
Issuer or the  Trustee  shall so  determine,  new  Securities  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
be  prepared  and  executed  by the  Issuer,  authenticated  by the  Trustee and
delivered in exchange for the Securities then outstanding.



ARTICLE 9

SATISFACTION AND DISCHARGE
OF INDENTURE; UNCLAIMED MONEYS

SECTION 9.1  DEFEASANCE AND REDEMPTION. The Issuer is  prohibited from
redeeming the  Securities  prior to their  maturity or otherwise or defeasing or
discharging  this  Indenture  prior to the maturity of the  Securities  or their
repurchase pursuant to the terms hereof.

SECTION 9.2 RETURN OF MONEYS HELD BY TRUSTEE AND PAYING AGENT  UNCLAIMED FOR ONE
YEAR. Any moneys and Government Securities deposited with or paid to the Trustee
or any Paying  Agent for the payment of the  Repurchase  Price,  principal of or
interest on any Security and not applied but  remaining  unclaimed  for one year
after the date upon which such Repurchase Price principal or interest shall have
become due and payable shall,  upon the written request of the Issuer and unless
otherwise required by mandatory provisions of applicable escheat or abandoned or
unclaimed  property  law,  be repaid to the Issuer by the Trustee or such Paying
Agent,  and the Holder of such  Security  shall,  unless  otherwise  required by
mandatory  provisions of applicable  escheat or abandoned or unclaimed  property
laws,  thereafter  look only to the Issuer for any payment which such Holder may
be entitled to collect,  and all  liability  of the Trustee or any Paying  Agent
with respect to such moneys and Government  Securities  shall  thereupon  cease;
PROVIDED,  HOWEVER,  that the Trustee or such Paying Agent before being required
to make any such  repayments  may,  but shall have no  fiduciary  obligation  or
contractual  obligation to, at the expense of the Issuer,  cause to be published
once, in a newspaper published in the English language, customarily published on
each Business Day and of general  circulation  in the Borough of Manhattan,  the
City of New York, notice that such money remains unclaimed and that after a date
specified  therein,  which  shall not be less than 30 days from the date of such
publication,  any unclaimed  balance of such money then remaining will be repaid
to the Issuer.  In the event any  Securities  are not presented for payment when
due,  either  at  maturity  or at the  date  fixed  for  repurchase  thereof  or
otherwise,  if funds  sufficient  to pay such  Securities  shall  have been made
available to the Trustee or Paying Agent for the benefit of the Holders thereof,
all liability of the Issuer to the Holders for payment of such Securities  shall
terminate and be completely  discharged.  The Trustee shall hold such segregated
funds,  without liability for interest thereon,  for the benefit of the Holders,
who  shall   thereafter  be  restricted   exclusively  to  such  funds  for  the
satisfaction  of any claim of whatever nature on their part under this Indenture
or relating to such Securities.

ARTICLE 10

MISCELLANEOUS PROVISIONS

SECTION  10.1  INCORPORATORS,  SHAREHOLDERS,  OFFICERS  AND  DIRECTORS OF ISSUER
EXEMPT FROM  INDIVIDUAL  LIABILITY.  No recourse  under or upon any  obligation,
covenant or  agreement  contained  in this  Indenture,  or in any  Security,  or
because  of  any  indebtedness  evidenced  thereby,  shall  be had  against  any
incorporator, as such, or
against any past, present or future stockholder, officer, employee, director, or
creditor,  as such, of the Issuer or the Trustee or any Subsidiary of the Issuer
or any  successor of the Issuer or the Trustee or any such  Subsidiary,  whether
directly or through the Issuer or any  Subsidiary of the Issuer or any successor
of the  Issuer  or any  such  subsidiary,  under  any  rule of law,  statute  or
constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise,  all such liability being expressly waived
and released by the acceptance of the  Securities by the Holders  thereof and as
part of the consideration for the issue of the Securities.

SECTION 10.2  PROVISIONS OF INDENTURE FOR THE SOLE BENEFIT OF
PARTIES AND  SECURITYHOLDERS.  Nothing in this  Indenture or in the  Securities,
express or implied,  shall give or be construed  to give to any Person,  firm or
corporation,  other than the parties hereto and their successors and the Holders
of the  Securities,  any legal or  equitable  right,  remedy or claim under this
Indenture or under any covenant or provision herein contained.

SECTION 10.3  SUCCESSORS AND ASSIGNS OF ISSUER BOUND BY
INDENTURE.  All the  covenants,  stipulations,  promises and  agreements in this
Indenture  contained by or on behalf of the Issuer shall bind its successors and
assigns, whether so expressed or not.

SECTION 10.4  NOTICES AND DEMANDS ON ISSUER, TRUSTEE AND
SECURITYHOLDERS.  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  Securities  to or on the Issuer  shall be given or served by (i) delivery in
Person,  (ii)  telecopy  (confirmed by copy sent by  first-class  mail) or (iii)
certified or registered  mail,  return  receipt  requested  (except as otherwise
specifically  provided herein), in each case addressed (until another address of
the  Issuer is filed by the  Issuer  with the  Trustee)  to  Allstate  Financial
Corporation,  2700 South Quincy Street,  Suite 540,  Arlington,  Virginia 22206,
Attention:  President  (Telecopy  No.: 703-  931-2034).  Any notice,  direction,
request or demand by the  Issuer or any  Securityholder  to or upon the  Trustee
shall be deemed to have been  sufficiently  given or made, for all purposes,  if
given or served by one of the methods  described  in the first  sentence of this
Section 10.4, addressed to the Corporate Trust Office (Telecopy No.: ______).

Where this  Indenture  provides  for notice to  Holders,  such  notice  shall be
sufficiently  given (unless  otherwise herein expressly  provided) if in writing
and mailed, first-class postage prepaid, to each Holder entitled thereto, at his
last  address as it  appears  in the  Security  register.  Any  notice  which is
delivered,  telecopied  (and  confirmed by mail) or mailed in the manner  herein
provided shall be conclusively  presumed to have been given,  whether or not the
addressee  receives such notice. In any case where notice to Holders is given by
mail,  neither the failure to mail such notice,  nor any defect in any notice so
mailed to any particular Holder shall affect the sufficiency of such notice with
respect  to other  Holders.  Where  this  Indenture  provides  for notice in any
manner,  such notice may be waived in writing by the Person  entitled to receive
such  notice,  either  before or after the event,  and such waiver  shall be the
equivalent of such notice.  Waivers of notice by Holders shall be filed with the
Trustee,  but such filing shall not be a condition  precedent to the validity of
any action taken in reliance upon such waiver.

In case,  by reason of the  suspension  of or  irregularities  in  regular  mail
service,  it shall be  impracticable  to mail notice or confirm by mail telecopy
notice to the Issuer and  Securityholders  when such  notice is  required  to be
given  pursuant to any  provision of this  Indenture,  then any manner of giving
such  notice as shall be  satisfactory  to the  Trustee  shall be deemed to be a
sufficient giving of such notice.

SECTION 10.5 COMPLIANCE  CERTIFICATES AND OPINIONS OF COUNSEL;  STATEMENTS TO BE
CONTAINED THEREIN. Upon an application or demand by the Issuer to the Trustee to
take any action under any of the provisions of this Indenture,  the Issuer shall
furnish to the Trustee (i) an Officers'  Certificate stating that all conditions
precedent  provided for in this Indenture  relating to the proposed  action have
been complied with and (ii) an Opinion of Counsel stating that in the opinion of
such counsel all such conditions  precedent have been complied with and (iii) if
appropriate,  an  Accountants'  Certificate  stating that in the opinion of such
accountants all such conditions  precedent have been complied with,  except that
in the case of any such application or demand as to which the furnishing of such
documents is specifically  required by any provision of this Indenture  relating
to such particular  application or demand, no additional  certificate or opinion
need be furnished.

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  (a) a  statement  that the Person  making  such
certificate  or  opinion  has  read  such  covenant  or  condition,  (b) a brief
statement as to the nature and scope of the  examination or  investigation  upon
which the  statements or opinions  contained in such  certificate or opinion are
based,  (c) a statement  that,  in the opinion of such Person,  he has made such
examination  or  investigation  as is  necessary  to enable  him to  express  an
informed  opinion as to  whether  or not such  covenant  or  condition  has been
complied  with and (d) a statement  as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.

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

Any certificate,  statement or opinion of an officer of the Issuer or of counsel
may be based, insofar as it relates to accounting matters, upon a certificate or
opinion of or  representations  by an accountant or firm of  accountants  in the
employ of the Issuer  unless such officer or counsel,  as the case may be, knows
that  the  certificate  or  opinion  or  representations  with  respect  to  the
accounting matters upon which his certificate, statement or opinion may be based
as aforesaid are  erroneous,  or in the exercise of reasonable  care should know
that the same are erroneous.

Any certificate or opinion of any independent firm of public  accountants  filed
with the Trustee shall contain a statement that such firm is independent.

SECTION 10.6  PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS.
If the date of maturity of interest on or  principal  of the  Securities  or the
date fixed for  repurchase  of any Security  shall not be a Business  Day,  then
payment of interest or principal  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  repurchase,  and no interest  shall
accrue for the period after such date.

SECTION 10.7  APPLICABLE  LAW.  VIRGINIA LAW TO GOVERN.  THIS INDENTURE AND EACH
SECURITY  SHALL BE  DEEMED  TO BE A  CONTRACT  UNDER  THE  LAWS OF THE  STATE OF
VIRGINIA,  AND FOR ALL PURPOSES  SHALL BE CONSTRUED IN ACCORDANCE  WITH THE LAWS
(OTHER THAN CHOICE OF LAW RULES) OF SAID STATE.  THE ISSUER  HEREBY  IRREVOCABLY
SUBMITS  TO THE  NON-EXCLUSIVE  JURISDICTION  OF ANY  UNITED  STATES  FEDERAL OR
VIRGINIA STATE COURT SITTING IN VIRGINIA IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR  RELATING  TO THIS  INDENTURE  OR THE  SECURITIES  AND THE  ISSUER  HEREBY
IRREVOCABLY  AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING  MAY
BE HEARD AND  DETERMINED  IN ANY SUCH UNITED  STATES  FEDERAL OR VIRGINIA  STATE
COURT.  THE  ISSUER  IRREVOCABLY  WAIVES  ANY  OBJECTION,   INCLUDING,   WITHOUT
LIMITATION,  ANY  OBJECTION  TO THE  LAYING OF VENUE OR BASED ON THE  GROUNDS OF
FORUM NON CONVENIENS,  WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH  ACTION  OR  PROCEEDINGS  IN  SUCH  RESPECTIVE  JURISDICTIONS.  THE  ISSUER
IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR
PROCEEDING  BROUGHT IN ANY COURT IN OR OF THE STATE OF VIRGINIA BY THE  DELIVERY
OF COPIES OF SUCH  PROCESS TO THE ISSUER,  AT ITS ADDRESS  SPECIFIED  IN SECTION
10.4 HEREOF OR BY CERTIFIED MAIL DIRECT TO SUCH ADDRESS.

