<PAGE>
 
                                  EXHIBIT 4-H
                                  -----------

  Junior Subordinated Indenture, dated as of October 1, 1998, by and between
      Atlantic City Electric Company and The Bank of New York, as Trustee
<PAGE>
 
                  __________________________________________



                        ATLANTIC CITY ELECTRIC COMPANY

                                      TO

                             THE BANK OF NEW YORK

                                    Trustee



                                   _________


                                   Indenture
                  (FOR UNSECURED SUBORDINATED DEBT SECURITIES
                         RELATING TO TRUST SECURITIES)


                          Dated as of October 1, 1998




                  __________________________________________
<PAGE>
 
                        ATLANTIC CITY ELECTRIC COMPANY

          Reconciliation and tie between Trust Indenture Act of 1939
                  and indenture, dated as of October 1, 1998

<TABLE>
<CAPTION>

Trust Indenture Act Section                                                     Indenture Section 

<S>                                                                                      <C>
(S)310  (a)(1)..........................................................................  909
        (a)(2)..........................................................................  909
        (a)(3)..........................................................................  914
        (a)(4)...................................................................... Not Applicable
        (b).............................................................................  908
                                                                                          910
(S)311  (a).............................................................................  913
        (b).............................................................................  913
        (c).............................................................................  913
(S)312  (a)............................................................................. 1001
        (b)............................................................................. 1001
        (c)............................................................................. 1001
(S)313  (a)............................................................................. 1002
        (b)............................................................................. 1002
        (c)............................................................................. 1002
(S)314  (a)............................................................................. 1003
        (a)(4)..........................................................................  606
        (b)......................................................................... Not Applicable
        (c)(1)..........................................................................  102
        (c)(2)..........................................................................  102
        (c)(3)...................................................................... Not Applicable
        (d)......................................................................... Not Applicable
        (e).............................................................................  102
(S)315  (a).............................................................................  901
                                                                                          903
        (b).............................................................................  902
        (c).............................................................................  901
        (d).............................................................................  901
        (e).............................................................................  814
(S)316  (a).............................................................................  812
                                                                                          813
        (a)(1)(A).......................................................................  802
                                                                                          812
        (a)(1)(B).......................................................................  813
        (a)(2)...................................................................... Not Applicable
        (b).............................................................................  808
(S)317  (a)(1)..........................................................................  803
        (a)(2)..........................................................................  804
        (b).............................................................................  603
(S)318  (a).............................................................................  107
</TABLE> 

 
<PAGE>
 
                               TABLE OF CONTENTS

<TABLE> 
<CAPTION> 
 
                                                                                   Page 
                                                                                   ---- 
<S>                                                                               <C>  
RECITAL OF THE COMPANY...........................................................    1
 
ARTICLE ONE
 
   DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.......................    1
 SECTION 101.  Definitions.......................................................    1
  Act............................................................................    2
  Affiliate......................................................................    2
  Authenticating Agent...........................................................    2
  Authorized Officer.............................................................    2
  Board of Directors.............................................................    2
  Board Resolution...............................................................    2
  Business Day...................................................................    2
  Commission.....................................................................    2
  Company........................................................................    3
  Company Request or Company Order...............................................    3
  Corporate Trust Office.........................................................    3
  corporation....................................................................    3
  Creditor.......................................................................    3
  Defaulted Interest.............................................................    3
  Dollar or......................................................................    3
  Event of Default...............................................................    3
  Governmental Authority.........................................................    3
  Government Obligations.........................................................    3
  Guarantee......................................................................    3
  Holder.........................................................................    3
  Indenture......................................................................    4
  Interest Payment Date..........................................................    4
  Maturity.......................................................................    4
  Officer's Certificate..........................................................    4
  Opinion of Counsel.............................................................    4
  Outstanding....................................................................    4
  Paying Agent...................................................................    5
  Person.........................................................................    5
  Place of Payment...............................................................    5
  Predecessor Security...........................................................    5
  Preferred Securities...........................................................    5
  Property Trustee...............................................................    5
  Redemption Date................................................................    5
  Redemption Price...............................................................    5
  Regular Record Date............................................................    5
  Responsible Officer............................................................    5
  Securities.....................................................................    5
  Security Register and Security Registrar.......................................    5
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

