ACTION PERFORMANCE COMPANIES, INC.

                                       and

                            FIRST UNION NATIONAL BANK
                                   as Trustee




                                    INDENTURE

                           Dated as of March 24, 1998



                                  $100,000,000

                 4 3/4% Convertible Subordinated Notes due 2005
<PAGE>
                 Certain Sections of this Indenture relating to
                      Sections 310 through 318 of the Trust
                             Indenture Act of 1939:

Section 310       (a)(l).......................................  609
                  (a)(2).......................................  609
                  (a)(3).......................................  Not Applicable
                  (a)(4).......................................  Not Applicable
                  (a)(5).......................................  609
                  (b)..........................................  608
Section 311       (a)..........................................  613
                  (b)..........................................  613
Section 312       (a)..........................................  701
                  (a)..........................................  702(a)
                  (b)..........................................  702(b)
                  (c)..........................................  702(c)
Section 313       (a)..........................................  703(a)
                  (b)..........................................  703(a)
                  (c)..........................................  703(a)
                  (d)..........................................  703(b)
Section 314       (a)..........................................  704
                  (a)(4).......................................  1004
                  (b)..........................................  Not Applicable
                  (c)(1).......................................  102
                  (c)(2) ......................................  102
                  (c)(3).......................................  Not Applicable
                  (d)..........................................  Not Applicable
                  (e)..........................................  102
Section 315       (a)..........................................  601
                  (b)..........................................  602
                  (c)..........................................  601
                  (d)..........................................  601
                  (e)..........................................  514
Section 316       (a)(l)(A) ...................................  502
                  (a)(1)(A)....................................  512
                  (a)(l)(B)....................................  513
                  (a)(2) ......................................  Not Applicable
                  (b) .........................................  508
                  (c) .........................................  104(c)

   Note: This reconciliation and tie shall not, for any purpose, be deemed to
                           be a part of the Indenture
                                        i
<PAGE>
Section 317       (a)(l).......................................  503
                  (a)(2).......................................  504
                  (b)..........................................  1003
Section 318       (a)..........................................  107














   Note: This reconciliation and tie shall not, for any purpose, be deemed to
                           be a part of the Indenture
                                                        ii
<PAGE>
                               TABLE OF CONTENTS*
<TABLE>
<CAPTION>
<S>       <C>                                                                                                  <C>
Recitals of the Company................................................................ERROR! BOOKMARK NOT DEFINED.


ARTICLE ONE.......................................................................................................2

   Definitions and Other Provisions of General Application........................................................2

   SECTION 101.  Definitions......................................................................................2
         Act......................................................................................................2
         Affiliate................................................................................................2
         Authenticating Agent.....................................................................................2
         Beneficial Owner.........................................................................................3
         Board of Directors.......................................................................................3
         Board Resolution.........................................................................................3
         Business Day.............................................................................................3
         Cedel....................................................................................................3
         Change in Control........................................................................................3
         Closing Date.............................................................................................3
         Commission...............................................................................................3
         Common Stock.............................................................................................3
         Company..................................................................................................4
         Company Request..........................................................................................4
         Company Order............................................................................................4
         Corporate Trust Office...................................................................................4
         Corporation..............................................................................................4
         Current Market Price.....................................................................................4
         DTC......................................................................................................4
         Defaulted Interest.......................................................................................4
         Definitive Note..........................................................................................4
         Definitive Notes.........................................................................................4
         Depositary...............................................................................................4
         Designated Senior Indebtedness...........................................................................4
         Euroclear................................................................................................5
         Event of Default.........................................................................................5
         Exchange Act.............................................................................................5
         Global Note..............................................................................................5
         Global Notes.............................................................................................5
         Holder...................................................................................................5
         Indenture................................................................................................5
         Initial Purchasers.......................................................................................5
         Interest Payment Date....................................................................................5
         Maturity.................................................................................................5
         Notes Custodian..........................................................................................8
         Note Register............................................................................................8
         Note Registrar...........................................................................................8
         Officers' Certificate....................................................................................5
</TABLE>
            *Note: This table of contents shall not, for any purpose,
                    be deemed to be a part of the Indenture
                                       iii
<PAGE>
<TABLE>
<S>       <C>                                                                                                  <C>
         144A Global Notes........................................................................................5
         Opinion of Counsel.......................................................................................6
         Outstanding..............................................................................................6
         Paying Agent.............................................................................................6
         Person...................................................................................................6
         Predecessor Note.........................................................................................6
         Purchase Agreement.......................................................................................7
         Record Date..............................................................................................7
         Redemption Date..........................................................................................7
         Redemption Price.........................................................................................7
         Registration Rights Agreement............................................................................7
         Regular Record Date......................................................................................7
         Regulation S.............................................................................................7
         Regulation S Global Note.................................................................................7
         Repurchase Date..........................................................................................7
         Repurchase Event.........................................................................................7
         Repurchase Price.........................................................................................7
         Resale Restriction Termination Date......................................................................7
         Responsible Officer......................................................................................8
         Senior Indebtedness......................................................................................8
         Shelf Registration Statement.............................................................................8
         Special Record Date......................................................................................8
         Stated Maturity..........................................................................................8
         Subsidiary...............................................................................................9
         Termination of Trading...................................................................................9
         Transfer Restricted Securities...........................................................................9
         Trust Indenture Act......................................................................................9
         Trustee..................................................................................................9
         Vice President...........................................................................................9

     SECTION 102.  Compliance Certificates and Opinions...........................................................9
     SECTION 103.  Form of Documents Delivered to Trustee........................................................10
     SECTION 104.  Acts of Holders; Record Dates.................................................................11
     SECTION 105.  Notices, Etc., to Trustee and Company.........................................................12
     SECTION 106.  Notice to Holders; Waiver.....................................................................12
     SECTION 108.  Effect of Headings and Table of Contents......................................................13
     SECTION 109.  Successors and Assigns........................................................................13
     SECTION 110.  Separability Clause...........................................................................13
     SECTION 111.  Benefits of Indenture.........................................................................13
     SECTION 112.  Governing Law.................................................................................13
     SECTION 113.  Legal Holidays................................................................................13
     SECTION 114.  No Security Created...........................................................................14
     SECTION 115.  Limitation on Individual Liability............................................................14


ARTICLE TWO......................................................................................................14

Security Forms...................................................................................................14

     SECTION 201.  Forms Generally...............................................................................14
     SECTION 202.  Form of Face of Note..........................................................................16
</TABLE>
            *Note: This table of contents shall not, for any purpose,
                    be deemed to be a part of the Indenture
                                       iv
<PAGE>
<TABLE>
<S>  <C>                                                                                                       <C>
     SECTION 203.  Form of Reverse of Global Notes and Definitive Notes..........................................22
     SECTION 204.  Form of Trustee's Certificate of Authentication...............................................32


ARTICLE THREE....................................................................................................33

The Securities...................................................................................................33

     SECTION 301.  Title and Terms...............................................................................33
     SECTION 302.  Denominations.................................................................................34
     SECTION 303.  Execution.  Authentication, Delivery and Dating...............................................34
     SECTION 304.  Temporary Notes...............................................................................35
     SECTION 305.  Registration; Registration of Transfer and Exchange...........................................35
     SECTION 306.  Mutilated, Destroyed, Lost and Stolen Notes...................................................44
     SECTION 307.  Payment of Interest; Interest Rights Preserved................................................45
     SECTION 308.  Persons Deemed Owners.........................................................................46
     SECTION 309.  Cancellation..................................................................................46
     SECTION 310.  Computation of Interest.......................................................................47


ARTICLE FOUR.....................................................................................................48

Satisfaction and Discharge.......................................................................................48

     SECTION 401.  Satisfaction and Discharge of Indenture.......................................................48
     SECTION 402.  Application of Trust Money....................................................................49


ARTICLE FIVE.....................................................................................................49

Remedies.........................................................................................................49

     SECTION 501.  Events of Default.............................................................................49
     SECTION 502.  Acceleration of Maturity; and Annulment.......................................................51
     SECTION 503.  Collection of Indebtedness and Suits for Enforcement by Trustee...............................53
     SECTION 504.  Trustee May File Proofs of Claim..............................................................53
     SECTION 505.  Trustee May Enforce Claims Without Possession of Notes........................................54
     SECTION 506.  Application of Money Collected................................................................54
     SECTION 507.  Limitation on Suits...........................................................................55
     SECTION 508.  Unconditional Right of Holders to Receive Principal, Premium, Interest and
                   Liquidated Damages and to Convert.............................................................55
     SECTION 509.  Restoration of Rights and Remedies............................................................55
     SECTION 510.  Rights and Remedies Cumulative................................................................56
     SECTION 511.  Delay or Omission Not Waiver..................................................................56
     SECTION 512.  Control by Holders............................................................................56
     SECTION 513.  Waiver of Past Defaults.......................................................................57
     SECTION 514.  Undertaking for Costs.........................................................................57


ARTICLE SIX......................................................................................................57

The Trustee......................................................................................................57
</TABLE>
            *Note: This table of contents shall not, for any purpose,
                    be deemed to be a part of the Indenture
                                       v
<PAGE>
<TABLE>
<S>  <C>                                                                                                       <C>
     SECTION 601.  Certain Duties and Responsibilities...........................................................58
     SECTION 602.  Notice of Defaults............................................................................58
     SECTION 603.  Certain Rights of Trustee.....................................................................59
     SECTION 604.  Not Responsible for Recitals or Issuance of Notes.............................................60
     SECTION 605.  May Hold Notes................................................................................60
     SECTION 606.  Money Held in Trust...........................................................................60
     SECTION 607.  Compensation and Reimbursement................................................................60
     SECTION 608.  Disqualification; Conflicting Interests.......................................................61
     SECTION 609.  Corporate Trustee Required; Eligibility.......................................................62
     SECTION 610.  Resignation and Removal; Appointment of Successor.............................................62
     SECTION 611.  Acceptance of Appointment by Successor........................................................63
     SECTION 612.  Merger, Conversion, Consolidation or Succession to Business...................................63
     SECTION 613.  Preferential Collection of Claims Against Company.............................................64
     SECTION 614.  Appointment of Authenticating Agent...........................................................64


ARTICLE SEVEN....................................................................................................67

Holders' Lists and Reports by Trustee and Company................................................................67

     SECTION 701.  Company to Furnish Trustee Names and Addresses of Holders.....................................67
     SECTION 702.  Preservation of Information: Communication to Holders.........................................67
     SECTION 703.  Reports by Trustee............................................................................67
     SECTION 704.  Reports by Company............................................................................68
     SECTION 705.  Rule 144A Information Requirement.............................................................68


ARTICLE EIGHT....................................................................................................68

Consolidation, Merger, Conveyance, Transfer or Lease.............................................................68

     SECTION 801.  Company May Consolidate, Etc., Only on Certain Terms..........................................68
     SECTION 802.  Successor Substituted.........................................................................69


ARTICLE NINE.....................................................................................................69

Supplemental Indentures..........................................................................................69

     SECTION 901.  Supplemental Indentures Without Consent of Holders............................................69
     SECTION 902.  Supplemental Indentures with Consent of Holders...............................................70
     SECTION 903.  Execution of Supplemental Indentures..........................................................71
     SECTION 904.  Effect of Supplemental Indentures.............................................................71
     SECTION 905.  Conformity with Trust Indenture Act...........................................................71
     SECTION 906.  Reference in Securities to Supplemental Indentures............................................71
     SECTION 907.  Notice of Supplemental Indenture..............................................................71


ARTICLE TEN......................................................................................................72

Covenants........................................................................................................72
</TABLE>
            *Note: This table of contents shall not, for any purpose,
                    be deemed to be a part of the Indenture
                                       vi
<PAGE>
<TABLE>
<S>  <C>                                                                                                       <C>
     SECTION 1001.  Payment of Principal.  Premium and Interest..................................................72
     SECTION 1002.  Maintenance of Office or Agency..............................................................72
     SECTION 1003.  Money for Note Payments to Be Held in Trust..................................................72
     SECTION 1004.  Statement by Officers as to Default..........................................................74
     SECTION 1005.  Existence....................................................................................74
     SECTION 1006.  Waiver of Certain Covenants..................................................................74


ARTICLE ELEVEN...................................................................................................74

Redemption of Notes..............................................................................................74

     SECTION 1101.  Right of Redemption..........................................................................74
     SECTION 1102.  Applicability of Article.....................................................................74
     SECTION 1103.  Election to Redeem; Notice Trustee...........................................................74
     SECTION 1104.  Selection by Trustee of Notes to be Redeemed.................................................75
     SECTION 1105.  Notice of Redemption.........................................................................75
     SECTION 1106.  Deposit of Redemption Price..................................................................76
     SECTION 1107.  Notes Payable on Redemption Date.............................................................76
     SECTION 1108.  Notes Redeemed in Part.......................................................................77


ARTICLE TWELVE...................................................................................................77

Subordination of Notes...........................................................................................77

     SECTION 1201.  Notes Subordinated to Senior Indebtedness....................................................77
     SECTION 1202.  Payment Over of Proceeds Upon Dissolution.  Etc..............................................77
     SECTION 1203.  Prior Payment to Senior Indebtedness upon Acceleration of Securities.........................78
     SECTION 1204.  Payment When Designated Senior Indebtedness in Default.......................................79
     SECTION 1205.  Payment Permitted If No Default..............................................................80
     SECTION 1206.  Subrogation to Rights of Holders of Senior Indebtedness......................................81
     SECTION 1207.  Provisions Solely to Define Relative Rights..................................................81
     SECTION 1208.  Trustee to Effectuate Subordination..........................................................81
     SECTION 1209.  No Waiver of Subordination Provisions........................................................81
     SECTION 1210.  Notice to Trustee............................................................................82
     SECTION 1211.  Reliance on Judicial Order or Certificate of Liquidating Agent...............................83
     SECTION 1212.  Trustee Not Fiduciary for Holders of Senior Indebtedness.....................................83
     SECTION 1213.  Rights of Trustee as Holder of Senior Indebtedness: Preservation of Trustee's Rights.........83
     SECTION 1214.  Article Applicable to Paying Agents..........................................................84
     SECTION 1215.  Certain Conversions Deemed Payment...........................................................84
     SECTION 1216.  No Suspension of Remedies....................................................................84


ARTICLE THIRTEEN.................................................................................................84

Conversion of Securities.........................................................................................84

     SECTION 1301.  Conversion Privilege and Conversion Price....................................................84
     SECTION 1302.  Exercise of Conversion Privilege.............................................................85
     SECTION 1303.  Fractions of Shares..........................................................................86
     SECTION 1304.  Adjustment of Conversion Price...............................................................86
</TABLE>
            *Note: This table of contents shall not, for any purpose,
                    be deemed to be a part of the Indenture
                                      vii
<PAGE>
<TABLE>
<S>  <C>                                                                                                       <C>
     SECTION 1305.  Notice of Adjustments of Conversion Price....................................................93
     SECTION 1306.  Notice of Certain Corporate Action...........................................................93
     SECTION 1307.  Company to Reserve Common Stock..............................................................95
     SECTION 1308.  Taxes on Conversions.........................................................................95
     SECTION 1309.  Covenant as to Common Stock..................................................................95
     SECTION 1310.  Cancellation of Converted Securities.........................................................95
     SECTION 1311.  Provisions of Consolidation.  Merger or Sale of Assets.......................................95
     SECTION 1312.  Trustee's Disclaimer.........................................................................96


ARTICLE FOURTEEN.................................................................................................96

Right to Require Repurchase......................................................................................96

     SECTION 1401.  Right to Require Repurchase..................................................................97
     SECTION 1402.  Notice: Method of Exercising Repurchase Right................................................97
     SECTION 1403.  Deposit of Repurchase Price..................................................................98
     SECTION 1404.  Notes Not Repurchased on Repurchase Date.....................................................98
     SECTION 1405.  Notes Repurchased in Part....................................................................98
     SECTION 1406.  Certain Definitions..........................................................................98
</TABLE>
            *Note: This table of contents shall not, for any purpose,
                    be deemed to be a part of the Indenture
                                      viii
<PAGE>
     INDENTURE, dated as of March 24, 1998 between Action Performance Companies,
Inc., an Arizona corporation (herein called the "Company"), having its principal
executive offices at 4707 East Baseline Road,  Phoenix,  Arizona 85040 and First
Union National Bank, a national banking  association,  as Trustee (herein called
the "Trustee").

                             RECITALS OF THE COMPANY

     The  Company  has duly  authorized  the  creation of an issue of its 4 3/4%
Convertible   Subordinated  Notes  due  2005  (herein  called  the  "Notes")  of
substantially  the  tenor and  amount  hereinafter  set  forth,  and to  provide
therefor  the Company has duly  authorized  the  execution  and delivery of this
Indenture.

      All things  necessary to make the Notes,  when executed by the Company and
authenticated and delivered hereunder and duly issued by the Company,  the valid
obligations of the Company,  and to make this Indenture a valid agreement of the
Company, in accordance with their and its terms, have been done.

     NOW, THEREFORE, THIS INDENTURE WITNESSETH:

     For and in  consideration  of the premises and the purchase of the Notes by
the Holders  thereof,  it is mutually  agreed,  for the equal and  proportionate
benefit of all Holders of the Notes, as follows:
                                       1
<PAGE>
                                   ARTICLE ONE

             Definitions and Other Provisions of General Application

SECTION 101.  Definitions.

     For all purposes of this Indenture,  except as otherwise expressly provided
or unless the context otherwise requires:

     (1) the terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the singular;

     (2) all other  terms used herein  which are defined in the Trust  Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;

     (3) all  accounting  terms not otherwise  defined  herein have the meanings
assigned to them in accordance with generally  accepted  accounting  principles,
and, except as otherwise herein expressly provided, the term "generally accepted
accounting  principles"  with respect to any computation  required and permitted
hereunder  shall mean such accounting  principles as are generally  accepted and
accepted and adopted by the Company at the date of this Indenture; and

     (4) 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.

     Certain terms used in Articles Twelve, Thirteen and Fourteen are defined in
such Articles.

     "Act," when used with respect to any Holder,  has the meaning  specified in
Section 104.

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

     "Authenticating  Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Notes.

     "Beneficial Owner" means any "beneficial owner" as determined in accordance
with Rule 13d-3, promulgated by the Commission under the Exchange Act.

     "Board of Directors"  means either the board of directors of the Company or
any duly authorized committee of that board.
                                       2
<PAGE>
     "Board Resolution" means a copy of a resolution  certified by the Secretary
or an Assistant  Secretary of the Company to have been duly adopted by the Board
of  Directors  and  to be  in  full  force  and  effect  on  the  date  of  such
certification and delivered to the Trustee.

     "Business Day" means each Monday, Tuesday,  Wednesday,  Thursday and Friday
which is not a day on which banking  institutions  in New York,  New York or the
city in which the Corporate  Trust Office is located are authorized or obligated
to close by law or executive order.

     "Cedel" means Cedel Bank societe anonyme.

     "Change in Control" has the meaning specified in Section 1406.

     "Closing Date" means March 24, 1998.

     "Commission"  means the Securities and Exchange  Commission as from time to
time  constituted,  created under the Exchange Act, or, if at any time after the
execution of this  instrument such Commission is not existing and performing the
duties  now  assigned  to it  under  the  Trust  Indenture  Act,  then  the body
performing such duties at such time.

     "Common Stock"  includes any stock of any class of the Company which has no
preference  in respect of  dividends  or of amounts  payable in the event of any
voluntary or involuntary  liquidation,  dissolution or winding-up of the Company
and which is not subject to redemption by the Company.  However,  subject to the
provisions of Section 1311, shares issuable on conversion of Notes shall include
only shares of the class  designated  as Common Stock of the Company at the date
of this  Indenture  or  shares  of any  class  or  classes  resulting  from  any
reclassification  or  reclassifications  thereof and which have no preference in
respect of  dividends  or of amounts  payable in the event of any  voluntary  or
involuntary liquidation,  dissolution or winding-up of the Company and which are
not subject to  redemption by the Company;  provided,  that if at any time there
shall be more than one such resulting  class, the shares of each such class then
so issuable shall be  substantially  in the proportion which the total number of
shares of such  class  resulting  from all such  reclassifications  bears to the
total   number  of  shares  of  all  such  classes   resulting   from  all  such
reclassifications.

     "Company" means the Person named as the "Company" in the first paragraph of
this instrument  until a successor Person shall have become such pursuant to the
applicable  provisions of this  Indenture,  and thereafter  "Company" shall mean
such successor Person.

     "Company  Request"  or  "Company  Order"  means a written  request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary, and delivered to the Trustee.

     "Corporate  Trust  Office"  means the office of the Trustee at which at any
particular time its corporate trust business shall  principally be administered,
which office at the date as of
                                        3
<PAGE>
which this Indenture is dated, is located at Suite 1100,  First Union Plaza, 999
Peachtree  St.,  N.E.,  Atlanta,  Georgia,  30309,  Attention:  Corporate  Trust
Administration.

     "Corporation"  means  a  corporation,   association,  company,  joint-stock
company or business trust.

     "Current Market Price" has the meaning specified in Section 1304.

     "DTC" has the meaning specified in Section 305.

     "Defaulted Interest" has the meaning specified in Section 307.

     "Definitive  Note" or "Definitive  Notes" means a Note or Notes that are in
the form of the Note set forth in Sections  202 and 203 hereof,  containing  the
legend specified for a Definitive Note and not including the additional language
referred to in footnote 1 or the additional schedule referred to in footnote 2.

     "Depositary" has the meaning specified in Section 305.

     "Designated  Senior  Indebtedness"  means the principal of, premium if any,
and interest, fees, indemnification amounts,  reimbursements,  damages and other
liabilities payable under the documentation governing indebtedness (a) under any
debt facility  with banks or other  lenders that  provides for revolving  credit
loans,  term  loans,  receivables  financing  (including  through  the  sale  of
receivables) or letters of credit to the Company or any of its subsidiaries, and
(b) any other Senior  Indebtedness the principal amount of which is $5.0 million
or more and that  has been  designated  by the  Company  as  "Designated  Senior
Indebtedness."

     "Euroclear"  means  Morgan  Guaranty  Trust  Company of New York,  Brussels
office, as operator of the Euroclear System.

     "Event of Default" has the meaning specified in Section 501.

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

     "Global  Note" or "Global  Notes"  means a Note or Notes in the form of the
Note set  forth in  Sections  202,  203 and 204  hereof  containing  the  legend
specified for a Global Note, the additional  language  referred to in footnote 1
and the additional schedule referred to in footnote 2.

     "Holder"  means a Person  in whose  name a Note is  registered  in the Note
Register.

     "Indenture" means this instrument as originally  executed or as it may from
time to time be supplemented  or amended by one or more indentures  supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument and
                                        4
<PAGE>
any such supplemental indenture,  the provisions of the Trust Indenture Act that
are deemed to be a part of and govern this instrument and any such  supplemental
indenture, respectively.

     "Initial  Purchasers"  means  NationsBanc  Montgomery  Securities LLC, CIBC
Oppenheimer Corp., EVEREN Securities, Inc., and Piper Jaffray Inc.

     "Interest  Payment  Date" means the Stated  Maturity of an  installment  of
interest on the Notes.

     "Maturity," when used with respect to any Note, means the date on which the
principal  of such Note  becomes due and payable as therein or herein  provided,
whether  at the  Stated  Maturity  thereof or by  declaration  of  acceleration,
redemption or otherwise.

      "Notes  Custodian"  means the Trustee,  as  custodian  with respect to the
Notes in global form, or any successor entity thereto.

      "Note  Register"  and  "Note  Registrar"  have  the  respective   meanings
specified in Section 305.

     "Officers'  Certificate"  means a certificate signed by the Chairman of the
Board, the Chief Executive  Officer,  the President or a Vice President,  and by
the Treasurer, an Assistant Treasurer,  the Secretary or an Assistant Secretary,
of the Company,  and  delivered to the Trustee.  One of the officers  signing an
Officers'  Certificate  given  pursuant to Section  1004 shall be the  principal
executive, financial or accounting officer of the Company.

     "144A Global Note" has the meaning specified in Section 201.

     "Opinion  of  Counsel"  means a written  opinion  of  counsel  who shall be
reasonably acceptable to the Trustee.

     "Outstanding,"  when used with respect to Notes,  means,  as of the date of
determination,  all Notes  theretofore  authenticated  and delivered  under this
Indenture, except:

          (i) Notes  theretofore  canceled  by the Trustee or  delivered  to the
Trustee for cancellation;

          (ii) Notes,  or portions  thereof,  for the payment or  redemption  of
which moneys in the necessary  amount have been  theretofore  deposited with the
Trustee or any Paying  Agent  (other than the Company) in trust or set aside and
segregated  in trust by the Company (if the Company  shall act as its own Paying
Agent) for the Holders of such Notes; provided,  that if such Notes, or portions
thereof,  are to be  redeemed,  notice of such  redemption  has been duly  given
pursuant to this Indenture or provision therefor satisfactory to the Trustee has
been made; and
                                       5
<PAGE>
          (iii)  Notes  which  have  been paid  pursuant  to  Section  306 or in
exchange  for or in lieu of  which  other  Notes  have  been  authenticated  and
delivered  pursuant to this  Indenture,  other than any such Notes in respect of
which there shall have been  presented to the Trustee proof  satisfactory  to it
that such Notes are held by a bona fide  purchaser in whose hands such Notes are
valid obligations of the Company; provided, however, that in determining whether
the Holders of the  requisite  principal  amount of the  Outstanding  Notes have
given any request, demand,  authorization,  direction, notice, consent or waiver
hereunder,  Notes  owned by the  Company or any other  obligor  the Notes or any
Affiliate  of the  Company or of such other  obligor  shall be  disregarded  and
deemed not to be  Outstanding,  except that, in determining  whether the Trustee
shall be  protected  in relying upon any such  request,  demand,  authorization,
direction,  notice,  consent or waiver,  only Notes as to which the  Trustee has
actual knowledge of such ownership shall be so disregarded. Notes 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 Notes and that the pledgee is not the Company or any other
obligor upon the Notes or any Affiliate of the Company or of such other obligor.

      "Paying  Agent"  means any  Person  authorized  by the  Company to pay the
principal of and premium, if any, interest or liquidated damages, if any, on any
Notes on behalf of the Company.

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

      "Predecessor  Note" of any  particular  Note  means  every  previous  Note
evidencing  all or a  portion  of the  same  debt  as  that  evidenced  by  such
particular   Note;  and,  for  the  purposes  of  this   definition,   any  Note
authenticated  and  delivered  under Section 306 in exchange for or in lieu of a
mutilated,  destroyed,  lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.

      "Purchase  Agreement" means that certain Purchase Agreement dated March _,
1998 between the Company and the Initial Purchasers.

     "Record Date" means either a Regular  Record Date or a Special Record Date,
as applicable.

      "Redemption  Date,"  when used with  respect  to any Note to be  redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.

      "Redemption  Price,"  when used with  respect to any Note to be  redeemed,
means the price at which it is to be redeemed  pursuant to this Indenture on the
applicable Redemption Date.

     "Registration  Rights  Agreement"  means that certain  Registration  Rights
Agreement dated March 24, 1998 between the Company and the Initial Purchasers.
                                       6
<PAGE>
     "Regular  Record  Date," for the interest  payable on any Interest  Payment
Date means March 15 or September 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.

     "Regulation  S" means  Regulation S under the  Securities  Act of 1933,  as
amended.

     "Regulation S Global Note" has the meaning specified in Section 201.

     "Repurchase Date" has the meaning specified in Section 1401.

     "Repurchase Event" has the meaning specified in Section 1406.

     "Repurchase Price" has the meaning specified in Section 1401.

     "Resale Restriction  Termination Date" means, with respect to any Note, the
date which is two years after the later of (i) the  original  issue date of such
Note and (ii) the last date on which the Company or any Affiliate of the Company
was the owner of such Note (or any Predecessor Note).

     "Responsible  Officer"  means,  when used with respect to the  Trustee,  an
officer of the Trustee assigned and duly authorized by the Trustee to administer
its corporate trust matters.

     "Senior  Indebtedness"  means the  principal  of and  premium,  if any, and
interest on (a) all  indebtedness  of the Company for money  borrowed  under the
Company's credit  facilities and any predecessor or successor credit  facilities
thereto,  whether outstanding on the date of execution of the Indenture (such as
the  Company's  bank credit  agreement,  any  increase in the maximum  principal
amount  thereof  and  any  predecessor  or  successor   facilities  thereto)  or
thereafter  created,  incurred or  assumed,  (b) any other  indebtedness  of the
Company for money borrowed,  whether outstanding on the date of execution of the
Indenture  or  thereafter  created,  incurred or assumed,  except any such other
indebtedness  that by the terms of the  instrument or  instruments by which such
indebtedness was created or incurred expressly provides that it (i) is junior in
right of payment to the Notes or (ii) ranks pari passu in right of payment  with
the  Notes,  and  (c)  any  amendments,  renewals,  extensions,   modifications,
refinancings  and refundings of any of the  foregoing.  For the purposes of this
definition,  "indebtedness  for money  borrowed"  when used with  respect to the
Company  means (i) any  obligation  of, or any  obligation  guaranteed  by,  the
Company for the repayment of borrowed money (including  without limitation fees,
penalties or other obligations in respect thereof),  whether or not evidenced by
bonds, debentures, notes or other written instruments, (ii) any deferred payment
obligation of, or any such obligation guaranteed by, the Company for the payment
of the  purchase  price of  property  or assets  evidenced  by a note or similar
instrument,  and (iii) any obligation of, or any such obligation  guaranteed by,
the Company for the payment of rent or other  amounts  under a lease of property
or assets which  obligation is required to be classified  and accounted for as a
capitalized  lease on the balance sheet of the Company under generally  accepted
accounting principles.
                                       7
<PAGE>
     "Shelf  Registration  Statement"  means  the  Registration  Statement  with
respect  to the Notes and the  Common  Stock the  Company  is  required  to file
pursuant to the Registration Rights Agreement.

     "Special  Record Date" for the payment of any  Defaulted  Interest  means a
date fixed by the Trustee pursuant to Section 307.

     "Stated Maturity," when used with respect to any Note or any installment of
interest  thereon,  means the date  specified  in such Note as the fixed date on
which the  principal  of such Note or such  installment  of  interest is due and
payable.

     "Subsidiary"  means a corporation  more than 50% of the outstanding  voting
stock of which is owned,  directly  or  indirectly,  by the Company or by one or
more other  Subsidiaries  or by the Company and one or more other  Subsidiaries.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors,  whether at all times or only so
long as no  senior  class  of stock  has such  voting  power  by  reason  of any
contingency.

     "Termination of Trading" has the meaning specified in Section 1406.

     "Transfer  Restricted  Securities" means Notes that bear or are required to
bear the legend set forth in Section 305 hereof.

      "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed;  provided,  however,  that in
the event the Trust  Indenture  Act of 1939 is amended  after such date,  "Trust
Indenture Act" means, to the extent  required by any such  amendment,  the Trust
Indenture Act of 1939, as so amended.

      "Trustee"  means the Person named as the "Trustee" in the first  paragraph
of this instrument until a successor  Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.