     WHENEVER  POSSIBLE EACH PROVISION OF THIS INDENTURE SHALL BE INTERPRETED IN
SUCH  MANNER AS TO BE  EFFECTIVE  AND VALID  UNDER  APPLICABLE  LAW,  BUT IF ANY
PROVISION OF THIS INDENTURE  SHALL BE PROHIBITED BY OR INVALID UNDER  APPLICABLE
LAW, SUCH PROVISION  SHALL BE  INEFFECTIVE TO THE EXTENT OF SUCH  PROHIBITION OR
INVALIDITY,  WITHOUT  INVALIDATING  THE  REMAINDER  OF  SUCH  PROVISION  OR  THE
REMAINING PROVISIONS OF THIS INDENTURE.  WHENEVER IN THIS INDENTURE REFERENCE IS
MADE TO THE ISSUER OR A HOLDER,  SUCH REFERENCE  SHALL BE DEEMED TO INCLUDE,  AS
APPLICABLE,  A  REFERENCE  TO  THEIR  RESPECTIVE  SUCCESSORS  AND  ASSIGNS.  THE
PROVISIONS  OF THIS  INDENTURE  SHALL BE  BINDING  UPON AND  SHALL  INURE TO THE
BENEFIT OF SUCH SUCCESSOR AND ASSIGNS. THE ISSUER'S SUCCESSORS AND ASSIGNS SHALL
INCLUDE, WITHOUT LIMITATION, A RECEIVER, TRUSTEE OR DEBTOR IN POSSESSION FOR THE
ISSUER.

SECTION 10.8  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.

SECTION 10.9 EFFECT OF HEADINGS. The Article and Section headings herein and the
Table of Contents are for convenience only and shall not affect the construction
hereof.

SECTION 10.10  USURIOUS INTEREST. All agreements between the Issuer, the
Trustee and the Holders,  whether now existing or hereafter  arising and whether
written or oral, are hereby limited so that in no contingency, whether by reason
of demand  or  acceleration  of the final  maturity  date of the  Securities  or
otherwise,  shall the interest contracted for, charged, received, paid or agreed
to be paid to Holders  exceed the maximum amount  permissible  under the laws of
the  State  of  Virginia  (hereinafter  the  "Applicable  Law").  If,  from  any
circumstance  whatsoever,  interest would otherwise be payable to the Holders in
excess of the maximum  amount  permissible  under  Applicable  Law, the interest
payable to the Holders shall be reduced to the maximum amount  permissible under
Applicable  Law,  and if from any  circumstance  the Holders  shall ever receive
anything of value deemed interest by the Applicable Law in excess of the maximum
amount  permissible  under the Applicable  Law, an amount equal to the excessive
interest  shall be applied to the reduction of the  principal  hereof and not to
the payment of interest,  or if such  excessive  amount of interest  exceeds the
unpaid principal balance of principal  hereof,  such excess shall be refunded to
Issuer.  All  interest  paid or agreed to be paid to the Holders  shall,  to the
extent  permitted by the Applicable Law, be amortized,  prorated,  allocated and
spread  throughout the full period  (including  any renewal or extension)  until
payment  in full of the  principal  so that the  interest  hereon  for such full
period shall not exceed the maximum amount permissible under the Applicable Law.
The Holders  expressly  disavow any intent to  contract  for,  charge or receive
interest in an amount which  exceeds the maximum  amount  permissible  under the
Applicable Law. This paragraph shall control  agreements  between the Issuer and
the Holders.

SECTION  10.11 VALUE OF  SECURITIES.  To the extent  lawful,  conversion  rights
issued in association  herewith shall have a deminimus value and shall be valued
at zero for U.S.
income tax purpose, including adjustment to the Securities.

     SECTION  10.12  DIRECTORS.  The  Holder or  Holders  of 50  percent  of the
outstanding  Securities shall, until such time as the Securities are paid and/or
converted in full,  have the right to name,  at any time,  and from time to time
(i) one of the  members  of the  Board  of  Directors  so long as the  Board  of
Directors  shall have eight or fewer  members,  including  that  director  named
pursuant  to this  provision,  and (ii) two  members  of the Board of  Directors
should the Board of Directors  exceed  eight  members,  including  the member so
named by clause (i) of this provision.  Such named persons shall, upon direction
by the required Holder(s), be placed upon the Board of Directors and the Issuer,
at such time as such Board of Directors'  seat of such appointee is subject to a
shareholder  vote,  shall  support and  nominate  such named  individual(s)  for
election  to the Board of  Directors.  Such right to name such  directors  shall
include,  upon a one day written notice,  the right to remove and replace one or
both such named  directors.  During such time period as this right  exists,  the
Issuer  will not  permit  its Board of  Directors  to exceed a total of ten (10)
directors.

ARTICLE 11

CONVERSION

     SECTION 11.1   CONVERSION PRIVILEGE.   At any time or from time to time,
at the option of any  Securityholder,  which option shall be exercised by giving
notice to the  Issuer  and the  Trustee,  the  Securities  shall be  subject  to
conversion  to Common  Stock of the Issuer as provided in this Article 11 hereof
at a conversion  price of $6.50 per share (such price,  as so adjusted from time
to time, the "Conversion  Price"),  as such price may be adjusted as provided in
this  Article 11 hereof.  The  Securities  may be converted in whole or in part,
provided  that if any  Security  is  converted  in part,  the  principal  amount
remaining with respect to the Securities shall be in an Authorized Denomination.
No fractional  shares will be issued upon the  conversion of the  Securities and
any fractional amount shall be paid to the holder in cash.

     Securities  surrendered for conversion  during the period from the close of
business on any Interest Record Date next preceding any Interest Payment Date to
the opening of business on such Interest  Payment Date shall be  accompanied  by
payment of an amount equal to the interest  payable from the date of  conversion
to and including the Interest Payment Date on the principal amount of Securities
surrendered for conversion.

     SECTION 11.2   NOTICE OF CONVERSION.   The Securityholder converting
Securities  shall give written  notice to the Issuer at least fifteen days prior
to such conversion of its election to convert Securities, specifying the numbers
and amounts of the Securities or portions  thereof to be converted,  accompanied
by the Securities being converted,  any payment of interest  required to be made
pursuant to Section 11.1 hereof,  and an instrument of transfer  satisfactory to
the Trustee.

     SECTION 11.3   ISSUANCE AND RESERVATION OF COMMON STOCK.

(a) Notice having been given in the manner  provided in Section 11.2 above,  the
Securities  or portions  thereof shall be converted to Common Stock as set forth
in such notice.

(b) Common  Stock will be promptly  issued by the Issuer to or upon the order of
the registered  owner of the Securities or portions thereof to be converted upon
compliance with the above provisions.

          (c)  Reservation of Shares.  The Issuer shall at all times reserve for
issuance and delivery upon  conversion  such number of shares of Common Stock or
other  shares of  Capital  Stock of the  Issuer  as from  time to time  shall be
issuable upon  conversion.  All such shares shall be duly  authorized  and, when
issued  upon  such   exercise,   shall  be  validly   issued,   fully  paid  and
nonassessable,  free and clear of all liens,  security  interests,  charges  and
other encumbrances and free and clear of all preemptive rights.

     SECTION 11.4   CANCELLATION OF CONVERTED SECURITIES.

          (a) All  Securities  converted  in full under the  provisions  of this
Article  shall  forthwith  be  cancelled  and  destroyed  by the  Trustee  and a
certificate of destruction  furnished to the Issuer,  and no Securities shall be
executed,  authenticated,  issued  or  delivered  in  exchange  or  substitution
therefor  or for or in respect of any  converted  portion of a fully  registered
Security.

          (b) If there  shall be  presented  for  conversion  less than all of a
Security,  the Issuer  shall  execute and the  Trustee  shall  authenticate  and
deliver,  upon the  surrender  of such  Security,  without  charge  to the owner
thereof,  for the unconverted balance of the principal amount of the Security so
surrendered, Securities of like maturity in an Authorized Denomination.

     SECTION 11.5 ADJUSTMENTS OF CONVERSION PRICE AND NUMBER OF SHARES OF COMMON
STOCK.  The  Conversion  Price and the number and kind of shares of Common Stock
issuable upon the conversion  will be subject to change or adjustment  from time
to time as follows:

          (a) Change in Common Stock. In the event the Issuer shall, at any time
or from time to time after the date hereof, (i) issue any shares of Common Stock
as a stock  dividend to the holders of Common Stock;  (ii)  subdivide or combine
the outstanding shares of Common Stock into a greater or lesser number of shares
or  (iii)  issue  any  shares  of its  Capital  Stock in a  reclassification  or
reorganization of the Common Stock (any such issuance, subdivision, combination,
reclassification  or  reorganization  being herein called a "Change of Shares"),
then (A) in the case of (i) or (ii) above,  the number of shares of Common Stock
that may be purchased upon conversion  shall be adjusted to the number of shares
of Common  Stock that the  Holder  would  have  owned or have been  entitled  to
receive after the happening of such event had  conversion  occurred  immediately
prior to the record date (or, if there is no record date,  the  effective  date)
for such  event,  and the  Conversion  Price  shall  be  adjusted  to the  price
(calculated to the nearest  1,000th of one cent)  determined by multiplying  the
Conversion Price immediately prior to such event by a fraction, the numerator of
which shall be the number of shares of Common Stock  receivable  upon conversion
immediately prior to such event and the denominator of which shall be the number
of  shares of Common  Stock  receivable  upon  conversion  after the  adjustment
referred to above and (B) in the case of clause (iii) above, paragraph (l) below
shall apply.  An adjustment  made  pursuant to clause (A) of this  paragraph (a)
shall become effective  retroactively  immediately  after the record date in the
case of such dividend and shall become effective immediately after the effective
date in other cases,  but any shares of Common Stock issuable solely as a result
of such  adjustment  shall not be  issued  prior to the  effective  date of such
event.