                                                                                   Page 
                                                                                   ---- 
<S>                                                                               <C>   
  Senior Indebtedness............................................................    5
  Special Record Date............................................................    6
  Stated Maturity................................................................    6
  Trust..........................................................................    6
  Trust Agreement................................................................    6
  Trust Indenture Act............................................................    6
  Trustee........................................................................    6
  United States..................................................................    6
 SECTION 102.  Compliance Certificates and Opinions..............................    6
 SECTION 103.  Form of Documents Delivered to Trustee............................    7
 SECTION 104.  Acts of Holders...................................................    8
 SECTION 105.  Notices, etc. to Trustee and Company..............................    9
 SECTION 106.  Notice to Holders of Securities; Waiver...........................   10
 SECTION 107.  Conflict with Trust Indenture Act.................................   10
 SECTION 108.  Effect of Headings and Table of Contents..........................   10
 SECTION 109.  Successors and Assigns............................................   10
 SECTION 110.  Separability Clause...............................................   10
 SECTION 111.  Benefits of Indenture.............................................   11
 SECTION 112.  GOVERNING LAW.....................................................   11
 SECTION 113.  Legal Holidays....................................................   11
 
ARTICLE TWO
 
   SECURITY FORMS................................................................   12
 SECTION 201.  Forms Generally...................................................   12
 SECTION 202.  Form of Trustee's Certificate of Authentication...................   12
 
ARTICLE THREE
 
   THE SECURITIES................................................................   12
 SECTION 301.  Amount Unlimited; Issuable in Series..............................   12
 SECTION 302.  Denominations.....................................................   15
 SECTION 303.  Execution, Authentication, Delivery and Dating....................   15
 SECTION 304.  Temporary Securities..............................................   17
 SECTION 305.  Registration, Registration of Transfer and Exchange...............   17
 SECTION 306.  Mutilated, Destroyed, Lost and Stolen Securities..................   18
 SECTION 307.  Payment of Interest; Interest Rights Preserved....................   19
 SECTION 308.  Persons Deemed Owners.............................................   20
 SECTION 309.  Cancellation by Security Registrar................................   20
 SECTION 310.  Computation of Interest...........................................   20
 SECTION 311.  Extension of Interest Payment.....................................   20
 SECTION 312.  Payment of Expenses...............................................   20
 
ARTICLE FOUR
 
   Redemption of Securities......................................................   21
 SECTION 401.  Applicability of Article..........................................   21
 SECTION 402.  Election to Redeem; Notice to Trustee.............................   21
 SECTION 403.  Selection of Securities to Be Redeemed............................   22
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 
 
                                                                                   Page 
                                                                                   ---- 
<S>                                                                               <C>   
 SECTION 404.  Notice of Redemption..............................................   22
 SECTION 405.  Securities Payable on Redemption Date.............................   23
 SECTION 406.  Securities Redeemed in Part.......................................   23
 
ARTICLE FIVE
 
   Sinking Funds.................................................................   24
 SECTION 501.  Applicability of Article..........................................   24
 SECTION 502.  Satisfaction of Sinking Fund Payments with Securities.............   24
 SECTION 503.  Redemption of Securities for Sinking Fund.........................   24
 
ARTICLE SIX
 
   Covenants.....................................................................   25
 SECTION 601.  Payment of Principal, Premium and Interest........................   25
 SECTION 602.  Maintenance of Office or Agency...................................   25
 SECTION 603.  Money for Securities Payments to Be Held in Trust.................   26
 SECTION 604.  Corporate Existence...............................................   27
 SECTION 605.  Maintenance of Properties.........................................   27
 SECTION 606.  Annual Officer's Certificate as to Compliance.....................   27
 SECTION 607.  Waiver of Certain Covenants.......................................   28
 SECTION 608.  Restriction on Payment of Dividends...............................   28
 SECTION 609.  Maintenance of Trust Existence....................................   28
 
ARTICLE SEVEN
 
   Satisfaction and Discharge....................................................   29
 SECTION 701.  Defeasance........................................................   29
 SECTION 702.  Satisfaction and Discharge of Indenture...........................   31
 SECTION 703.  Application of Trust Money........................................   31
 