      "Vice  President,"  when used with  respect to the Company  means any duly
appointed  vice  president,  whether or not  designated by a number or a word or
words added before or after the title "vice president."

SECTION 102.  Compliance Certificates and Opinions.

     Upon any  application  or request by the Company to the Trustee to take any
action under any provision of this  Indenture,  the Company shall furnish to the
Trustee  such  certificates  and  opinions  as may be  required  under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers'  Certificate,  if to be  given by an  officer  of the  Company,  or an
Opinion of Counsel, if to be given by counsel, and shall comply
                                       8
<PAGE>
with the  requirements of the Trust Indenture Act and any other  requirement set
forth in this Indenture.

     Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:

          (1) a statement that each individual or firm signing such  certificate
or opinion  has read such  covenant  or  condition  and the  definitions  herein
relating thereto;

          (2) 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;

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

          (4) a statement as to whether,  in the opinion of each such individual
or such firm, such condition or covenant has been complied with.

SECTION 103.  Form of Documents Delivered to Trustee.

     In any case where  several  matters  are  required  to be  certified  by or
covered by an opinion of, any specified  Person,  it is not  necessary  that all
such  matters  be  certified  by, or covered by the  opinion  of,  only one such
Person,  or that they be so certified or covered by only one  document,  but one
such Person may certify or give an opinion  with respect to some matters and one
or more other such  Persons as to other  matters,  and any Person may certify to
give an opinion as to such matters in one or several documents.

     Any  certificate  or opinion of an  officer  of the  Company  may be based,
insofar as it relates to legal matters,  upon a certification  or opinion of, or
representations  by,  counsel,  unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or  representations
with respect to the matters upon which his  certificate  or opinion is based are
erroneous.  Any such certificate or Opinion of Counsel may be based,  insofar as
it relates to factual matters,  upon a certificate of public officials or upon a
certificate or opinion of, or representations  by, an officer or officers of the
Company stating that the information  with respect to such factual matters is in
the possession of the Company,  unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or  representations
with respect to such matters are erroneous.

     Where  any  Person  is  required  to  make,  give  or  execute  two or more
applications,  requests, consents,  certificates,  statements, opinions or other
instruments  under this Indenture,  they may, but need not, be consolidated  and
form one instrument.
                                       9
<PAGE>
     SECTION 104.  Acts of Holders; Record Dates.

     (a) Any request, demand, authorization,  direction, notice, consent, waiver
or other action  provided by this  Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such  Holders in person or by agents duly  appointed in writing;
and, except as herein  otherwise  expressly  provided,  such action shall become
effective when such  instrument or instruments are delivered to the Trustee and,
where it is hereby  expressly  required,  to the  Company.  Such  instrument  or
instruments (and the action embodied  therein and evidenced  thereby) are herein
sometimes  referred to as the "Act" of the Holders  signing such  instrument  or
instruments.  Proof  of  execution  of  any  such  instrument  or  of a  writing
appointing  any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 601) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.

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

     (c) The Company may, in the circumstances  permitted by the Trust Indenture
Act, fix any day as the record date for the purpose of  determining  the Holders
entitled to give or take any request, demand, authorization,  direction, notice,
consent,  waiver  or  other  action,  or to vote on any  action,  authorized  or
permitted  to be given or taken by Holders.  If not set by the Company  prior to
the first  solicitation  of a Holder  made by any  Person in respect of any such
action,  or, in the case of any such vote,  prior to such vote,  the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders  required  to be provided  pursuant to Section  701)
prior to such first solicitation or vote, as the case may be. With regard to any
record date,  only the Holders on such date (or their duly  designated  proxies)
shall  be  entitled  to  give  or  take,  or  vote  on,  the  relevant   action.
Notwithstanding the foregoing,  the Company shall not set a record date for, and
the provisions of this paragraph shall not apply with respect to, any Act by the
Holders pursuant to Section 501, 502 or 512.

     (d) The ownership of Notes shall be proved by the Note Register.

     (e) Any Act of the Holder of any Note shall bind every future Holder of the
same Note and the Holder of every Note issued upon the  registration of transfer
therefor or in exchange therefor or in lieu thereof in respect of anything done,
omitted  or  suffered  to be done by the  Trustee  or the  Company  in  reliance
thereon, whether or not notation of such action is made upon such Note.

     (f) Without limiting the foregoing,  a Holder entitled hereunder to give or
take any action  hereunder  with  regard to any  particular  Note may do so with
regard to all or any part of the principal amount of such Note or by one or more
duly appointed  agents each of which may 
                                       10
<PAGE>
do so pursuant to such  appointment  with regard to all or any different part of
such principal amount.

SECTION 105.  Notices, Etc., to Trustee and Company.

     Any Act of  Holders  or  other  documents  provided  or  permitted  by this
Indenture to be made upon, given or furnished to, or filed with,

          (1) the  Trustee by any Holder or by the Company  shall be  sufficient
for every purpose hereunder if made, given,  furnished or filed in writing to or
with the Trustee at its Corporate Trust Office,  Corporate Trust Administration,
or at any other address  previously  furnished in writing to the Holders and the
Company by the Trustee; or

          (2) the  Company by the Trustee or by any Holder  shall be  sufficient
for every purpose hereunder  (unless otherwise herein expressly  provided) if in
writing and mailed, first-class postage prepaid, to the Company, addressed to it
at the  address  of its  principal  executive  offices  specified  in the  first
paragraph of this  instrument  or at any other address  previously  furnished in
writing to the Trustee by the Company.

     All such  notices  and  communications  shall be  deemed  to have been duly
given:  at the time delivered by hand, if personally  delivered;  three Business
Days after being  deposited in the mail,  registered  or certified  with postage
prepaid, if mailed; when answered back if telexed; when receipt acknowledged, if
telecopied;  and the next Business Day after timely delivery to the courier,  if
sent by  nationally  recognized  overnight  air  courier  guaranteeing  next day
delivery.

SECTION 106.  Notice to Holders; Waiver.

     Where this  Indenture  provides  for  notice to Holders of any event,  such
notice shall be sufficiently given (unless otherwise herein expressly  provided)
if made, given, mailed or otherwise furnished or filed in writing to each Holder
affected by such event,  at his address as it appears in the Note Register,  not
later than the latest date (if any),  and not earlier than the earliest date (if
any),  prescribed for the giving of such notice.  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.  All
such notices and communications  shall be deemed to have been duly given: at the
time delivered by hand, if personally  delivered;  two Business Days after being
deposited in the mail,  registered or certified with postage prepaid, if mailed;
when answered back if telexed; when receipt acknowledged, if telecopied; and the
next  Business Day after timely  delivery to the courier,  if sent by nationally
recognized overnight air courier guaranteeing next day delivery.

     In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be 
                                       11
<PAGE>
made with the approval of the Trustee shall constitute a sufficient notification
for every purpose hereunder.

SECTION 107.  Conflict with Trust Indenture Act. If any provision hereof limits,
qualifies or conflicts  with a provision of the Trust  Indenture  Act or another
provision that would be required or deemed under the Trust Indenture Act to be a
part of and govern this Indenture if this Indenture  were subject  thereto,  the
relevant provision of the Trust Indenture Act shall control. If any provision of
this  Indenture  modifies or excludes any  provision of the Trust  Indenture Act
that may be so  modified  or  excluded,  the  relevant  provision  of the  Trust
Indenture Act shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.

SECTION 108.  Effect of Headings and Table of Contents.  The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.

SECTION 109.  Successors  and Assigns.  All  covenants  and  agreements  in this
Indenture  by the Company and the  Trustee  shall bind each of their  respective
successors and assigns, whether so expressed or not.

SECTION 110.  Separability Clause. In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability  of the remaining  provisions shall not in any way be affected or
impaired thereby.

SECTION 111.  Benefits of Indenture.  Nothing in this Indenture or in the Notes,
express or implied,  shall give to any Person, other than the parties hereto and
their  successors  hereunder,  the Holders of Notes and, with respect to Article
Twelve,  the  holders  of  Senior  Indebtedness,  any  benefit  or any  legal or
equitable right, remedy or claim under this Indenture.

SECTION 112.  Governing  Law.  This  Indenture  and,  except as may otherwise be
required  by  mandatory  provisions  of law,  the Notes shall be governed by and
construed  in  accordance  with the laws of the State of New York,  but  without
regard to the principles of conflicts of laws thereof.

SECTION  113.  Legal  Holidays.  In any case where any  Interest  Payment  Date,
Redemption  Date or  Stated  Maturity  of any Note or the  last  date on which a
Holder has the right to convert  his Notes  shall not be a  Business  Day,  then
(notwithstanding  any other provision of this Indenture or of the Notes) payment
of interest,  liquidated  damages,  if any, or principal  and premium if any, or
conversion  of the Notes 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
Interest Payment Date or Redemption Date, or at the Stated Maturity,  or on such
last day for conversion;  provided, that no interest shall accrue for the period
from and after such Interest  Payment Date,  Redemption Date or Stated Maturity,
as the case may be, to the next succeeding Business Day.
                                       12
<PAGE>
SECTION  114. No Security  Created.  Nothing in this  Indenture or in the Notes,
express or implied,  shall be construed to constitute a security  interest under
the Uniform Commercial Code or similar legislation,  as now or hereafter enacted
and  in  effect  in any  jurisdiction  where  property  of  the  Company  or its
Subsidiaries is or may be located.

SECTION 115. Limitation on Individual  Liability.  No recourse under or upon any
obligation, covenant or agreement contained in this Indenture or in any Note, or
for any claim  based  thereon  or  otherwise  in respect  thereof,  shall be had
against any  incorporator,  shareholder,  officer or  director,  as such,  past,
present or future, of the Company or any successor corporation,  either directly
or through the Company,  whether by virtue of any constitution,  statute or rule
of law, or by the  enforcement  of any  assessment or penalty or  otherwise;  it
being  expressly  understood  that this  Indenture  and the  obligations  issued
hereunder are solely corporate obligations,  and that no such personal liability
whatever  shall  attach to, or is or shall be  incurred  by, the  incorporators,
shareholders,  officers or  directors,  as such, of the Company or any successor
Person,  or any of them,  because of the  creation  of the  indebtedness  hereby
authorized,  or under or by reason of the  obligations,  covenants or agreements
contained in this  Indenture or in any Note or implied  therefrom;  and that any
and all such personal  liability of every name and nature,  either at common law
or in equity or by constitution or statute,  of, and any and all such rights and
claims against,  every such incorporator,  shareholder,  officer or director, as
such, because of the creation of the indebtedness hereby authorized, or under or
by  reason  of the  obligations,  covenants  or  agreements  contained  in  this
Indenture or in any Note or implied  therefrom,  are hereby expressly waived and
released as a condition  of, and as a  consideration  for, the execution of this
Indenture and the issuance of such Note.

                                   ARTICLE TWO

                                   Note Forms

SECTION 201.  Forms Generally.

     The Notes  and the  Trustee's  certificate  of  authentication  shall be in
substantially  the  forms  set  forth in this  Article,  with  such  appropriate
insertions,  omissions,  substitutions  and other  variations as are required or
permitted by this Indenture,  and may have such letters,  numbers or other marks
of  identification  and such legends or  endorsements  placed  thereon as may be
required to comply with any organizational  document, any applicable law or with
the rules of any  securities  exchange  on which the Notes are listed or as may,
consistently  herewith,  be determined by the Company  officers  executing  such
Notes, as evidenced by their execution of the Notes.

     The Notes issued in definitive form shall be  substantially in the form set
forth in Section 202 hereof.

     Unless issued in definitive form, Notes issued and sold in reliance on Rule
144A shall be issued in the form of one or more global  notes (the "144A  Global
Note"),  the  face of  which  shall be  substantially  in the form set  forth in
Section 202 hereof and the reverse of which shall
                                       13
<PAGE>
be substantially in the form set forth in Section 203 hereof,  which 144A Global
Note  shall be  deposited  on behalf  of the  holders  of the Notes  represented
thereby with the Trustee, as custodian for the Depositary, and registered in the
name  of the  nominee  of the  Depositary,  duly  executed  by the  Company  and
authenticated as provided for herein.

      Notes offered and sold outside the United States in reliance on Regulation
S shall be issued in the form of one or more  global  notes (the  "Regulation  S
Global Note"), the face of which shall be substantially in the form set forth in
Section 202 hereof and the reverse of which shall be  substantially  in the form
set forth in  Section  203  hereof,  which  Regulation  S Global  Note  shall be
deposited  on behalf of the holders of the Notes  represented  thereby  with the
Trustee,  as  custodian  for the  Depositary,  and  registered  in the name of a
nominee of the  Depositary,  duly executed by the Company and  authenticated  as
provided herein,  for credit to the accounts of the respective  depositaries for
Euroclear and Cedel (or such other accounts as they may direct).  Prior to or on
the 40th day after the later of the  commencement  of the  offering of the Notes
and the Closing  Date (the  "Restricted  Period"),  beneficial  interests in the
Regulation S Global Note may only be held through Morgan  Guaranty Trust Company
of New York, Brussels office, as operator of Euroclear or Cedel or another agent
member  of the  Euroclear  System  and Cedel  acting  for and on behalf of them,
unless  delivery is made  through the 144A  Global Note in  accordance  with the
certification  requirements hereof.  During the Restricted Period,  interests in
the  Regulation S Global Note may be exchanged  for interests in the 144A Global
Note  or  for  Definitive  Notes  only  in  accordance  with  the  certification
requirements described in Section 305 below.

     Each Global Note shall represent such of the outstanding  Notes as shall be
specified  therein and each shall provide that it shall  represent the aggregate
amount of  outstanding  Notes from time to time  endorsed  thereon  and that the
aggregate amount of outstanding Notes represented  thereby may from time to time
be reduced or increased,  as appropriate,  to reflect exchanges and redemptions.
Any  endorsement  of a Global  Note to  reflect  the amount of any  increase  or
decrease in the amount of outstanding Notes represented thereby shall be made by
the  Trustee  or the  Notes  Custodian,  at the  direction  of the  Trustee,  in
accordance with instructions given by the Holder thereof.

     The Definitive Notes shall be printed, lithographed or engraved or produced
by any combination of these methods on steel engraved borders or may be produced
in any other manner  permitted by the rules of any securities  exchange on which
the Notes may be listed, all as determined by the officers executing such Notes,
as evidenced by their execution of such Notes.
                                       14
<PAGE>
SECTION 202. Form of Face of Note.

      LEGENDS FOR GLOBAL NOTE:

      UNLESS  AND  UNTIL  IT IS  EXCHANGED  IN  WHOLE  OR IN PART  FOR  NOTES IN
DEFINITIVE  FORM,  THIS  NOTE MAY NOT BE  TRANSFERRED  EXCEPT  AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE  DEPOSITARY OR BY A NOMINEE OF THE  DEPOSITARY TO
THE DEPOSITARY OR ANOTHER  NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH  NOMINEE  TO  A  SUCCESSOR  DEPOSITARY  OR  A  NOMINEE  OF  SUCH  SUCCESSOR
DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET,  NEW YORK, NEW YORK) ("DTC"),  TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,  EXCHANGE OR PAYMENT, AND ANY
NOTE  ISSUED  IS  REGISTERED  IN THE NAME OF CEDE & CO.  OR SUCH  OTHER  NAME AS
REQUESTED  BY AN  AUTHORIZED  REPRESENTATIVE  OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED  REPRESENTATIVE
OF DTC),  ANY TRANSFER,  PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL  INASMUCH AS THE REGISTERED OWNER HEREOF,  CEDE & CO.,
HAS AN INTEREST HEREIN.

      THE  NOTE  EVIDENCED  HEREBY  HAS  NOT  BEEN  REGISTERED  UNDER  THE  U.S.
SECURITIES  ACT OF  1933,  AS  AMENDED  (THE  "SECURITIES  ACT"),  OR ANY  STATE
SECURITIES LAWS, AND, ACCORDINGLY, NEITHER THIS NOTE, THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS NOTE NOR ANY INTEREST OR  PARTICIPATION  HEREIN
OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE  DISPOSED  OF IN THE  ABSENCE  OF SUCH  REGISTRATION  OR  UNLESS  SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,  REGISTRATION.  UNLESS THE SHARES
OF COMMON STOCK HAVE BEEN REGISTERED  UNDER THE SECURITIES ACT, A HOLDER OF THIS
NOTE WILL BE ABLE TO EXERCISE THE CONVERSION  RIGHT ONLY IF THE HOLDER CERTIFIES
THAT IT IS A "QUALIFIED  INSTITUTIONAL  BUYER" OR AN  INSTITUTIONAL  "ACCREDITED
INVESTOR" AS DEFINED BELOW.

      THE HOLDER OF THIS NOTE, BY ITS  ACQUISITION  HEREOF,  AGREES THAT IT WILL
NOT,  PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE  HEREOF  AND THE LAST DATE ON WHICH THE  COMPANY  OR ANY  AFFILIATE  OF THE
COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE),  RESELL OR
OTHERWISE  TRANSFER THE NOTE EVIDENCED  HEREBY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY,  OR ANY  SUBSIDIARY  THEREOF,
(B) INSIDE THE UNITED  STATES TO A QUALIFIED  INSTITUTIONAL  BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE  SECURITIES  ACT,  (C)  INSIDE THE UNITED  STATES TO AN
INSTITUTIONAL
                                       15
<PAGE>
ACCREDITED  INVESTOR  THAT,  PRIOR TO SUCH  TRANSFER,  FURNISHES  TO FIRST UNION
NATIONAL  BANK, AS TRUSTEE (OR A SUCCESSOR  TRUSTEE,  AS  APPLICABLE),  A SIGNED
LETTER  CONTAINING  CERTAIN  REPRESENTATIONS  AND  AGREEMENTS  RELATING  TO  THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED  HEREBY (THE FORM OF WHICH LETTER
CAN BE OBTAINED  FROM SUCH TRUSTEE OR SUCCESSOR  TRUSTEE,  AS  APPLICABLE),  (D)
OUTSIDE  THE  UNITED  STATES  IN AN  OFFSHORE  TRANSACTION  IN  COMPLIANCE  WITH
REGULATION  S UNDER THE  SECURITIES  ACT,  (E)  PURSUANT TO THE  EXEMPTION  FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES  ACT  (AND  WHICH  CONTINUES  TO BE  EFFECTIVE  AT THE  TIME  OF SUCH
TRANSFER);  AND  AGREES  THAT IT WILL  DELIVER  TO EACH  PERSON TO WHOM THE NOTE
EVIDENCED  HEREBY IS  TRANSFERRED A NOTICE  SUBSTANTIALLY  TO THE EFFECT OF THIS
LEGEND.  IN CONNECTION  WITH ANY TRANSFER OF THE NOTE EVIDENCED  HEREBY,  OR THE
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF,  WITHIN TWO YEARS AFTER
THE ORIGINAL  ISSUANCE OF SUCH NOTE, THE HOLDER MUST CHECK THE  APPROPRIATE  BOX
SET FORTH ON THE  REVERSE  HEREOF  RELATING TO THE MANNER OF SUCH  TRANSFER  AND
SUBMIT THIS CERTIFICATE TO FIRST UNION NATIONAL BANK, AS TRUSTEE (OR A SUCCESSOR
TRUSTEE,  AS  APPLICABLE).  IF  THE  PROPOSED  TRANSFEREE  IS  AN  INSTITUTIONAL
ACCREDITED  INVESTOR OR A PURCHASER WHO IS NOT A U.S.  PERSON,  THE HOLDER MUST,
PRIOR TO SUCH  TRANSFER,  FURNISH TO FIRST UNION NATIONAL BANK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS,  LEGAL OPINIONS OR OTHER
INFORMATION AS IT MAY REASONABLY  REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE  PURSUANT TO AN EXEMPTION  FROM,  OR IN A  TRANSACTION  NOT SUBJECT TO, THE
REGISTRATION  REQUIREMENTS  OF THE  SECURITIES  ACT. THIS LEGEND WILL BE REMOVED
UPON ANY TRANSFER OF THE NOTE  EVIDENCED  HEREBY,  OR THE SHARES OF COMMON STOCK
ISSUED  UPON  CONVERSION  THEREOF,  AFTER THE  EXPIRATION  OF TWO YEARS FROM THE
ORIGINAL  ISSUANCE  OF THE NOTE  EVIDENCED  HEREBY.  AS USED  HEREIN,  THE TERMS
"OFFSHORE  TRANSACTION,"  "UNITED  STATES" AND "U.S.  PERSON"  HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

LEGENDS FOR DEFINITIVE NOTE:

      THE  NOTE  EVIDENCED  HEREBY  HAS  NOT  BEEN  REGISTERED  UNDER  THE  U.S.
SECURITIES  ACT OF  1933,  AS  AMENDED  (THE  "SECURITIES  ACT"),  OR ANY  STATE
SECURITIES LAWS, AND, ACCORDINGLY, NEITHER THIS NOTE, THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS NOTE NOR ANY INTEREST OR  PARTICIPATION  HEREIN
OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE  DISPOSED  OF IN THE  ABSENCE  OF SUCH  REGISTRATION  OR  UNLESS  SUCH
                                       16
<PAGE>
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,  REGISTRATION.  UNLESS THE SHARES
OF COMMON STOCK HAVE BEEN REGISTERED  UNDER THE SECURITIES ACT, A HOLDER OF THIS
NOTE WILL BE ABLE TO EXERCISE THE CONVERSION  RIGHT ONLY IF THE HOLDER CERTIFIES
THAT IT IS A "QUALIFIED  INSTITUTIONAL  BUYER" OR AN  INSTITUTIONAL  "ACCREDITED
INVESTOR" AS DEFINED BELOW.

      THE HOLDER OF THIS NOTE, BY ITS  ACQUISITION  HEREOF,  AGREES THAT IT WILL
NOT,  PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE  HEREOF  AND THE LAST DATE ON WHICH THE  COMPANY  OR ANY  AFFILIATE  OF THE
COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE),  RESELL OR
OTHERWISE  TRANSFER THE NOTE EVIDENCED  HEREBY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY,  OR ANY  SUBSIDIARY  THEREOF,
(B) INSIDE THE UNITED  STATES TO A QUALIFIED  INSTITUTIONAL  BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE  SECURITIES  ACT,  (C)  INSIDE THE UNITED  STATES TO AN
INSTITUTIONAL  ACCREDITED  INVESTOR THAT,  PRIOR TO SUCH TRANSFER,  FURNISHES TO
FIRST UNION NATIONAL BANK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A
SIGNED LETTER CONTAINING CERTAIN  REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED  HEREBY (THE FORM OF WHICH LETTER
CAN BE OBTAINED  FROM SUCH TRUSTEE OR SUCCESSOR  TRUSTEE,  AS  APPLICABLE),  (D)
OUTSIDE  THE  UNITED  STATES  IN AN  OFFSHORE  TRANSACTION  IN  COMPLIANCE  WITH
REGULATION  S UNDER THE  SECURITIES  ACT,  (E)  PURSUANT TO THE  EXEMPTION  FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES  ACT  (AND  WHICH  CONTINUES  TO BE  EFFECTIVE  AT THE  TIME  OF SUCH
TRANSFER);  AND  AGREES  THAT IT WILL  DELIVER  TO EACH  PERSON TO WHOM THE NOTE
EVIDENCED  HEREBY IS  TRANSFERRED A NOTICE  SUBSTANTIALLY  TO THE EFFECT OF THIS
LEGEND.  IN CONNECTION  WITH ANY TRANSFER OF THE NOTE EVIDENCED  HEREBY,  OR THE
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF,  WITHIN TWO YEARS AFTER
THE ORIGINAL  ISSUANCE OF SUCH NOTE, THE HOLDER MUST CHECK THE  APPROPRIATE  BOX
SET FORTH ON THE  REVERSE  HEREOF  RELATING TO THE MANNER OF SUCH  TRANSFER  AND
SUBMIT THIS CERTIFICATE TO FIRST UNION NATIONAL BANK, AS TRUSTEE (OR A SUCCESSOR
TRUSTEE,  AS  APPLICABLE).  IF  THE  PROPOSED  TRANSFEREE  IS  AN  INSTITUTIONAL
ACCREDITED  INVESTOR OR A PURCHASER WHO IS NOT A U.S.  PERSON,  THE HOLDER MUST,
PRIOR TO SUCH  TRANSFER,  FURNISH TO FIRST UNION NATIONAL BANK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS,  LEGAL OPINIONS OR OTHER
INFORMATION AS IT MAY REASONABLY  REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE  PURSUANT TO AN EXEMPTION  FROM,  OR IN A  TRANSACTION  NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE
                                       17
<PAGE>
SECURITIES  ACT.  THIS  LEGEND  WILL BE REMOVED  UPON ANY  TRANSFER  OF THE NOTE
EVIDENCED HEREBY, OR THE SHARES OF COMMON STOCK ISSUED UPON CONVERSION  THEREOF,
AFTER  THE  EXPIRATION  OF TWO  YEARS  FROM THE  ORIGINAL  ISSUANCE  OF THE NOTE
EVIDENCED  HEREBY.  AS USED HEREIN,  THE TERMS "OFFSHORE  TRANSACTION,"  "UNITED
STATES" AND `'U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT.
                                       18
<PAGE>
                       ACTION PERFORMANCE COMPANIES, INC.

                 4 3/4% Convertible Subordinated Notes due 2005
                               CUSIP No. 004933107

         Action  Performance  Companies  Inc.,  an Arizona  corporation  (herein
called the  "Company,"  which  term  includes  any  successor  Person  under the
Indenture  hereinafter referred to), for value received,  hereby promises to pay
to ______________,  or its registered assigns, the principal sum of ____________
Dollars  [OR SUCH  GREATER OR LESSER  AMOUNT AS  INDICATED  ON THE  SCHEDULE  OF
EXCHANGES  OF NOTES ON THE  REVERSE  HEREOF]1  on April 1, 2005  upon  surrender
hereof  to the  Paying  Agent,  and to pay  interest  thereon  from  the date of
original  issuance of Notes  pursuant to the Indenture or from and including the
most  recent  Interest  Payment  Date to which  interest  has been  paid or duly
provided for,  semi-annually  on April 1 and October 1 in each year,  commencing
October 1, 1998 at the rate of 4 3/4% per annum,  until the principal  hereof is
paid or made  available for payment and promises to pay any  liquidated  damages
which may be payable pursuant to Section 4 of the Registration  Rights Agreement
on the Damages  Payment Dates.  The interest so payable,  and punctually paid or
duly  provided  for,  on any  Interest  Payment  Date will,  as provided in such
Indenture,  be paid to the  Person  in  whose  name  this  Note  (or one or more
Predecessor  Notes) is registered at the close of business on the Regular Record
Date for such interest,  which shall be the March 15 or September 15 (whether or
not a Business Day), as the case may be, next  preceding  such Interest  Payment
Date.  Any  such  interest  not so  punctually  paid or duly  provided  for will
forthwith  cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Note (or one or more Predecessor
Notes) is registered  at the close of business on a Special  Record Date for the
payment of such Defaulted  Interest to be fixed by the Trustee or be paid at any
time in any other lawful manner not  inconsistent  with the  requirements of any
securities exchange on which the Notes may be listed and upon such notice as may
be  required by such  exchange,  all as more fully  provided in said  Indenture.
Notice of a Special Record Date shall be given to Holders of Notes not less than
10 days prior to such  Special  Record  Date.  Payment of the  principal  of and
premium,  if any, interest and liquidated  damages, if any, on this Note will be
made (i) in respect of Notes held of record by the  Depositary or its nominee in
same day funds on or prior to the  respective  payment dates and (ii) in respect
of Notes held of record by Holders  other than the  Depositary or its nominee in
same day  funds at the  office  or agency  of the  Company  maintained  for that
purpose pursuant to Section 1002 of the Indenture,  in each case in such coin or
currency  of the  United  States of  America  as of the time of payment is legal
tender for payment of public and private debts;  provided,  however, that at the
option of the Company  payment of interest in respect of Notes held of record by
Holders other than the  Depositary or its nominee may be made by check mailed to
the address of the Person  entitled  thereto as such address shall appear in the
Note Register.

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

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

(1)      This  phrase  should be  included  only if the Note is issued in global
         form.
                                       19
<PAGE>
         Unless the  certificate of  authentication  hereon has been executed by
the Trustee  referred to on the reverse  hereof by manual  signature,  this Note
shall  not be  entitled  to any  benefit  under  the  Indenture  or be  valid or
obligatory for any purpose.

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

Dated:                                 ACTION PERFORMANCE COMPANIES, INC.
       ----------------------

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



------------------------------------
                                       20
<PAGE>
SECTION 203.  Form of Reverse of Global Notes and Definitive Notes.

     This  Note  is one of a duly  authorized  issue  of  Notes  of the  Company
designated as its 4 3/4% Convertible  Subordinated Notes due 2005 (herein called
the "Notes"),  limited in aggregate principal amount to $115,000,000  (including
Notes issuable  pursuant to the Initial  Purchasers'  over-allotment  option, as
provided for in the Purchase  Agreement dated March 18, 1998 between the Company
and the Initial Purchasers),  issued and to be issued under an Indenture,  dated
as of March 24, 1998 (herein  called the  "Indenture"),  between the Company and
First Union  National Bank, as Trustee  (herein called the "Trustee,  which term
includes any successor trustee under the Indenture),  to which Indenture and all
indentures  supplemental thereto reference is hereby made for a statement of the
respective rights,  limitations of rights,  duties and immunities  thereunder of
the Company,  the Trustee, the holders of Senior Indebtedness and the Holders of
the  Notes  and  of  the  terms  upon  which  the  Notes  are,  and  are  to be,
authenticated and delivered.