          (b) Common Stock  Distribution.  In the event the Issuer shall, at any
time or from  time to time  after  the date  hereof,  issue,  sell or  otherwise
distribute (including by way of deemed distributions  pursuant to paragraphs (c)
and (d) below) any shares of Common Stock  (other than  pursuant to (i) a Change
of  Shares,  or (ii) the  exercise  or  conversion,  as the case may be,  of any
Option,  Convertible  Security  (each as  defined  in  paragraph  (c)  below) or
warrant)  (any such  event,  including  any deemed  distributions  described  in
paragraphs (c) and (d) but excluding any transaction described in paragraph (m),
being herein  called a "Common Stock  Distribution"),  for a  consideration  per
share less than the current market price per share of Common Stock,  on the date
of such Common  Stock  Distribution,  then,  effective  upon such  Common  Stock
Distribution,  the Conversion Price shall be reduced to the price (calculated to
the nearest 1,000th of one cent)  determined by multiplying the Conversion Price
in effect immediately prior to such Common Stock Distribution by a fraction, the
numerator  of which  shall be the sum of (1) the product of the number of shares
of Common Stock outstanding (exclusive of any treasury shares) immediately prior
to such Common Stock  Distribution  multiplied  by the current  market price per
share of Common  Stock on the date of such Common Stock  Distribution,  plus (2)
the  consideration,  if any,  received  by the  Issuer  upon such  Common  Stock
Distribution, and the denominator of which shall be the product of (x) the total
number of shares of Common Stock issued and outstanding  immediately  after such
Common Stock  Distribution  multiplied by (y) the current market price per share
of Common Stock on the date of such Common Stock Distribution.

     If any  Common  Stock  Distribution  shall  require  an  adjustment  to the
Conversion  Price  pursuant to the foregoing  provisions of this  paragraph (b),
including by operation of  paragraph  (c) or (d) below,  then,  effective at the
time such  adjustment is made,  the number of shares of Common Stock  receivable
upon  conversion  shall be increased to a number  determined by multiplying  the
number  of  shares  so  receivable   immediately  prior  to  such  Common  Stock
Distribution by a fraction, the numerator of which shall be the Conversion Price
in effect  immediately  prior to such  adjustment  and the  denominator of which
shall be the Conversion Price in effect  immediately  after such adjustment.  In
computing adjustments under this paragraph, fractional interests in Common Stock
shall be taken into account to the nearest 1,000th of a share.

     The provisions of this  paragraph (b),  including by operation of paragraph
(c) or (d) below,  shall not operate to increase the Conversion  Price or reduce
the  number of shares of Common  Stock  receivable  upon  conversion,  except by
operation of paragraph  (j) or (k) below,  or in the event of a reverse split of
the Common Stock.

          (c) Issuance of Options. In the event the Issuer shall, at any time or
from time to time after the date hereof,  issue,  sell,  distribute or otherwise
grant in any manner  (including by assumption) any rights to subscribe for or to
purchase,  or any warrants or options for the  purchase of,  Common Stock or any
stock or securities  convertible into or exchangeable for Common Stock (any such
rights,  warrants  or  options  being  herein  called  "Options"  and  any  such
convertible or exchangeable stock or securities being herein called "Convertible
Securities"),  whether or not such  Options or the rights to convert or exchange
such Convertible Securities are immediately exercisable, and the price per share
at which Common Stock is issuable  upon the exercise of such Options or upon the
conversion or exchange of such  Convertible  Securities  (determined by dividing
(i) the  aggregate  amount,  if any,  received  or  receivable  by the Issuer as
consideration for the issuance,  sale, distribution or granting of such Options,
plus the minimum aggregate amount of additional  consideration,  if any, payable
to the  Issuer  upon the  exercise  of all such  Options,  plus,  in the case of
Options to acquire  Convertible  Securities,  the  minimum  aggregate  amount of
additional consideration, if any, payable upon the conversion or exchange of all
such  Convertible  Securities,  by (ii) the  total  maximum  number of shares of
Common Stock  issuable upon the exercise of all such Options) shall be less than
the current  market price per share of Common Stock on the date of the issuance,
sale,  distribution  or  granting of such  Options,  then,  for the  purposes of
paragraph (b) above, the total maximum number of shares of Common Stock issuable
upon the exercise of all such Options or upon the  conversion or exchange of the
total maximum amount of the Convertible Securities issuable upon the exercise of
all such  Options  shall be  deemed  to have  been  issued as of the date of the
issuance, sale, distribution or granting of such Options and thereafter shall be
deemed to be  outstanding  and the Issuer  shall be deemed to have  received  as
consideration  such price per share,  determined  as provided  above,  therefor.
Except as otherwise  provided in  paragraphs  (j) and (k) below,  no  additional
adjustment  of the  Conversion  Price shall be made upon the actual  exercise of
such  Options or upon  conversion  or  exchange  of the  Convertible  Securities
issuable upon the exercise of such Options.  If the minimum and maximum  numbers
or amounts referred to in this paragraph (c) or in paragraph (d) below cannot be
calculated  with  certainty  as of the  date of the  required  adjustment,  such
numbers and amounts  shall be determined in good faith by the Board of Directors
of the Issuer.

          (d) Issuance of Convertible Securities. In the event the Issuer shall,
at any time or from time to time after the date hereof, issue, sell or otherwise
distribute (including by assumption) any Convertible Securities (other than upon
the  exercise of any  Option),  whether or not the rights to convert or exchange
such Convertible Securities are immediately exercisable, and the price per share
at which  Common  Stock is  issuable  upon the  conversion  or  exchange of such
Convertible Securities (determined by dividing (i) the aggregate amount, if any,
received or receivable by the Issuer as consideration for the issuance,  sale or
distribution of such Convertible  Securities,  plus the minimum aggregate amount
of additional  consideration,  if any, payable to the Issuer upon the conversion
or exchange of all such Convertible Securities, by (ii) the total maximum number
of shares of Common Stock  issuable upon the  conversion or exchange of all such
Convertible Securities) shall be less than the current market price per share of
Common Stock on the date of such issuance,  sale or distribution,  then, for the
purposes of  paragraph  (b) above,  the total  number of shares of Common  Stock
issuable  upon the  conversion  or exchange of all such  Convertible  Securities
shall be  deemed to have been  issued  as of the date of the  issuance,  sale or
distribution of such Convertible Securities and thereafter shall be deemed to be
outstanding  and the Issuer  shall be deemed to have  received as  consideration
such  price  per  share,  determined  as  provided  above,  therefor.  Except as
otherwise provided in paragraphs (j) and (k) below, no additional  adjustment of
the  Conversion  Price shall be made upon the actual  conversion  or exchange of
such Convertible Securities.

          (e) Dividends and Distributions. In the event the Issuer shall, at any
time or from time to time after the date  hereof,  distribute  to the holders of
Common  Stock any  dividend  or other  distribution  of cash,  evidences  of its
indebtedness, other securities or other properties or assets (in each case other
than (i) dividends  payable in Common Stock,  Options or Convertible  Securities
and (ii) any cash  dividend  declared and paid  pursuant to a regular  quarterly
dividend  policy of the  Issuer),  or any  options,  warrants or other rights to
subscribe for or purchase any of the foregoing,  then (A) the  Conversion  Price
shall be decreased to a price  determined by multiplying  the  Conversion  Price
then in effect by a fraction, the numerator of which shall be the current market
price per share of Common  Stock on the record date for such  distribution  less
the sum of (X) the cash  portion,  if any,  of such  distribution  per  share of
Common Stock  outstanding  (exclusive of any treasury  shares) plus (Y) the then
fair market value (as  determined in good faith by the Board of Directors of the
Issuer) per share of Common Stock issued and  outstanding on the record date for
such distribution of that portion,  if any, of such  distribution  consisting of
evidences  of  indebtedness,  other  securities,  properties,  assets,  options,
warrants or subscription or purchase rights,  and the denominator of which shall
be such  current  market  price per share of Common  Stock and (B) the number of
shares of Common Stock receivable upon conversion shall be increased to a number
determined  by  multiplying  the number of shares of Common Stock so  receivable
immediately  prior to the record date for such  distribution by a fraction,  the
numerator of which shall be the Conversion Price in effect  immediately prior to
the  adjustment  required by clause (A) of this sentence and the  denominator of
which shall be the Conversion Price in effect immediately after such adjustment.
The  adjustments  required by this paragraph (e) shall be made whenever any such
distribution  is made  and  shall  be  retroactive  to the  record  date for the
determination of stockholders entitled to receive such distribution.

          (f) Current  Market Price.  For the purpose of any  computation  under
paragraphs  (b), (c), (d) and (e) of this Section 11.5, the current market price
per share of Common Stock at any date shall be the average of the daily  closing
prices for the shorter of (i) the 20 consecutive trading days ending on the last
full  trading day on the exchange or market  specified in the second  succeeding
sentence,  prior to the Time of Determination  and (ii) the period commencing on
the date next succeeding the first public  announcement  of the issuance,  sale,
distribution or granting in question through such last full trading day prior to
the Time of Determination. The term "Time of Determination" as used herein shall
be the  time and date of the  earlier  to occur of (A) the date as of which  the
current market price is to be computed and (B) the last full trading day on such
exchange  or market  before the  commencement  of  "ex-dividend"  trading in the
Common  Stock  relating to the event giving rise to the  adjustment  required by
paragraph  (b), (c), (d) or (e). The closing price for any day shall be the last
reported sale price regular way or, in case no such reported sale takes place on
such day, the average of the closing bid and asked  prices  regular way for such
day, in each case (1) on the principal national securities exchange on which the
shares of Common  Stock are  listed or to which  such  shares  are  admitted  to
trading or (2) if the Common  Stock is not  listed or  admitted  to trading on a
national securities exchange, in the over-the-counter  market as reported by the
National  Association of Securities  Dealers,  Inc.  Automated  Quotation System
("Nasdaq") or any comparable  system or (3) if the Common Stock is not listed on
Nasdaq or a  comparable  system,  as  furnished  by two members of the  National
Association of Securities  Dealers,  Inc. ("NASD") selected from time to time in
good faith by the Board of  Directors  of the Issuer  for that  purpose.  In the
absence of all of the  foregoing,  or if for any other reason the current market
price per share cannot be  determined  pursuant to the  foregoing  provisions of
this  paragraph (f), the current market price per share shall be the fair market
value  thereof  as  determined  in good faith by the Board of  Directors  of the
Issuer.

          (g) Certain Distributions.  If the Issuer shall pay a dividend or make
any other distribution payable in Options or Convertible  Securities,  then, for
purposes  of  paragraph  (b) above  (including  dividends  or  distributions  by
operation of paragraph  (c) or (d) above,  as the case may be),  such Options or
Convertible  Securities  shall be  deemed to have  been  issued or sold  without
consideration except for such amounts of consideration as shall have been deemed
to have been received by the Issuer pursuant to paragraphs (c) or (d) above, as,
appropriate.