ARTICLE EIGHT
 
   Events of Default; Remedies...................................................   32
 SECTION 801.  Events of Default.................................................   32
 SECTION 802.  Acceleration of Maturity; Rescission and Annulment................   33
 SECTION 803.  Collection of Indebtedness and Suits for Enforcement by Trustee...   34
 SECTION 804.  Trustee May File Proofs of Claim..................................   34
 SECTION 805.  Trustee May Enforce Claims Without Possession of Securities.......   35
 SECTION 806.  Application of Money Collected....................................   35
 SECTION 807.  Limitation on Suits...............................................   35
 SECTION 808.  Unconditional Right of Holders to Receive Principal,
Premium and Interest.............................................................   36
 SECTION 809.  Restoration of Rights and Remedies................................   36
 SECTION 810.  Rights and Remedies Cumulative....................................   37
 SECTION 811.  Delay or Omission Not Waiver......................................   37
 SECTION 812.  Control by Holders of Securities..................................   37
 SECTION 813.  Waiver of Past Defaults...........................................   37
 SECTION 814.  Undertaking for Costs.............................................   38
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

                                                                                   Page 
                                                                                   ---- 
<S>                                                                               <C>   
 SECTION 815.  Waiver of Stay or Extension Laws..................................   38
 
ARTICLE NINE
 
   The Trustee...................................................................   38
 SECTION 901.  Certain Duties and Responsibilities...............................   39
 SECTION 902.  Notice of Defaults................................................   39
 SECTION 903.  Certain Rights of Trustee.........................................   39
 SECTION 904.  Not Responsible for Recitals or Issuance of Securities............   40
 SECTION 905.  May Hold Securities...............................................   41
 SECTION 906.  Money Held in Trust...............................................   41
 SECTION 907.  Compensation and Reimbursement....................................   41
 SECTION 908.  Disqualification; Conflicting Interests...........................   42
 SECTION 909.  Corporate Trustee Required; Eligibility...........................   42
 SECTION 910.  Resignation and Removal; Appointment of Successor.................   42
 SECTION 911.  Acceptance of Appointment by Successor............................   44
 SECTION 912.  Merger, Conversion, Consolidation or Succession to Business.......   45
 SECTION 913.  Preferential Collection of Claims Against Company.................   45
 SECTION 914.  Co-trustees and Separate Trustees.................................   46
 SECTION 915.  Appointment of Authenticating Agent...............................   46
 
ARTICLE TEN
 
   Holders' Lists and Reports by Trustee and Company.............................   48
 SECTION 1001.  Lists of Holders.................................................   48
 SECTION 1002.  Reports by Trustee...............................................   48
 SECTION 1003.  Reports to the Trustee...........................................   49
 
ARTICLE ELEVEN
 
   Consolidation, Merger, Conveyance or Other Transfer...........................   49
 SECTION 1101.  Company May Consolidate, etc., Only on Certain Terms.............   49
 SECTION 1102.  Successor Corporation Substituted................................   50
 
ARTICLE TWELVE
 
   Supplemental Indentures.......................................................   50
 SECTION 1201.  Supplemental Indentures Without Consent of Holders...............   50
 SECTION 1202.  Supplemental Indentures With Consent of Holders..................   52
 SECTION 1203.  Execution of Supplemental Indentures.............................   53
 SECTION 1204.  Effect of Supplemental Indentures................................   53
 SECTION 1205.  Conformity With Trust Indenture Act..............................   53
 SECTION 1206.  Reference in Securities to Supplemental Indentures...............   53
 SECTION 1207.  Modification Without Supplemental Indenture......................   54
 
ARTICLE THIRTEEN
 
   Meetings of Holders; Action Without Meeting...................................   54
 SECTION 1301.  Purposes for Which Meetings May Be Called........................   54
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 
 
                                                                                   Page 
                                                                                   ---- 
<S>                                                                               <C>   
 SECTION 1302.  Call, Notice and Place of Meetings...............................   54
 SECTION 1303.  Persons Entitled to Vote at Meetings.............................   55
 SECTION 1304.  Quorum; Action...................................................   55
 SECTION 1305.  Attendance at Meetings; Determination of Voting Rights;
Conduct and Adjournment of Meetings..............................................   56
 SECTION 1306.  Counting Votes and Recording Action of Meetings..................   57
 SECTION 1307.  Action Without Meeting...........................................   57
 