     Subject to and upon  compliance  with the provisions of the Indenture,  the
Holder of this Note is entitled,  at his option,  at any time following the date
of original  issuance of Notes  pursuant to the  Indenture  and on or before the
close of business on April 1, 2005, or in case this Note or a portion  hereof is
called for redemption, then in respect of this Note or such portion hereof until
and including,  but (unless the Company  defaults in making the payment due upon
redemption)  not  after,  the  close of  business  on the  second  business  day
preceding  the  Redemption  Date,  to convert  this Note (or any  portion of the
principal amount hereof which is $1,000 or an integral multiple thereof), at the
principal amount hereof,  or of such portion,  into fully paid and nonassessable
shares  (calculated as to each  conversion to the nearest 1/l00th of a share) of
Common Stock at a  conversion  price equal to $48.20  principal  amount for each
share  of  Common  Stock  (or at the  current  adjusted  conversion  price if an
adjustment  has been made as provided in the  Indenture)  by  surrender  of this
Note,  duly  endorsed or assigned to the Company or in blank,  to the Company at
its office or agency maintained for that purpose pursuant to Section 1002 of the
Indenture,  accompanied by written notice to the Company in the form provided in
this Note (or such other notice as is acceptable to the Company) that the Holder
hereof elects to convert this Note, or if less than the entire  principal amount
hereof is to be converted, the portion hereof to be converted, and, in case such
surrender  shall be made  during the period  from the opening of business on any
Regular  Record Date next  preceding  any Interest  Payment Date to the close of
business on such Interest  Payment Date (unless this Note or the portion thereof
being converted has been called for redemption),  also accompanied by payment in
funds  acceptable  to the Company of an amount equal to the interest  payable on
such  Interest  Payment  Date on the  principal  amount of this Note then  being
converted.  Subject to the aforesaid requirement for payment and, in the case of
a conversion  after the Regular Record Date next preceding any Interest  Payment
Date and on or before such Interest  Payment Date, to the right of the Holder of
this Note (or any  Predecessor  Note) of record at such  Regular  Record Date to
receive an  installment  of interest  (with certain  exceptions  provided in the
Indenture), no payment or adjustment is to be made upon conversion on account of
any interest  accrued  hereon or on account of any dividends on the Common Stock
issued upon conversion.  No fractional shares or scrip representing fractions of
shares will be issued on  conversion,  but instead of any  fractional  share the
Company shall pay a cash adjustment as provided in the
                                       21
<PAGE>
Indenture.  The  conversion  price is subject to  adjustment  as provided in the
Indenture.  In  addition,  the  Indenture  provides  that  in  case  of  certain
consolidations  or  mergers  to  which  the  Company  is a party  or the sale or
transfer of all or substantially all of the assets of the Company, the Indenture
shall be amended,  without  the  consent of any  Holders of Notes,  so that this
Note, if then  outstanding,  will be convertible  thereafter,  during the period
this Note shall be convertible as specified above, only into the kind and amount
of  securities,  cash and  other  property  receivable  upon the  consolidation,
merger,  sale or  transfer  by a holder of the number of shares of Common  Stock
into  which  this Note  might  have  been  converted  immediately  prior to such
consolidation,  merger,  sale or transfer  (assuming such holder of Common Stock
failed to exercise  any rights of election  and  received per share the kind and
amount received per share by a plurality of non-electing shares).

     The Notes are subject to redemption upon not less than 30 and not more than
60 days'  notice  by mail,  at any time on or after  April 1,  2001 and prior to
Maturity,  as a  whole  or in  part,  at the  election  of the  Company,  at the
Redemption  Prices set forth below  (expressed as  percentages  of the principal
amount),  plus  accrued  interest  and  liquidated  damages,  if any, up to, but
excluding the Redemption  Date (subject to the right of Holders of record on the
relevant Regular Record Date to receive interest due on an Interest Payment Date
that is on or prior to the Redemption Date).

     If redeemed during the period beginning April 1 in the year indicated,  and
ending on the succeeding March 31, the redemption price shall be:

          Redemption Year                       Redemption Price
     -----------------------------      -----------------------------------
                2001                           102.71%
                2002                           102.04
                2003                           101.36
                2004                           100.68
                2005                           100.00


in each case together with accrued and unpaid  interest and liquidated  damages,
if any, up to but not including the date of redemption.

     In certain circumstances involving the occurrence of a Repurchase Event (as
defined in the Indenture), the Holder hereof shall have the right to require the
Company to repurchase this Note at 100% of the principal amount hereof, together
with accrued  interest and liquidated  damages,  if any, to the Repurchase Date,
but  interest  installments  whose  Stated  Maturity  is on  or  prior  to  such
Repurchase  Date will be payable to the  Holders of such  Notes,  or one or more
Predecessor  Notes,  of record at the close of business on the  relevant  Record
Dates referred to on the face hereof, all as provided in the Indenture.
                                       22
<PAGE>
     In the event of  redemption  or conversion of this Note in part only, a new
Note or Notes for the unredeemed or unconverted portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.

     The  indebtedness  evidenced by this Note is, in all respects,  subordinate
and  subject  in right of  payment  to the prior  payment  in full of all Senior
Indebtedness  of the Company,  and this Note is issued subject to the provisions
of the Indenture  with respect  thereto.  Each Holder of this Note, by accepting
the same,  (a) agrees to and shall be bound by such  provisions,  (b) authorizes
and directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the  subordination  so provided,  and (c) appoints the
Trustee his attorney-in-fact for any and all such purposes.

     If an Event of Default shall occur and be continuing,  the principal of all
the Notes may be  declared  due and  payable  in the  manner and with the effect
provided in the Indenture.

     The Indenture  permits,  with certain  exceptions as therein provided,  the
amendment  thereof and the  modification  of the rights and  obligations  of the
Company and the rights of the Holders of the Notes  under the  Indenture  at any
time by the Company and the Trustee  with the consent of the Holders of not less
than a  majority  in  aggregate  principal  amount  of  the  Notes  at the  time
Outstanding,  and, under certain limited  circumstances,  by the Company and the
Trustee  without  the  consent  of the  Holders.  The  Indenture  also  contains
provisions   permitting  the  Holders  of  specified  percentages  in  aggregate
principal amount of the Notes at the time Outstanding,  on behalf of the Holders
of all the Notes, to waive compliance by the Company with certain  provisions of
the Indenture and to waive certain past defaults and Events of Default under the
Indenture  and their  consequences.  Any such consent or waiver by the Holder of
this Note shall be  conclusive  and binding upon such Holder and upon all future
Holders of this Note and of any Note  issued upon the  registration  of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.

     No reference  herein to the  Indenture  and no provision of this Note or of
the  Indenture  shall alter or impair the  obligation  of the Company,  which is
absolute and  unconditional,  to pay the  principal of and premium,  if any, and
interest and liquidated  damages,  if any, on this Note at the times,  place and
rate, and in the coin or currency,  herein prescribed or to convert this Note as
provided in the Indenture.

     As provided in the Indenture and subject to certain limitations therein set
forth,  the  transfer of this Note is  registrable  in the Note  Register,  upon
surrender of this Note for  registration  of transfer at the office or agency of
the Company in any place where the  principal of and any premium and interest on
this Note are payable,  duly endorsed by, or accompanied by a written instrument
of transfer in form  satisfactory  to the  Company and the Note  Registrar  duly
executed by, the Holder hereof or his attorney duly  authorized in writing,  and
thereupon one or more new Notes,  of authorized  denominations  and for the same
aggregate  principal  amount,  will be issued to the  designated  transferee  or
transferees.
                                       23
<PAGE>
     The Notes are issuable  only in fully  registered  form without  coupons in
minimum  denominations of $1,000 and any integral multiple thereof.  As provided
in the Indenture and subject to certain limitations therein set forth, Notes are
exchangeable  for a like  aggregate  principal  amount  of Notes of a  different
authorized denomination, as requested by the Holder surrendering the same.

     No service  charge shall be made for any such  registration  of transfer or
exchange  except as  provided  in the  Indenture,  and the  Company  may require
payment  of a sum  sufficient  to  cover  any tax or other  governmental  charge
payable in connection therewith.

     Prior to due  presentment of this Note for  registration  of transfer,  the
Company,  the  Trustee and any agent of the Company or the Trustee may treat the
Person in whose  name  this  Note is  registered  as the  owner  hereof  for all
purposes,  except as provided in this Note, whether or not this Note be overdue,
and  neither  the  Company,  the Trustee nor any such agent shall be affected by
notice to the contrary.

     All terms used in this Note which are defined in the  Indenture  shall have
the meanings assigned to them in the Indenture.  The Company will furnish to any
Holder upon written  request and without  charge a copy of the Indenture  and/or
the Registration Rights Agreement.
                                       24
<PAGE>
                           [FORM OF CONVERSION NOTICE]

TO ACTION PERFORMANCE COMPANIES, INC.

     The undersigned  registered owner of this Note hereby irrevocably exercises
the option to convert  this Note,  or the portion  hereof  (which is $1,000 or a
multiple  thereof)  designated  below,  into  shares of  Common  Stock of Action
Performance  Companies,  Inc.  in  accordance  with the  terms of the  Indenture
referred to in this Note, and directs that the shares  issuable and  deliverable
upon the conversion,  together with any check in payment for a fractional  share
and any Note representing any unconverted principal amount hereof, be issued and
delivered  to the  registered  Holder  hereof  unless a different  name has been
provided  below.  If this Notice is being delivered on a date after the close of
business  on a Regular  Record  Date and prior to the close of  business  on the
related  Interest  Payment Date,  this Notice is accompanied by payment in funds
acceptable  to the Company,  of an amount equal to the interest  payable on such
Interest Payment Date on the principal of this Note to be converted (unless this
Note has been called for redemption).  If shares or any portion of this Note not
converted  are to be issued in the name of a person other than the  undersigned,
the undersigned  will pay all transfer taxes payable with respect  thereto.  Any
amount required to be paid by the undersigned on account of interest accompanies
this Note.

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

Signature(s)  must be guaranteed by an eligible  guarantor  institution  (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved  signature  guarantee  medallion  program)  pursuant to S.E.C.  Rule
17Ad-15,  if shares of Common Stock are to be delivered,  or Notes to be issued,
other than to and in the name of the registered Holder.


-------------------------------------
       Signature Guarantee
                                       25
<PAGE>
Fill in for  registration of shares of Common Stock if they are to be delivered,
or  Notes  if  they  are to be  issued,  other  than  to and in the  name of the
registered owner:


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

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

-------------------------------
  (City, State and zip code)

(Please print name and
address)

Register:                   _____ Common Stock
                            _____ Notes

    (Check appropriate line(s)).

Principal amount to be converted (if less than all): $_____________,000




                                               ---------------------------------
                                               Social Security or other Taxpayer
                                               Identification Number of owner

                                       [ASSIGNMENT FORM]

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

I or we assign and transfer this Note to


--------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
                                                    ----------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
--------------------------------------------------------------------------------

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


--------------------------------------------------------------------------------
                                       26
<PAGE>
Date:                           Your signature:
     ------------------------                  ---------------------------------
                                (Sign   exactly   as  your   name
                                appears on the face of this Note)

Signature Guarantee:
                     -----------------------------------------------------------

The signature to this assignment  should be guaranteed by an eligible  guarantor
institution  (banks,  stockbrokers,  savings  and loan  associations  and credit
unions with membership in an approved  signature  guarantee  medallion  program)
pursuant to S.E.C. Rule 17Ad-15.
                                       27
<PAGE>
              [FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
                       REGISTRATION OF TRANSFER OF NOTES]

                      CERTIFICATE FOR EXCHANGE OR TRANSFER

  Re: 4 3/4% Convertible Subordinated Notes due 2005

         This Certificate relates to $__________  principal amount of Notes held
in  **____________   book-entry  or   **_________________   definitive  form  by
______________ (the "Transferor").

The Transferor**:

[ ]      has  requested  the Trustee by written order to deliver in exchange for
         its beneficial  interest in a Global Note held by the Depositary a Note
         or Notes in definitive, registered form of authorized denominations and
         an aggregate  principal amount equal to its beneficial interest in such
         Global Note (or the portion thereof indicated above); or

[ ]      has  requested  the Trustee by written order to deliver in exchange for
         its Note or Notes a  beneficial  interest  in a Global Note held by the
         Depositary  in a  principal  amount  equal to the  aggregate  principal
         amount of such Note or Notes; or

[ ]      has  requested the Trustee by written order to exchange or register the
         transfer of a Note or Notes.

[ ]      In connection  with such request and in respect of each such Note,  the
         Transferor  does hereby  certify to the  Company  and the Trustee  that
         Transferor  is  familiar  with  the  Indenture  relating  to the  above
         captioned Notes and, as provided in Section 305 of such Indenture,  the
         transfer  of  this  Note  does  not  require   registration  under  the
         Securities Act (as defined below) because**:

[ ]      Such Note is being acquired for the Transferor's  own account,  without
         transfer  (in   satisfaction  of  Section   305(b)(ii)(A)   or  Section
         305(f)(i)(A) of the Indenture).

[ ]      Such Note is being transferred to a "qualified institutional buyer" (as
         defined in Rule 144A under the  Securities Act of 1933, as amended (the
         "Securities Act")) in reliance on Rule 144A or pursuant to an exemption
         from  registration in accordance with Regulation S under the Securities
         Act (in  satisfaction  of  Section  305(b)(ii)(B),  Section  305(c)(i),
         Section 305(d)(i), Section 305(f)(i)(B), Section 305(g)(iii) or Section
         305(h)(iii) of the Indenture). An opinion of counsel to the effect that
         such transfer does not require registration under the Securities Act

-----------------------------
            **Check applicable box.
                                       28
<PAGE>
accompanies this Certificate (in satisfaction of Section 305(b)(ii)(B),  Section
305(c)(i),  Section  305(d)(i),  Section  305(f)(i)(B),  Section  305(g)(iii) or
Section 305(h)(iii) of the Indenture).

[ ]      Such Note is being  transferred  in accordance  with Rule 144 under the
         Securities  Act,  or pursuant to an  effective  registration  statement
         under the Securities  Act (in  satisfaction  of Section  305(b)(ii)(B),
         Section  305(f)(i)(B) or Section 305(k)(ii) of the Indenture).  If such
         Note is  being  transferred  in  accordance  with  Rule 144  under  the
         Securities  Act, an opinion of counsel to the effect that such transfer
         does not require registration under the Securities Act accompanies this
         Certificate  (in   satisfaction  of  Section   305(b)(ii)(B),   Section
         305(f)(i)(B) or Section 305(k)(ii) of the Indenture).

[ ]      Such Note is being transferred in reliance on and in compliance with an
         exemption from the  registration  requirements  of the Securities  Act,
         other than Rule 144A, 144 or Regulation S under the Securities  Act. An
         opinion of counsel to the effect  that such  transfer  does not require
         registration  under the Securities Act accompanies this Certificate (in
         satisfaction of Section  305(b)(ii)(C)  or Section  305(f)(i)(C) of the
         Indenture).

     You are  entitled  to rely upon this  certificate  and you are  irrevocably
authorized to produce this  certificate or a copy hereof to any interested party
in any  administrative  or legal  proceeding or official inquiry with respect to
the matters covered hereby.



                                             -----------------------------------
                                             [INSERT NAME OF TRANSFEROR]

                                             By:
                                                --------------------------------

Date:
     -------------------------------
                                       29
<PAGE>
                      [OPTION OF HOLDER TO ELECT PURCHASE]

     If you wish to have this Note purchased by the Company  pursuant to Section
1401 of the Indenture, check the Box: [ ]

     If you wish to have a portion of this Note  (which is $1,000 or an integral
multiple  thereof)  purchased  by the Company  pursuant  to Section  1401 of the
Indenture, state the amount you wish to have purchased:

$
 ------------------

Date:                                 Your Signature(s):
     ------------------                                 ------------------------

                                      Tax Identification No.:
                                                             -------------------

(Sign exactly as your name appears on the face of this Note)

Signature Guarantee:
                    ------------------------------------------------------------

The signature to this option of holder to elect purchase should be guaranteed by
an  eligible  guarantor  institution  (banks,  stockbrokers,  savings  and  loan
associations  and  credit  unions  with  membership  in  an  approved  signature
guarantee medallion program) pursuant to S.E.C. Rule 17Ad-15.
                                       30
<PAGE>
              [FORM OF SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES2]

     The following  exchanges of a part of this Global Note for Definitive Notes
have been made:
<TABLE>
<CAPTION>
                                                                        Principal
                          Amount of              Amount of              Amount of this          Signature of
                          decrease in            increase in            Global Note             authorized
                          Principal              Principal              following such          signatory of
                          Amount of this         Amount of this         decrease (or            Trustee or
  Date of                 Global Note            Global Note            increase)               Notes
  Exchange                                                                                      Custodian

<S>                       <C>                    <C>                    <C>                     <C>
1.

2.

3.

4.

5.
</TABLE>

SECTION 204.  Form of Trustee's Certificate of Authentication.

     The Trustee's  certificate of authentication  shall be in substantially the
following form:

     This is one of the Notes referred to in the within-mentioned Indenture.

                                                  FIRST UNION NATIONAL BANK,
                                                  --------------------------
                                                  as Trustee


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


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

(2)      This  Schedule  should be included only if the Note is issued in global
         form.
                                       31
<PAGE>
                                  ARTICLE THREE

                                    The Notes

SECTION 301.  Title and Terms.

     The  aggregate  principal  amount of Notes which may be  authenticated  and
delivered under this Indenture is limited to $115,000,000 (including $15,000,000
aggregate  principal amount of Notes that may be sold to the Initial  Purchasers
by the Company upon exercise of the  over-allotment  option granted  pursuant to
the Purchase  Agreement),  except for Notes  authenticated  and  delivered  upon
registration  of  transfer  of, or in exchange  for, or in lieu of,  other Notes
pursuant to Section 304, 305, 306, 906, 1108, 1302 or 1405.

     The  Notes  shall  be  known  and  designated  as the "4  3/4%  Convertible
Subordinated  Notes due 2005" of the  Company.  Their Stated  Maturity  shall be
April 1, 2005 and they shall bear interest at the rate of 4 3/4% per annum, from
the date of original  issuance of Notes  pursuant to this  Indenture or from the
most  recent  Interest  Payment  Date to which  interest  has been  paid or duly
provided for, as the case may be, payable semi-annually on April 1 and October 1
commencing  October  1,  1998,  until  the  principal  thereof  is  paid or made
available for payment.

     The principal of and premium and liquidated  damages,  if any, and interest
on the Notes  shall be  payable  (i) in  respect  of Notes held of record by the
Depositary  or its  nominee  in same day  funds  on or  prior to the  respective
payment  dates and (ii) in respect of Notes held of record by Holders other than
the  Depositary  or its nominee in same day funds at the office or agency of the
Company maintained for such purpose pursuant to Section 1002; provided, however,
that at the option of the Company payment of interest to Holders of record other
than the  Depositary  may be made by check  mailed to the  address of the Person
entitled thereto as such address shall appear in the Note Register.

     The  Notes  shall be  subject  to the  transfer  restrictions  set forth in
Section 305.

     The Notes shall be redeemable as provided in Article Eleven.

     The Notes shall be subordinated in right of payment to Senior  Indebtedness
as provided in Article Twelve.

     The Notes shall be convertible as provided in Article Thirteen.

     The Notes  shall be  subject to  repurchase  at the option of the Holder as
provided in Article Fourteen.

     Neither the Company nor the Trustee shall have any  responsibility  for any
defect in the CUSIP number that appears on any Note,  check,  advance of payment
or  redemption  notice,  and any such  document  may contain a statement  to the
effect  that CUSIP  numbers  have been  assigned by an  independent  service for
convenience of
                                       32
<PAGE>
reference  and that neither the Company nor the Trustee  shall be liable for any
inaccuracy in such numbers.

SECTION 302.  Denominations.

     The Notes shall be issuable only in fully  registered  form without coupons
and only in denominations of $1,000 and any integral multiple thereof.

SECTION 303.  Execution, Authentication, Delivery and Dating.

     The Notes shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President or one of its Vice Presidents,
under its corporate seal or a facsimile thereof  reproduced  thereon attested by
its Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Notes may be manual or facsimile.

     Notes bearing the manual or facsimile signatures of individuals who were at
any  time  the  proper   officers  of  the  Company   shall  bind  the  Company,
notwithstanding  that such  individuals  or any of them have ceased to hold such
offices prior to the  authentication  and delivery of such Notes or did not hold
such offices at the date of such Notes.

     At any time and from time to time after the  execution and delivery of this
Indenture,  the Company may deliver Notes executed by the Company to the Trustee
for  authentication,  together with a Company Order for the  authentication  and
delivery of such Notes;  and the Trustee in  accordance  with such Company Order
shall either at one time or from time to time pursuant to such  instructions  as
may be  described  therein  authenticate  and  deliver  such  Notes  as in  this
Indenture  provided  and not  otherwise.  Such Company  Order shall  specify the
amount of Notes to be authenticated  and the date on which the original issue of
Notes is to be authenticated, and shall certify that all conditions precedent to
the issuance of such Notes  contained in this Indenture have been complied with.
The aggregate  principal amount of Notes  Outstanding at any time may not exceed
the amount set forth above except as provided in Section 306.

     Each Note shall be dated the date of its authentication.

     No Note shall be entitled to any benefit  under this  Indenture or be valid
or obligatory for any purpose unless there appears on such Note a certificate of
authentication  substantially  in the form  provided for herein duly executed by
the Trustee by manual  signature,  and such  certificate  upon any Note shall be
conclusive  evidence,  and the only  evidence,  that  such  Note  has been  duly
authenticated  and  delivered  hereunder  and is entitled to the benefits of the
Indenture. The Trustee may appoint an Authenticating Agent pursuant to the terms
of Section 614.

SECTION 304.  Temporary Notes.

     Pending the preparation of Definitive  Notes, the Company may execute,  and
upon Company Order the Trustee shall  authenticate and deliver,  temporary Notes
which are printed,
                                       33
<PAGE>
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination,  substantially  of the  tenor of the  Definitive  Notes in lieu of
which  they  are  issued  and  with  such  appropriate  insertions,   omissions,
substitutions  and other  variations  as the officers  executing  such Notes may
determine,  as evidenced by their execution of such Notes.  Every such temporary
Note shall be executed by the Company and shall be  authenticated  and delivered
by the Trustee upon the same  conditions and in  substantially  the same manner,
and with the same effect, as the Definitive Note or Notes in lieu of which it is
issued.

     Not including Global Notes, if temporary Notes are issued, the Company will
cause  Definitive  Notes to be prepared without  unreasonable  delay.  After the
preparation of Definitive  Notes,  the temporary Notes shall be exchangeable for
Definitive  Notes upon surrender of the temporary  Notes at any office or agency
of the  Company  designated  pursuant  to Section  1002,  without  charge to the
Holder.  Upon surrender for  cancellation of any one or more temporary Notes the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor one or more Definitive  Notes of a like principal  amount of authorized
denominations.  Until so exchanged the temporary  Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.

SECTION 305.  Registration; Registration of Transfer and Exchange.

         (a) The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register  maintained in such office and in any other
office or agency  designated  pursuant to Section  1002 being  herein  sometimes
collectively  referred  to as the "Note  Register")  in which,  subject  to such
reasonable  regulations as it may  prescribe,  the Company shall provide for the
registration  of Notes and of transfers of Notes.  The Note Register shall be in
written form or in any form capable of being  converted into written form within
a  reasonably  prompt  period of time.  The  Trustee is hereby  appointed  "Note
Registrar" for the purpose of registering Notes and transfers of Notes as herein
provided. At all reasonable times the Note Register shall be open for inspection
by the Company.

     The Company initially  appoints The Depository Trust Company ("DTC") to act
as depositary (the "Depositary") with respect to the Global Note(s).

     The Company  initially  appoints the Trustee to act as Notes Custodian with
respect to the Global Note(s).

         (b) With respect to the transfer and exchange of Definitive Notes, when
Definitive  Notes are  presented to the Note  Registrar  with the request (x) to
register the transfer of the Definitive Notes or (y) to exchange such Definitive
Notes for an equal  principal  amount of  Definitive  Notes of other  authorized
denominations,  the Note  Registrar  shall  register  the  transfer  or make the
exchange  as  requested  if its  requirements  for  such  transactions  are met;
provided,  however,  that the  Definitive  Notes  presented or  surrendered  for
register of transfer or exchange:
                                       34
<PAGE>
                  (i)  shall  be  duly  endorsed  or  accompanied  by a  written
instruction of transfer in form satisfactory to the Note Registrar duly executed
by the Holder thereof or by its attorney, duly authorized in writing; and

                  (ii) shall, in the case of Transfer Restricted Securities that
are Definitive Notes, be accompanied by the following additional information and
documents, as applicable:

                      (A)  if  such  Transfer   Restricted   Security  is  being
delivered to the Note Registrar by a Holder for registration in the name of such
Holder,  without transfer,  a certification  from such Holder to that effect (in
substantially the form of Exhibit A hereto); or

                      (B)  if  such  Transfer   Restricted   Security  is  being
transferred to a "qualified  institutional buyer" (as defined in Rule 144A under
the  Securities  Act) in  reliance  on Rule  144A  under the  Securities  Act or
pursuant  to an  exemption  from  registration  in  accordance  with Rule 144 or
Regulation S under the Securities  Act or pursuant to an effective  registration
statement  under  the  Securities  Act,  a  certification  to  that  effect  (in
substantially  the form of Exhibit A hereto)  and,  in the case of a transfer in
accordance with Rule 144A, Rule 144 or Regulation S under the Securities Act, an
Opinion of Counsel reasonably  acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act; or

                      (C)  if  such  Transfer   Restricted   Security  is  being
transferred in reliance on another exemption from the registration  requirements
of the Securities Act, a certification to that effect (in substantially the form
of Exhibit A hereto)  and an Opinion of  Counsel  reasonably  acceptable  to the
Company to the effect that such  transfer is in compliance  with the  Securities
Act.

     (c) The  following  restrictions  apply  to any  transfer  of a  Definitive
Security for a beneficial  interest in a 144A Global Note. A Definitive Note may
not be exchanged  for a  beneficial  interest in a 144A Global Note except until
and upon  satisfaction of the requirements set forth below.  Upon receipt by the
Trustee of a  Definitive  Note,  duly  endorsed or  accompanied  by  appropriate
instruments of transfer, in form satisfactory to the Trustee, together with:

                      (i) if  such  Definitive  Note  is a  Transfer  Restricted
Security,  certification,  substantially  in the form of Exhibit A hereto,  that
such Definitive Note is being transferred to a "qualified  institutional  buyer"
(as defined in Rule 144A under the Securities  Act) in accordance with Rule 144A
and an Opinion of Counsel  reasonably  acceptable  to the  Company to the effect
that such transfer is in compliance with the Securities Act; and

                      (ii)  whether  or not such  Definitive  Note is a Transfer
Restricted Security,  written instructions  directing the Trustee to make, or to
direct the Notes  Custodian to make, an  endorsement  on the 144A Global Note to
reflect an increase in the aggregate  principal amount of the Notes  represented
by the 144A Global Note,  then the Trustee shall cancel such Definitive Note and
cause,  or direct the Notes  Custodian to cause, in accordance with the standing
instructions  and  procedures  existing  between  the  Depositary  and the Notes
Custodian,
                                       35
<PAGE>
the aggregate  principal amount of Notes  represented by the 144A Global Note to
be  increased  accordingly.  If no 144A Global Notes are then  outstanding,  the
Company shall execute and, upon receipt of an  authentication  order in the form
of  a  Company  Order  in  accordance   with  Section  303,  the  Trustee  shall
authenticate a new 144A Global Note in the appropriate principal amount.

     (d) The following  restrictions  apply to any transfer of a Definitive Note
for a beneficial  interest in a Regulation S Global Note. A Definitive  Note may
not be exchanged for a beneficial  interest in a Regulation S Global Note except
until and upon satisfaction of the requirements set forth below. Upon receipt by
the Trustee of a Definitive  Note,  duly endorsed or  accompanied by appropriate
instruments of transfer, in the form satisfactory to the Trustee, together with:

                      (i) if  such  Definitive  Note  is a  Transfer  Restricted
Security,  certification,  substantially  in the form of Exhibit A hereto,  that
such Definitive Note is being transferred in accordance with Regulation S and an
Opinion of Counsel reasonably  acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act; and

                      (ii)  whether  or not such  Definitive  Note is a Transfer
Restricted Security,  written instructions  directing the Trustee to make, or to
direct the Notes  Custodian to make, an  endorsement  on the Regulation S Global
Note to reflect  an  increase  in the  aggregate  principal  amount of the Notes
represented by the Regulation S Global Note,  then the Trustee shall cancel such
Definitive Note and cause, or direct the Notes Custodian to cause, in accordance
with the standing  instructions  and procedures  existing between the Depositary
and the Notes Custodian,  the aggregate principal amount of Notes represented by
the  Regulation S Global Note to be increased  accordingly.  If no  Regulation S
Global Notes are then  outstanding,  the Company shall execute and, upon receipt
of an  authentication  order in the form of a Company Order in  accordance  with
Section 303, the Trustee shall  authenticate  a new  Regulation S Global Note in
the appropriate principal amount.

     (e) The  transfer  and  exchange of Global  Notes or  beneficial  interests
therein  shall be  effected  through the  Depositary,  in  accordance  with this
Indenture  (including  the  restrictions  on transfer set forth  herein) and the
procedures of the Depositary therefor.

     (f) With respect to the transfer of a beneficial  interest in a 144A Global
Note or a Regulation S Global Note for a Definitive Note:

                  (i) Any person  having a beneficial  interest in a 144A Global
Note or a  Regulation S Global Note may upon request  exchange  such  beneficial
interest  for a  Definitive  Note.  Upon  receipt  by  the  Trustee  of  written
instructions  or  such  other  form  of  instructions  as is  customary  for the
Depositary or its nominee on behalf of any person  having a beneficial  interest
in a 144A Global Note or a  Regulation  S Global  Note  constituting  a Transfer
Restricted Security only, and receipt by the Trustee of the following additional
information and documents (all of which may be submitted by facsimile):
                                       36
<PAGE>
                      (A) if such  beneficial  interest is being  transferred to
the  person  designated  by the  Depositary  as being the  beneficial  owner,  a
certification  from such  person to that  effect (in  substantially  the form of
Exhibit A hereto); or

                      (B) if such beneficial  interest is being transferred to a
"qualified  institutional  buyer" (as defined in Rule 144A under the  Securities
Act) in  accordance  with Rule 144A under the  Securities  Act or pursuant to an
exemption from  registration  in accordance  with Rule 144 or Regulation S under
the Securities Act or pursuant to an effective  registration statement under the
Securities  Act,  a  certification  to  that  effect  from  the  transferor  (in
substantially  the form of Exhibit A hereto)  and,  in the case of a transfer in
accordance with Rule 144A, Rule 144 or Regulation S under the Securities Act, an
Opinion of Counsel reasonably  acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act; or

                      (C) if such  beneficial  interest is being  transferred in
reliance  on  another  exemption  from  the  registration  requirements  of  the
Securities Act, a certification to that effect from the transferee or transferor
(in  substantially  the form of Exhibit A hereto) and an Opinion of Counsel from
the transferee or transferor  reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, then the Trustee or
the Notes Custodian,  at the direction of the Trustee, will cause, in accordance
with the standing  instructions  and procedures  existing between the Depositary
and the Notes Custodian, the aggregate principal amount of the Global Note to be
reduced and,  following  such  reduction,  the Company  will  execute and,  upon
receipt of an authentication  order in the form of a Company Order in accordance
with Section 303, the Trustee will  authenticate and deliver to the transferee a
Definitive Note.

                  (ii)  Definitive  Notes  issued in exchange  for a  beneficial
interest in a 144A Global Note or a  Regulation  S Global Note  pursuant to this
Section  305  shall  be  registered  in  such  names  and  in  such   authorized
denominations  as the Depositary,  pursuant to  instructions  from its direct or
indirect  participants  or otherwise,  shall  instruct the Trustee.  The Trustee
shall deliver such Definitive Notes to the persons in whose names such Notes are
so registered.