     (h) Consideration  Received.  If any shares of Common Stock shall be issued
and sold in an underwritten public offering,  the consideration  received by the
Issuer  for  such  shares  of  Common  Stock  shall be  deemed  to  include  the
underwriting  discounts and  commissions  realized by the  underwriters  of such
public  offering.  If  any  shares  of  Common  Stock,  Options  or  Convertible
Securities shall be issued,  sold or distributed for a consideration  other than
cash, the amount of the consideration  other than cash received by the Issuer in
respect  thereof  shall be  deemed  to be the  then  fair  market  value of such
consideration  (as  determined  in good faith by the Board of  Directors  of the
Issuer). If any Options shall be issued in connection with the issuance and sale
of other securities of the Issuer,  together comprising one integral transaction
in which no specific  consideration  is allocated to such Options by the parties
thereto,  such Options shall be deemed to have been issued,  sold or distributed
for such amount of  consideration  as shall be allocated to such Options in good
faith by the Board of Directors of the Issuer.

     (i) Deferral of Certain Adjustments. No adjustments to the Conversion Price
(including  the  related  adjustment  to the  number of  shares of Common  Stock
receivable upon conversion) shall be required  hereunder unless such adjustment,
together with other adjustments  carried forward as provided below, would result
in an increase or  decrease  of at least one  percent of the  Conversion  Price;
provided,  however, that any adjustment which by reason of this paragraph (i) is
not  required to be made shall be carried  forward and taken into account in any
subsequent adjustment.

          (j) Changes in Options and Convertible  Securities.  If the Conversion
Price  provided  for in any Options  referred  to in  paragraph  (c) above,  the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in paragraph (c) or (d) above, or the rate at
which any Convertible  Securities  referred to in paragraph (c) or (d) above are
convertible  into or  exchangeable  for Common  Stock  shall  change at any time
(other  than  under or by reason  of  provisions  designed  to  protect  against
dilution  upon an event which results in a related  adjustment  pursuant to this
Section 11.5),  the Conversion  Price then in effect and the number of shares of
Common Stock receivable upon conversion shall forthwith be readjusted (effective
only with respect to any Conversion of this Security after such readjustment) to
the  Conversion  Price and number of shares of Common  Stock  receivable  at the
Conversion  Price that would then be in effect had the adjustment  made upon the
issuance,  sale,  distribution  or  granting  of  such  Options  or  Convertible
Securities  been  made  based  upon  such  changed  purchase  price,  additional
consideration  or conversion  rate, as the case may be, but only with respect to
such Options and Convertible Securities as then remain outstanding.

          (k) Expiration of Options and Convertible Securities.  If, at any time
after any  adjustment  to the number of shares of Common Stock  receivable  upon
conversion  shall have been made pursuant to paragraph  (c), (d) or (j) above or
this  paragraph (k), any Options or  Convertible  Securities  shall have expired
unexercised or, solely with respect to Options that are rights  ("Rights"),  are
redeemed,  the number of such shares  which would be  received  upon  conversion
shall,  upon  such  expiration  or such  redemption,  be  readjusted  and  shall
thereafter be such as they would have been had they been originally adjusted (or
had the original adjustment not been required, as the case may be) as if (i) the
only shares of Common Stock deemed to have been issued in  connection  with such
Options  or  Convertible  Securities  were the shares of Common  Stock,  if any,
actually  issued or sold upon the  Conversion  of such  Options  or  Convertible
Securities and (ii) such shares of Common Stock, if any, were issued or sold for
the consideration  actually received by the Issuer upon such Conversion plus the
aggregate  consideration,  if  any,  actually  received  by the  Issuer  for the
issuance,  sale,  distribution  or granting of all such  Options or  Convertible
Securities,  whether  or not  exercised;  provided,  however,  that  (x) no such
readjustment  shall  have the  effect  of  decreasing  the  number  of shares so
receivable by an amount  (calculated  by adjusting  such decrease to account for
all other  adjustments  made pursuant to this Section 11.5 following the date of
the  original  adjustment  referred  to above)  in  excess of the  amount of the
adjustment  initially  made in respect of the issuance,  sale,  distribution  or
granting of such Options or  Convertible  Securities  and (y) in the case of the
redemption  of any Rights,  there shall be deemed (for the purposes of paragraph
(c)  above)  to have  been  issued  as of the  date of such  redemption,  for no
consideration,  a number  of  shares  of  Common  Stock  equal to the  aggregate
consideration paid to effect such redemption divided by the current market price
of the Common Stock on the date of such redemption.

     (l) Other  Adjustments.  In the  event  that at any time the  Holder  shall
become  entitled to receive any  securities  of the Issuer  other than shares of
Common  Stock  as  constituted  on the  Issue  Date  the  number  of such  other
securities so receivable upon conversion and the Conversion  Price applicable to
such Conversion  shall be adjusted at such time, and shall be subject to further
adjustment  from  time to time  thereafter,  in a manner  and on terms as nearly
equivalent as practicable to the provisions with respect to the shares of Common
Stock contained in this Section 11.5.

     (m) Excluded  Transactions.  Notwithstanding  any provision in this Section
11.5 to the contrary,  no adjustment shall be made pursuant to this Section 11.5
in  respect of (i) any  change in the par value of the  Common  Stock,  (ii) the
granting of any Options or the issuance of any shares of Common Stock, in either
case,  which would  otherwise  trigger an adjustment  under paragraph (b) above,
that may be registered on Form S-8 or any  successor  form under the  Securities
Act, to any  directors,  officers or employees of the Issuer,  provided that the
granting of Options or the issuance of shares of Common  Stock  pursuant to this
clause (ii) are in the ordinary  course of business and are usual and customary,
(iii) the issuance of Common Stock  pursuant to any dividend  reinvestment  plan
which  provides  that  the  price  of  the  Common  Stock   purchased  for  plan
participants from the Issuer will be no less than 95% of the average of the high
and low  sales  prices  of the  Common  Stock on the  investment  date or, if no
trading in the Common  Stock  occurs on such date,  the next  preceding  date on
which trading  occurred (1) on the  principal  national  securities  exchange on
which the shares of Common Stock are listed or to which such shares are admitted
to trading or (2) if the Common  Stock is not listed or admitted to trading on a
national  securities  exchange,  in the  over-the-counter  market as reported by
Nasdaq or any  comparable  system or (3) if the  Common  Stock is not  listed on
Nasdaq or a comparable  system, as furnished by two members of the NASD selected
from time to time in good faith by the Board of Directors of the Issuer for that
purpose, or (4) the issuance on conversion of any Common Stock of the Old Notes.
In the absence of all of the  foregoing,  or if for any other reason the current
market price per share cannot be determined pursuant to the foregoing provisions
of this  paragraph,  the current market price per share shall be the fair market
value  thereof  as  determined  in good faith by the Board of  Directors  of the
Issuer.

     SECTION 11.6   REORGANIZATIONS AND ASSET SALES.   If any capital
reorganization  or  reclassification  of the  capital  stock of the  Issuer,  or
consolidation or merger of the Issuer with another  corporation,  or the sale of
all or substantially all of its assets to another  corporation shall be effected
in such a way that holders of Common  Stock shall be entitled to receive  stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such  reorganization,  reclassification,  consolidation,  merger or
sale,  lawful  and  adequate  provision  shall be made  whereby  the  Holders of
Securities shall  thereafter have the right to receive,  upon the basis and upon
the terms and  conditions  specified in Securities  and in lieu of the shares of
Common Stock immediately  theretofore receivable upon the exercise of the rights
represented hereby, such shares of stock,  securities or assets as may be issued
or payable  with  respect to or in exchange for a number of shares of such stock
immediately  theretofore  receivable upon the exercise of the rights represented
hereby had such reorganization, reclassification,  consolidation, merger or sale
not taken place, and in any such case  appropriate  provision shall be made with
respect to the rights and interests of the Holders of the  Securities to the end
that  the  provisions  hereof  (including  without  limitation   provisions  for
adjustments of the Conversion Price and of the number of shares  receivable upon
the conversion) shall thereafter be applicable, as nearly as may be, in relation
to any  shares  of  stock,  securities  or assets  thereafter  deliverable  upon
conversion. The Issuer shall not effect any such consolidation,  merger or sale,
unless prior to the  consummation  thereof the successor  corporation  (if other
than the Issuer) resulting from such  consolidation or merger or the corporation
purchasing such assets shall assume, by written  instrument  executed and mailed
by first class mail,  postage  prepaid,  to the Holders of the Securities at the
last address of such Holders appearing on the register maintained by the Issuer,
the  obligation  to deliver to such Holders such shares of stock,  securities or
assets as, in  accordance  with the  foregoing  provisions,  such Holders may be
entitled to receive.

     SECTION 11.7   NOTICE OF ADJUSTMENT.    Whenever the Conversion
Price is adjusted, the Issuer shall promptly mail to Securityholders a notice of
the  adjustment  and file  with the  Trustee  a  certificate  from the  Issuer's
independent public accountant briefly stating the facts requiring the adjustment
and the  manner  of  computing  it.  In the  absence  of  manifest  error,  such
certificate  shall be presumptive  evidence that the adjustment is correct.  The
Trustee  shall  have  no  responsibility   for  calculating  or  confirming  any
adjustment  to  the  Conversion  Price  and  shall  be  entitled  to  rely  upon
calculations of such adjustments set forth in such certificate.

SECTION 11.8   NOTICE OF CERTAIN TRANSACTIONS.         If:

(a)  the Issuer takes any action which would require an adjustment in the
Conversion Price;

(b)  the Issuer takes any action that would require a supplemental indenture
pursuant to Section 11.6.; or

(c)  there is a dissolution or liquidation of the Issuer,

the Issuer shall mail to  Securityholders  and the Trustee a notice  stating the
record  date  for any  such  distribution  or the  effective  date  of any  such
subdivision,  combination,  reclassification,  consolidation,  merger, transfer,
lease, liquidation or dissolution.  The Issuer shall mail the notice at least 15
days before such date.

SECTION 11.9   REGISTRATION.

(a) Each  Holder  shall  have  the  right to have the  shares  of  Common  Stock
underlying  this Security  registered as part of the next public offering of the
Common  Stock.  If no Common  Stock  offering has occurred by December 31, 1998,
then upon the written  request of any combination of the holders of Common Stock
reserved upon conversion of the Securities or of Securities issued by the Issuer
and  collectively  convertible into not less than 100,000 shares of Common Stock
(as such number may be adjusted under Paragraph  11.5), and on a one-time basis,
the Issuer  shall file,  within  ninety  (90) days after  written  request  such
registration,  and use its best efforts to cause to be declared effective ninety
(90) days thereafter,  by the Securities and Exchange Commission, a registration
statement or post-effective  amendment thereto as permitted under the Securities
Act covering the sale by the Holder of the Common Stock issuable upon conversion
of this  Security or any portion  hereof (the  "Registerable  Securities").  The
Issuer shall supply prospectuses in order to facilitate the public sale or other
disposition of the Registerable Securities, use its best efforts to register and
qualify  any of the  Registerable  Securities  for sale in such  states  as such
Holder reasonably  designates and do any and all other acts and things which may
be  necessary  to  enable  such  Holder to  consummate  the  public  sale of the
Registerable  Securities,  and furnish indemnification in the manner provided in
Paragraph  11.10  hereto.  The  Holder  shall  furnish  information   reasonably
requested by the Issuer in  accordance  with such  post-effective  amendments or
registration  statements,  including its intentions  with respect  thereto,  and
shall furnish indemnification as set forth in Paragraph 11.10.

(b) The Issuer will  maintain  such  registration  statement  or  post-effective
amendment  current and  effective  under the Act until two years  following  the
expiration of the conversion  rights herein, or until shares owned by the Holder
are eligible for sale without restriction under Rule 144.

(c) The Issuer  shall bear the entire  cost and expense of any  registration  of
securities  under  Paragraph 11.9 hereof.  Notwithstanding  the  foregoing,  any
Holder  whose  Registerable  Securities  are  included in any such  registration
statement pursuant to this Paragraph 11.9 shall,  however,  bear the fees of any
counsel  retained by him and any  transfer  taxes or  underwriting  discounts or
commissions  applicable  to the  Registerable  Securities  sold by him  pursuant
thereto.

          (d)  In addition, the Issuer shall:

(i)  furnish to the Holder  such  numbers of copies of a summary  prospectus  or
other  prospectus,  including  a  preliminary  prospectus  or any  amendment  or
supplement  to any  prospectus,  in  conformity  with  the  requirements  of the
Securities Act, and such other documents,  as the Holder may reasonably  request
in order to facilitate  the public sale or other  disposition  of the securities
owned by the Holder;

(ii) use its best efforts to register and qualify the securities covered by such
registration  statement  under  such other  securities  or blue sky laws of such
jurisdictions as the Holder shall reasonably  request,  and do any and all other
acts and things  which may be  necessary  or  advisable to enable such Holder to
consummate  the public sale or other  disposition in such  jurisdictions  of the
securities  owned by such Holder,  except that the Issuer shall not for any such
purpose be required to qualify to do  business as a foreign  corporation  in any
jurisdiction  wherein it is not so  qualified  or to file  therein  any  general
consent to service of process;

(iii) use its best efforts to list such securities on any securities exchange on
which any  securities  of the  Issuer is then  listed,  if the  listing  of such
securities is then permitted under the rules of such exchange;

(iv) enter into and perform its obligations under an underwriting  agreement, if
the offering is an underwritten  offering, in usual and customary form, with the
managing underwriter or underwriters of such underwritten offering;

(v) notify the Holder of Registerable  Securities  covered by such  registration
statement,  at any time  when a  prospectus  relating  thereto  covered  by such
registration  statement is required to be delivered under the Securities Act, of
the  happening  of any event of which it has  knowledge as a result of which the
prospectus included in such registration  statement, as then in effect, includes
an  untrue  statement  of a  material  fact or omits to  state a  material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading in the light of the circumstances then existing;

(vi)  furnish,  at the  request  of the  Holder  on the date  such  Registerable
Securities  are  delivered  to  the  underwriters  for  sale  pursuant  to  such
registration  or, if such  Registerable  Securities  are not being sold  through
underwriters,  on the date  the  registration  statement  with  respect  to such
Registerable  Securities becomes effective,  (A) an opinion, dated such date, of
the  counsel  representing  the  Issuer for the  purpose  of such  registration,
addressed to the  underwriters,  if any, and to the Holder  making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such  Registerable  Securities  may
reasonably  request  and are  customarily  included  in such an opinion  and (B)
letters,  dated,  respectively,  (1)  the  effective  date  of the  registration
statement  and (2) the date such  Registerable  Securities  are delivered to the
underwriters,  if any, for sale  pursuant to such  registration,  from a firm of
independent  certified public accountants of recognized standing selected by the
Issuer,  addressed to the  underwriters,  if any, and to the Holder  making such
request,  covering  such  financial,  statistical  and  accounting  matters with
respect to the  registration in respect of which such letters are being given as
the  Holder of such  Registerable  Securities  may  reasonably  request  and are
customarily included in such letters; and

(vii) take such other actions as shall be reasonably  requested by any Holder to
facilitate the registration and sale of the Registerable Securities.

SECTION 11.10. INDEMNIFICATION.

(a) Whenever pursuant to Paragraph 11.9 a registration statement relating to any
Registerable  Securities is filed under the Act,  amended or  supplemented,  the
Issuer  will  indemnify  and  hold  harmless  each  Holder  of the  Registerable
Securities covered by such registration statement, amendment or supplement (such
holder hereinafter referred to as the Distributing Holder), each person, if any,
who controls (within the meaning of the Act) the Distributing  Holder,  and each
officer,  director,  or general partner or agent of the Distributing Holder, and
each  underwriter  (within the meaning of the Securities Act) of such securities
and each person, if any, who controls (within the meaning of the Securities Act)
any such  underwriter  and each officer,  director,  or general  partner of such
underwriter against any losses, claims, damages or liabilities joint or several,
to which the  Distributing  Holder,  any such  underwriter  or any other  person
described  above may become subject under the Act or otherwise,  insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue  statement  or alleged  untrue  statement of any
material fact contained in any such  registration  statement or any  preliminary
prospectus or final  prospectus  constituting a part thereof or any amendment or
supplement  thereto,  or arise out of or are based  upon the  omission  to state
therein a material fact  required to be stated  therein or necessary to make the
statements  therein not misleading;  and will reimburse the Distributing  Holder
and each such  underwriter  or such other person for any legal or other expenses
reasonably  incurred by the  Distributing  Holder,  or underwriter or such other
person,  in connection  with  investigating  or defending any such loss,  claim,
damage,  liability  or action;  provided,  however,  that the Issuer will not be
liable in any such case (i) to the extent that any such loss,  claim,  damage or
liability  arises out of or is based upon an untrue  statement or alleged untrue
statement or omission or alleged omission made in said  registration  statement,
said  preliminary  prospectus,  said  final  prospectus  or  said  amendment  or
supplement in reliance upon and in conformity with written information furnished
by such  Distributing  Holder,  any  other  Distributing  Holder  for use in the
preparation  thereof or any  underwriter  or any person  acting on behalf of any
Distributing  Holder or underwriter,  and (ii) such losses,  claims,  damages or
liabilities  arise  out of or are  based  upon  any  actual  or  alleged  untrue
statement or omission made in or from any preliminary prospectus,  but corrected
in the final prospectus, as amended or supplemented.

(b) Whenever pursuant to Paragraph 11.9 a registration statement relating to the
Registerable  Securities is filed,  amended or supplemented under the Securities
Act, the  Distributing  Holder will  indemnify  and hold harmless the Issuer and
each underwriter,  each of their respective directors,  each of their respective
officers and general partners thereto, and each person, if any, who controls the
Issuer  (within the meaning of the Securities  Act) against any losses,  claims,
damages  or  liabilities  to which  the  Issuer or any such  director,  officer,
general  partner or  controlling  person may become subject under the Securities
Act or otherwise,  insofar as such losses,  claims,  damages or liabilities  (or
actions in respect thereof) arise out of or are based upon any untrue or alleged
untrue  statement  of any  material  fact  contained  in any  such  registration
statement or any preliminary prospectus or final prospectus  constituting a part
thereof,  or any amendment or supplement  thereto,  or arise out of or are based
upon the  omission or the  alleged  omission  to state  therein a material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading,  in each case to the extent, but only to the extent that such untrue
statement or alleged untrue statement or omission was made in said  registration
statement, said preliminary prospectus,  said final prospectus or said amendment
or  supplement  in reliance  upon and in  conformity  with  written  information
furnished by such Distributing  Holder or such underwriter (or any person acting
on behalf of such Distributing Holder or underwriter) for use in the preparation
thereof;  and will reimburse the Issuer or any such director,  officer,  general
partner  or  controlling  person  for any  legal  or other  expenses  reasonably
incurred by them in connection  with  investigating  or defending any such loss,
claim, damage, liability or action.

(c) Promptly after receipt by an indemnified party under this Paragraph 11.10 of
notice of the  commencement  of any action,  such  indemnified  party will, if a
claim in respect thereof is to be made against any indemnifying  party, give the
indemnifying  party notice of the commencement  thereof;  but the omission to so
notify the  indemnifying  party will not relieve it from any liability  which it
may have to any indemnified party otherwise than under this Paragraph 11.10.

(d) In case any such action is brought  against any  indemnified  party,  and it
notifies an  indemnifying  party of the  commencement  thereof,  the indemnified
party will be entitled to participate  in, and , to the extent that it may wish,
jointly with any other  indemnifying  party  similarly  notified,  to assume the
defense thereof with counsel reasonably satisfactory to such indemnifying party,
and after notice from the indemnified  party to such  indemnifying  party of its
election to so assume the defense thereof,  the  indemnifying  party will not be
liable to such  indemnified  party under this  Paragraph  11.10 for any legal or
other expenses  subsequently  incurred by such  indemnified  party in connection
with the defense thereof other than reasonable costs of investigation.

SECTION 11.11  DISCLAIMER  BY THE TRUSTEE.  The Trustee has no duty to determine
when an adjustment  under Article 11 should be made, or how it should be made or
what it should be. The Trustee makes no  representation as the validity or value
of any  securities  or assets  issued upon  conversion  of the  Securities.  The
Trustee shall not be responsible for the Issuer's failure to comply with Article
11.

     SECTION 11.12 WAIVER; AMENDMENT. The provisions of this Article 11 may only
be modified  or  amended,  and  performance  waived,  only by the consent of the
holders of all Outstanding  Securities,  except to the extent such change is not
adverse to the holders of the Outstanding Securities.