     (g) With respect to the transfer of a beneficial interest in a Regulation S
Global Note for a beneficial interest in a 144A Global Note, any person having a
beneficial interest in a Regulation S Global Note may upon request exchange such
beneficial  interest for an interest in a 144A Global Note.  Upon receipt by the
Trustee  of  written  instructions  or such  other  form of  instructions  as is
customary  for the  Depositary  or its nominee on behalf of any person  having a
beneficial  interest  in a  Regulation  S Global  Note  constituting  a Transfer
Restricted Security only, and receipt by the Trustee of the following additional
information and documents (all of which may be submitted by facsimile):

                  (i)  instructions  given in accordance  with the procedures of
Euroclear or Cedel, the Depositary and the Notes Custodian,  as the case may be,
from or on behalf of a  beneficial  owner of an  interest in the  Regulations  S
Global Note directing the Trustee,  as transfer  agent, to credit or cause to be
credited a beneficial interest in the 144A Global Note in 
                                       37
<PAGE>
an amount equal to the beneficial interest in the Regulation S Global Note to be
exchanged or transferred,

                  (ii) a written order given in accordance  with the  procedures
of Euroclear or Cedel, the Depositary and the Notes  Custodian,  as the case may
be,  containing  information  regarding  the account with the  Depositary  to be
credited with such increase and the name of such account, and

                  (iii) a  certification  from the transferor (in  substantially
the form of Exhibit A hereto) to the effect  that such  beneficial  interest  is
being transferred to a "qualified  institutional buyer" (as defined in Rule 144A
under the Securities  Act) in accordance with Rule 144A under the Securities Act
and an Opinion of Counsel  reasonably  acceptable  to the  Company to the effect
that such transfer is in compliance  with the Securities  Act, then the Trustee,
as transfer  agent,  shall  promptly  deliver  appropriate  instructions  to the
Depositary,  its nominee,  or the custodian for the Depositary,  as the case may
be, to reduce or reflect on its records a reduction  of the  Regulation S Global
Note by the  aggregate  principal  amount  of the  beneficial  interest  in such
Regulation  S Global Note to be exchanged or  transferred,  and the Trustee,  as
transfer  agent,  shall  promptly  deliver   appropriate   instructions  to  the
Depositary,  its nominee,  or the custodian for the Depositary,  as the case may
be,  concurrently  with such  reduction,  increase  or reflect on its records an
increase  of the  principal  amount  of the 144A  Global  Note by the  aggregate
principal  amount of the beneficial  interest in the Regulation S Global Note to
be so  exchanged  or  transferred,  and to credit or cause to be credited to the
account of the person  specified in such  instructions a beneficial  interest in
the 144A  Global  Note equal to the  reduction  in the  principal  amount of the
Regulation S Global Note.

     (h) With respect to the transfer of a beneficial  interest in a 144A Global
Note for a beneficial  interest in a Regulation S Global Note, any person having
a  beneficial  interest  in a 144A Global Note may upon  request  exchange  such
beneficial  interest for an interest in a Regulation S Global Note. Upon receipt
by the Trustee of written  instructions or such other form of instructions as is
customary  for the  Depositary  or its nominee on behalf of any person  having a
beneficial  interest in a 144A Global Note  constituting  a Transfer  Restricted
Security  only,  and  receipt  by  the  Trustee  of  the  following   additional
information and documents (all of which may be submitted by facsimile):

                  (i)  instructions  given in accordance  with the procedures of
the Depositary and the Notes Custodian, as the case may be, from or on behalf of
a holder  of a  beneficial  interest  in the 144A  Global  Note,  directing  the
Trustee,  as  transfer  agent,  to credit or cause to be  credited a  beneficial
interest in the  Regulation S Global Note in an amount  equal to the  beneficial
interest in the 144A Global Note to be exchanged or transferred,

                  (ii) a written order given in accordance  with the  procedures
of the  Depositary  and the  Notes  Custodian,  as the case  may be,  containing
information  regarding  the  Euroclear or Cedel account to be credited with such
increase and the name of such account, and
                                       38
<PAGE>
                  (iii) a  certification  from the transferor (in  substantially
the form of Exhibit A hereto) to the effect  that such  beneficial  interest  is
being  transferred  in  accordance  with  Regulation S and an Opinion of Counsel
reasonably  acceptable  to the  Company to the effect  that such  transfer is in
compliance with the Securities Act, then the Trustee,  as transfer agent,  shall
promptly deliver appropriate instructions to the Depositary, its nominee, or the
custodian  for the  Depositary,  as the case may be, to reduce or reflect on its
records a reduction of the 144A Global Note by the aggregate principal amount of
the  beneficial  interest  in  such  144A  Global  Note  to be so  exchanged  or
transferred from the relevant  participant,  and the Trustee, as transfer agent,
shall promptly deliver appropriate instructions to the Depositary,  its nominee,
or the custodian for the Depositary,  as the case may be, concurrently with such
reduction,  to increase  or reflect on its records an increase of the  principal
amount of such Regulation S Global Note by the aggregate principal amount of the
beneficial  interest in such 144A Global Note to be so exchanged or transferred,
and to credit or cause to be credited to the account of the person  specified in
such  instructions  (who  shall be Morgan  Guaranty  Trust  Company of New York,
Brussels  office,  as operator of Euroclear or Cedel or another  agent member of
Euroclear  or Cedel,  or both,  as the case may be,  acting for and on behalf of
them) a  beneficial  interest  in such  Regulation  S Global  Note  equal to the
reduction in the principal amount of such 144A Global Note.

     (i)  Notwithstanding any other provisions of this Indenture (other than the
provisions  set forth in Clause (j) of this Section  305), a Global Note may not
be  transferred  as a  whole  except  by  the  Depositary  to a  nominee  of the
Depositary  or by a nominee  of the  Depositary  to the  Depositary  or  another
nominee  of  the  Depositary  or by the  Depositary  or any  such  nominee  to a
successor Depositary or a nominee of such successor Depositary.

     (j) The following  relates to the  authentication  of  Definitive  Notes in
absence of the  Depositary.  If at any time:  (i) the  Depositary  for the Notes
notifies the Company that the  Depositary  is unwilling or unable to continue as
Depositary for the Global Notes and a successor  Depositary for the Global Notes
is not appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company,  at its sole discretion,  notifies the Trustee in writing that
it elects to cause the issuance of Definitive  Notes under this Indenture,  then
the Company will  execute,  and the Trustee,  upon receipt of a Company Order in
accordance  with  Section 303  requesting  the  authentication  and  delivery of
Definitive Notes, will authenticate and deliver Definitive Notes in an aggregate
principal  amount equal to the principal amount of the Global Notes, in exchange
for such Global Notes.

     (k) (i) Except as  permitted by the  following  paragraph  (ii),  each Note
certificate  evidencing the Global Notes and the Definitive Notes (and all Notes
issued in exchange  therefor  or  substitution  thereof)  shall bear a legend in
substantially the following form:

     THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"), OR ANY STATE  SECURITIES LAWS,
AND,  ACCORDINGLY,  NEITHER THIS NOTE,  THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS NOTE NOR ANY INTEREST OR PARTICIPATION  HEREIN OR THEREIN MAY
BE REOFFERED,
                                       39
<PAGE>
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH  REGISTRATION OR UNLESS SUCH  TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION. UNLESS THE SHARES OF COMMON STOCK HAVE BEEN REGISTERED
UNDER THE  SECURITIES  ACT, A HOLDER OF THIS NOTE WILL BE ABLE TO  EXERCISE  THE
CONVERSION  RIGHT  ONLY  IF  THE  HOLDER  CERTIFIES  THAT  IT  IS  A  "QUALIFIED
INSTITUTIONAL BUYER" OR AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED BELOW.

     THE HOLDER OF THIS NOTE,  BY ITS  ACQUISITION  HEREOF,  AGREES THAT IT WILL
NOT,  PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE  HEREOF  AND THE LAST DATE ON WHICH THE  COMPANY  OR ANY  AFFILIATE  OF THE
COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE),  RESELL OR
OTHERWISE  TRANSFER THE NOTE EVIDENCED  HEREBY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY,  OR ANY  SUBSIDIARY  THEREOF,
(B) INSIDE THE UNITED  STATES TO A QUALIFIED  INSTITUTIONAL  BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE  SECURITIES  ACT,  (C)  INSIDE THE UNITED  STATES TO AN
INSTITUTIONAL  ACCREDITED  INVESTOR THAT,  PRIOR TO SUCH TRANSFER,  FURNISHES TO
FIRST UNION NATIONAL BANK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A
SIGNED LETTER CONTAINING CERTAIN  REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED  HEREBY (THE FORM OF WHICH LETTER
CAN BE OBTAINED  FROM SUCH TRUSTEE OR SUCCESSOR  TRUSTEE,  AS  APPLICABLE),  (D)
OUTSIDE  THE  UNITED  STATES  IN AN  OFFSHORE  TRANSACTION  IN  COMPLIANCE  WITH
REGULATION  S UNDER THE  SECURITIES  ACT,  (E)  PURSUANT TO THE  EXEMPTION  FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES  ACT  (AND  WHICH  CONTINUES  TO BE  EFFECTIVE  AT THE  TIME  OF SUCH
TRANSFER);  AND  AGREES  THAT IT WILL  DELIVER  TO EACH  PERSON TO WHOM THE NOTE
EVIDENCED  HEREBY IS  TRANSFERRED A NOTICE  SUBSTANTIALLY  TO THE EFFECT OF THIS
LEGEND.  IN CONNECTION  WITH ANY TRANSFER OF THE NOTE EVIDENCED  HEREBY,  OR THE
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF,  WITHIN TWO YEARS AFTER
THE ORIGINAL  ISSUANCE OF SUCH NOTE, THE HOLDER MUST CHECK THE  APPROPRIATE  BOX
SET FORTH ON THE  REVERSE  HEREOF  RELATING TO THE MANNER OF SUCH  TRANSFER  AND
SUBMIT THIS CERTIFICATE TO FIRST UNION NATIONAL BANK, AS TRUSTEE (OR A SUCCESSOR
TRUSTEE,  AS  APPLICABLE).  IF  THE  PROPOSED  TRANSFEREE  IS  AN  INSTITUTIONAL
ACCREDITED  INVESTOR OR A PURCHASER WHO IS NOT A U.S.  PERSON,  THE HOLDER MUST,
PRIOR TO SUCH  TRANSFER,  FURNISH TO FIRST UNION NATIONAL BANK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS,  LEGAL OPINIONS OR OTHER
INFORMATION AS IT MAY REASONABLY  REQUIRE TO CONFIRM THAT SUCH 
                                       40
<PAGE>
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION  FROM,  OR IN A TRANSACTION  NOT
SUBJECT TO, THE  REGISTRATION  REQUIREMENTS  OF THE SECURITIES  ACT. THIS LEGEND
WILL BE REMOVED UPON ANY TRANSFER OF THE NOTE EVIDENCED HEREBY, OR THE SHARES OF
COMMON STOCK ISSUED UPON CONVERSION  THEREOF,  AFTER THE EXPIRATION OF TWO YEARS
FROM THE ORIGINAL  ISSUANCE OF THE NOTE EVIDENCED  HEREBY.  AS USED HEREIN,  THE
TERMS  "OFFSHORE  TRANSACTION,"  "UNITED  STATES"  AND  "U.S.  PERSON"  HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

                  (ii)  Upon  any  sale or  transfer  of a  Transfer  Restricted
Security  (including any Transfer  Restricted  Security  represented by a Global
Note) pursuant to Rule 144 under the Securities Act or an effective registration
statement under the Securities Act (including the Shelf Registration  Statement)
or on or after the Resale Restriction Termination Date:

                           (A) in the case of any Transfer  Restricted  Security
that is a Definitive Note, the Note Registrar shall permit the Holder thereof to
exchange such Transfer  Restricted  Security for a Definitive Note that does not
bear the legend set forth above and rescind any  restriction  on the transfer of
such Transfer Restricted  Security;  provided,  however,  that with respect to a
transfer made in reliance upon Rule 144 or an effective registration  statement,
the Holders  thereof  shall certify in writing to the Note  Registrar  that such
request  is  being  made  pursuant  to  Rule  144 or an  effective  registration
statement  (such  Certification  to be  substantially  in the form of  Exhibit A
hereto) and, in the case of a transfer made in reliance upon Rule 144,  shall be
accompanied by an Opinion of Counsel reasonably acceptable to the Company to the
effect that such transfer is in compliance with the Securities Act; and

                           (B) any such Transfer Restricted Security represented
by a Global Note shall not be subject to the  provisions  set forth in (i) above
(such sales or transfers  being subject only to the provisions of Section 305(e)
hereon; provided, however, that with respect to any request for an exchange of a
Transfer  Restricted  Security  that  is  represented  by a  Global  Note  for a
Definitive  Note that does not bear a legend,  which request is made in reliance
upon Rule 144 or an effective registration  statement,  the Holder thereof shall
certify  in  writing  to the Note  Registrar  that such  request  is being  made
pursuant to Rule 144 or an effective  registration statement (such certification
to be  substantially  in the form of  Exhibit  A hereto)  and,  in the case of a
transfer made in reliance upon Rule 144,  shall be  accompanied by an Opinion of
Counsel reasonably acceptable to the Company to the effect that such transfer is
in compliance with the Securities Act.

     (1) At such time as all  beneficial  interests in a Global Note have either
been exchanged for Definitive Notes,  redeemed,  repurchased or cancelled,  such
Global Note shall be returned to or retained and  cancelled  by the Trustee.  At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for  Definitive  Notes,  redeemed,  repurchased  or cancelled,  the
principal  amount of Notes  represented by such Global Note shall be reduced and
an  endorsement  shall be made on such Global Note,  by the Trustee or the Notes
Custodian, at the direction of the Trustee, to reflect such reduction.
                                       41
<PAGE>
     (m) All Definitive  Notes and Global Notes issued upon any  registration of
transfer  or  exchange of  Definitive  Notes or Global  Notes shall be the valid
obligations  of the Company,  evidencing the same debt, and entitled to the same
benefits  under  this  Indenture,  as  the  Definitive  Notes  or  Global  Notes
surrendered upon such registration of transfer or exchange.

     (n) To the  extent  requested  by the  Trustee,  all  Notes  the  transfer,
exchange and/or  registration  of which is effectuated  pursuant to this Section
305 shall be accompanied by an Officers' Certificate of the Company,  certifying
that such transfer,  exchange  and/or  registration is authorized by the Company
and permitted hereunder.

     To permit  registrations  of transfer  and  exchanges,  the  Company  shall
execute and the Trustee shall authenticate  Definitive Notes and Global Notes at
the Note Registrar's request.

     No  service  charge  to a  Holder  shall be made  for any  registration  of
transfer or exchange of Notes except as provided in Section 306. The Company may
require  payment  of a sum  sufficient  to cover  any tax or other  governmental
charge that may be imposed in connection  with any  registration  of transfer or
exchange of Notes,  other than  exchanges  pursuant to Section 304, 906, 1108 or
1302 not involving any transfer.

     The  Company  or the Note  Registrar  shall not be  required  (i) to issue,
register the  transfer of or exchange any Note during a period  beginning at the
opening  of  business  15 days  before  the day of the  mailing  of a notice  of
redemption of Notes selected for redemption under Section 1104 and ending at the
close of business on the day of such  mailing,  (ii) to register the transfer of
or exchange any  Definitive  Note or  beneficial  interest in any Global Note so
selected for redemption in whole or in part,  except the  unredeemed  portion of
any Definitive  Note being redeemed in part or (iii) to register the transfer of
or exchange of any  Definitive  Note or  beneficial  interest in any Global Note
surrendered for conversion  pursuant to Article Thirteen or repurchase  pursuant
to Article Fourteen.

SECTION 306.  Mutilated, Destroyed,  Lost and Stolen Notes.

         If any mutilated Note is surrendered to the Trustee,  the Company shall
execute and the Trustee shall  authenticate  and deliver in exchange  therefor a
new  Note  of  like  tenor  and  principal  amount  and  bearing  a  number  not
contemporaneously outstanding.

         If there shall be delivered to the Company and the Trustee (i) evidence
to their  satisfaction  of the  destruction,  loss or theft of any Note and (ii)
such  security or  indemnity as may be required by them to save each of them and
any agent of either of them  harmless,  then,  in the  absence  of notice to the
Company  or the  Trustee  that  such  Note  has  been  acquired  by a bona  fide
purchaser,  the Company  shall execute and the Trustee  shall  authenticate  and
deliver, in lieu of any such destroyed,  lost or stolen Note, a new Note of like
tenor  and  principal   amount  and  bearing  a  number  not   contemporaneously
outstanding.  The Trustee may charge the Company for the  Trustee's  expenses in
replacing such Note.
                                       42
<PAGE>
         In case any such mutilated,  destroyed,  lost or stolen Note has become
or is about to become due and  payable or is about to be  converted  into Common
Stock,  the Company in its  discretion  may,  instead of issuing a new Note, pay
such Note or convert or authorize  the  conversion  of the same if the applicant
for such payment or  conversion  shall furnish to the Company or to the Trustee,
if applicable, or to such authenticating agent such security or indemnity as set
forth above.

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

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

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

SECTION 307.  Payment of Interest; Interest Rights Preserved.

         Interest on any Note which is payable,  and is punctually  paid or duly
provided for, on any Interest  Payment Date shall be paid to the Person in whose
name that Note (or one or more Predecessor  Notes) is registered at the close of
business on the Regular Record Date for such interest.  Payment of interest will
be made in same day funds at the office of the Trustee in Atlanta, Georgia or at
such other office or agency of the Company as it shall maintain for that purpose
pursuant to Section 1002, provided, however, that, at the option of the Company,
interest on any Note held of record by Holders other than the  Depositary or its
nominee may be paid by mailing checks to the addresses of the Holders thereof as
such addresses appear in the Notes Register.

         Any interest on any Note which is payable,  but is not punctually  paid
or duly provided  for, on any Interest  Payment Date (herein  called  "Defaulted
Interest")  shall  forthwith  cease to be payable to the Holder on the  relevant
Regular  Record Date by virtue of having been such  Holder,  and such  Defaulted
Interest may be paid by the Company,  at its election in each case,  as provided
in Clause (1) or (2) below:

                  (1) The  Company  may elect to make  payment of any  Defaulted
Interest  to  the  Persons  in  whose  names  the  Notes  (or  their  respective
Predecessor  Notes) are  registered at the close of business on a Special Record
Date for the  payment of such  Defaulted  Interest  which  shall be fixed in the
following manner.  The Company shall notify the Trustee in writing of the amount
of  Defaulted  Interest  proposed  to be paid on each  Note  and the date of the
proposed
                                       43
<PAGE>
payment,  and at the same time the  Company  shall  deposit  with the Trustee an
amount of money equal to the aggregate  amount proposed to be paid in respect of
such Defaulted  Interest or shall make arrangements  satisfactory to the Trustee
for such  deposit  prior to the date of the  proposed  payment,  such money when
deposited  to be held in trust for the benefit of the  Persons  entitled to such
Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a
Special  Record Date for the payment of such  Defaulted  Interest which shall be
not  more  than 15 days  and not  less  than 10 days  prior  to the  date of the
proposed  payment  and not less than 10 days after the receipt by the Trustee of
the notice of the  proposed  payment.  The  Trustee  shall  promptly  notify the
Company of such  Special  Record Date and, in the name and at the expense of the
Company,  shall cause notice of the proposed payment of such Defaulted  Interest
and the Special Record Date therefor to be mailed,  first-class postage prepaid,
to each Holder at his address as it appears in the Note Register,  not less than
10 days prior to such  Special  Record Date.  Notice of the proposed  payment of
such  Defaulted  Interest and the Special  Record Date  therefor  having been so
mailed,  such Defaulted Interest shall be paid to the Persons in whose names the
Notes (or their  respective  Predecessor  Notes) are  registered at the close of
business on such Special Record Date and shall no longer be payable  pursuant to
the following Clause (2).

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

                  Subject to the foregoing provisions of this Section, each Note
delivered  under this Indenture upon  registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest  accrued and
unpaid, and to accrue, which were carried by such other Note. In the case of any
Note which is  converted  after any  Regular  Record Date and on or prior to the
Business Day next preceding next  succeeding  Interest  Payment Date (other than
any Note whose Maturity is prior to such Interest Payment Date),  interest whose
Stated  Maturity  is on such  Interest  Payment  Date  shall be  payable on such
Interest  Payment  Date  notwithstanding  such  conversion,  and  such  interest
(whether  or not  punctually  paid or duly  provided  for)  shall be paid to the
Person in whose name that Note (or one or more Predecessor  Notes) is registered
at the close of business on such Regular  Record Date  provided,  however,  that
Notes  so  surrendered  for  conversion  shall  (except  in the case of Notes or
portions thereof called for redemption,  which is addressed in Article 11 and in
Section 1302 below) be accompanied by payment in funds acceptable to the Company
of an amount equal to the interest  payable on such Interest Payment Date on the
principal amount being surrendered for conversion. Except as otherwise expressly
provided  above in Clause (2) of this  Section 307, in Article 11 and in Section
1302, in the case of any Note which is converted, interest whose Stated Maturity
is after the date of conversion of such Note shall not be payable.

SECTION 308.  Persons  Deemed  Owners.  Prior to due  presentment  of a Note for
registration of transfer,  the Company, the Trustee and any agent of the Company
or the Trustee may treat
                                       44
<PAGE>
the Person in whose name such Note is  registered  as the owner of such Note for
the purpose of  receiving  payment of  principal  of and  premium,  if any,  and
(subject  to  Section  307)  interest  on such Note and for all  other  purposes
whatsoever,  whether or not such Note be overdue,  and neither the Company,  the
Trustee nor any agent of the Company or the Trustee  shall be affected by notice
to the contrary.

SECTION  309.  Cancellation.  All Notes  surrendered  for  payment,  redemption,
registration  of transfer,  exchange or conversion  shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled  by it.  The  Company  may at  any  time  deliver  to the  Trustee  for
cancellation any Notes previously  authenticated  and delivered  hereunder which
the  Company  may have  acquired  in any  manner  whatsoever,  and all  Notes so
delivered  shall  be  promptly  canceled  by the  Trustee.  No  Notes  shall  be
authenticated  in lieu of or in exchange  for any Notes  canceled as provided in
this  Section,  except as expressly  permitted by this  Indenture.  All canceled
Notes held by the Trustee  shall be destroyed by the Trustee,  unless  otherwise
directed by a Company Order.

SECTION 310. Computation of Interest. Interest on the Notes shall be computed on
the basis of a 360-day year of twelve 30-day months.
                                       45
<PAGE>
                                  ARTICLE FOUR

                           Satisfaction and Discharge

SECTION 401.  Satisfaction and Discharge of Indenture.

         This Indenture shall upon Company Request cease to be of further effect
(except as expressly provided for in this Article Four), and the Trustee, at the
expense  of  the  Company,   shall  execute  proper  instruments   acknowledging
satisfaction  and  discharge  of this  Indenture,  when (1) either (A) all Notes
theretofore  authenticated  and delivered  (other than (i) Notes which have been
destroyed,  lost or stolen and which have been  replaced  or paid as provided in
Section  306 and (ii)  Notes  for  whose  payment  money  has  theretofore  been
deposited in trust or segregated and held in trust by the Company and thereafter
repaid to the  Company or  discharged  from such  trust,  as provided in Section
1003) have been delivered to the Trustee for cancellation; or

         (B)      all such Notes not  theretofore  delivered  to the Trustee for
                  cancellation

                  (i) have become due and payable, or

                  (ii) will  become  due and  payable at their  Stated  Maturity
within one year, or

                  (iii) are to be called  for  redemption  within one year under
arrangements  satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company, or

                  (iv) are delivered to the Trustee for Conversion in accordance
with Article Thirteen,  and the Company, in the case of (i), (ii), (iii) or (iv)
above,  has irrevocably  deposited or caused to be deposited with the Trustee as
trust  funds in trust for the  purpose  an amount  in cash  sufficient  (without
consideration  of any  investment  of such cash) to pay and discharge the entire
indebtedness  on  such  Notes  not  theretofore  delivered  to the  Trustee  for
cancellation for principal and premium, if any, and interest to the date of such
deposit  (in the case of Notes  which  have  become due and  payable)  or to the
Stated  Maturity  or  Redemption  Date,  as the case may be;  provided  that the
Trustee  shall have been  irrevocably  instructed  to apply such  amount to said
payments  with  respect to the Notes;  (2) the  Company has paid or caused to be
paid all other sums payable  hereunder  by the Company;  and (3) the Company has
delivered  to the Trustee an  Officers'  Certificate  and an Opinion of Counsel,
each stating that all conditions  precedent  herein provided for relating to the
satisfaction   and  discharge  of  this   Indenture  have  been  complied  with.
Notwithstanding the satisfaction and discharge of this Indenture,  the following
rights or  obligations  under the Notes and this  Indenture  shall survive until
otherwise  terminated or discharged  hereunder:  (a) Article  Thirteen,  Article
Fourteen and the Company's  obligations  under  Sections 304, 305, 306, 1002 and
1003,  in each case with  respect to any Notes  described  in  subclause  (B) of
Clause (1) of this  Section,  (b) this  Article  Four,  (c) the rights,  powers,
trusts,   duties  and  immunities  of  the  Trustee  hereunder,   including  the
obligations of the Company to the Trustee under Section 607, and the obligations
of the Trustee to any Authenticating Agent under
                                       46
<PAGE>
Section 614 and (d) if money shall have been deposited with the Trustee pursuant
to  subclause  (B) of Clause (1) of this  Section , the rights of Holders of any
Notes  described  in  subclause  (B) of Clause (1) of this  Section to  receive,
solely from the trust fund described in such subclause (B),  payments in respect
of the  principal  of, and premium (if any),  liquidated  damages (if any),  and
interest on, such Notes when such payment are due.

SECTION 402.  Application of Trust Money.  Subject to the provisions of the last
paragraph of Section 1003 and Section 506, all money  deposited with the Trustee
pursuant to Section 401 shall be held in trust and applied by it, in  accordance
with the  provisions  of the Notes and this  Indenture,  to the payment,  either
directly or through any Paying Agent  (including  the Company  acting as its own
Paying Agent) as the Trustee may determine,  to the Persons entitled thereto, of
the principal and premium, if any, and interest for whose payment such money has
been deposited with the Trustee.  All moneys deposited with the Trustee pursuant
to  Section  401 (and held by it or any Paying  Agent) for the  payment of Notes
subsequently converted shall be returned to the Company upon Company Request.

SECTION  403.  Reinstatement.  If the  Trustee or the Paying  Agent is unable to
apply any money in  accordance  with this Article Four by reason of any order or
judgment  of any  court or  governmental  authority  enjoining,  restraining  or
otherwise  prohibiting such  application,  then the Company's  obligations under
this  Indenture  and the Notes  shall be  revived  and  reinstated  as though no
deposit  had  occurred  pursuant  to this  Article  Four  until such time as the
Trustee  or Paying  Agent is  permitted  to apply all money  held in trust  with
respect to the Notes;  provided,  however, that if the Company makes any payment
of  principal  of,  or any  premium  or  interest  on,  any Note  following  the
reinstatement of its obligations,  the Company shall be subrogated to the rights
of the Holders of the Notes to receive  such  payment  from the money so held in
trust.

                                  ARTICLE FIVE

                                    Remedies

SECTION 501.  Events of Default.

         "Event  of  Default,"  wherever  used  herein,  means  any  one  of the
following  events  (whatever the reason for such Event of Default and whether it
shall be  occasioned  by the  provisions  of Article  Twelve or 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);

                  (1) default in the payment of the principal of, or premium, if
any, on any Note at its  Maturity,  whether or not such payment is prohibited by
the provisions of Article Twelve; or

                  (2)  default in the  payment of any  interest  and  liquidated
damages,  if any, upon any Note when it becomes due and payable,  whether or not
such payment is prohibited by the provisions of Article Twelve,  and continuance
of such default for a period of 30 days; or
                                       47
<PAGE>
                  (3) failure to provide timely notice of a Repurchase  Event as
required in accordance with the provisions of Article Fourteen; or

                  (4) default in the payment of the Repurchase  Price in respect
of any Note on the Repurchase Date therefor in accordance with the provisions of
Article Fourteen, whether or not such payment is prohibited by the provisions of
Article Twelve; or

                  (5) default in the performance,  or breach, of any covenant or
warranty of the Company in this  Indenture  (other than a covenant or warranty a
default  in whose  performance  or whose  breach is  elsewhere  in this  Section
specifically dealt with), and continuance of such default or breach for a period
of 60 days after there has been given,  by registered or certified  mail, to the
Company by the  Trustee or to the  Company  and the Trustee by the Holders of at
least  25% in  principal  amount  of the  Outstanding  Notes  a  written  notice
specifying  such  default or breach and  requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or

                  (6)  default  under one or more  bonds,  debentures,  notes or
other  evidences  of  indebtedness  for money  borrowed  by the  Company  or any
Subsidiary or under one or more mortgages, indentures or instruments under which
there  may  be  issued  or by  which  there  may be  secured  or  evidenced  any
indebtedness  for money borrowed by the Company or any Subsidiary,  whether such
indebtedness   now  exists  or  shall   hereafter  be  created,   which  default
individually or in the aggregate shall constitute a failure to pay the principal
of  indebtedness  in  excess  of  $10,000,000  when due and  payable  after  the
expiration  of any  applicable  grace period with respect  thereto or shall have
resulted in indebtedness in excess of $10,000,000 becoming or being declared due
and payable  prior to the date on which it would  otherwise  have become due and
payable, without such indebtedness having been discharged,  or such acceleration
having been rescinded or annulled,  within a period of 30 days after there shall
have been given,  by registered or certified mail, to the Company by the Trustee
or to the Company  and the  Trustee by the Holders of at least 25% in  principal
amount of the  Outstanding  Notes a written notice  specifying  such default and
requiring the Company to cause such  indebtedness to be discharged or cause such
acceleration  to be  rescinded  or annulled  and  stating  that such notice is a
"Notice of Default" hereunder;  provided,  however, that this Clause (6) of this
Section 501 shall not apply to the failure to pay any outstanding purchase money
debt incurred by the Company or any Subsidiary in connection  with the purchase,
lease, or other acquisition of assets or all or any portion of a business entity
if: (i) the failure to pay such purchase money debt is the result of a bona fide
dispute with respect  thereto,  (ii) the Company  provides written notice to the
Trustee of such dispute with a reasonably  detailed  explanation  of the dispute
and the amount in controversy,  (iii) the Company segregates from other funds of
the Company at least the maximum  amount  payable  with  respect to the issue in
dispute to be used to pay such purchase money debt if, upon final  resolution of
the dispute,  it is determined  that such debt is due and payable by the Company
or any  Subsidiary,  and (iv) no other creditor of the Company or any Subsidiary
has the right to  accelerate  any  obligation  or to exercise  any remedies as a
secured creditor as a result of such default on such purchase money debt; or
                                       48
<PAGE>
                  (7) the entry by a court having  jurisdiction  in the premises
of (A) a decree or order for relief in respect of the Company or any  Subsidiary
in an  involuntary  case or  proceeding  under any  applicable  Federal or State
bankruptcy,  insolvency,  reorganization or other similar law or (B) a decree or
order  adjudging  the Company or any  Subsidiary  as bankrupt or  insolvent,  or
approving  as properly  filed a petition  seeking  reorganization,  arrangement,
adjustment  or  composition  of or in respect of the  Company or any  Subsidiary
under any applicable Federal or State law, or appointing a custodian,  receiver,
liquidator,  assignee,  trustee,  sequestrator or other similar  official of the
Company  or any  Subsidiary  or of any  substantial  part  of its  property,  or
ordering the winding up or  liquidation of its affairs,  and the  continuance of
any such decree or order for relief or any such other  decree or order  unstayed
and in effect for a period of 120 consecutive days; or

                  (8) the  commencement  by the Company or any  Subsidiary  of a
voluntary case or proceeding under any applicable  Federal or State  bankruptcy,
insolvency,  reorganization  or  other  similar  law or of  any  other  case  or
proceeding to be  adjudicated  a bankrupt or insolvent,  or the consent by it to
the entry of a decree  or order for  relief in  respect  of the  Company  or any
Subsidiary in an involuntary case or proceeding under any applicable  Federal or
State  bankruptcy,  insolvency,  reorganization  or other  similar law or to the
commencement of any bankruptcy or insolvency  case or proceeding  against it, or
the filing by it of a petition or answer or consent  seeking  reorganization  or
relief  under any  applicable  Federal or State law, or the consent by it to the
filing of such  petition  or to the  appointment  of or taking  possession  by a
custodian,  receiver,  liquidator,  assignee,  trustee,  sequestrator  or  other
similar  official of the Company or any Subsidiary or of any substantial part of
its  property,  or the making by it of a general  assignment  for the benefit of
creditors,  or the  admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of  corporate  action by the Company
or any Subsidiary in furtherance of any such action.

         Upon  receipt by the Trustee of any Notice of Default  pursuant to this
Section 501, a record date shall  automatically  and without any other action by
any Person be set for the  purpose of  determining  the  Holders of  Outstanding
Notes entitled to join in such Notice of Default, which record date shall be the
close of business on the day the Trustee  receives  such Notice of Default.  The
Holders  of  Outstanding  Notes on such  record  date (or their  duly  appointed
agents),  and only such  Persons,  shall be  entitled  to join in such Notice of
Default,  whether or not such  Holders  remain  Holders  after such record date;
provided,  that  unless such Notice of Default  shall have become  effective  by
virtue of the Holders of the requisite  principal amount of Outstanding Notes on
such record date (or their duly  appointed  agents)  having joined therein on or
prior to the 90th day after such  record  date,  such  Notice of  Default  shall
automatically and without any action by any Person be canceled and of no further
force or effect.

SECTION 502.  Acceleration of Maturity; and Annulment.

         If an Event of Default (other than as specified in subparagraph  (7) or
(8) of Section  501) occurs and is  continuing,  then and in every such case the
Trustee  or the  Holders  of  not  less  than  25% in  principal  amount  of the
Outstanding  Notes  may  declare  the  principal  of all the Notes to be due and
payable  immediately,  by a notice in writing to the Company (and to the Trustee
if
                                       49
<PAGE>
given  by  Holders),  and  upon any such  declaration  such  principal  plus any
interest  accrued  on  the  Notes  to  the  date  of  declaration  shall  become
immediately  due and payable.  If an Event of Default  specified in subparagraph
(7) or (8) of Section  501  occurs and is  continuing,  then the  principal  of,
premium,  if any,  and  accrued  and unpaid  interest,  if any,  and  liquidated
damages,  if any, on all of the Notes shall ipso facto become and be immediately
due and payable  without any declaration or other act on the part of the Trustee
or any Holder of Notes.

         At any time after such a declaration of acceleration  has been made and
before a judgment  or decree for  payment of the money due has been  obtained by
the Trustee as hereinafter in this Article  provided,  the Holders of a majority
in principal  amount of the Outstanding  Notes, by written notice to the Company
and the Trustee, may rescind and annul such declaration and its consequences if

                  (1)      the Company has paid or deposited  with the Trustee a
                           sum sufficient to pay

                           (A) all overdue interest on all Notes,

                           (B) the  principal  of and  premium,  if any,  on any
Notes which have become due otherwise than by such  declaration of  acceleration
and interest thereon at the rate borne by the Notes,

                           (C) to the extent  that  payment of such  interest is
lawful, interest upon overdue interest at the rate borne by the Notes, and

                           (D) all sums paid or advanced by the Trustee and each
predecessor  Trustee,  their  respective  agents and counsel  hereunder  and the
reasonable compensation, expenses, disbursements and advances of the Trustee and
each predecessor Trustee, their respective agents and counsel; and

                  (2) all Events of Default,  other than the  nonpayment  of the
principal  of,  premium,  if any,  and interest on the Notes that has become due
solely  by such  declaration  of  acceleration,  have  been  cured or  waived as
provided  in  Section  513.  No such  rescission  and  waiver  shall  affect any
subsequent default or impair any right consequent thereon.

         Upon receipt by the Trustee of any declaration of acceleration,  or any
rescission and annulment of any such declaration,  pursuant to this Section 502,
a record date shall  automatically and without any other action by any Person be
set for the purpose of determining the Holders of Outstanding  Notes entitled to
join in such declaration, or rescission and annulment, as the case may be, which
record date shall be the close of business on the day the Trustee  receives such
declaration,  or rescission  and  annulment,  as the case may be. The Holders of
Outstanding Notes on such record date (or their duly appointed agents), and only
such Persons,  shall be entitled to join in such declaration,  or rescission and
annulment,  as the case may be, whether or not such Holders remain Holders after
such record date;  provided,  that unless such  declaration,  or rescission  and
annulment,  as the case may be, shall have become effective by virtue of Holders
                                       50
<PAGE>
of the requisite  principal amount of Outstanding  Notes on such record date (or
their duly  appointed  agents) having joined therein on or prior to the 90th day
after such record date, such  declaration,  or rescission and annulment,  as the
case may be,  shall  automatically  and  without  any  action  by any  Person be
canceled and of no further force or effect.

SECTION 503.  Collection of Indebtedness and Suits for Enforcement by Trustee.

         The Company covenants that if

         (1)  default is made in the  payment of any  interest  on any Note when
such interest becomes due and payable and such default continues for a period of
30 days, or

         (2) default is made in the payment of the  principal of or premium,  if
any, on any Note at the Maturity  thereof,  the Company will, upon demand of the
Trustee,  pay to it, for the  benefit of the  Holders of such  Notes,  the whole
amount then due and payable on such Notes for principal of, and premium, if any,
and interest,  and, to the extent that payment of such interest shall be legally
enforceable,  interest, on any overdue principal and premium, if any, and on any
overdue interest, at the rate borne by the Notes, and, in addition thereto, such
further  amount  as shall be  sufficient  to cover the  costs  and  expenses  of
collection,  including the reasonable compensation,  expenses, disbursements and
advances of the Trustee and each predecessor  Trustee,  their respective  agents
and counsel,  and any other amounts due the Trustee or any  predecessor  Trustee
under Section 607.

         If the Company  fails to pay such amounts  forthwith  upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial  proceeding  for the  collection  of the sums so due and unpaid and may
prosecute any such  proceeding to judgment or final decree,  and may enforce the
same against the Company (or any other obligor the Notes) and collect the moneys
adjudged  or decreed to be  payable  in the  manner  provided  by law out of the
property  of the  Company  (or any  other  obligor  upon  the  Notes),  wherever
situated.

         If an Event of Default occurs and is continuing, the Trustee may in its
discretion  proceed  to  protect  and  enforce  its rights and the rights of the
Holders by such appropriate  judicial proceedings as the Trustee shall deem most
effectual  to protect  and  enforce any such  rights,  whether for the  specific
enforcement  of any  covenant or  agreement  in this  Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 504.  Trustee May File Proofs of Claim.

         In case of any  judicial  proceeding  relative  to the  Company (or any
other obligor upon the Notes), its property or its creditors,  the Trustee shall
be entitled and empowered,  by intervention in such proceeding or otherwise,  to
take any and all actions  authorized  under the Trust  Indenture Act in order to
have the claims of the Holders and the Trustee  allowed in any such  proceeding.
In particular, the Trustee shall be authorized to collect and receive any moneys
or other  property  payable or  deliverable on any such claims and to distribute
the  same;  and  any  custodian,   receiver,   assignee,  trustee,   liquidator,
sequestrator or other similar official in any such judicial proceeding
                                       51
<PAGE>
is hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments directly
to the  Holders,  to pay to the Trustee  any amount due it and each  predecessor
Trustee for the reasonable compensation, expenses, disbursements and advances of
the  Trustee  and each  predecessor  Trustee  and their  respective  agents  and
counsel, and any other amounts due the Trustee under Section 607.

         No provision of this Indenture shall be deemed to authorize the Trustee
to  authorize  or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder  thereof or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding;  provided,  however, that the
Trustee  may, on behalf of the  Holders,  vote for the  election of a trustee in
bankruptcy or similar official and may be a member of the Creditors' Committee.

SECTION 505. Trustee May Enforce Claims Without  Possession of Notes. All rights
of action and claims  under this  Indenture or the Notes may be  prosecuted  and
enforced  by the  Trustee  without  the  possession  of any of the  Notes or the
production thereof in any proceeding  relating thereto,  and any such proceeding
instituted  by the  Trustee  shall be  brought  in its own name as trustee of an
express  trust,  and any recovery of judgment  shall,  after  provision  for the
payment of the reasonable compensation,  expenses, disbursements and advances of
the  Trustee  and each  predecessor  Trustee  and their  respective  agents  and
counsel,  be for the  ratable  benefit of the Holders of the Notes in respect of
which such judgment has been recovered.

SECTION 506.  Application of Money Collected.

         Any money  collected by the Trustee  pursuant to this Article  shall be
applied in the following  order,  at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or premium, if
any, or interest, upon presentation of the Notes and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:

         FIRST:  To payment of all amounts due the Trustee under Section 607;

         SECOND:   Subject  to  Article   Twelve,   to  the  holders  of  Senior
Indebtedness;

         THIRD:  To the payment of the amounts then due and unpaid for principal
of and premium, if any, and interest on the Notes in respect of which or for the
benefit of which such money has been collected,  ratably,  without preference or
priority of any kind, according to the amounts due and payable on such Notes for
principal and premium, if any, and interest, respectively; and

         FOURTH:  The  balance,  if any, to the  Company or any other  Person or
Persons  determined  to be  entitled  thereto  upon  provision  of an  Officer's
Certificate  or other  evidence  reasonably  satisfactory  to the Trustee by the
Company or such other person verifying such entitlement.
                                       52
<PAGE>
SECTION 507.  Limitation on Suits.

         No Holder of any Note shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless

                  (1) such Holder has  previously  given  written  notice to the
Trustee of a continuing Event of Default;

                  (2) the  Holders of not less than 25% in  principal  amount of
the  Outstanding  Notes  shall  have made  written  request  to the  Trustee  to
institute  proceedings  in  respect  of such Event of Default in its own name as
Trustee hereunder;

                  (3)  such  Holder  or  Holders  have  offered  to the  Trustee
reasonable  indemnity  satisfactory  to  it  against  the  costs,  expenses  and
liabilities to be incurred in compliance with such request;

                  (4) the Trustee for 60 days after its receipt of such  notice,
request and offer of indemnity has failed to institute any such proceeding; and

                  (5) no direction  inconsistent  with such written  request has
been given to the Trustee during such 60-day period by the Holders of a majority
in principal  amount of the Outstanding  Notes; it being understood and intended
that no one or more  holders  shall  have any right in any  manner  whatever  by
virtue of, or by availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other Holders,  or to obtain or to seek to obtain
priority or preference over any other Holders or to enforce any right under this
Indenture,  except in the manner  herein  provided and for the equal and ratable
benefit of all the Holders.

SECTION  508.  Unconditional  Right of Holders to  Receive  Principal,  Premium,
Interest  and  Liquidated  Damages  and to  Convert.  Notwithstanding  any other
provision in this Indenture,  the Holder of any Note shall have the right, which
is absolute and unconditional,  to receive payment of the principal of, premium,
and  liquidated  damages,  if any, and (subject to Section 307) interest on such
Note on the respective Stated Maturities expressed in such Note (or, in the case
of redemption,  on the Redemption Date or, in the case of a repurchase  pursuant
to  Article  Fourteen,  on the  Repurchase  Date)  and to  convert  such Note in
accordance  with Article  Thirteen and to institute suit for the  enforcement of
any such  payment  and right to convert,  and such rights  shall not be impaired
without the consent of such Holder.

SECTION 509.  Restoration  of Rights and Remedies.  If the Trustee or any Holder
has  instituted  any  proceeding  to  enforce  any  right or remedy  under  this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined  adversely to the Trustee or to such Holder,  then and in
every such case,  subject to any determination in such proceeding,  the Company,
the Trustee and the Holders  shall be restored  severally  and  respectively  to
their former  positions  hereunder and thereafter all rights and remedies of the
Trustee and the Holders  shall  continue as though no such  proceeding  had been
instituted.
                                       53
<PAGE>
SECTION 510. Rights and Remedies  Cumulative.  Except as otherwise provided with
respect to the  replacement or payment of mutilated,  destroyed,  lost or stolen
Notes in Section 306, no right or remedy  herein  conferred  upon or reserved to
the Trustee or to the Holders 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 hereafter  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.

SECTION 511.  Delay or Omission Not Waiver.  No delay or omission of the Trustee
or of any Holder of any Note to exercise any right or remedy  accruing  upon any
Event of Default shall impair any such right or remedy or constitute a waiver of
any such Event of Default or an  acquiescence  therein.  Every  right and remedy
given  by  this  Article  or by law  to the  Trustee  or to the  Holders  may be
exercised  from time to time,  and as often as may be deemed  expedient,  by the
Trustee or by the Holders, as the case may be.

SECTION 512.  Control by Holders.

         The Holders of a majority in principal amount of the Outstanding  Notes
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; provided, that

                  (1) such  direction  shall not be in conflict with any rule of
law or with this Indenture; and

                  (2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and

                  (3)  subject to the  provisions  of Section  601,  the Trustee
shall have the right to decline to follow any such  direction  if the Trustee in
good faith shall determine that the action so directed would involve the Trustee
in personal  liability or would be unduly  prejudicial to Holders not joining in
such direction.

         Upon receipt by the Trustee of any such direction,  a record date shall
automatically  and without any other action by any Person be set for the purpose
of  determining  the  Holders  of  Outstanding  Notes  entitled  to join in such
direction,  which  record  date  shall be the close of  business  on the day the
Trustee receives such direction. The Holders of Outstanding Notes on such record
date (or their duly appointed agents), and only such Persons,  shall be entitled
to join in such direction, whether or not such Holders remain Holders after such
record date; provided, that unless such direction shall have become effective by
virtue of Holders of the requisite principal amount of Outstanding Notes on such
record date (or their duly  appointed  agents) having joined therein on or prior
to the 90th day after such record date, such direction shall  automatically  and
without any action by any Person be canceled and of no further force or effect.
                                       54
<PAGE>
SECTION 513.  Waiver of Past Defaults.

         The  Holders of not less than a  majority  in  principal  amount of the
Outstanding  Notes may on behalf of the  Holders of all the Notes waive any past
default hereunder and its consequences, except a default

                  (1) in the payment of the principal of or premium,  if any, or
interest on any Note, or

                  (2) in respect of a covenant or  provision  hereof which under
Article Nine cannot be modified or amended  without the consent of the Holder of
each Outstanding Note affected.

         Upon any such waiver,  such default shall cease to exist, and any Event
of  Default  arising  therefrom  shall be deemed to have been  cured,  for every
purpose of this Indenture;  but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

SECTION 514. Undertaking for Costs. In any suit for the enforcement of any right
or remedy  under this  Indenture,  or in any suit  against  the  Trustee for any
action  taken,  suffered  or omitted by it as  Trustee,  a court may require any
party  litigant  in such  suit to file an  undertaking  to pay the costs of such
suit, and may assess costs against any such party litigant, in the manner and to
the extent  provided in the Trust  Indenture  Act;  provided,  that neither this
Section nor the Trust  Indenture  Act shall be deemed to authorize  any court to
require such an undertaking or to make such an assessment in any suit instituted
by the  Company,  in any  suit  instituted  by the  Trustee,  a suit by a Holder
pursuant  to Section  508,  or a suit by a Holder or Holders of more than 10% in
principal amount of the Outstanding Notes.

                                   ARTICLE SIX

                                   The Trustee

SECTION 601.  Certain Duties and Responsibilities.

         The duties and  responsibilities of the Trustee shall be as provided by
this  Indenture and the Trust  Indenture Act for securities  issued  pursuant to
indentures   qualified   thereunder.   Except  as  otherwise   provided  herein,
notwithstanding the foregoing,  no provision of this Indenture shall require the
Trustee  to  expend  or risk its own  funds or  otherwise  incur  any  financial
liability or risk in the performance of any of its duties  hereunder,  or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity  satisfactory to it
against such risk or liability is not  reasonably  assured to it. 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.  The Trustee shall not be
liable (x) 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 or (y) with respect to
any
                                       55
<PAGE>
action taken or omitted to be taken by it in good faith in  accordance  with the
direction  of the  Holders of not less than a majority  in  aggregate  principal
amount of the Notes at the time  Outstanding  relating  to the time,  method and
place of conducting  any proceeding or any remedy  available to the Trustee,  or
exercising any trust or power conferred upon the Trustee,  under this Indenture.
Prior to the  occurrence  of an Event of Default and after the curing or waiving
of all 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 in the Trust  Indenture  Act, and the Trustee shall not be liable
except for the  performance of such duties and  obligations as are  specifically
set forth in this  Indenture  and in the Trust  Indenture  Act,  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 therein, upon any statements, certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture and believed by the
Trustee to be genuine and to have been signed or  presented  by the proper party
or parties;  but in the case of any such  statements,  certificates  or opinions
which by any provisions 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 on their face to the requirements of this Indenture.
If a default or an Event of Default has occurred and is continuing,  the Trustee
shall  exercise the rights and powers vested in it by this Indenture and use the
same degree of care and skill in its exercise  thereof as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.

SECTION 602.  Notice of Defaults.  The Trustee shall give the Holders  notice of
any  default  hereunder  of which it has actual  knowledge  as and to the extent
provided by the Trust Indenture Act; provided,  however, that in the case of any
default of the character  specified in Section 501(5), no such notice to Holders
shall be given  until at least 30 days  after the  occurrence  thereof.  For the
purpose of this Section,  the term "default"  means any event which is, or after
notice or lapse of time or both would become, an Event of Default.

SECTION 603.  Certain Rights of Trustee.

         Subject to the provisions of Section 601:

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

                  (b) any request or direction of the Company  mentioned  herein
shall be  sufficiently  evidenced by a Company  Request or Company Order (unless
other evidence in respect thereof is specifically  prescribed herein or required
by the Trust Indenture Act); and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
                                       56
<PAGE>
                  (c)  whenever  in the  administration  of this  Indenture  the
Trustee shall deem it desirable that a matter be proved or established  prior to
taking,  suffering or omitting any action  hereunder,  the Trustee (unless other
evidence be herein specifically  prescribed) may, in the absence of bad faith on
its part, rely conclusively upon an Officers' Certificate;

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

                  (e) the Trustee  shall be under no  obligation to exercise any
of the  rights  or powers  vested  in it by this  Indenture  at the  request  or
direction of any of the Holders pursuant to this Indenture,  unless such Holders
shall have offered to the Trustee reasonable security or indemnity  satisfactory
to it against the costs,  expenses and liabilities which might be incurred by it
in compliance with such request or direction;

                  (f) before the  Trustee  acts or  refrains  from  acting  with
respect  to any  matter  contemplated  by  this  Indenture,  it may  require  an
Officers'  Certificate  or an Opinion of  Counsel,  which  shall  conform to the
provisions  of Section 102, and the Trustee  shall be protected and shall not be
liable for any action it takes or omits to take in good faith and without  gross
negligence in reliance on such certificate or opinion;

                  (g) the  Trustee  shall  not be  required  to give any bond or
surety in respect of the performance of its power and duties hereunder;

                  (h) the Trustee  shall not be bound to make any  investigation
into the facts or  matters  stated in any  resolution,  certificate,  statement,
instrument,  opinion, report, notice, request, direction,  consent, order, bond,
debenture,  note, other evidence of indebtedness or other paper or document, but
the Trustee,  in its discretion,  may make such further inquiry or investigation
into such facts or matters as it may see fit; and

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

SECTION 604.  Not  Responsible  for Recitals or Issuance of Notes.  The recitals
contained  herein  and  in  the  Notes,  except  the  Trustee's  certificate  of
authentication, shall be taken as the statements of the Company, and the Trustee
and any Authenticating Agent assume no responsibility for their correctness. The
Trustee  makes no  representations  as to the  validity or  sufficiency  of this
Indenture or of the Notes. The Trustee and any Authenticating Agent shall not be
accountable  for the use or  application by the Company of Notes or the proceeds
thereof.

SECTION 605. May Hold Notes. The Trustee,  any Authenticating  Agent, any Paying
Agent,  any Note Registrar or any other agent of the Company,  in its individual
or any other capacity,  
                                       57
<PAGE>
may become the owner or pledgee of Notes and,  subject to Sections  608 and 613,
may  otherwise  deal with the  Company  with the same rights it would have if it
were not Trustee,  Authenticating  Agent,  Paying Agent,  Note Registrar or such
other agent.

SECTION 606.  Money Held in Trust.  All monies held by the Trustee or any Paying
Agent shall,  until used or applied as provided herein, be held in trust for the
purposes for which they were received. Money held in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee or
any Paying Agent shall be under no liability for interest on any money  received
by it hereunder except as otherwise agreed with the Company.

SECTION 607.  Compensation and Reimbursement.

         The Company agrees:

                  (1) to pay  to  the  Trustee  from  time  to  time  reasonable
compensation for all services  rendered by it hereunder  (including its services
as Note  Registrar  or Paying  Agent,  if so appointed by the Company) as may be
mutually  agreed  upon  in  writing  by  the  Company  and  the  Trustee  (which
compensation  shall  not be  limited  by any  provision  of law in regard to the
compensation of a trustee of an express trust);

                  (2)  except  as  otherwise   expressly   provided  herein,  to
reimburse  the Trustee  and each  predecessor  Trustee  upon its request for all
reasonable expenses, disbursements and advances incurred or made by or on behalf
of it in connection  with the  performance  of its duties under any provision of
this  Indenture  (including  the  reasonable  compensation  and the expenses and
disbursements  of its agents and counsel and all other  persons not regularly in
its employ) except to the extent any such expense,  disbursement  or advance may
be attributable to its negligence or bad faith; and

                  (3) to  indemnify  the  Trustee and each  predecessor  Trustee
(each an "indemnitee") 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  its  services  as Note
Registrar  or  Paying  Agent,  if  so  appointed  by  the  Company),   including
enforcement  of this  Section  607 and  including  the  costs  and  expenses  of
defending itself against or  investigating  any claim or liability in connection
with the exercise or performance of any of its powers or duties  hereunder.  The
Company  shall  defend  any  claim  or  threatened  claim  asserted  against  an
indemnitee for which it may seek indemnity,  and the indemnitee  shall cooperate
in the defense unless,  in the reasonable  opinion of the indemnitee's  counsel,
the indemnitee has an interest adverse to the Company or a potential conflict of
interest  exists  between  the  indemnitee  and the  Company,  in which case the
indemnitee  may have separate  counsel and the Company shall pay the  reasonable
fees and  expenses of such  counsel;  provided  that the  Company  shall only be
responsible for the reasonable fees and expenses of one law firm (in addition to
local counsel) in any one action or separate  substantially  similar  actions in
the  same  jurisdiction   arising  out  of  the  same  general   allegations  or
circumstances, such law firm to be designated by the indemnitee.
                                       58
<PAGE>
         As security for the performance of the obligations of the Company under
this  Section  607,  the  Trustee  shall have a lien prior to the Notes 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  Notes,  and the Notes are
hereby  subordinated  to such prior lien.  The  obligations of the Company under
this Section to compensate and indemnify the Trustee and any predecessor Trustee
and to pay or reimburse  the Trustee and any  predecessor  Trustee for expenses,
disbursements  and  advances,  and any  other  amounts  due the  Trustee  or any
predecessor Trustee under Section 607, shall constitute an additional obligation
hereunder and shall survive the satisfaction and discharge of this Indenture.

         When the Trustee or any predecessor  Trustee incurs expenses or renders
services  in  connection  with  the  performance  of its  obligations  hereunder
(including  its services as Note  Registrar or Paying Agent,  if so appointed by
the  Company)  after an Event of  Default  specified  in  Section  501(7) or (8)
occurs,  the  expenses  and the  compensation  for the  services are intended to
constitute   expenses  of  administration   under  any  applicable   bankruptcy,
insolvency  or other  similar  federal  or state law to the extent  provided  in
Section  503(b)(5) of Title 11 of the United States Code, as now or hereafter in
effect.

SECTION  608.  Disqualification;  Conflicting  Interests.  If the Trustee has or
shall acquire a conflicting  interest  within the meaning of the Trust Indenture
Act, the Trustee shall either  eliminate such interest or resign,  to the extent
and in the manner  provided  by, and  subject  to the  provisions  of, the Trust
Indenture Act and this Indenture.

SECTION 609. Corporate Trustee Required;  Eligibility.  There shall at all times
be a Trustee  hereunder which shall be a Person that (i) is eligible pursuant to
the  Trust  Indenture  Act to act as  such,  (ii)  has  (or,  in the  case  of a
corporation  included in a bank  holding  company  system,  whose  related  bank
holding company has) a combined capital and surplus of at least  $50,000,000 and
(iii) has an office where it provides  corporate trust services,  or at which it
is authorized to receive notices hereunder, in Atlanta, Georgia, or a designated
agent.  If such  Person  publishes  reports  of  conditions  at least  annually,
pursuant  to law or to the  requirements  of a Federal or state  supervising  or
examining authority, then for the purposes of this Section, the combined capital
and  surplus  of such  Person  shall be deemed to be its  combined  capital  and
surplus as set forth in its most recent report of condition so published.  If at
any  time  the  Trustee  shall  cease  to be  eligible  in  accordance  with the
provisions of this Section,  it shall resign  immediately in the manner and with
the effect hereinafter specified in this Article.

SECTION 610.  Resignation and Removal; Appointment of Successor.

         (a) No  resignation  or removal of the Trustee and no  appointment of a
successor  Trustee  pursuant to this Article  shall become  effective  until the
acceptance  of  appointment  by the  successor  Trustee in  accordance  with the
applicable requirements of Section 611.

         (b) The Trustee may resign at any time by giving written notice thereof
to the Company.  If an instrument of acceptance by a successor  Trustee required
by Section 611 shall 
                                       59
<PAGE>
not have been delivered to the resigning Trustee within 30 days after the giving
of such notice of resignation,  the resigning  Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

         (c) The  Trustee may be removed at any time by an Act of the Holders of
a majority in principal amount of the Outstanding Notes delivered to the Trustee
and to the Company.

         (d) If at any time:

                  (1) the Trustee  shall fail to comply  with  Section 608 after
written  request  therefor  by the  Company or by any Holder who has been a bona
fide Holder of a Note for the last six months, or

                  (2) the Trustee  shall cease to be eligible  under Section 609
and shall fail to resign after written request therefor by the Company or by any
such Holder, or

                  (3) the Trustee  shall become  incapable of acting or shall be
adjudged  a  bankrupt  or  insolvent,  or a  receiver  of the  Trustee or of its
property shall be appointed,  or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of  rehabilitation,
conservation or liquidation,  then, in any such case, (i) the Company by a Board
Resolution  may remove the  Trustee,  or (ii) subject to Section 514, any Holder
who has been a bona fide Holder of a Note for at least six months may, on behalf
of himself and all others  similarly  situated,  petition any court of competent
jurisdiction  for the removal of the Trustee and the  appointment of a successor
Trustee.

         (e) If the Trustee  shall  resign,  be removed or become  incapable  of
acting,  or if a vacancy shall occur in the office of Trustee for any cause, the
Company,  by a Board Resolution,  shall promptly appoint a successor Trustee and
such successor Trustee shall comply with the applicable  requirements of Section
611. If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding  Notes delivered to
the Company and the retiring Trustee,  the successor Trustee so appointed shall,
forthwith  upon  its  acceptance  of such  appointment  in  accordance  with the
applicable  requirements  of  Section  611  become  the  successor  Trustee  and
supersede  the  successor  Trustee  appointed  by the  Company.  If no successor
Trustee  shall have been so appointed by the Company or the Holders and accepted
appointment  in the manner  required by Section  611,  any Holder who has been a
bona fide Holder of a Note for at least six months may, on behalf of himself and
all others similarly situated,  petition any court of competent jurisdiction for
the appointment of a successor Trustee.

         (f) The Company shall give notice of each  resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders in the
manner  provided  in Section  106.  Each  notice  shall  include the name of the
successor Trustee and the address of its Corporate Trust Office.
                                       60
<PAGE>
SECTION 611.  Acceptance of Appointment by Successor.

         Every successor Trustee appointed hereunder shall execute,  acknowledge
and deliver to the Company and to the retiring  Trustee an instrument  accepting
such  appointment,  and  thereupon  the  resignation  or removal of the retiring
Trustee shall become effective and such successor  Trustee,  without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the  retiring  Trustee;  but,  on  request  of the  Company or the
successor  Trustee,  such retiring  Trustee shall,  upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights,  powers  and  trusts of the  retiring  Trustee  and shall  duly  assign,
transfer  and deliver to such  successor  Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company  shall  execute  any and all  instruments  for more fully and  certainly
vesting in and confirming to such successor Trustee all such rights,  powers and
trusts.

         No successor Trustee shall accept its appointment unless at the time of
such  acceptance  such  successor  Trustee shall be qualified and eligible under
this Article.

SECTION 612. Merger,  Conversion,  Consolidation or Succession to Business.  Any
corporation  into which the Trustee may be merged or  converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or
consolidation  to  which  the  Trustee  shall  be a  party,  or any  corporation
succeeding  to all or  substantially  all the  corporate  trust  business of the
Trustee,  shall  be  the  successor  of the  Trustee  hereunder,  provided  such
corporation  shall be  otherwise  qualified  and  eligible  under this  Article,
without the  execution  or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated,  but
not  delivered,  by the  Trustee  then  in  office,  any  successor  by  merger,
conversion  or  consolidation  to such  authenticating  Trustee  may adopt  such
authentication and deliver the Notes so authenticated with the same effect as if
such successor Trustee had itself authenticated such Notes.

SECTION 613. Preferential  Collection of Claims Against Company. If and when the
Trustee  shall be or become a creditor of the Company (or any other obligor upon
the  Notes),  the  Trustee  shall be  subject  to the  provisions  of the  Trust
Indenture  Act regarding  the  collection of claims  against the Company (or any
such other obligor).

SECTION 614.  Appointment of Authenticating Agent.