ARTICLE 12

REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDERS UPON A FUNDAMENTAL CHANGE

     SECTION 12.1   REPURCHASE UPON A FUNDAMENTAL CHANGE.   The
Issuer  covenants  and agrees that, in the event that there occurs a Fundamental
Change, each Holder will have the right, at such Holder's option, to require the
Issuer to repurchase all, or any portion that is an Authorized Denomination,  of
such Holder's  Securities on the Repurchase Date selected as provided below at a
repurchase price (the "Repurchase  Price") equal to the principal amount of such
Securities  plus accrued and unpaid interest to the Repurchase  Date;  provided,
that the  failure  of the  Issuer to  repurchase  Securities  as a result of the
application of Article 13 hereof or the failure of the Required  Lenders to have
consented to the repurchase  shall  nevertheless  constitute an Event of Default
hereunder.  Notwithstanding  anything  to the  contrary,  compliance  with  this
Article 13 and timely payment of the Repurchase Price can be waived, modified or
amended only by each such Holder  entitled to the benefits of this Article 12. A
Holder shall have the right to exercise  such  Holder's  right to convert all or
any portion of such  Holder's  Security  into Common  Stock of the Issuer  until
actual receipt of the Purchase Price as provided herein.  Any right or remedy as
set forth herein with respect to the payment,  failure to pay or  enforcement of
payment of principal or interest shall be applicable to the Repurchase Price.

     SECTION 12.2 NOTICES, ETC. The Issuer shall deliver to the Trustee, and the
Issuer  shall mail to each  Holder at such  Holder's  address  appearing  in the
Securities  register,  a written  notice (the "Issuer  Notice")  describing  the
occurrence  of  the  Fundamental   Change  within  ten  Business  Days  of  such
Fundamental  Change and of the  repurchase  right set forth herein  arising as a
result  thereof,  as well as stating the final date by which the Securities must
be  surrendered  for  repurchase,  the last day on which an  election to require
repurchase must be invoked,  the Conversion Price then in effect, the Repurchase
Date,  the  Repurchase  Price and the procedure  which the Holder must follow to
elect repurchase.

No failure of the Issuer to give the foregoing  notices or defect  therein shall
limit any Holder's right to exercise  repurchase right to affect the validity of
the proceedings for the repurchase of Securities.

     SECTION 12.3   EXERCISING REPURCHASE RIGHT.

(a) To elect repurchase of any Security or portion  thereof,  the Holder will be
required to surrender, on or before the Final Surrender Date (as defined below),
at any place where principal is payable, such Security duly endorsed or assigned
to the Issuer or in blank, together with written notice of the Holder's election
to have  the  Issuer  repurchase  all or any  $1,000  portion  of such  Security
specified in such notice.  Election of repurchase by a Holder shall be revocable
at any time prior to the Final  Surrender  Date by delivering  written notice to
that effect to the Trustee. "Final Surrender Date" shall mean the date which is,
subject to any contrary  requirements  of applicable law, 60 days after the date
of mailing of the Issuer Notice.  "Repurchase Date" shall mean the date selected
by the Issuer for the repurchase of the Securities  that is not less than 10 and
not more than 30 days after the Final Surrender Date.

(b) In the event a repurchase  right shall be exercised in  accordance  with the
terms hereof,  the Issuer shall pay or cause to be paid the Repurchase  Price in
cash to the Holder on the Repurchase Date; provided,  however, that installments
of interest that mature on or prior to the  Repurchase  Date shall be payable in
cash to the  holders  of such  Securities,  registered  as such at the  close of
business on the relevant  record date specified in the  Securities  according to
the terms and provisions of Article 2.

(c) If any  Security  surrendered  for  repurchase  shall  not be so paid on the
Repurchase Date, the principal amount which is payable at maturity shall,  until
the Repurchase Price (as calculated at the date of payment) is paid, continue to
bear  interest  from the  Repurchase  Date at the rate borne by the Security and
each such Security shall continue to remain  convertible into Common Stock until
said Repurchase Price shall have been paid to the holder or duly provided for by
deposit  with  the  Paying  Agent  in   immediately   available   funds  without
restriction.

(d) Any Security which is to be repurchased only in part shall be surrendered to
the Trustee (with, if the Issuer or the Trustee so requires, due endorsement by,
or written  instrument  of transfer in form  satisfactory  to the Issuer and the
Trustee duly executed by the Holder  thereof or his attorney duly  authorized in
writing),  and the Issuer shall execute,  and the Trustee shall authenticate and
deliver to the Holder without service charge,  a new Security or Securities,  of
any Authorized  Denomination as requested by such holder in aggregate  principal
amount equal to and in exchange for the  unrepurchased  portion of the principal
of the Security so surrendered.

     SECTION 12.4   CERTAIN DEFINITIONS.     For purposes of this Article the 
terms "Fundamental Change" shall mean the following:

(a) an event or series of events  occurs by which any Person or Group of Persons
shall,  as a result  of a tender  or  exchange  offer,  open  market  purchases,
privately negotiated purchases,  merger, consolidation or otherwise (which shall
not include an Allowed Transaction,  as defined in Section 12.4(c) hereof, other
than an Allowed  Transaction  described in Section 12.4(w) hereunder have become
the "beneficial  owner" (as defined in Rule 13d-3 under the Securities  Exchange
Act of 1934, as amended) of the Voting Shares entitled to exercise more than 50%
of the total voting power of all outstanding Voting Shares (including any Voting
Shares that are not then outstanding of which such Person or Group of Persons is
deemed the beneficial owner); or

(b) the direct or indirect sale, lease, exchange or other transfer to any Person
or Group of  Persons  of all or  substantially  all of the  assets of the Issuer
(which shall not include (i) a  transaction  the primary  purpose of which is to
provide  financing for the Issuer's  operations so long as such  transaction  is
otherwise  permitted by and complies with the terms of this  Indenture,  or (ii)
any sale or transfer by the Issuer of all or substantially  all of its assets to
one or more of its wholly-owned subsidiaries, in any one transaction or a series
of transactions); or

(c) any  consolidation  of the Issuer with,  or merger of the Issuer  into,  any
other Person or any merger of another  Person into the Issuer  (other than (w) a
consolidation  or  merger  which  does  not  result  in  any   reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock other
than shares of Common Stock owned by either of the parties to the  consolidation
merger,  (x) a merger  which is effected  solely to change the  jurisdiction  of
incorporation of the Issuer,  (y) any consolidation with or merger of the Issuer
into a wholly-owned  subsidiary of the Issuer in which the  stockholders  of the
Issuer hold all of the  outstanding  shares of the surviving  corporation in the
same proportion as immediately  prior to the merger or  consolidation,  or (z) a
consolidation or merger in which the stockholders of the Issuer hold more than a
majority of the combined voting power of the then  outstanding  Voting Shares of
the Person  surviving  such  transaction,  provided  in any such case,  that the
resulting corporation or each such subsidiary assumes or guarantees the Issuer's
obligations under the Securities and the Consolidated Net Worth of the surviving
or acquiring  corporation  in any such  consolidation,  merger or sale of assets
immediately after the consummation of any such transaction equals or exceeds the
Consolidated Net Worth of the Issuer immediately prior to such transaction (each
case set forth in (w), (x), (y) and (z), an "Allowed Transaction")); or

          (d)  the liquidation or dissolution of the Issuer; or

(e) the purchase or the  acquisition by the Issuer,  directly or indirectly,  of
beneficial  ownership of Voting  Shares of such  purchase or  acquisition  would
result in a violation or default  that has not been waived under any  agreement,
instrument or document evidencing any Senior Indebtedness to which the Issuer is
a party, whether as primary obligor,  guarantor or otherwise which would entitle
the holders of any Senior  Indebtedness  to accelerate or otherwise  require the
payment of amounts owed under any such Senior Indebtedness; or

(f) any  Person  shall  succeed  in  having a  sufficient  number  of his or its
nominees elected to the Board of Directors of the Issuer such that such nominees
so elected  (whether new or continuing as directors) shall constitute a majority
of the  Board of  Directors  of the  Issuer,  provided  that such  nominees  are
originally  proposed for election  either (i) in  opposition  to those  nominees
proposed for  election by the Board of Directors of the Issuer,  or (ii) without
being nominated by the Board of Directors of the Issuer.

ARTICLE 13

SUBORDINATION

     SECTION 13.1   SUBORDINATION PROVISIONS.          Notwithstanding any
other  provision  of this  Indenture  or the  Securities  to the  contrary,  any
Distribution with respect to the Securities is and shall be expressly junior and
subordinated  in right of  payment to the extent and in manner set forth in this
Article  13,  to  all  amounts  due  and  owing  upon  all  Senior  Indebtedness
outstanding from time to time.

     SECTION  13.2  PAYMENTS.  The  Issuer  shall  make no  Distribution  on the
Securities  until such time as the Senior  Indebtedness  shall have been paid in
full in cash and the Loan  Agreement  shall  have been  irrevocably  terminated;
provided, however, that so long as the Trustee has not received a written notice
from the Agent or any Senior  Lender (or any  agent,  trustee or  representative
acting on its behalf) stating that a Senior Event of Default has occurred and is
continuing and specifying the nature thereof (any such notice, a "Senior Default
Notice"),  the Issuer may pay and the  Securityholders  may receive  payments of
principal of premium, if any, and interest on the Securities; provided, however,
that if the Trustee  receives a Senior  Default  Notice within five (5) business
days  following  an  Interest  Payment  Date  or  payment  of  principal  of the
Securities  specifying  that a Senior Event of Default  occurred  prior to or on
such Interest Payment Date or date of payment of principal and such Senior Event
of Default is continuing as of the date of such notice, then the Securityholders
shall be obligated to remit such  payments to the Agent for the ratable  benefit
of the Senior Lenders as provided in Section 13.5 hereof.

     Following the Trustee's receipt of a Senior Default Notice,  (i) the Issuer
shall make no Distribution on the Securities,  and (ii) no Securityholder  shall
be entitled to receive or retain such Distribution in respect of the Securities;
provided that, notwithstanding the foregoing restriction, the Issuer may pay and
the  holders of the  Securities  shall be  entitled  to  receive  and retain any
principal  or  interest  payment  which  shall  become  due  and  payable  (on a
non-accelerated  basis)  on the  earliest  to occur of (x) the date of which the
Trustee receives a written notice from the Agent or Senior Lender (or any agent,
trustee or other  representative  acting on its  behalf)  stating  that all such
Senior  Events of  Default  have been  cured or waived or the  benefits  of this
sentence  have  been  waived  by or on  behalf  of the  holders  of  the  Senior
Indebtedness or (y) payment in full in cash of all Senior  Indebtedness  and the
irrevocable termination of the Loan Agreement.