         The Trustee may appoint an Authenticating Agent or Agents acceptable to
and at the expense of the Company  which shall be authorized to act on behalf of
the Trustee to authenticate  Notes issued upon original issue and upon exchange,
registration of transfer,  partial  conversion or partial redemption or pursuant
to Section 306, and Notes so authenticated  shall be entitled to the benefits of
this  Indenture  and  shall be  valid  and  obligatory  for all  purposes  as if
authenticated  by the  Trustee  hereunder.  Wherever  reference  is made in this
Indenture  to the  authentication  and  delivery  of Notes by the Trustee or the
Trustee's  certificate  of  authentication,  such  reference  shall be deemed to
include   authentication   and   delivery   on  behalf  of  the  Trustee  by  an
Authenticating  Agent and a certificate of authentication  executed on behalf of
the Trustee by an Authenticating
                                       61
<PAGE>
Agent. Each Authenticating Agent shall be acceptable to the Company and shall at
all times be a Person  organized and doing business under the laws of the United
States of America,  any State  thereof or the District of  Columbia,  authorized
under such laws to act as  Authenticating  Agent,  having a combined capital and
surplus of not less than  $50,000,000  and subject to supervision or examination
by Federal or State authority. If such Authenticating Agent publishes reports of
condition  at least  annually,  pursuant to law or to the  requirements  of said
supervising or examining  authority,  then for the purposes of this Section, the
combined capital and surplus of such Authenticating  Agent shall be deemed to be
its  combined  capital  and  surplus as set forth in its most  recent  report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section,  such Authenticating
Agent shall resign  immediately  in the manner and with the effect  specified in
this Section.

         Any  Person  into  which  an  Authenticating  Agent  may be  merged  or
converted or with which it may be consolidated, or any Person resulting from any
merger,  conversion or consolidation to which such Authenticating Agent shall be
a party,  or any Person  succeeding to the corporate  agency or corporate  trust
business of an  Authenticating  Agent,  shall  continue to be an  Authenticating
Agent,  provided  such Person shall be otherwise  eligible  under this  Section,
without the  execution  or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.

         An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an  Authenticating  Agent by giving written notice thereof to such
Authenticating  Agent  and to the  Company.  Upon  receiving  such a  notice  of
resignation  or  upon  such  a  termination,   or  in  case  at  any  time  such
Authenticating  Agent  shall  cease  to  be  eligible  in  accordance  with  the
provisions of this Section,  the Trustee may appoint a successor  Authenticating
Agent  which  shall be  acceptable  to the Company and shall mail notice of such
appointment by first-class mail, postage prepaid,  to all Holders as their names
and addresses appear in the Note Register.  Any successor  Authenticating  Agent
upon acceptance of its  appointment  under this Section shall become vested with
all the rights, powers and duties of its predecessor hereunder, with like effect
as if originally named as an Authenticating  Agent. No successor  Authenticating
Agent shall be appointed  unless eligible to act as such under the provisions of
this Section.

         Any Authenticating  Agent by the acceptance of its appointment shall be
deemed to have represented to the Trustee that it is eligible for appointment as
Authenticating  Agent  under this  Section  and to have  agreed with the Trustee
that:  it will  perform and carry out the duties of an  Authenticating  Agent as
herein set forth,  including among other things the duties to authenticate Notes
when  presented  to it  in  connection  with  the  original  issuance  and  with
exchanges,  registrations  of transfer or redemptions or conversions  thereof or
pursuant to Section 306; it will keep and  maintain,  and furnish to the Trustee
from  time to time as  requested  by the  Trustee,  appropriate  records  of all
transactions  carried  out by it as  Authenticating  Agent and will  furnish the
Trustee  such other  information  and  reports  as the  Trustee  may  reasonably
require;  and it will  notify  the  Trustee  promptly  if it  shall  cease to be
eligible to act as  Authenticating  Agent in accordance  with the  provisions of
this Section . Any  Authenticating  Agent by the  acceptance of its  appointment
shall be deemed to have agreed with the Trustee to indemnify the Trustee against
                                       62
<PAGE>
any loss,  liability or expense  incurred by the Trustee and to defend any claim
asserted  against  the  Trustee by reason of any acts or failures to act of such
Authenticating  Agent, but such Authenticating Agent shall have no liability for
any action taken by it in accordance with the specific written  direction of the
Trustee.

         The  Trustee  shall not be  liable  for any act or any  failure  of the
Authenticating  Agent to perform any duty either  required  herein or authorized
herein to be performed by such person in accordance with this Indenture.

         The  Company  agrees to pay to each  Authenticating  Agent from time to
time reasonable compensation for its services under this Section.

         If an appointment is made pursuant to this Section,  the Notes may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternative certificate of authentication in the following form:

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

                                          FIRST UNION NATIONAL BANK,
                                          --------------------------
                                          As Trustee

                                          By
                                             ---------------------------------
                                                   As Authenticating Agent

                                          By
                                             ---------------------------------
                                                   Authorized Officer
                                       63
<PAGE>
                                  ARTICLE SEVEN

                Holders' Lists and Reports by Trustee and Company

SECTION 701.  Company to Furnish Trustee Names and Addresses of Holders.

         The Company  will  furnish or cause to be  furnished to the Trustee (a)
semi-annually,  not more than 15 days after each Regular Record Date, a list, in
such form as the Trustee may reasonably  require,  of the names and addresses of
the Holders as of such Regular  Record Date,  and (b) at such other times as the
Trustee may request in writing,  within 30 days after the receipt by the Company
of any such  request,  a list of similar  form and content as of a date not more
than 15 days prior to the time such list is furnished.

         Notwithstanding  the  foregoing,  so long as the  Trustee  is the  Note
Registrar, no such list shall be required to be furnished.

SECTION 702.  Preservation of Information; Communication to Holders.

         (a) The Trustee shall  preserve,  in as current a form as is reasonably
practicable,  the names and  addresses  of Holders  contained in the most recent
list  furnished  to the  Trustee as  provided  in Section  701 and the names and
addresses of Holders  received by the Trustee in its capacity as Note Registrar.
The Trustee may destroy any list furnished to it as provided in Section 701 upon
receipt of a new list so furnished.

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

         (c) Every Holder of Notes,  by receiving  and holding the same,  agrees
with the Company and the  Trustee  that  neither the Company nor the Trustee nor
any  agent  of  either  of them  shall  be held  accountable  by  reason  of any
disclosure of  information as to names and addresses of Holders made pursuant to
the Trust Indenture Act or otherwise in accordance with this Indenture.

SECTION 703.  Reports by Trustee.

         (a) Not later than 60 days  following  each April 1, the Trustee  shall
transmit to Holders such reports  concerning  the Trustee and its actions  under
this  Indenture as may be required  pursuant to the Trust  Indenture  Act at the
times and in the manner provided pursuant thereto.

         (b) A copy of each such report shall, at the time of such  transmission
to  Holders,  be filed by the  Trustee  with each stock  exchange  or  automated
quotation system upon which the Notes are listed or traded,  with the Commission
and with the Company. The Company will
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<PAGE>
notify the Trustee when the Notes are listed on any stock  exchange or automated
quotation system.

SECTION 704. Reports by Company. The Company shall file with the Trustee and the
Commission,  and  transmit to Holders,  such  information,  documents  and other
reports,  and such summaries  thereof,  as may be required pursuant to the Trust
Indenture  Act at the times and in the  manner  provided  pursuant  to such Act;
provided,  that any such information,  documents or reports required to be filed
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be
filed with the Trustee  within 15 days after the same is so required to be filed
with the Commission.

SECTION 705. Rule 144A Information Requirement.  The Company will furnish to the
Holders or  beneficial  holders of the Notes and  prospective  purchasers of the
Notes  designated by the Holders of the Notes,  upon their request,  information
required to be delivered  pursuant to Rule  144A(d)(4)  under the Securities Act
until the earlier of (i) the date on which the Notes and the  underlying  Common
Stock are registered  under the  Securities  Act or (ii) the Resale  Restriction
Termination Date.

                                  ARTICLE EIGHT

              Consolidation, Merger, Conveyance, Transfer or Lease

SECTION 801.  Company May Consolidate, Etc.,  Only on Certain Terms.

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

                  (1) in case the Company shall  consolidate  with or merge into
another  Person or convey,  transfer  or lease all or  substantially  all of its
properties and assets to any Person,  the Person formed by such consolidation or
into which the Company is merged or the Person which  acquires by  conveyance or
transfer, or which leases, all or substantially all of the properties and assets
of the Company shall be a corporation, limited liability company, partnership or
trust,  shall be  organized  and validly  existing  under the laws of the United
States of America,  any State  thereof or the  District  of  Columbia  and shall
expressly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee,  in form satisfactory to the Trustee,  the due and punctual payment
of the  principal of and premium,  if any, and interest on all the Notes and the
performance or observance of every covenant of this Indenture on the part of the
Company to be  performed  or observed  and shall have  provided  for  conversion
rights in accordance with Section 1311;

                  (2) immediately  after giving effect to such  transaction,  no
Event of Default,  and no event  which,  after  notice or lapse of time or both,
would become an Event of Default, shall have happened and be continuing;
                                       65
<PAGE>
                  (3) such consolidation,  merger, conveyance, transfer or lease
does not adversely affect the validity or enforceability of the Notes; and

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

SECTION 802. Successor Substituted.  Upon any consolidation of the Company with,
or merger of the Company into, any other Person or any  conveyance,  transfer or
lease of all or substantially all of the properties and assets of the Company in
accordance with Section 801, the successor  Person formed by such  consolidation
or into which the  Company is merged or to which such  conveyance,  transfer  or
lease is made shall succeed to, and be  substituted  for, and may exercise every
right and power of, the Company under this  Indenture with the same effect as if
such  successor  Person had been named as the Company  herein,  and  thereafter,
except in the case of a  transfer  by lease,  the  predecessor  Person  shall be
relieved of all obligations and covenants under this Indenture and the Notes.

                                  ARTICLE NINE

                             Supplemental Indentures

SECTION 901.  Supplemental Indentures Without Consent of Holders.

         Without the consent of any Holders,  the Company,  when authorized by a
Board  Resolution  and the  provisions  hereunder,  at any time and from time to
time,  may  enter  into  one or more  indentures  supplemental  hereto,  in form
satisfactory to the Trustee, for any of the following purposes:

                  (1) to cause this  Indenture to be  qualified  under the Trust
Indenture Act; or

                  (2) to  evidence  the  succession  of  another  Person  to the
Company and the assumption by any such successor of the covenants of the Company
herein and in the Notes; or

                  (3) to add to the  covenants of the Company for the benefit of
the Holders or an  additional  Event of Default,  or to  surrender  any right or
power conferred herein or in the Notes upon the Company provided that in respect
of any such additional covenant or Event of Default, such supplemental indenture
may provide for a larger or shorter  period of grace after  default or may limit
the  remedies  available  to the Trustee upon such default from those that would
otherwise be applicable; or

                  (4) to secure the Notes; or
                                       66
<PAGE>
                  (5) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Section 1311; or

                  (6) to evidence and provide for the  acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or

                  (7) to cure  any  ambiguity,  to  correct  or  supplement  any
provision herein or in the Notes which may be defective or inconsistent with any
other  provision  herein or in the Notes,  or to make any other  provisions with
respect to matters or questions  arising under this Indenture which shall not be
inconsistent with the provisions of this Indenture;  provided,  that such action
pursuant  to this Clause (7) shall not  adversely  affect the  interests  of the
Holders in any  material  respect  and the  Trustee  may rely upon an Opinion of
Counsel to that effect.

SECTION 902.  Supplemental Indentures with Consent of Holders.

         With  the  consent  of the  Holders  of not  less  than a  majority  in
principal amount of the Outstanding  Notes, by Act of said Holders  delivered to
the Company and the Trustee, the Company, when authorized by a Board Resolution,
and the Trustee may 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  modifying in any
manner the rights of the Holders under this Indenture;  provided,  however, that
no such supplemental  indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby,

                  (1) change the Stated  Maturity  of the  principal  of, or any
installment of interest on, any Note, or reduce the principal  amount thereof or
the rate of interest thereon or any premium payable upon the redemption thereof,
or change the place of payment where, or the coin or currency in which, any Note
or any premium or interest thereon is payable,  or impair the right to institute
suit for the  enforcement  of any such  payment on or after the Stated  Maturity
thereof (or, in the case of  redemption,  on or after the Redemption  Date),  or
adversely  affect the right to convert any Note as provided in Article  Thirteen
(except as permitted by Section  901(5)),  or modify the  provisions  of Article
Fourteen,  or the provisions of this Indenture with respect to the subordination
of the Notes, in a manner adverse to the Holders, or

                  (2)  reduce  the   percentage  in  principal   amount  of  the
Outstanding  Notes,  the  consent  of whose  Holders  is  required  for any such
supplemental  indenture,  or the consent of whose  Holders is  required  for any
waiver of  compliance  with  certain  provisions  of this  Indenture  or certain
defaults hereunder and their consequences provided for in this Indenture, or

                  (3) modify any of the provisions of this Section,  Section 513
or Section  1006,  except to increase  any such  percentage  or to provide  that
certain other  provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Note affected  thereby;  provided,
however,  that this  Clause  shall not be deemed to require  the  consent of any
Holder  with  respect  to  changes  in  the  references  to  "the  Trustee"  and
concomitant  changes in this Section and Section  1006,  or the deletion of this
proviso, in accordance with the requirements of Section 901(6).
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         It shall not be necessary  for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.

SECTION 903. Execution of Supplemental  Indentures.  In executing,  or accepting
the additional trusts created by, any supplemental  indenture  permitted by this
Article or the  modifications  thereby of the trusts created by this  Indenture,
the Trustee shall be entitled to receive,  and (subject to Section 601) shall be
fully  protected in relying  upon,  an Officers'  Certificate  and an Opinion of
Counsel stating that the execution of such supplemental  indenture is authorized
or permitted by this Indenture.  The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which adversely affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise.

SECTION  904.  Effect of  Supplemental  Indentures.  Upon the  execution  of any
supplemental  indenture under this Article,  this Indenture shall be modified in
accordance therewith,  and such supplemental indenture shall form a part of this
Indenture for all purposes;  and every Holder of Notes theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.

SECTION 905.  Conformity with Trust Indenture Act. Every supplemental  indenture
executed pursuant to this Article shall conform to the requirements of the Trust
Indenture Act.

SECTION 906. Reference in Notes to Supplemental Indentures.  Notes authenticated
and delivered after the execution of any supplemental indenture pursuant to this
Article  may,  and shall if  required  by the  Company,  bear a notation in form
approved  by the  Company as to any  matter  provided  for in such  supplemental
indenture.  If the  Company  shall so  determine,  new Notes so  modified  as to
conform, in the opinion of the Company,  to any such supplemental  indenture may
be prepared and  executed by the Company and (at the  specific  direction of the
Company)  authenticated and delivered by the Trustee in exchange for Outstanding
Notes.

SECTION 907. Notice of Supplemental  Indenture.  Promptly after the execution by
the Company and the Trustee of any  supplemental  indenture  pursuant to Section
902,  the  Company  shall  transmit to the  Holders a notice  setting  forth the
substance of such supplemental indenture.

                                   ARTICLE TEN

                                    Covenants

SECTION 1001. Payment of Principal,  Premium and Interest. The Company will duly
and  punctually  pay  the  principal  of and  premium,  if  any,  interest,  and
liquidated  damages,  if any, on the Notes in  accordance  with the terms of the
Notes and this Indenture.
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SECTION 1002.  Maintenance of Office or Agency.

         The Company  will  maintain  in New York,  New York an office or agency
where Notes may be presented  or  surrendered  for  payment,  where Notes may be
surrendered  for  registration  of transfer,  where Notes may be surrendered for
exchange or  conversion  and where notices and demands to or upon the Company in
respect of the Notes and this  Indenture  may be served.  The Company  will give
prompt  written  notice to the  Trustee of the  location,  and any change in the
location, of any such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof,  such presentations,  surrenders,  notices and demands
may be made or served at the  Corporate  Trust  Office of the  Trustee,  and the
Company  hereby   appoints  the  Trustee  as  its  agent  to  receive  all  such
presentations, surrenders, notices and demands.

         The  Company  may also from time to time  designate  one or more  other
offices or agencies where the Notes may be presented or  surrendered  for any or
all such purposes and may from time to time rescind such designations; provided,
however,  that no such designation or rescission shall in any manner relieve the
Company of its  obligation to maintain an office or agency in New York, New York
for such purposes. The Company will give prompt written notice to the Trustee of
any such designation or rescission and of any change in the location of any such
other office or agency.

SECTION 1003.  Money for Note Payments to Be Held in Trust.

         If the Company shall at any time act as its own Paying Agent,  it will,
on or before each due date of the principal of and premium,  if any, or interest
on any of the Notes,  segregate and hold in trust for the benefit of the Persons
entitled  thereto a sum sufficient to pay the principal and premium,  if any, or
interest  so  becoming  due until  such sums  shall be paid to such  Persons  or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.

         Whenever the Company shall have one or more Paying Agents,  it will, on
or prior to 11:00 a.m.  (New York City  time) on each due date of the  principal
of, and premium, if any, or interest on any Notes, deposit with a Paying Agent a
sum in same day  funds  sufficient  to pay the  principal  and any  premium  and
interest so becoming due, such sum to be held as provided by the Trust Indenture
Act, and (unless  such Paying  Agent is the  Trustee) the Company will  promptly
notify the Trustee of its action or failure so to act.

         The Company  will cause each Paying Agent other than the Trustee or the
Company to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee,  subject to the  provisions of this Section,
that  such  Paying  Agent  will (i)  comply  with the  provisions  of the  Trust
Indenture Act and this Indenture applicable to it as a Paying Agent and hold all
sums held by it for the payment of principal  of, or any premium or interest on,
the Notes in trust for the benefit of the Persons  entitled  thereto  until such
sums shall be paid to such Persons or otherwise  disposed of as herein provided;
(ii) give the Trustee written notice of any default by the Company (or any other
obligor upon the Notes) in the making of any payment in
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respect  of the  Notes;  and (iii) at any time  during  the  continuance  of any
default by the  Company (or any other  obligor  upon the Notes) in the making of
any payment in respect of the Notes,  upon the written  request of the  Trustee,
forthwith  pay to the Trustee  all sums held in trust by such  Paying  Agent for
payment in respect of the Notes, and account for any funds disbursed.

         The  Company  may at  any  time,  for  the  purpose  of  obtaining  the
satisfaction  and discharge of this Indenture or for any other purpose,  pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying  Agent,  such sums to be held by the Trustee
upon the same  trusts as those upon which such sums were held by the  Company or
such Paying  Agent;  and,  upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further  liability  with respect to
such money.

         The  Trustee  shall not be liable  for any act or failure to act of any
Paying  Agent  (other than the Trustee  acting in such  capacity) to perform any
duty either required herein or authorized  herein to be performed by such person
in accordance with this Indenture.

         Any money  deposited with the Trustee or any Paying Agent, or then held
by the Company,  in trust for the payment of the  principal  of and premium,  if
any, or interest on any Note and  remaining  unclaimed  for two years after such
principal  and premium,  if any, or interest has become due and payable shall be
paid to the Company on Company  Request,  or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Note shall thereafter,  as
an unsecured general creditor, look only to the Company for payment thereof, and
all  liability  of the Trustee or such Paying  Agent with  respect to such trust
money,  and all  liability of the Company as trustee  thereof,  shall  thereupon
cease;  provided,  however,  that the Trustee or such Paying Agent, before being
required to make any such repayment,  may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in New York, 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
Company.

SECTION 1004.  Statement by Officers as to Default.  The Company will deliver to
the  Trustee,  within 120 days after the end of each  fiscal year of the Company
ending after the date hereof, an Officers' Certificate stating whether or not to
the best  knowledge  of the  signers  thereof  the  Company is in default in the
performance  and  observance of any of the terms,  provisions  and conditions of
this Indenture  (without  regard to any period of grace or requirement of notice
provided hereunder) and, if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.

SECTION 1005. Existence.  Subject to Article Eight, the Company will do or cause
to be done all things  necessary  to preserve  and keep in full force and effect
its existence,  rights (charter and statutory) and franchises and the existence,
rights  (charter and  statutory) and  franchises of each  Subsidiary;  provided,
however,  that the Company  shall not be required to preserve  any such right or
franchise  if the  Board of  Directors  shall  determine  that the  preservation
thereof is no longer
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desirable  in the  conduct  of the  business  of the  Company  and that the loss
thereof is not disadvantageous in any material respect to the Holders.

SECTION  1006.  Waiver  of  Certain  Covenants.  The  Company  may  omit  in any
particular  instance  to comply  with any  covenant  or  condition  set forth in
Section 1005, if before the time for such  compliance  the Holders of at least a
majority in principal  amount of the  Outstanding  Notes  shall,  by Act of such
Holders,  either  waive such  compliance  in such  instance or  generally  waive
compliance  with such covenant or condition,  but no such waiver shall extend to
or affect such covenant or condition  except to the extent so expressly  waived,
and, until such waiver shall become  effective,  the  obligations of the Company
and the duties of the Trustee in respect of any such covenant or condition shall
remain in full force and effect.

                                 ARTICLE ELEVEN

                               Redemption of Notes

SECTION 1101. Right of Redemption.  The Notes may be redeemed at the election of
the  Company,  in  whole or from  time to time in part,  at any time on or after
April  1,  2001,  at the  Redemption  Prices  specified  in  the  form  of  Note
hereinbefore set forth, together with accrued and unpaid interest and liquidated
damages, if any, up to but not including the Redemption Date.

SECTION 1102.  Applicability of Article.  Redemption of Notes at the election of
the Company as permitted by any  provision  of this  Indenture  shall be made in
accordance with such provision and this Article.

SECTION 1103. Election to Redeem; Notice to Trustee. The election of the Company
to redeem any Notes  pursuant  to Section  1101  shall be  evidenced  by a Board
Resolution.  In case of any  redemption  at the  election of the Company of less
than all the Notes,  the Company shall, at least 60 days prior to the Redemption
Date fixed by the Company  (unless a shorter period shall be satisfactory to the
Trustee),  notify the  Trustee in  writing  of such  Redemption  Date and of the
principal  amount  of Notes to be  redeemed.  In case of any  redemption  at the
election of the Company of all of the Notes, the Company shall, at least 45 days
prior to the Redemption Date fixed by the Company (unless a shorter period shall
be  satisfactory  to the  Trustee),  notify  the  Trustee  in  writing  of  such
Redemption Date.

SECTION 1104. Selection by Trustee of Notes to be Redeemed.

         If less than all the Notes are to be redeemed,  the particular Notes to
be redeemed shall be selected not more than 45 days prior to the Redemption Date
by the Trustee, from the Outstanding Notes not previously called for redemption,
by lot.

         If any Note selected for partial redemption is converted in part before
termination of the  conversion  right with respect to the portion of the Note so
selected,  the converted portion of such Note shall be deemed (so far as may be)
to be the portion  selected  for  redemption.  Notes  which have been  converted
during a selection  of Notes to be  redeemed  shall be treated by the Trustee as
                                       71
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Outstanding for the purpose of such  selection.  In any case where more than one
Note is registered in the same name, the Trustee in its discretion may treat the
aggregate principal amount so registered as if it were represented by one Note.

         The Trustee shall promptly notify the Company and the Note Registrar in
writing  of the Notes  selected  for  redemption  and,  in the case of any Notes
selected for partial redemption, the principal amount thereof to be redeemed.

         For all  purposes  of this  Indenture,  unless  the  context  otherwise
requires,  all provisions  relating to the redemption of Notes shall relate,  in
the case of any Notes redeemed or to be redeemed only in part, to the portion of
the principal amount of such Notes which has been or is to be redeemed.

SECTION 1105.  Notice of Redemption.

         Notice  of  redemption  shall  be given by  first-class  mail,  postage
prepaid,  mailed not less than 30 nor more than 60 days prior to the  Redemption
Date, to the Trustee and to each Holder of Notes to be redeemed,  at his address
appearing in the Note Register.

         All notices of redemption shall state:

         (a) the Redemption Date,

         (b) the Redemption Price,

         (c) if less  than all the  Outstanding  Notes are to be  redeemed,  the
identification  (and,  in the  case of  partial  redemption  of any  Notes,  the
principal amounts) of the particular Notes to be redeemed,

         (d) that on the Redemption  Date the  Redemption  Price will become due
and  payable  upon each such Note to be  redeemed  and that  (unless the Company
shall default in payment of the Redemption Price) interest thereon will cease to
accrue on and after said date,

         (e) the  conversion  price,  the date on which the right to convert the
Notes to be redeemed will terminate (which right shall extend at least until two
business days prior to the  Redemption  Date) and the place or places where such
Notes may be surrendered for conversion, and

         (f) the place or places  where  such  Notes are to be  surrendered  for
payment of the Redemption Price.

         Notice of  redemption  of Notes to be redeemed  at the  election of the
Company shall be given by the Company or, at the Company's  request  received by
the Trustee at least 30 days prior to the Redemption Date, by the Trustee in the
name and at the expense of the Company.
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SECTION 1106.  Deposit of Redemption Price.

         At or prior to 9:00 a.m. (New York City time) on any  Redemption  Date,
the Company  shall  deposit  with the Trustee or with a Paying Agent (or, if the
Company  is  acting  as its own  Paying  Agent,  segregate  and hold in trust as
provided in Section 1003) an amount of money in same day funds sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued  interest on, all the Notes or portions  thereof which are
to be redeemed on that date other than any Notes or portions  thereof called for
redemption on that date which have been  delivered by the Company to the Trustee
for cancellation or converted prior to the date of such deposit.

         If any Note called for  redemption  is converted,  any money  deposited
with the Trustee or with any Paying Agent or so segregated and held in trust for
the  redemption  of such Note shall  (subject to any right of the Holder of such
Note or any  Predecessor  Note to  receive  interest  as  provided  in the  last
paragraph of Section  307) be paid to the Company  upon  Company  Request or, if
then held by the Company, shall be discharged from such trust.

SECTION 1107.  Notes Payable on Redemption Date.

         Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified,  and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued  interest) such Notes
shall cease to bear interest.  Upon surrender of any such Note for redemption in
accordance  with said  notice,  such Note  shall be paid by the  Company  at the
Redemption  Price,  together  with  accrued  interest  to the  Redemption  Date;
provided,  however,  that installments of interest whose Maturity is on or prior
to the Redemption  Date shall be payable to the Holders of such Notes, or one or
more  Predecessor  Notes,  registered  as such at the close of  business  on the
relevant  Record Dates  according to their terms and the  provisions  of Section
307.

         If any Note called for  redemption  shall not be so paid upon surrender
thereof for redemption,  the principal and premium,  if any, shall,  until paid,
bear interest from the Redemption Date at the rate borne by the Note.

SECTION 1108.  Notes  Redeemed in Part. Any Note which is to be redeemed only in
part shall be surrendered  at an office or agency of the Company  maintained for
that purpose  pursuant to Section  1002 (with,  if the Company or the Trustee so
requires,  due  endorsement  by, or a written  instrument  of  transfer  in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing),  and the Company shall execute, and
the Trustee  shall  authenticate  and deliver to the Holder of such Note without
service charge, a new Note or Notes, of any authorized denomination as requested
by such Holder,  in aggregate  principal amount equal to and in exchange for the
unredeemed portion of the principal of the Note so surrendered.
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                                 ARTICLE TWELVE

                             Subordination of Notes

SECTION 1201. Notes Subordinated to Senior  Indebtedness.  The Company covenants
and  agrees,  and each Holder of a Note,  by his  acceptance  thereof,  likewise
covenants and agrees,  that, at all times and in all respects,  the indebtedness
represented  by the Notes and the payment of the  principal of and  premium,  if
any, interest and liquidated  damages,  if any, on each and all of the Notes are
hereby  expressly made  subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness.

SECTION 1202.  Payment Over of Proceeds Upon Dissolution, Etc.

         In the event of (a) any insolvency or bankruptcy case or proceeding, or
any  receivership,   liquidation,   reorganization  or  other  similar  case  or
proceeding,  relative  to the  Company  or to its  creditors,  as such,  or to a
substantial  part of its  assets,  or (b) any  proceeding  for the  liquidation,
dissolution or other winding up of the Company, whether voluntary or involuntary
and  whether or not  involving  insolvency  or  bankruptcy,  or (c) any  general
assignment for the benefits of creditors or any other  marshalling of assets and
liabilities  of the  Company,  then and in any such event the  holders of Senior
Indebtedness  shall be entitled to receive payment in full of all amounts due or
to become due on or in respect of all Senior Indebtedness; or provision shall be
made for such payment in money or money's worth, before the Holders of the Notes
are entitled to receive any payment or  distribution  of any kind or  character,
whether in cash, property or securities,  on account of principal of or premium,
if any,  or  interest  on the  Notes,  and to that  end the  holders  of  Senior
Indebtedness  shall be  entitled  to  receive,  for  application  to the payment
thereof, any payment or distribution of any kind or character,  whether in cash,
property or securities,  including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness of the
Company being  subordinated to the payment of the Notes, which may be payable or
deliverable in respect of the Notes in any such case,  proceeding,  dissolution,
liquidation or other winding up or event.

         In the event that,  notwithstanding  the  foregoing  provisions of this
Section,  the Trustee or the Holder of any Note shall have  received any payment
or  distribution  of assets of the Company of any kind or character,  whether in
cash,  property or securities,  including any such payment or distribution which
may be payable or deliverable by reason of the payment of any other indebtedness
of the Company being subordinated to the payment of the Notes, before all Senior
Indebtedness is paid in full or payment  thereof  provided for, and if such fact
shall, at or prior to the time of such payment or  distribution,  have been made
known to the Trustee or such Holder,  as the case may be, then and in such event
such payment or  distribution  shall be paid over or delivered  forthwith to the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent
or other  Person  making  payment or  distribution  of assets of the Company for
application to the payment of all Senior  Indebtedness  remaining unpaid, to the
extent necessary to pay all Senior  Indebtedness in full, after giving effect to
any  concurrent  payment  or  distribution  to or  for  the  holders  of  Senior
Indebtedness.
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         For  purposes  of this  Article  only,  the words  "cash,  property  or
securities"  shall  not be  deemed  to  include  securities  of the  Company  as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, which are subordinated
in  right  of  payment  to all  Senior  Indebtedness  which  may at the  time be
outstanding  to  substantially  the same extent as, or to a greater extent than,
the Notes are so subordinated as provided in this Article.  The consolidation of
the Company  with,  or the merger of the  Company  into,  another  Person or the
liquidation or  dissolution of the Company  following the conveyance or transfer
of its properties and assets substantially as an entirety to another Person upon
the  terms  and  conditions  set forth in  Article  Eight  shall not be deemed a
dissolution, winding up, liquidation, reorganization, general assignment for the
benefit of creditors or marshalling of assets and liabilities of the Company for
the purposes of this Section if the Person formed by such  consolidation or into
which the Company is merged or which  acquires by  conveyance  or transfer  such
properties and assets  substantially as an entirety,  as the case may be, shall,
as a part of such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Article Eight.

SECTION 1203.  Prior Payment to Senior Indebtedness upon Acceleration of Notes.

         In the event that any Notes are declared  due and payable  before their
Stated  Maturity,  then and in such  event the  holders  of Senior  Indebtedness
outstanding  at the time such Notes so become due and payable  shall be entitled
to receive  payment in full of all  amounts  due on or in respect of such Senior
Indebtedness,  or  provision  shall be made for such payment in money or money's
worth,  before the  Holders of the Notes are  entitled  to receive  any  payment
(including  any  payment  which may be payable  by reason of the  payment of any
other  indebtedness  of the  Company  being  subordinated  to the payment of the
Notes) by the  Company  on  account  of the  principal  of or  premium,  if any,
interest,  or  liquidated  damages,  if any,  on the Notes or on  account of the
purchase or other acquisition of Notes.

         In the event that,  notwithstanding  the  foregoing,  the Company shall
make any  payment to the  Trustee or the  Holder of any Note  prohibited  by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or such Holder, as the
case  may be,  then  and in such  event  such  payment  shall  be paid  over the
delivered forthwith to the Company.

         The  provisions  of this  Section  shall not apply to any payment  with
respect to which Section 1202 would be applicable.

SECTION 1204.  Payment When Designated Senior Indebtedness in Default.

         No payment  shall be made with respect to the principal of, or premium,
if any, interest or liquidated damages, if any, on any Note (including,  but not
limited to, the  Redemption  Price or the  Repurchase  Price with respect to the
Note to be called for redemption in accordance  with Article 11 or submitted for
repurchase  in  accordance  with  Article 14, as the case may be, as provided in
this  Agreement),  except  payments  and  distributions  made by the  Trustee as
permitted by Section 1210, if:
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         (a) a default in the payment of principal,  premium,  interest, rent or
other  obligations  due on any  Designated  Senior  Indebtedness  occurs  and is
continuing (or, in the case of Senior  Indebtedness occurs and is continuing or,
in the case of  Designated  Senior  Indebtedness  for which there is a period of
grace, in the event of such a default that continues beyond the period of grace,
if any,  specified in the instrument or lease evidencing such Designated  Senior
Indebtedness),  unless and until such default shall have been cured or waived or
shall have ceased to exist (a "Payment Default"); or

         (b) a default,  other than a Payment Default,  on any Designated Senior
Indebtedness  occurs  and is  continuing  that  then  permits  holders  of  such
Designated  Senior  Indebtedness  to  accelerate  its  maturity  (a  "Nonpayment
Default")  and the  Trustee  receives a notice of default (a  "Payment  Blockage
Notice"') from a person who may give it pursuant to Section 1210 hereof.

         If the Trustee  receives any Payment Blockage Notice pursuant to Clause
(b) above, no subsequent Payment Blockage Notice shall be effective for purposes
of this Section  unless and until (1) at least 365 days shall have elapsed since
the effectiveness of the immediately prior Payment Blockage Notice,  and (2) all
scheduled payments of principal,  premium,  interest and liquidated  damages, if
any,  on the  Notes  that  have  come due  have  been  paid in full in cash.  No
Nonpayment Default that existed or was continuing on the date of delivery of any
Payment  Blockage  Notice to the Trustee  shall be, or be made,  the basis for a
subsequent Payment Blockage Notice.

         The  Company may and shall  resume  payments  on and  distributions  in
respect of the Notes upon the earlier of:

                  (x)        the date upon which the default is cured or waived;

                  (y)        the date the applicable  Payment Blockage Notice is
                             retracted  by written  notice to the Trustee from a
                             representative  of the  holders  of the  Designated
                             Senior  Indebtedness  which have given the  Payment
                             Blockage Notice; or

                  (z)        in the case of a default  referred to in Clause (b)
                             above,  179 days pass after  notice is  received if
                             the maturity of such Designated Senior Indebtedness
                             has not been  accelerated,  unless this  Article 12
                             otherwise  prohibits the payment or distribution at
                             the time of such payment or distribution.

         In the event that,  notwithstanding  the  foregoing,  the Company shall
make any  payment to the  Trustee or the  Holder of any Note  prohibited  by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or such Holder, as the
case  may be,  then  and in such  event  such  payment  shall  be paid  over and
delivered forthwith to the Company.
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         The  provisions  of this  Section  shall not apply to any payment  with
respect to which Section 1202 would be applicable.

SECTION 1205. Payment Permitted If No Default. Nothing contained in this Article
or  elsewhere  in this  Indenture  or in any of the Notes shall  prevent (a) the
Company,  at any time  except  during  the  pendency  of any  case,  proceeding,
dissolution, liquidation or other winding up, general assignment for the benefit
of  creditors  or other  marshalling  of assets and  liabilities  of the Company
referred to in Section 1202 or under the conditions described in Section 1203 or
1204, from making payments at any time of principal of and premium,  interest or
liquidated  damages, if any, on the Notes, or (b) the application by the Trustee
of any money  deposited with it hereunder to the payment of or on account of the
principal of and premium,  if any, or interest on the Notes or the  retention of
such payment by the Holders, if, at the time of such application by the Trustee,
it did not have  knowledge  that such payment would have been  prohibited by the
provisions of this Article.

SECTION 1206.  Subrogation to Rights of Holders of Senior Indebtedness.  Subject
to  the  payment  in  full  of  all  amounts  due  on or in  respect  of  Senior
Indebtedness,  the Holders of the Notes shall be subrogated to the extent of the
payments  or  distributions  made to the  holders  of such  Senior  Indebtedness
pursuant to the provisions of this Article (equally and ratably with the holders
of all indebtedness of the Company which by its express terms is subordinated to
other  indebtedness of the Company to substantially the same extent as the Notes
are subordinated and is entitled to like rights of subrogation) to the rights of
the holders of such Senior Indebtedness to receive payments and distributions of
cash,  property and securities  applicable to the Senior  Indebtedness until the
principal  of and  premium,  if any,  and Interest on the Notes shall be paid in
full.  For purposes of such  subrogation,  no payments or  distributions  to the
holders of the Senior  Indebtedness of any cash, property or securities to which
the Holders of the Notes or the Trustee would  otherwise be entitled  except for
the provisions of this Article,  and no payments over pursuant to the provisions
of this Article to the holders of Senior Indebtedness by Holders of the Notes or
the Trustee,  shall,  as among the Company,  its creditors other than holders of
Senior  Indebtedness  and the Holders of the Notes, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.

SECTION 1207.  Provisions  Solely to Define Relative  Rights.  The provisions of
this  Article  are and are  intended  solely  for the  purpose of  defining  the
relative  rights of the  Holders of the Notes on the one hand and the holders of
Senior  Indebtedness  on the other hand.  Nothing  contained  in this Article or
elsewhere in this  Indenture or in the Notes is intended to or shall (a) impair,
as among the Company,  its creditors  other than holders of Senior  Indebtedness
and the Holders of the Notes,  the obligation of the Company,  which is absolute
and  unconditional,  to pay to the  Holders  of the Notes the  principal  of and
premium, if any, and interest on the Notes as and when the same shall become due
and payable in accordance  with their terms;  or (b) affect the relative  rights
against  the Company of the  Holders of the Notes and  creditors  of the Company
other than the holders of Senior Indebtedness; or (c) prevent the Trustee or the
Holder  of  any  Note  from  exercising  all  remedies  otherwise  permitted  by
applicable law upon default under this Indenture, subject to the rights, if any,
under  this  Article  of the  holders of Senior  Indebtedness  to 
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receive cash,  property and securities  otherwise  payable or deliverable to the
Trustee or such Holder.

SECTION 1208. Trustee to Effectuate Subordination.  Each holder of a Note by his
acceptance thereof authorizes and directs the Trustee on his behalf to take such
action as may be  necessary  or  appropriate  to  effectuate  the  subordination
provided in this Article and appoints the Trustee his  attorney-in-fact  for any
and all such purposes.

SECTION 1209.  No Waiver of Subordination Provisions.

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

         Without in any way limiting the generality of the foregoing  paragraph,
the  holders  of  Senior  Indebtedness  may,  at any time and from time to time,
without  the  consent of or notice to the  Trustee or the  Holders of the Notes,
without  incurring  responsibility  to the  Holders  of the  Notes  and  without
impairing  or  releasing  the  subordination  provided  in this  Article  or the
obligations  hereunder  of the  Holders  of the Notes to the  holders  of Senior
Indebtedness,  do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter,  Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any  instrument  evidencing  the same or any  agreement  under  which  Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release  any  Person  liable  in  any  manner  for  the   collection  of  Senior
Indebtedness;  and (iv) exercise or refrain from  exercising  any rights against
the Company and any other Person.

SECTION 1210.  Notice to Trustee.

         The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Notes.  Notwithstanding the provisions of this Article
or any other provision of this Indenture,  the Trustee shall not be charged with
knowledge of the  existence of any facts which would  prohibit the making of any
payment to or by the  Trustee  in  respect  of the  Notes,  unless and until the
Trustee shall have received  written notice thereof from the Company or a holder
of Senior  Indebtedness or from any trustee therefor;  and, prior to the receipt
of any such written  notice,  the Trustee,  subject to the provisions of Section
601,  shall be  entitled in all  respects  to assume  that no such facts  exist;
provided,  however,  that if the  Trustee  shall not have  received  the  notice
provided for in this Section at least four  Business Days prior to the date upon
which  by the  terms  hereof  any  money  may  become  payable  for any  purpose
(including,  without limitation, the payment of the principal of and premium, if
any, or interest on any Note),  then,  anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to
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<PAGE>
receive such money and to apply the same to the purpose for which such money was
received  and shall not be affected by any notice to the  contrary  which may be
received by it within four Business Days prior to such date.

         Subject to the provisions of Section 601, the Trustee shall be entitled
to rely on the  delivery  to it of a  written  notice  by a Person  representing
himself  to be a holder  of  Senior  Indebtedness  (or a  trustee  therefor)  to
establish that such notice has been given by a holder of Senior Indebtedness (or
a trustee therefor). In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of Senior Indebtedness to participate in any payment or distribution pursuant to
this  Article,  the Trustee may request  such Person to 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 such  evidence is not  furnished,  the
Trustee may defer any payment to such Person pending  judicial  determination as
to the right of such Person to receive such payment.

SECTION 1211.  Reliance on Judicial Order or  Certificate of Liquidating  Agent.
Upon any payment or  distribution  of assets of the Company  referred to in this
Article, the Trustee,  subject to the provisions of Section 601, and the Holders
of the Notes shall be  entitled to rely upon any order or decree  entered by any
court  of  competent   jurisdiction  in  which  such   insolvency,   bankruptcy,
receivership,  liquidation,  reorganization,  dissolution, winding up or similar
case or proceeding is pending,  or a certificate  of the trustee in  bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other  person  making such  payment or  distribution,  delivered to the
Trustee or to the Holders of Notes,  for the purpose of ascertaining the Persons
entitled to  participate  in such  payment or  distribution,  the holders of the
Senior Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article.

SECTION  1212.  Trustee Not Fiduciary  for Holders of Senior  Indebtedness.  The
Trustee shall not be deemed to owe any  fiduciary  duty to the holders of Senior
Indebtedness  and shall not be  liable to any such  holders  if it shall in good
faith mistakenly pay over or distribute to Holders of Notes or to the Company or
to any other  Person cash,  property or  securities  to which  holders of Senior
Indebtedness  shall be entitled  by virtue of this  Article or  otherwise.  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 Article against the
Trustee.

SECTION 1213. Rights of Trustee as Holder of Senior  Indebtedness;  Preservation
of Trustee's Rights.

         The  Trustee in its  individual  capacity  shall be entitled to all the
rights set forth in this Article with respect to any Senior  Indebtedness  which
may at any time be held by it, to the same 
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<PAGE>
extent as any other holder of Senior Indebtedness, and nothing in this Indenture
shall deprive the Trustee of any of its rights as such holder.

     Nothing  in this  Article  shall  apply to claims of, or  payments  to, the
Trustee under or pursuant to Section 607.

SECTION  1214.  Article  Applicable  to Paying  Agents.  In case at any time any
Paying Agent other than the Trustee shall have been appointed by the Company and
be then acting  hereunder,  the term  "Trustee" as used in this Article shall in
such case (unless the context  otherwise  requires) be construed as extending to
and including  such Paying Agent within its meaning as fully for all intents and
purposes as if such Paying Agent were named in this Article in addition to or in
place of the Trustee;  provided,  however,  that Section 1213 shall not apply to
the  Company or any  Affiliate  of the Company if it or such  Affiliate  acts as
Paying Agent.

SECTION  1215.  Certain  Conversions  Deemed  Payment.  For the purposes of this
Article only, (l) the issuance and delivery of junior securities upon conversion
of Notes in accordance with Article Thirteen shall not be deemed to constitute a
payment or distribution on account of the principal of or premium or interest on
Notes or on account of the purchase or other  acquisition of Notes,  and (2) the
payment, issuance or delivery of cash, property or securities (other than junior
securities)  upon conversion of a Note shall be deemed to constitute  payment on
account of the  principal of such Note.  For the purposes of this  Section,  the
term "junior  securities"  means (a) shares of any class of capital stock of the
Company and (b) any other  securities of the Company which are  subordinated  in
right of payment to all Senior Indebtedness which may be outstanding at the time
of issuance or delivery of such securities to substantially  the same extent as,
or to a greater extent than, the Notes are so  subordinated  as provided in this
Article.  Nothing contained in this Article or elsewhere in this Indenture or in
the Notes is intended to or shall  impair,  as among the Company,  its creditors
other than  holders of Senior  Indebtedness  and the  Holders of the Notes,  the
right, which is absolute and unconditional, of the Holder of any Note to convert
such Note in accordance with Article Thirteen.

SECTION 1216. No Suspension of Remedies. Nothing contained in this Article shall
limit the right of the Trustee or the Holders of the Notes to take any action to
accelerate the maturity of the Notes pursuant to the provisions  described under
Article  Five and as set  forth in this  Indenture  or to pursue  any  rights or
remedies hereunder or under applicable law, subject to the rights, if any, under
this  Article  of the  holders,  from time to time,  of Senior  Indebtedness  to
receive the cash,  property or securities  receivable  upon the exercise of such
rights or remedies.

                                ARTICLE THIRTEEN

                               Conversion of Notes

SECTION 1301.  Conversion Privilege and Conversion Price.

         Subject to and upon compliance with the provisions of this Article,  at
the  option of the Holder  thereof,  any Note or any  portion  of the  principal
amount thereof which equals $1,000 or
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<PAGE>
any  integral  multiple  thereof may be  converted at any time after the date of
original issuance of Notes under this Indenture at the principal amount thereof,
or of such portion thereof, into fully paid and nonassessable shares (calculated
as to each  conversion to the nearest 1/100 of a share) of Common Stock,  at the
conversion price,  determined as hereinafter  provided, in effect at the time of
conversion. Such conversion right shall expire at the close of business on April
1, 2005.  In case a Note or  portion  thereof  is called  for  redemption,  such
conversion right in respect of the Note or portion so called shall expire at the
close of business  on the second  business  day next  preceding  the  applicable
Redemption  Date,  unless the  Company  defaults  in making the payment due upon
redemption.

         The price at which  shares  of Common  Stock  shall be  delivered  upon
conversion (herein called the "conversion  price") shall be initially $48.20 per
share of Common  Stock.  The  conversion  price  shall be  adjusted  in  certain
instances as provided in paragraphs (a), (b), (c), (d), (e), (f), (g) and (i) of
Section 1304.

SECTION 1302.  Exercise of Conversion Privilege.

         In order to exercise the conversion  privilege,  the Holder of any Note
shall surrender such Note, duly endorsed or assigned to the Company or in blank,
at any office or agency of the  Company  maintained  pursuant  to Section  1002,
accompanied  by written  notice to the Company in the form  provided in the Note
(or such other notice as is  acceptable to the Company) at such office or agency
that the  Holder  elects  to  convert  such  Note or,  if less  than the  entire
principal  amount  thereof  is  to  be  converted,  the  portion  thereof  to be
converted.

         In the case of any Note  surrendered  for conversion  during the period
after the close of business on any Regular Record Date for any Interest  Payment
Date to the close of business on the Business Day next  preceding  the following
Interest Payment Date,  interest,  the Stated Maturity of which is such Interest
Payment Date,  shall be payable on such  Interest  Payment Date to the Holder of
such Note on such Regular Record Date  notwithstanding  such  conversion.  Notes
surrendered  for  conversion  after any Regular  Record Date but before the next
Interest Payment Date shall (unless such Note or portion thereof being converted
shall have been  called  for  redemption  during  the  period  from the close of
business  on such  Regular  Record  Date to the close of  business on the second
business day next succeeding the following  Interest  Payment Date, as described
in the succeeding sentence) be accompanied by payment in funds acceptable to the
Company of an amount equal to the interest payable on such Interest Payment Date
on the principal  amount being  surrendered for conversion;  provided,  however,
that no such  payment  need be made with  respect to  interest  payable on Notes
called  for  redemption  on April 1,  2001.  Except as  described  above,  Notes
surrendered for conversion on a date that is not an Interest  Payment Date shall
not receive any interest  for the period  after the  Interest  Payment Date next
preceding the conversion  date to the  conversion  date or for any later period.
Except  as  provided  above in this  Section  1302  and  subject  to the  fourth
paragraph  of  Section  307,  no payment  or  adjustment  shall be made upon any
conversion  on account of any  interest  accrued  on the Notes  surrendered  for
conversion  or on  account of any  dividends  on the Common  Stock  issued  upon
conversion.
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<PAGE>
         Notes shall be deemed to have been converted  immediately  prior to the
close of  business  on the day of  surrender  of such  Notes for  conversion  in
accordance  with the  foregoing  provisions,  and at such time the rights of the
Holders of such Notes as Holders shall cease, and the Person or Persons entitled
to receive the Common Stock  issuable upon  conversion  shall be treated for all
purposes of the record  holder or holders of such Common Stock as and after such
time. As promptly as practicable  on or after the  conversion  date, the Company
shall  issue and  shall  deliver  at such  office  or  agency a  certificate  or
certificates  for the  number  of full  shares  of Common  Stock  issuable  upon
conversion,  together  with  payment  in lieu of any  fraction  of a  share,  as
provided in Section 1303.

         In the case of any Note  which is  converted  in part  only,  upon such
conversion  the Company  shall execute and the Trustee  shall  authenticate  and
deliver to the Holder  thereof,  at the  expense of the  Company,  a new Note or
Notes of authorized  denominations  in aggregate  principal  amount equal to the
unconverted portion of the principal amount of such Note.

SECTION 1303.  Fractions of Shares. No fractional share of Common Stock shall be
issued upon  conversion of Notes. If more than one Note shall be surrendered for
conversion at one time by the same Holder, the number of full shares which shall
be  issuable  upon  conversion  thereof  shall be  computed  on the basis of the
aggregate  principal  amount of the Notes (or  specified  portions  thereof)  so
surrendered.  If any  fractional  share of  stock  would  be  issuable  upon the
conversion  of any Note or Notes,  the  Company  shall  make an  adjustment  and
payment  therefor in cash at the current  market value  thereof to the holder of
Notes.  The current market value of a share of Common Stock shall be the Closing
Price on the first Business Day immediately preceding the day on which the Notes
(or specified portions thereof) are deemed to have been converted.

SECTION 1304.  Adjustment of Conversion Price.

         (a) In  case  the  Company  shall  pay  or  make a  dividend  or  other
distribution  on the Common  Stock  exclusively  in Common Stock or shall pay or
make a dividend or other distribution on any other class of capital stock of the
Company which dividend or  distribution  includes  Common Stock,  the conversion
price in effect at the opening of business on the day  following  the date fixed
for the determination of shareholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such conversion price by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the  close of  business  on the date  fixed  for such  determination  and the
denominator  shall be the sum of such  number of shares and the total  number of
shares  constituting  such  dividend or other  distribution,  such  reduction to
become effective  immediately after the opening of business on the day following
the date fixed for such  determination.  For the purpose of this  paragraph (a),
the number of shares of Common Stock at any time  outstanding  shall not include
shares  held in the  treasury  of the  Company.  The  Company  shall not pay any
dividend or make any distribution on shares of Common Stock held in the treasury
of the Company.

         (b) Subject to paragraph (h) of this Section, in case the Company shall
pay or make a dividend  or other  distribution  on the Common  Stock  consisting
exclusively of, or shall otherwise
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<PAGE>
issue to all  holders of the Common  Stock,  rights or  warrants  entitling  the
holders  thereof  to  subscribe  for or  purchase  shares  of  Common  Stock (or
securities  convertible  into  Common  Stock) at a price per share less than the
Current  Market Price  (determined as provided in paragraph (i) of this Section)
on the date fixed for the determination of shareholders entitled to receive such
rights or warrants, the conversion price in effect at the opening of business on
the day  following  the date  fixed for such  determination  shall be reduced by
multiplying  such conversion price by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of business on the
date  fixed for such  determination  plus the  number of shares of Common  Stock
which the  aggregate  of the  offering  price of the  total  number of shares of
Common  Stock so offered for  subscription  or purchase  would  purchase at such
Current Market Price and the denominator shall be the number of shares of Common
Stock  outstanding  at  the  close  of  business  on the  date  fixed  for  such
determination  plus  the  number  of  shares  of  Common  Stock so  offered  for
subscription or purchase,  such reduction to become effective  immediately after
the  opening  of  business  on  the  day  following  the  date  fixed  for  such
determination.  For the purposes of this  paragraph (b), the number of shares of
Common  Stock at any time  outstanding  shall  not  include  shares  held in the
treasury of the Company.  The Company  shall not issue any rights or warrants in
respect  of shares of Common  Stock  held in the  treasury  of the  Company.  In
determining  whether any rights or warrants entitle the holders to subscribe for
or purchase  shares of Common Stock at less than such Current Market Price,  and
in  determining  the  aggregate  offering  price of such shares of Common Stock,
there shall be taken into account any consideration  received by the Company for
such rights or warrants, the value of such consideration, if other than cash, to
be  determined  in good  faith  by the  Board of  Directors,  whose  good  faith
determination shall be conclusive and described in a Board Resolution.

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

         (d) Subject to the last sentence of this paragraph (d) and to paragraph
(h) of this  Section,  in case the Company  shall,  by  dividend  or  otherwise,
distribute  to all holders of the Common Stock  evidences  of its  indebtedness,
shares  of any  class of its  capital  stock,  cash or other  assets  (including
securities, but excluding any rights or warrants referred to in paragraph (b) of
this Section,  excluding  any dividend or  distribution  in connection  with the
liquidation,  dissolution  or winding up of the Company or paid  exclusively  in
cash and excluding any dividend or distribution  referred to in paragraph (a) of
this  Section),  the  conversion  price  shall be  reduced  by  multiplying  the
conversion  price in effect  immediately  prior to the close of  business on the
date fixed for the  determination of shareholders  entitled to such distribution
by a  fraction  of  which  the  numerator  shall  be the  Current  Market  Price
(determined  as provided in paragraph (i) of this Section) on such date less the
fair market value (as determined by the Board of
                                       83
<PAGE>
Directors,  whose  determination  shall be  conclusive  and described in a Board
Resolution) on such date of the portion of the evidences of indebtedness, shares
of capital  stock,  cash and other assets to be  distributed  applicable  to one
share of Common Stock and the  denominator  shall be such Current  Market Price,
such reduction to become effective  immediately prior to the opening of business
on the day following  such date. If the Board of Directors  determines  the fair
market value of any distribution for purposes of this paragraph (d) by reference
to the actual or when-issued  trading market for any securities  comprising part
or all of such  distribution,  it must in doing so  consider  the prices in such
market over the same period used in computing the Current  Market Price pursuant
to paragraph (i) of this Section,  to the extent possible.  For purposes of this
paragraph  (d),  any dividend or  distribution  that  includes  shares of Common
Stock, rights or warrants to subscribe for or purchase shares of Common Stock or
securities  convertible into or exchangeable for shares of Common Stock shall be
deemed to be (x) a dividend or  distribution  of the evidences of  indebtedness,
cash,  assets or shares of capital stock other than such shares of Common Stock,
such rights or warrants or such convertible or exchangeable  securities  (making
any conversion  price  reduction  required by this  paragraph  (d))  immediately
followed  by (y) in the case of such  shares of Common  Stock or such  rights or
warrants,  a dividend or  distribution  thereof  (making any further  conversion
price  reduction  required by paragraph (a) and (b) of this Section,  except any
shares of Common Stock  included in such dividend or  distribution  shall not be
deemed  "outstanding  at the  close  of  business  on the  date  fixed  for such
determination"  within the meaning of paragraph (a) of this Section),  or (z) in
the  case  of  such  convertible  or  exchangeable  securities,  a  dividend  or
distribution  of the number of shares of Common  Stock as would then be issuable
upon the  conversion  or  exchange  thereof,  whether or not the  conversion  or
exchange of such  securities  is subject to any  conditions  (making any further
conversion price reduction required by paragraph (a) of this Section, except the
shares deemed to constitute  such dividend or  distribution  shall not be deemed
"outstanding at the close of business on the date fixed for such  determination"
within the meaning of paragraph (a) of this Section).

         (e) In case the Company  shall,  by dividend or otherwise,  at any time
distribute to all holders of the Common Stock cash  (excluding  any cash that is
distributed  as part of a  distribution  referred  to in  paragraph  (d) of this
Section or in connection with a transaction to which Section 1311 applies) in an
aggregate  amount  that,  together  with (A) the  aggregate  amount of any other
distributions to all holders of the Common Stock made exclusively in cash within
the 12 months  preceding the date fixed for the  determination  of  shareholders
entitled  to such  distribution  and in  respect  of which no  conversion  price
adjustment  pursuant to this paragraph (e) has been made  previously and (B) the
aggregate of any cash plus the fair market value (as  determined by the Board of
Directors,  whose  determination  shall be  conclusive  and described in a Board
Resolution) as of such date of determination of consideration payable in respect
of any tender offer by the Company or a Subsidiary for all or any portion of the
Common  Stock   consummated   within  the  12  months  preceding  such  date  of
determination and in respect of which no conversion price adjustment pursuant to
paragraph (f) of this Section has been made  previously,  exceeds the greater of
(I) 10.0% of the product of the Current Market Price  (determined as provided in
paragraph (i) of this Section) on such date of determination times the number of
shares of Common Stock  outstanding on such date or (II) the Company's  retained
earnings on the date fixed for  determining  the  stockholders  entitled to such
distribution, the conversion price shall be
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reduced by multiplying the conversion price in effect  immediately  prior to the
close of  business  on such date of  determination  by a  fraction  of which the
numerator shall be the Current Market Price (determined as provided in paragraph
(i) of this Section) on such date less the amount of cash to be  distributed  at
such time applicable to one share of Common Stock and the  denominator  shall be
such Current Market Price, such reduction to become effective  immediately prior
to the opening of business on the day after such date.

         (f) In case a tender  offer made by the Company or any  Subsidiary  for
all or any  portion of the Common  Stock  shall be  consummated  and such tender
offer shall  involve an aggregate  consideration  having a fair market value (as
determined by the Board of Directors,  whose  determination  shall be conclusive
and described in a Board Resolution) as of the last time (the "Expiration Time")
that  tenders may be made  pursuant to such tender  offer (as it shall have been
amended) that,  together with (A) the aggregate of the cash plus the fair market
value (as  determined by the Board of Directors,  whose  determination  shall be
conclusive and described in a Board Resolution) as of the Expiration Time of the
other  consideration paid in respect of any other tender offer by the Company or
a Subsidiary for all or any portion of the Common Stock  consummated  within the
12 months  preceding the  Expiration  Time and in respect of which no conversion
price adjustment pursuant to this paragraph (f) has been made previously and (B)
the  aggregate  amount of any  distributions  to all holders of the Common Stock
made  exclusively in cash within the 12 months preceding the Expiration Time and
in respect of which no conversion price adjustment  pursuant to paragraph (e) of
this Section has been made  previously,  exceeds the greater of (I) 10.0% of the
product of the Current Market Price  (determined as provided in paragraph (i) of
this  Section)  immediately  prior to the  Expiration  Time  times the number of
shares of Common  Stock  outstanding  (including  any  tendered  shares)  at the
Expiration  Time or (II) the Company's  retained  earnings as of the  Expiration
Time, the conversion  price shall be reduced by multiplying the conversion price
in effect  immediately  prior to the Expiration  Time by a fraction of which the
numerator  shall be (x) the product of the Current  Market Price  (determined as
provided in paragraph (i) of this Section)  immediately  prior to the Expiration
Time  times the  number of shares of Common  Stock  outstanding  (including  any
tendered  shares  at the  Expiration  Time  minus  (y)  the  fair  market  value
(determined as aforesaid) of the aggregate consideration payable to shareholders
upon  consummation of such tender offer and the denominator shall be the product
of (A) such Current Market Price times (B) such number of outstanding  shares at
the  Expiration  Time minus the number of shares  accepted  for  payment in such
tender  offer (the  "Purchased  Shares"),  such  reduction  to become  effective
immediately prior to the opening of business on the day following the Expiration
Time;  provided,  that  if the  number  of  Purchased  Shares  or the  aggregate
consideration  payable therefor have not been finally determined by such opening
of business,  the adjustment required by this paragraph (f) shall,  pending such
final determination,  be made based upon the preliminarily  announced results of
such tender offer, and, after such final determination shall have been made, the
adjustment required by this paragraph (f) shall be made based upon the number of
Purchased Shares and the aggregate  consideration payable therefor as so finally
determined.

         (g) In case a tender  offer or  exchange  offer made by a Person  other
than the Company or any Subsidiary, which offer is not recommended for rejection
by the Company's Board of Directors,  shall be consummated  with respect to such
number of shares of Common Stock which,
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as of the closing  date of such  tender  offer or  exchange  offer,  as amended,
increases the acquiring  Person's  ownership of Common Stock to more than 25% of
the total  shares of Common  Stock  outstanding  and if the cash and fair market
value (as  determined by the Board of Directors,  whose  determination  shall be
conclusive  and  described  in a Board  Resolution)  of any other  consideration
included in such  payment per share of Common Stock  exceeds the current  market
price per share of Common  Stock on the Business  Day next  succeeding  the last
date on which  tenders or exchanges may be made pursuant to such tender offer or
exchange  offer,  the  conversion  price  shall be  reduced by  multiplying  the
conversion price in effect  immediately  prior to the closing of such offer by a
fraction of which the numerator  shall be (x) the product of the current  market
price  (determined as described above in this paragraph (g)) times the number of
shares of Common Stock  outstanding  (including any tendered or exchanged shares
at the closing) minus (y) the fair market value (determined as aforesaid) of the
aggregate  consideration  payable to shareholders  upon the consummation of such
offer and the  denominator  shall be the product of (A) the current market price
(as determined above) times (B) such number of outstanding shares at the closing
minus the number of shares accepted for payment in such tender offer or exchange
offer,  such reduction to become effective  immediately  prior to the opening of
business  on the day  following  the  closing;  provided,  that if the number of
shares tendered or exchanged or the aggregate consideration payable therefor has
not been finally determined by such opening of business, the adjustment required
by this paragraph shall,  pending such final  determination,  be made based upon
the preliminarily announced results of such tender or exchange offer, and, after
such final  determination  shall have been made, the adjustment required by this
paragraph  shall be made based upon the number of shares  tendered or  exchanged
and the aggregate  consideration payable therefor as so finally determined.  The
adjustment referred to in the paragraph will generally not be made, however, if,
as of the closing of such tender offer or exchange offer, the offering documents
with respect to such offer  disclose a plan or an intention to cause the Company
to engage in a  consolidation  or  merger  of the  Company,  or a sale of all or
substantially all of the Company's assets.