     SECTION 13.3   LIMITATION ON ACCELERATION.   During any period
described in Section 13 hereof in which a  Distribution  is not  permitted to be
made on the Securities (any such period,  a "Non-Payment  Period"),  neither the
Trustee nor the Securityholders  shall be entitled to accelerate the maturity of
the Securities or commence any other action or proceeding to recover any amounts
due or to become due with  respect to the  Securities;  provided,  however,  the
foregoing  limitation  on  acceleration  or exercise of any remedy  shall not be
applicable  following the earliest to occur of (w) the Senior Indebtedness being
paid in full and the Loan Agreement irrevocably terminated;  (x) an Event (as to
which Section 13.4 shall apply), (y) the acceleration of the Senior Indebtedness
or, after maturity (as the same maybe extended) of the Senior Indebtedness,  the
exercise  of any  remedy by the  Senior  Lenders  pursuant  to, or to  otherwise
enforce, the Loan Agreement, excluding imposition of a default rate of interest,
or (z) the later to occur of (i) February  13,  2001,  or (ii) the date 270 days
following the Trustee's  receipt of a Senior  Default Notice other than a Senior
Default Notice  relating to a default in payment of any Obligation  with respect
to the Senior Indebtedness, in which case this clause (z) shall have no force or
effect; provided further,  however, that the foregoing limitation on exercise of
any remedy shall not restrict or limit the Trustee or the  Securityholders  from
commencing an action or proceeding  against the Issuer or any Subsidiary seeking
only equitable  relief as to the enforcement of the Issuer's  covenants or other
agreements hereunder.

     SECTION 13.4   PRIOR PAYMENT OF SENIOR INDEBTEDNESS IN
BANKRUPTCY,  ETC.  In the  event of any  insolvency  or  bankruptcy  proceedings
relative  to the  Issuer  or its  property,  or any  receivership,  liquidation,
reorganization or other similar  proceedings in connection  therewith or, in the
event of any proceedings for voluntary liquidation, dissolution or other winding
up of the Issuer or  distribution or marshaling of its assets or any composition
with creditors of the Issuer, whether or not involving insolvency or bankruptcy,
or if the Issuer shall cease its operations,  call a meeting of its creditors or
no longer do business as a going concern (each individually or collectively,  an
"Event"),  then all Senior  Indebtedness  shall be indefeasibly paid in full and
satisfied  in cash  before  any  Distribution  shall be made on  account  of the
Securities. Any such Distribution which would, but for the provisions hereof, be
payable or deliverable  in respect of the Securities  shall be paid or delivered
directly to the Agent for the ratable benefit of the Senior  Lenders,  until all
amounts owing upon the Senior  Indebtedness shall have been indefeasibly paid in
full in cash.

     SECTION 13.5   TRUSTEE TO EFFECT SUBORDINATION.

(a)  Each Securityholder by such Holder's acceptance hereof and its
Security(ies)  authorize and directs the Trustee on such Holder's behalf to take
such action as may be necessary or appropriate  to effectuate the  subordination
provided in this Article and appoints the Trustee such Holder's attorney-in-fact
with  full  power to act in such  Holder's  place and stead for any and all such
purposes,  including the right to make, present and file proofs of claim against
the  Issuer on  account  of all or any part of the  Securities  in a  proceeding
referred to in Section  13.4 or upon the  happening  of any Event and to receive
and  collect  any and all  payments  with  respect  to the  Securities  or other
payments  thereon  and to apply same on account  of the Senior  Indebtedness  as
contemplated in this Article.

(b) If the trustee  fails or omits to take action  required or  permitted  to be
taken pursuant to Section 13.5(A) hereof, each Securityholder,  by such Holder's
acceptance hereof and its Security(ies) authorizes and directs the Agent on such
Holder's  behalf  to take such  action as may be  necessary  or  appropriate  to
effectuate  the  subordination  provided in this  Article and appoints the Agent
such holder's attorney-in-fact with full power to act in such Holder's place and
stead for any and all purposes,  including  the right to make,  present and file
proofs  of  claim  against  the  Issuer  on  account  of all or any  part of the
Securities in a proceeding  referred to in Section 13.4 or upon the happening of
any Event and to receive and collect any and all  payments  with  respect to the
Securities or other payments  thereon and to apply same on account of the Senior
Indebtedness as contemplated in this Article.

(c) Should any Distribution or the proceeds thereof in respect of the Securities
be  collected  or received by the Trustee or any  Securityholder  at a time when
such  Securityholder  is not  permitted  to  receive  any such  Distribution  or
proceeds thereof,  then the Trustee or such Securityholder,  as the case may be,
will forthwith deliver, or cause to be delivered,  the same to the Agent for the
ratable  benefit of the Senior Lenders in precisely the form held by the Trustee
or such  Securityholder  (except  for any  necessary  endorsement)  and until so
delivered,   the  same   shall  be  held  in  trust  by  the   Trustee  or  such
Securityholder, as the case may be, as the property of the Senior Lenders.

     SECTION 13.6   SUBROGATION.

(a) Subject to the prior payment in full in cash of the Senior  Indebtedness and
the  irrevocable  termination of the Loan  Agreement,  to the extent that Senior
Lenders have received any Distribution on the Senior Indebtedness which, but for
this  Article  would have been  applied to the  Securities,  the Trustee and the
Securityholders  shall be  subrogated  to the then or  thereafter  rights of the
Senior  Lenders  including,   without  limitation,  the  right  to  receive  any
Distribution on the Senior  Indebtedness until the principal of, interest on and
other  charges  due under the  Securities  shall be paid in full,  and,  for the
purposes of such subrogation, no Distribution to the Senior Lenders to which the
Securityholders  would be entitled  except for the  provisions  of this  Article
shall, as between the Issuer,  its creditors (other than the Senior Lenders) and
the  Securityholders  be  deemed  to be a  Distribution  by the  Issuer to or on
account of the Senior  Indebtedness,  it being  understood  that the  provisions
hereof are intended  solely for the purpose of defining  the relative  rights of
the Securityholders on the one hand, the Senior Lenders on the other hand.

(b)  Nothing  in  this  Indenture  shall  impair,  between  the  Issuer  and the
Securityholders,  the unconditional and absolute obligation of the Issuer to pay
punctually the principal, interest and other amounts and obligations owing under
this Indenture,  the Securities and the other Subordinated Lending Agreements in
accordance with the term hereof and thereof, subject to the rights of the Senior
Lenders under this Article.

     SECTION 13.7.  NOTICE TO THE TRUSTEE.  The Issuer shall give prompt
written  notice to the  Trustee  of any fact  known to the  Issuer  which  would
prohibit  the  making of any  payment  to or by the  Trustee  in  respect of the
Securities pursuant to the provisions of this Article. Regardless of anything to
the contrary  contained in this  Article or  elsewhere  in this  Indenture,  the
Trustee shall not be charged with knowledge of the existence of any Senior Event
of Default (or of any other facts which would prohibit the making of any payment
to or by the Trustee) unless and until the Trustee shall have received notice in
writing at its Corporate Trust Office to that effect signed by an officer of the
Issuer,  the Agent or by any  Senior  Lender  (or any  agent,  trustee  or other
representative  acting  on its  behalf);  and prior to the  receipt  of any such
written  notice,  the  Trustee  shall be  entitled  to assume that no such facts
exist; provided, that if the Trustee shall not have received the notice provided
for in this Section at least three Business Days prior to the date upon which by
the terms of this  Indenture  any monies  shall  become  payable for any purpose
then, regardless of anything herein to the contrary, the Trustee shall have full
power and  authority to receive any monies from the Issuer and to apply the same
to the  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.
Nothing  contained  in this  Section  13.7  shall  limit the right of the Senior
Lenders to  recover  payments  as  contemplated  herein.  The  Trustee  shall be
entitled  to rely on the  delivery  to it or  after  such  prior  date.  Nothing
contained in this  Section  13.7 shall limit the right of the Senior  Lenders to
recover payments as contemplated  herein.  The Trustee shall be entitled to rely
on the delivery to it of a written  notice by a Person  representing  himself or
itself  to be the  Agent or a Senior  Lender  (or an  agent,  trustee,  or other
representative  of such Senior  Lender) to  establish  that such notice has been
given  by the  Agent  or such  Senior  Lender  (or an  agent,  trustee  or other
representative of any such Senior Lender).

     In the event that the Trustee determines in good faith that any evidence is
required  with  respect  to the  right  of any  Person  as a  Senior  Lender  to
participate in any payment or Distribution pursuant to this Article, the Trustee
may request that such Person furnish evidence to the reasonable  satisfaction of
the Trustee as to the amount of Senior  Indebtedness  held by such  Person,  the
extent to which  such  Person is  entitled  to  participate  in such  payment or
Distribution  and any other facts  pertinent  to the rights of such Person under
this Article,  and if any such evidence is not  furnished,  then the Trustee may
defer any payment to such Person pending judicial  determination as to the right
of such Person to receive such payment.

     SECTION 13.8.  RELIANCE ON JUDICIAL  ORDER OR  CERTIFICATE  OF  LIQUIDATING
AGENT.  Subject  to  the  provision  of  this  Article,   upon  any  payment  or
Distribution  of assets or securities of the Issuer referred to in this Article,
the Trustee shall be entitled to rely upon any order or decree made by any court
of  competent  jurisdiction  in  which  bankruptcy,   dissolution,  winding  up,
liquidation or  reorganization  proceedings are pending,  or upon certificate of
the receiver, trustee in bankruptcy,  liquidating trustee, agent or other person
making such payment or Distribution, delivered to the Trustee for the purpose of
ascertaining  the Persons  entitled to  participate  in such  Distribution,  the
Holders of the Senior  Indebtedness  and other  Indebtedness of the Issuer,  the
amount or amounts  paid or  distributed  thereon and all other  facts  pertinent
thereto or to this  Article.  Nothing in this Section,  however,  shall limit or
alter any rights or remedies of the Senior Lenders under the Article.

     SECTION 13.9.  TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS.  The
Trustee  and any Paying  Agent shall be entitled to the rights set forth in this
Article with respect to any Senior Indebtedness which may at any time be held by
either in its  individual or any other  capacity to the same extent as any other
holder of Senior  Indebtedness  and nothing in this Indenture  shall deprive the
Trustee or any Paying Agent of any of its rights as such holder.

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

     SECTION 13.10. MISCELLANEOUS.