         (h) The  reclassification of Common Stock into securities which include
securities  other than  Common  Stock  (other than any  reclassification  upon a
consolidation  or  merger  to which  Section  1311  applies)  shall be deemed to
involve (i) a  distribution  of such  securities  other than Common Stock to all
holders of Common Stock (and the effective date of such  reclassification  shall
be deemed to be "the date fixed for the  determination of shareholders  entitled
to such distribution" within the meaning of paragraph (d) of this Section),  and
(ii) a subdivision or  combination,  as the case may be, of the number of shares
of Common Stock outstanding  immediately prior to such reclassification into the
number of shares of Common Stock  outstanding  immediately  thereafter  (and the
effective  date of such  reclassification  shall be  deemed  to be "the day upon
which  such  subdivision   becomes  effective"  or  "the  day  upon  which  such
combination becomes effective," as the case may be, and "the day upon which such
subdivision or combination  becomes  effective"  within the meaning of paragraph
(c) of this Section).

         Rights or  warrants  issued by the Company to all holders of the Common
Stock  entitling  the holders  thereof to  subscribe  for or purchase  shares of
Common Stock (either initially or under certain circumstances),  which rights or
warrants (i) are deemed to be transferred with such shares
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<PAGE>
of Common Stock,  (ii) are not  exercisable and (iii) are also issued in respect
of future  issuances of Common Stock,  in each case in Clauses (i) through (iii)
until the occurrence of a specified event or events ("Trigger Event"), shall for
purposes of this  Section  1304 not be deemed  issued or  distributed  until the
occurrence of the earliest  Trigger  Event,  whereupon  such rights and warrants
shall be deemed to have been  distributed and an appropriate  adjustment (if any
is required) to the  conversion  price shall be made under this Section 1304. If
any such rights or  warrants,  including  any such  existing  rights or warrants
distributed  prior to the  date of this  Indenture  are  subject  to  subsequent
events,  upon the  occurrence  of each of which such  rights or  warrants  shall
become exercisable to purchase different  securities,  evidences of indebtedness
or other  assets,  then the  occurrence of each such event shall be deemed to be
such date of  issuance  and record  date with  respect to new rights or warrants
(and a  termination  or expiration  of the existing  rights or warrants  without
exercise by the holder thereof).  In addition,  in the event of any distribution
(or  deemed  distribution)  of rights or  warrants,  or any  Trigger  Event with
respect  thereto,  that was counted for purposes of  calculating a  distribution
amount for which an adjustment to the  conversion  price under this Section 1304
was made,  (1) in the case of any such  rights or warrant  which  shall all have
been  redeemed or  repurchased  without  exercise by any  holders  thereof,  the
conversion price shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be, as though
it were a cash  distribution,  equal to the per share  redemption  or repurchase
price  received  by a holder or  holders of Common  Stock  with  respect to such
rights or warrants  (assuming such holder had retained such rights or warrants),
made to all  holders  of  Common  Stock  as of the  date of such  redemption  or
repurchase,  and (2) in the case of such  rights or  warrants  which  shall have
expired  or  been  terminated  without  exercise  by any  holders  thereof,  the
conversion price shall be readjusted as if such rights and warrants had not been
issued.

         Notwithstanding  any  other  provision  of  this  Section  1304  to the
contrary, rights, warrants, evidences of indebtedness, other securities, cash or
other assets (including,  without limitation, any rights distributed pursuant to
any  stockholder  rights plan) shall be deemed not to have been  distributed for
purposes of this Section 1304 if the Company makes proper provision so that each
holder of Notes who  converts  a Note (or any  portion  thereof)  after the date
fixed for  determination of stockholders  entitled to receive such  distribution
shall be entitled to receive upon such conversion,  in addition to the shares of
Common  Stock  issuable  upon  such  conversions,  the  amount  and kind of such
distributions  that such  holder  would  have been  entitled  to receive if such
holder had,  immediately prior to such determination  date,  converted such Note
into Common Stock.

         (i) For  the  purpose  of any  computation  under  this  paragraph  and
paragraphs (b), (d) and (e) of this Section,  the current market price per share
of Common Stock (the "Current  Market  Price") on any date shall be deemed to be
the average of the daily  Closing  Prices for the 10  consecutive  Trading  Days
immediately prior to the date in question;  provided,  however,  that (i) if the
"ex" date for any event (other than the issuance or distribution  requiring such
computation)  that requires an adjustment to the  conversion  price  pursuant to
paragraph (a), (b), (c), (d), (e) or (f) above occurs during such 10 consecutive
Trading Days,  the Closing Price for each Trading Day prior to the "ex" date for
such other event shall be adjusted by multiplying such Closing Price by the same
fraction by which the conversion price is so required to be adjusted as a result
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<PAGE>
of such  other  event,  (ii) if the "ex"  date  for any  event  (other  than the
issuance or distribution requiring such computation) that requires an adjustment
to the  conversion  price  pursuant to paragraph  (a), (b), (c), (d), (e) or (f)
above  occurs  on or  after  the  "ex"  date for the  issuance  or  distribution
requiring such computation and on or prior to the date in question,  the Closing
Price for each Trading Day on and after the "ex" date for such other event shall
be adjusted by multiplying  such Closing Price by the reciprocal of the fraction
by which the conversion  price is so required to be adjusted as a result of such
other  event,  and  (iii) if the  "ex"  date for the  issuance  or  distribution
requiring such computation is on or prior to the date in question,  after taking
into account any  adjustment  required  pursuant to Clause (ii) of this proviso,
the  Closing  Price for each  Trading  Day on or after  such "ex" date  shall be
adjusted by adding  thereto the amount of any cash and the fair market  value on
the date in  question  (as  determined  by the  Board of  Directors  in a manner
consistent with any determination of such value for purposes of paragraph (d) or
(e) of this Section,  whose determination shall be conclusive and described in a
Board  Resolution) of the evidences of indebtedness,  shares of capital stock or
assets being distributed applicable to one share of Common Stock as of the close
of business on the day before such "ex" date. For the purpose of any computation
under paragraph (f) of this Section,  the Current Market Price on any date shall
be deemed to be the  average  of the daily  Closing  Prices for such day and the
next two succeeding Trading Days; provided,  however,  that if the "ex" date for
any event (other than the tender offer requiring such computation) that requires
an adjustment to the conversion  price pursuant to paragraph (a), (b), (c), (d),
(e) or (f)  above  occurs  on or after  the  Commencement  Date and prior to the
Expiration  Time for the tender offer  requiring such  computation,  the Closing
Price for each  Trading Day prior to the "ex" date for such other event shall be
adjusted by  multiplying  such Closing  Price by the same  fraction by which the
conversion  price is so required to be adjusted as a result of such other event.
The closing  price for any Trading Day (the  "Closing  Price") shall be the last
reported  sales price  regular way or, in case no such reported sale takes place
on such day,  the average of the reported  closing bid and asked prices  regular
way, in either case on the New York Stock  Exchange  or, if the Common  Stock is
not listed or admitted to trading on such  exchange,  on the principal  national
securities  exchange on which the Common  Stock is listed or admitted to trading
or, if not listed or admitted to trading on any national securities exchange, on
the Nasdaq Stock Market's  National Market or, if the Common Stock is not listed
or admitted  to trading on any  national  securities  exchange or quoted on such
National  Market,  the  average  of the  closing  bid and  asked  prices  in the
over-the-counter  market as furnished by any New York Stock Exchange member firm
selected from time to time by the Company for that purpose. For purposes of this
paragraph,  the term  "Trading  Day"  means  each  Monday,  Tuesday,  Wednesday,
Thursday and Friday,  other than any day on which  securities  are generally not
traded on the applicable  securities  exchange or in the  applicable  securities
market and the term "'ex'  date," (i) when used with  respect to any issuance or
distribution,  means the first date on which the Common Stock trades regular way
on the relevant exchange or in the relevant market from which the Closing Prices
were obtained without the right to receive such issuance or  distribution,  (ii)
when used with respect to any  subdivision  or  combination  of shares of Common
Stock, means the first date on which the Common Stock trades regular way on such
exchange  or in  such  market  after  the  time at  which  such  subdivision  or
combination  becomes  effective,  and (iii) when used with respect to any tender
offer means the first date on which the Common Stock trades  regular way on such
exchange or in such market 
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<PAGE>
after the last time that  tenders may be made  pursuant to such tender offer (as
it shall have been amended).

         (j) The Company may make such  reductions in the conversion  price,  in
addition to those required by paragraphs (a), (b), (c), (d), (e), (f) and (g) of
this  Section,  as it  considers  to  be  advisable  (as  evidenced  by a  Board
Resolution) in order that any event treated for federal income tax purposes as a
dividend of stock or stock rights shall not be taxable to the  recipients or, if
that is not possible,  to diminish any income taxes that are  otherwise  payable
because of such event.

         (k) No adjustment in the conversion price shall be required unless such
adjustment  (plus any other  adjustments  not previously  made by reason of this
paragraph  (k)) would  require an  increase  or  decrease  of at least 1% in the
conversion  price;  provided,  however,  that any adjustments which by reason of
this  paragraph  (k) are not  required  to be made shall be carried  forward and
taken into account in any subsequent adjustment.

         (l)  Notwithstanding  any other  provision  of this  Section  1304,  no
adjustment to the conversion  price shall reduce the conversion  price below the
then par value per share of the Common Stock, and any such purported  adjustment
shall instead reduce the conversion  price to such par value. The Company hereby
covenants  not to take any  action  to  increase  the par value per share of the
Common Stock.

SECTION 1305.  Notice of Adjustments of Conversion Price.

         Whenever the conversion price is adjusted as herein provided:

         (a)  the  Company  shall  compute  the  adjusted  conversion  price  in
accordance with Section 1304 and shall prepare an Officers'  Certificate  signed
by the Treasurer of the Company setting forth the adjusted  conversion price and
showing in reasonable  detail the facts upon which such adjustment is based, and
such  certificate  shall forthwith be filed (with a copy to the Trustee) at each
office or agency  maintained  for the purpose of conversion of Notes pursuant to
Section 1002; and

         (b) a notice  stating that the  conversion  price has been adjusted and
setting forth the adjusted conversion price shall forthwith be prepared,  and as
soon as  practicable  after it is  prepared,  such notice shall be mailed by the
Company to all Holders at their last  addresses as they shall appear in the Note
Register.

SECTION 1306.  Notice of Certain Corporate Action.

         In case:

         (a) the Company shall declare a dividend (or any other distribution) on
its  Common  Stock  payable  (i)  otherwise  than  exclusively  in  cash or (ii)
exclusively  in  cash  in an  amount  that  would  require  a  conversion  price
adjustment pursuant to paragraph (e) of Section 1304; or
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<PAGE>
         (b) the  Company  shall  authorize  the  granting to the holders of its
Common  Stock of rights or warrants to  subscribe  for or purchase any shares of
capital stock of any class or of any other rights  (excluding  shares of capital
stock or  options  for  capital  stock  issued  pursuant  to a benefit  plan for
employees, officers or directors of the Company); or

         (c)  of  any  reclassification  of  the  Common  Stock  (other  than  a
subdivision or combination of the outstanding shares of Common Stock), or of any
consolidation,  merger or share exchange to which the Company is a party and for
which approval of any stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the Company; or

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

         (e) the Company or any Subsidiary shall commence a tender offer for all
or a portion of the outstanding  shares of Common Stock (or shall amend any such
tender  offer to change the maximum  number of shares being sought or the amount
or type of consideration being offered therefor); or

         (f) the  Company  shall  receive  notice of a tender  offer or exchange
offer with respect to 25% or more of its outstanding Common Stock;

then the Company  shall  cause to be filed (with a copy to the  Trustee) at each
office or agency  maintained  pursuant  to Section  1002,  and shall cause to be
mailed to all Holders at their last  addresses  as they shall appear in the Note
Register, at least 21 days (or 11 days in any case specified in Clause (a), (b),
(e), or (f) above) prior to the applicable record,  effective or expiration date
hereinafter  specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such  dividend,  distribution  or granting of rights or
warrants,  or, if a record is not to be taken,  the date as of which the holders
of Common Stock of record who will be entitled to such  dividend,  distribution,
rights  or  warrants  are  to  be  determined,   (y)  the  date  on  which  such
reclassification,   consolidation,   merger,  share  exchange,  sale,  transfer,
dissolution,  liquidation or winding up is expected to become effective, and the
date as of which it is expected  that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities,  cash or other
property deliverable upon such  reclassification,  consolidation,  merger, share
exchange,  sale,  transfer,  dissolution,  liquidation or winding up, or (z) the
date on which such tender offer or exchange offer  commenced,  the date on which
such tender offer is  scheduled to expire  unless  extended,  the  consideration
offered and the other  material terms thereof or exchange offer (or the material
terms of any amendment thereto). Neither the failure to give any such notice nor
any defect therein shall affect the legality or validity of any action described
in Clauses (a) through (e) of this Section 1306.

SECTION 1307.  Company to Reserve  Common Stock.  The Company shall at all times
reserve and keep available,  free from preemptive  rights, out of the authorized
but unissued Common Stock or out of the shares of Common Stock held in treasury,
for the purpose of effecting the conversion of Notes,  the full number of shares
of Common Stock then issuable  
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<PAGE>
upon the conversion of all  outstanding  Notes.  Shares of Common Stock issuable
upon  conversion  of  Outstanding  Notes shall be issued out of the Common Stock
held in Treasury to the extent available.

SECTION 1308. Taxes on Conversions.  The Company will pay any and all taxes that
may be payable in respect of the issue or delivery of shares of Common  Stock on
conversion of Notes pursuant hereto. The Company shall not, however, be required
to pay any tax which may be payable in respect of any  transfer  involved in the
issue and  delivery  of shares of Common  Stock in a name other than that of the
Holder of the Note or Notes to be converted, and no such issue or delivery shall
be made  unless  and  until the  Person  requesting  such  issue has paid to the
Company the amount of any such tax, or has  established to the  satisfaction  of
the Company that such tax has been paid.

SECTION 1309. Covenant as to Common Stock. The Company covenants that all shares
of Common Stock which may be issued upon  conversion of Notes will upon issue be
fully paid and  nonassessable  and,  except as  provided  in Section  1308,  the
Company will pay all taxes, liens and charges with respect to the issue thereof.

SECTION  1310.   Cancellation  of  Converted  Notes.  All  Notes  delivered  for
conversion  shall  be  delivered  to the  Trustee  to be  canceled  by or at the
direction of the Trustee, which shall dispose of the same as provided in Section
309.

SECTION 1311. Provisions of Consolidation,  Merger or Sale of Assets. In case of
any  consolidation of the Company with, or merger of the Company into, any other
Person, any merger of another Person into the Company (other than a merger which
does not result in any reclassification, conversion, exchange or cancellation of
outstanding  shares  of  Common  Stock)  or  any  sale  or  transfer  of  all or
substantially  all of the  assets  of the  Company,  the  Person  formed by such
consolidation  or resulting from such merger or which  acquires such assets,  as
the case may be,  shall  execute  and  deliver  to the  Trustee  a  supplemental
indenture providing that the Holder of each Note then Outstanding shall have the
right thereafter,  during the period such Note shall be convertible as specified
in  Section  1301,  to  convert  such  Note  only  into the kind and  amount  of
securities, cash and other property, if any, receivable upon such consolidation,
merger,  sale or  transfer  by a holder of the number of shares of Common  Stock
into  which  such Note  might  have  been  converted  immediately  prior to such
consolidation,  merger,  sale or transfer,  assuming such holder of Common Stock
(i) is not a Person  with  which  the  Company  consolidated  or into  which the
Company  merged  or which  merged  into the  Company  or to which  such  sale or
transfer was made, as the case may be (a "Constituent  Person"), or an Affiliate
of a Constituent  Person and (ii) failed to exercise his rights of election,  if
any, as to the kind or amount of securities,  cash and other property receivable
upon such consolidation,  merger, sale or transfer (provided that if the kind or
amount  of   securities,   cash  and  other   property   receivable   upon  such
consolidation, merger, sale or transfer is not the same for each share of Common
Stock held immediately prior to such consolidation,  merger, sale or transfer by
other than a Constituent  Person or an Affiliate thereof and in respect of which
such rights of election  shall not have been  exercised  ("nonelecting  share"),
then for the purpose of this Section the kind and amount of securities, cash and
other property receivable upon such  consolidation,  merger, sale or 
                                       91
<PAGE>
transfer by each nonelecting  share shall be deemed to be the kind and amount so
receivable  per  share  by  a  plurality  of  the  nonelecting   shares).   Such
supplemental   indenture  shall  provide  for  adjustments   which,  for  events
subsequent to the effective  date of such  supplemental  indenture,  shall be as
nearly equivalent as may be practicable to the adjustments  provided for in this
Article.  The  above  provisions  of  this  Section  shall  similarly  apply  to
successive consolidations, mergers, sales or transfers.

SECTION 1312.  Trustee's Disclaimer.

         The  Trustee  and any other  conversion  agent shall not at any time be
under any duty or responsibility to any holder of Notes to determine whether any
facts exist that may require any  adjustment of the  conversion  price or notice
thereof,  or with  respect  to the nature or extent or  calculation  of any such
adjustment  when made, or with respect to the method  employed,  or herein or in
any supplemental indenture provided to be employed, in making the same and shall
be protected  in relying upon the  Officers'  Certificate  with respect  thereto
which the Company is required to file with the Trustee pursuant to Section 1305.
The Trustee and any other conversion agent shall not be accountable with respect
to the validity or value (or the kind or amount) of any shares of Common  Stock,
or of any  securities  or property,  that may at any time be issued or delivered
upon the conversion of any Note; and the Trustee and any other  conversion agent
make no  representations  with respect thereto or any actions or omission by the
Company in such regard.  Neither the Trustee nor any  conversion  agent shall be
responsible  for any  failure of the  Company to issue,  transfer or deliver any
shares of Common Stock or stock  certificates or other securities or property or
cash upon the  surrender of any  debenture  for the purpose of  conversion or to
comply  with any of the duties,  responsibilities  or  covenants  of the Company
contained in this Article Thirteen.

         The  Trustee  shall not be under any  responsibility  to  determine  or
verify the correctness of any provisions contained in any supplemental indenture
executed pursuant to Section 1311, but may accept as conclusive  evidence of the
correctness  thereof,  and shall be protected  in relying  upon,  the  Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 1311.

                                ARTICLE FOURTEEN

                           Right to Require Repurchase

SECTION 1401. Right to Require Repurchase. In the event that there shall occur a
Repurchase  Event (as defined in Section 1406),  then each Holder shall have the
right, at such Holder's option, to require the Company to purchase, and upon the
exercise of such right, the Company shall,  subject to the provisions of Section
1203,  purchase,  all or any  part of  such  Holder's  Notes  on the  date  (the
"Repurchase  Date") that is 30 days after the date the Company  gives  notice of
the  Repurchase  Event  as  contemplated  in  Section  1402(a)  at a price  (the
"Repurchase Price") equal to 100% of the principal amount thereof, together with
accrued and unpaid interest to the Repurchase Date.
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SECTION 1402.  Notice; Method of Exercising Repurchase Right.

         (a) On or  before  the 15th day after the  occurrence  of a  Repurchase
Event,  the Company,  or at the written  request of the Company  received by the
Trustee at least 40 days prior to the Repurchase  Date, the Trustee (in the name
and at the expense of the  Company),  in its capacity as tender agent (for which
services  it  shall  be  reasonably  compensated),  shall  give  notice  of  the
occurrence of the Repurchase  Event and of the repurchase right set forth herein
arising as a result thereof by first-class mail, postage prepaid, to the Trustee
and to each Holder of the Notes at such Holder's  address  appearing in the Note
Register.  The Company  shall also deliver a copy of such notice of a repurchase
right to the Trustee.

         Each notice of a repurchase right shall state:

                  (1)      the event  constituting  the Repurchase Event and the
                           date thereof,

                  (2)      the Repurchase Date,

                  (3)      the  date  by  which  the  repurchase  right  must be
                           exercised,

                  (4)      the Repurchase Price, and

                  (5)      the  instructions  a Holder must follow to exercise a
                           repurchase right.

         No failure of the Company to give the foregoing  notice shall limit any
Holder's  right to  exercise  a  repurchase  right.  The  Trustee  shall have no
affirmative  obligation  to determine if there shall have  occurred a Repurchase
Event.

         (b) To  exercise a  repurchase  right,  a Holder  shall  deliver to the
Company (or an agent  designated  by the Company for such  purpose in the notice
referred  to in (a) above) and to the Trustee on or before the close of business
on the  Repurchase  Date (i)  written  notice of the  Holder's  exercise of such
right, which notice shall set forth the name of the Holder, the principal amount
of the Note or Notes (or portion of a Note) to be  repurchased,  and a statement
that an election to exercise the  repurchase  right is being made  thereby,  and
(ii) the Note or Notes  with  respect  to which  the  repurchase  right is being
exercised,  duly endorsed for transfer to the Company. Such written notice shall
be irrevocable. If the Repurchase Date falls between any Regular Record Date and
the next  succeeding  Interest  Payment Date,  Notes to be  repurchased  must be
accompanied  by  payment  from the  Holder  of an amount  equal to the  interest
thereon  which the  registered  Holder  thereof is to  receive on such  Interest
Payment Date.

         In the event a repurchase  right shall be exercised in accordance  with
the terms hereof,  the Company shall on the  Repurchase  Date pay or cause to be
paid in cash to the Holder thereof the Repurchase  Price of the Note or Notes as
to which the repurchase right had been exercised.

SECTION 1403.  Deposit of Repurchase  Price. On or prior to the Repurchase Date,
the Company  shall  deposit  with the Trustee or with a Paying Agent (or, if the
Company  is  acting  as 
                                       93
<PAGE>
its own Paying  Agent,  segregate and hold in trust as provided in Section 1003)
an amount of money in same day funds  sufficient to pay the Repurchase  Price of
the Notes which are to be repaid on the Repurchase Date.

SECTION 1404.  Notes Not Repurchased on Repurchase Date. If any Note surrendered
for repurchase shall not be so paid on the Repurchase Date, the principal shall,
until paid,  bear interest to the extent  permitted by  applicable  law from the
Repurchase Date at the rate per annum bone by such Note.

SECTION 1405.  Notes  Repurchased  in Part.  Any Note which is to be repurchased
only in part  shall be  surrendered  at any  office  or  agency  of the  Company
designated  for that purpose  pursuant to Section 1002 (with,  if the Company or
the Trustee so requires,  due endorsement by, or written  instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his  attorney  duly  authorized  in writing),  and the Company  shall
execute,  and the Trustee shall  authenticate  and deliver to the Holder of such
Note without service charge, a new Note or Notes 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  Note  so
surrendered.

SECTION 1406.  Certain Definitions.

         For purposes of this Article:

         (a) A "Repurchase  Event" shall have occurred upon the  occurrence of a
Change in Control or Termination of Trading after the date of this Indenture and
on or prior to December 1, 2004.

         (b) A "Change in Control" shall occur when:

                  (i) all or substantially  all of the Company's assets are sold
as an entirety to any Person or related group of Persons;

                  (ii) there shall be consummated any consolidation or merger of
the  Company  (A) in  which  the  Company  is not the  continuing  or  surviving
corporation (other than a consolidation or merger with a wholly owned subsidiary
of the Company in which all shares of Common Stock outstanding immediately prior
to the  effectiveness  thereof  are  changed  into or  exchanged  for  the  same
consideration) or (B) pursuant to which the Common Stock would be converted into
cash,  securities or other property,  in each case other than a consolidation or
merger of the Company in which the holders of the Common Stock immediately prior
to the consolidation or merger have, directly or indirectly, at least a majority
of the total  voting  power of all  classes of capital  stock  entitled  to vote
generally  in  the  election  of  directors  of  the   continuing  or  surviving
corporation  immediately after such consolidation or merger in substantially the
same  proportion  as their  ownership  of Common Stock  immediately  before such
transaction;
                                       94
<PAGE>
                  (iii) any person,  or any persons acting  together which would
constitute  a "group"  for  purposes  of Section  13(d) of the  Exchange  Act (a
"Group"),  together with any  Affiliates  thereof,  shall  beneficially  own (as
defined in Rule 13d-3 under the  Exchange  Act) at least 50% of the total voting
power of all classes of capital stock of the Company  entitled to vote generally
in the election of directors of the Company; or

                  (iv) at any  time  during  any  consecutive  two-year  period,
individuals  who at the  beginning  of such  period  constituted  the  Board  of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose  nomination for election by the  stockholders of the
Company was approved by a vote of 66 2/3% of the directors  then still in office
who were either  directors at the beginning of such period or whose  election or
nomination  for election  was  previously  so approved)  cease for any reason to
constitute  a majority of the Board of  Directors of the Company then in office;
or

                  (v) the Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution.

         (c) A  "Termination  of Trading"  shall  occur if the Common  Stock (or
other common stock into which the Notes are then  convertible) is neither listed
for trading on a U.S. national  securities  exchange nor approved for trading on
an established automated over-the-counter trading market in the United States.

         This instrument may be executed in any number of counterparts,  each of
which  when so  executed  shall  be  deemed  to be an  original,  but  all  such
counterparts shall together constitute but one and the same instrument.
                                       95
<PAGE>
     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Indenture to be
duly executed,  and their respective  corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.

                                     ACTION PERFORMANCE COMPANIES, INC.

                                     By /s/ Fred W. Wagenhals
                                       ------------------------------------
                                     Name: Fred W. Wagenhals
                                          ---------------------------------
                                     Title: Chairman of the Board, President
                                           --------------------------------
                                            and Chief Executive Officer

Attest:

/s/ Tod J. Wagenhals
------------------------------
Tod J. Wagenhals


                                     FIRST UNION NATIONAL BANK,
                                     --------------------------
                                     as Trustee

                                     By /s/ Teresa L. Davis
                                       ------------------------------------
                                     Name: Teresa L. Davis
                                          ---------------------------------
                                     Title: Vice President
                                           --------------------------------

Attest:


[Illegible Signature]
------------------------------
                                       96
<PAGE>
State of Arizona                    )
                                    )        ss.
County of Maricopa                  )
          --------------

      On the  23rd  day of  March,  1998,  before  me  personally  came  Fred W.
Wagenhals,  to me known, who, being by me duly sworn, did depose and say that he
is an officer of Action  Performance  Companies,  Inc., one of the  corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation;  that the seal affixed to said instrument is such corporate
seal;  that it was so affixed by  authority  of the Board of  Directors  of said
corporation; and that he signed his name thereto by like authority.

           [Notary Seal]              /s/ Suzette M. Buron
                                      --------------------

State of Georgia       )
                       ) ss.
County of Fulton       )

     On the 24th day of March,  1998, before me personally came Teresa L. Davis,
to me known,  who, being by me duly sworn, did depose and say that she is a Vice
President  of  First  Union  National  Bank  , a  national  banking  association
described in and which executed the foregoing instrument;  that he/she knows the
seal of said association; that the seal affixed to said instrument is such seal;
that  it was so  affixed  by  authority  of  the  Board  of  Directors  of  said
association; and that he/she signed his/her name thereto by like authority.

           [Notary Seal]                    Brian K. Justice
                                            -------------------------

                                               BRIAN K. JUSTICE
                                     Notary Public, Gwinnett County, Georgia
                                     My Commission Expires September 11, 2000
                                       97
<PAGE>
                                    EXHIBIT A
       [FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
                              OF TRANSFER OF NOTES]

                      CERTIFICATE FOR EXCHANGE OR TRANSFER

Re 4 3/4% Convertible Subordinated Notes due 2005

      This Certificate relates to $__________  principal amount of Notes held in
**___________________   book-entry  or  **________________  definitive  form  by
____________ (the "Transferor").

The Transferor**:

[ ]      has  requested  the Trustee by written order to deliver in exchange for
its beneficial  interest in a Global Note held by the Depositary a Note or Notes
in  definitive,  registered  form of authorized  denominations  and an aggregate
principal  amount equal to its  beneficial  interest in such Global Note (or the
portion thereof indicated above); or

[ ]      has  requested  the Trustee by written order to deliver in exchange for
its Note or Notes a beneficial  interest in a Global Note held by the Depositary
in a principal  amount equal to the aggregate  principal  amount of such Note or
Notes; or

[ ]      has  requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.

         In connection  with such request and in respect of each such Note,  the
Transferor does hereby certify to the Company and the Trustee that Transferor is
familiar  with the  Indenture  relating  to the above  captioned  Notes and,  as
provided in Section 305 of such  Indenture,  the  transfer of this Note does not
require registration under the Securities Act (as defined below) because*:

[ ]      Such Note is being acquired for the Transferor's  own account,  without
transfer (in satisfaction of Section  305(b)(ii)(A)  or Section  305(f)(i)(A) of
the Indenture).

[ ]      Such Note is being transferred to a "qualified institutional buyer" (as
defined  in Rule  144A  under  the  Securities  Act of  1933,  as  amended  (the
"Securities  Act")) in reliance on Rule 144A or  pursuant to an  exemption  from
registration in accordance with



-----------------------------------
                  **Check applicable box.
<PAGE>
Regulation S under the Securities Act (in satisfaction of Section 305(b)(ii)(B),
Section 305(c)(i), Section 305(d)(i), Section 305(f)(i)(B),  Section 305(g)(iii)
or Section  305(h)(iii) of the  Indenture).  An opinion of counsel to the effect
that such  transfer  does not  require  registration  under the  Securities  Act
accompanies this Certificate (in satisfaction of Section 305(b)(ii)(B),  Section
305(c)(i),  Section  305(d)(i),  Section  305(f)(i)(B),  Section  305(g)(iii) or
Section 305(h)(iii) of the Indenture).

    [ ]           Such Note is being  transferred  in  accordance  with Rule 144
under the  Securities  Act, or pursuant to an effective  registration  statement
under the  Securities Act (in  satisfaction  of Section  305(b)(ii)(B),  Section
305(f)(i)(B)  or Section  305(k)(ii)  of the  Indenture).  If such Note is being
transferred in accordance  with Rule 144 under the Securities Act, an opinion of
counsel to the effect that such transfer does not require registration under the
Securities  Act  accompanies   this  Certificate  (in  satisfaction  of  Section
305(b)(ii)(B), Section 305(f)(i)(B) or Section 305(k)(ii) of the Indenture).

         Such Note is being transferred in reliance on and in compliance with an
exemption from the  registration  requirements of the Securities Act, other than
Rule 144A, 144 or Regulation S under the  Securities  Act. An opinion of counsel
to the  effect  that  such  transfer  does not  require  registration  under the
Securities  Act  accompanies   this  Certificate  (in  satisfaction  of  Section
305(b)(ii)(C) or Section 305(f)(i)(C) of the Indenture).

         You are entitled to rely upon this  certificate and you are irrevocably
authorized to produce this  certificate or a copy hereof to any interested party
in any  administrative  or legal  proceeding or official inquiry with respect to
the matters covered hereby.



--------------------------------------------------------------------------------
[INSERT NAME OF TRANSFEROR]

By:
Date:
                                       2