(a) The rights of the Senior  Lenders to enforce the  provisions of this Article
shall not be prejudiced or impaired by any act or omitted act of the Issuer, the
Trustee  or  any  Senior  Lender,   including  forbearance,   waiver,   consent,
compromise,  amendment,  extension, renewal or taking or release of the security
in respect of any Senior  Indebtedness or  noncompliance  with such  provisions,
regardless of the actual or imputed knowledge of the Issuer,  the Trustee or any
Senior Lender.

(b) This Article shall continue in full force and effect after the filing of any
petition by or against the Issuer under the United  States  Bankruptcy  Code and
all converted or succeeding cases in respect thereof.  All references  herein to
the Issuer shall be deemed to apply to the Issuer as debtor-in-possession and to
a trustee for the Issuer.

(c) So long as the Loan Agreement remains in effect,  neither the Issuer nor the
Trustee shall enter into any amendment or  modification of this Indenture or any
other Subordinated Lending Agreement which (i) without the prior written consent
of the  Required  Lenders,  increases  the  aggregate  principal  amount  of the
Securities  to greater  than  $5,000,000  or increases  the interest  rate on or
shortens  or  reduces  the time for  payment  of any  amount on  account  of the
Securities or adds to or modifies to make more restrictive the Events of Default
or covenants of the Issuer  hereunder or (ii) without the prior written  consent
of each Senior  Lender  affected  thereby,  adversely  affects the rights of any
holder of Senior  Indebtedness  at the time  outstanding  to the benefits of the
subordination affected by this Article.

(d) Nothing  contained in this Article or elsewhere in this  Indenture  shall in
any manner limit or restrict the ability of the Agent or the Senior Lenders from
increasing  or  changing  the  terms  of  the  Loan   Agreement  or  the  Senior
Indebtedness or to otherwise waive,  amend or modify the terms and conditions of
the Loan  Agreement or the Senior  Indebtedness,  in such manner as the Agent or
such  Senior  Lenders  and the Issuer  determine.  Each  Securityholder,  by its
acceptance  hereof and of its  Securities(ies),  hereby  consents to any and all
such waivers, amendments, modifications and compromises, and any other renewals,
extensions,  indulgences, releases of collateral or other accommodations granted
by the Agent or the Senior  Lenders to the Issuer from time to time,  and agrees
that none of such actions shall in any manner affect or impair the subordination
established by this Article in respect of the Securities.

(e) This Article shall be continuing agreement,  shall be binding upon and shall
inure to the benefit of holders of the Senior Indebtedness from time to time and
their  respective  successors  and  assigns,  shall be  irrevocable  without the
consent of the Senior Lenders as provided  herein and shall remain in full force
and effect until the Senior  Indebtedness  shall have been  satisfied or paid in
full in cash and the Loan Agreement shall have been irrevocably terminated,  but
shall continue to be effective, or be reinstated,  as the case may be, if at any
time  payment,  or any part  thereof,  of any amount paid by or on behalf of the
Issuer with regard to the Senior  Indebtedness is rescinded or must otherwise be
restored or returned upon the insolvency, bankruptcy,  dissolution,  liquidation
or  reorganization or the Issuer, or upon or as a result of the appointment of a
receiver,  intervenor  or  conservator,  or any  trustee,  custodian  or similar
officer, for the Issuer or any of its property.

(f) The failure to make a payment  pursuant to the  Securities  by reason of any
provision  of this  Article  shall not  prevent  the  occurrence  of an Event of
Default.  Subject to Section 13.3 nothing in this Article  shall have any effect
on the right of the Securityholders or the Trustee to accelerate the maturity of
the Securities or pursue any other remedy with respect thereto.

     SECTION 13.11 CONVERSION RIGHTS. Nothing in this Section 13 shall affect or
limit the right of any Holder to  convert  all or any  portion of such  Holder's
Security(ies) pursuant to Article 11 herein.

IN WITNESS  WHEREOF,  the parties  hereto have caused this  Indenture to be duly
executed,  and,  where  appropriate,  their  respective  corporate  seals  to be
hereunto affixed and attested, all as of September 14, 1998.

[CORPORATE SEAL]    ALLSTATE FINANCIAL CORPORATION


Attest:   By: _______________________________________
By:_______________________
     By: _______________________________________


Exhibit "A"
     INVESTMENT REPRESENTATION LETTER
     (Accredited Investor)

                ,        , 1998


 Allstate Financial Corporation


Attn: ____________
Gentlemen:

This letter is delivered to Allstate  Financial  Corporation  (the ?Company?) in
conjunction with the  undersigned?s  execution and delivery of the [Subscription
Agreement]  pursuant to the terms of which the undersigned (the  ?Purchaser?) as
agreed to exchange its [describe old note] for the [describe new note, (together
with the capital stock of the Company into which such Note is  convertible,  the
?Securities?),  which  will  or may be  issued  pursuant  to the  [describe  the
indenture  (the ?  Indenture?).  In  order  to  induce  the  Allstate  Financial
Corporation  (the  ?Company?)  to issue the  Securities  to the  Purchaser,  the
Purchaser makes the representations and warranties contained herein.

The  Company  has  informed  the  Purchaser  that the  Securities  have not been
registered  with the  Securities  and Exchange  Commission nor with the security
authorities  of any state,  and that the  Securities  must be held  indefinitely
unless they are  subsequently  registered  under the  Securities Act of 1933, as
amended,  and the appropriate  state  securities laws, or an exemption from such
registration is available.  The Purchaser  understands that the Company is under
no obligation to register the  Securities or to comply with any such  exemption,
except as may be set forth in the Indenture.  The Purchaser  understands that no
federal or state  securities  authority has made any finding or determination as
to the fairness of investment in, nor any  recommendation or endorsement of, the
Securities.

The Purchaser  hereby  represents  and warrants to the Company that Purchaser is
purchasing  the Securities  for  Purchaser?s  own account for investment and not
with a view to dividing  the  Securities  with  others,  or with a view to or in
connection with an offering or any  distribution,  and that the Purchaser has no
present intention of selling or otherwise disposing of the Securities.

In order to assure the Company  with  respect to the  foregoing,  the  Purchaser
further represents and warrants the following facts:

(a) Except as  specifically  noted  above,  it is the present  intention  of the
Purchaser to receive and hold the Securities for the private personal investment
of the Purchaser for Purchaser?s  own account.  Any sale or exchange or offer of
the  Securities  will not be made in any manner that will violate the Securities
Act of 1933, as amended, or any applicable securities law.

     (b) Except as  specifically  noted above,  the  Purchaser  has no contract,
understanding,  agreement  or  arrangement  with any person or entity to sell or
transfer  to any such  persons or  entities,  or to anyone,  or to have any such
person or entity sell for the Purchaser the  Securities and the Purchaser is not
engaged in, and does not plan to engage,  within the foreseeable  future, in any
discussion  with any person or entity  relating  to the sale or  transfer of the
Securities.

(c) Except as specifically noted above, as of the present date, the Purchaser is
not aware of any occurrence,  event or circumstance  upon the happening of which
Purchaser intends to transfer or sell the Securities,  or any part thereof,  and
the Purchaser does not have any present intention to sell the Securities, or any
part  thereof,  after the  lapse of any  particular  period  of time.  Purchaser
understands  that  Purchaser  may be  required  to bear  the  economic  risks of
Purchaser?s investment in the Securities for an indefinite period of time.

(d) The Purchaser has no present obligation,  indebtedness or commitment and has
no knowledge of any circumstances in existence, which would compel the Purchaser
to secure funds by the sale of the  Securities,  nor is the Purchaser a party to
any plans or undertakings  requiring  funds,  which plans or undertakings can be
consummated only by the sale of all or part of the Securities.

(e) The  Undersigned  is an  ?Accredited  Investor?  as that term is  defined in
Regulation D promulgated  by the Securities  and Exchange  Commission  under the
Securities Act of 1933. (f) The negotiations for the purchase of such Securities
have been  conducted  directly  between  the  Purchaser  on the one hand and the
Company on the  other.  The  Purchaser  has been  given the  opportunity  to ask
questions of, and receive answers from, the Company and its officers  concerning
the  terms  and  conditions  of the sale of the  Securities  and  other  matters
pertaining  to the  investment  in the  Company  in order for the  Purchaser  to
evaluate  the merits and risks of  purchase  of the  Securities.  The  Purchaser
acknowledges  that Purchaser has been furnished all  information  that Purchaser
has requested to the extent that  Purchaser  considers  necessary and advisable,
and such  information,  along with the  information  and advice  provided by the
Purchaser  Representative,  is  reasonable  upon  which  to base  an  investment
decision.

(g) The Purchaser acknowledges  Purchaser?s  understanding that the offering and
sale of the  Securities  is intended to be exempt  from  registration  under the
Securities Act of 1933, as amended, by virtue of Section 4(2) of that Act.

(h) Investment in the  Securities is  speculative  and involves a high degree of
risk  of  loss  by the  Purchaser  of the  Purchaser?s  entire  investment.  The
Purchaser has such  knowledge and  experience in financial and business  matters
that  Purchaser is capable of evaluating  the merits and risks of the investment
in the  Securities,  can bear the  economic  risk of losing  Purchaser?s  entire
investment,  has adequate means for providing for Purchaser?s  current needs and
personal  contingencies,  and has no need for  liquidity in an investment in the
Securities  and is capable of evaluating  the merits and risks of the investment
in the Securities.

The Purchaser  further  understands  that in the event Purchaser  should in fact
resell the  Securities,  or any part  thereof,  within the  foreseeable  future,
Purchaser  may be deemed to be an  underwriter,  as that term is  defined in the
Securities Act of 1933, as amended. The Purchaser further understands and agrees
that the Securities cannot be offered for sale, sold or otherwise transferred on
the register of the Company until  Purchaser has notified the Company in writing
of Purchaser?s  intention to do so and unless and until the Company, if it deems
appropriate,  has been  furnished  with an opinion of counsel for the  Purchaser
satisfactory  to counsel  for the Company  that such sale or  transfer  does not
involve a violation of the Securities Act of 1933, as amended, or the securities
laws  of any  state  having  jurisdiction.  The  Purchaser  agrees  that  the an
appropriate  restrictive legend may be placed on the certificates evidencing any
Securities issued pursuant hereto.

The  Purchaser  agrees  that  transfer of the  Securities  may be refused by the
Company or its transfer agent if, in the opinion of counsel for the Company, any
proposed  sale or transfer by the  Purchaser of the  Securities  would not be in
compliance with the applicable federal and state securities laws.

     * * * * *

Sincerely,





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