ARTICLE FOURTEEN
 
   Immunity of Incorporators, Stockholders, Officers and Directors...............   57
 SECTION 1401.  Liability Solely Corporate.......................................   57
 
ARTICLE FIFTEEN
 
   Subordination of Securities...................................................   58
 SECTION 1501.  Securities Subordinate to Senior Indebtedness....................   58
 SECTION 1502.  Payment Over of Proceeds of Securities...........................   58
 SECTION 1503.  Disputes with Holders of Certain Senior Indebtedness.............   60
 SECTION 1504.  Subrogation......................................................   60
 SECTION 1505.  Obligation of the Company Unconditional..........................   61
 SECTION 1506.  Priority of Senior Indebtedness Upon Maturity....................   61
 SECTION 1507.  Trustee as Holder of Senior Indebtedness.........................   61
 SECTION 1508.  Notice to Trustee to Effectuate Subordination....................   62
 SECTION 1509.  Modification, Extension, etc. of Senior Indebtedness.............   62
 SECTION 1510.  Trustee Has No Fiduciary Duty to Holders of Senior Indebtedness..   62
 SECTION 1511.  Paying Agents Other Than the Trustee.............................   63
 SECTION 1512.  Rights of Holders of Senior Indebtedness Not Impaired............   63
 SECTION 1513.  Effect of Subordination Provisions; Termination..................   63

Testimonium......................................................................   64

Signatures and Seals.............................................................   64
</TABLE> 
<PAGE>
 
          INDENTURE, dated as of October 1, 1998, between ATLANTIC CITY ELECTRIC
COMPANY, a corporation duly organized and existing under the laws of the State
of New Jersey (herein called the "Company"), having its principal office at 800
King Street, Wilmington, Delaware 19899, and THE BANK OF NEW YORK, a New York
banking corporation, having its principal corporate trust office at 101 Barclay
Street - 21 West, New York, New York 10286, as Trustee (herein called the
"Trustee").

                            RECITAL OF THE COMPANY

          The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
subordinated debentures, notes or other evidences of indebtedness (herein called
the "Securities"), in an unlimited aggregate principal amount to be issued in
one or more series as contemplated herein; and all acts necessary to make this
Indenture a valid agreement of the Company have been performed.

          For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires, capitalized terms used herein
shall have the meanings assigned to them in Article One of this Indenture.

          NOW, THEREFORE, THIS INDENTURE WITNESSETH:

          For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of any
series thereof, as follows:


                                  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:

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

        (b)  all terms used herein without definition which are defined in the
   Trust Indenture Act, either directly or by reference therein, have the
   meanings assigned to them therein;

        (c)  all accounting terms not otherwise defined herein have the meanings
   assigned to them in accordance with generally accepted accounting principles
   in the United States, and, except as otherwise herein expressly provided, the
   term "generally accepted accounting principles" with respect to any
   computation required or permitted hereunder shall mean such accounting
   principles as are generally accepted in the United States at the date of such
   computation or, at the election of the Company from time to time, at the date
   of the execution and delivery of this Indenture; provided, however, that in
   determining generally 

                                       1
<PAGE>
 
   accepted accounting principles applicable to the Company, the Company shall,
   to the extent required, conform to any order, rule or regulation of any
   administrative agency, regulatory authority or other governmental body having
   jurisdiction over the Company; and

        (d)  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 principally in Article Nine, are defined in that
Article.

        "ACT", when used with respect to any Holder of a Security, 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 through one or
more intermediaries, 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 (other than the Company or an
Affiliate of the Company) authorized by the Trustee pursuant to Section 915 to
act on behalf of the Trustee to authenticate one or more series of Securities.

        "AUTHORIZED OFFICER" means the Chairman of the Board, the President, any
Vice President, the Treasurer, any Assistant Treasurer, or any other officer or
agent of the Company duly authorized by the Board of Directors to act in respect
of matters relating to this Indenture.

        "BOARD OF DIRECTORS" means either the board of directors of the Company
or any committee thereof duly authorized to act in respect of matters relating
to this Indenture.

        "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", when used with respect to a Place of Payment or any
other particular location specified in the Securities or this Indenture, means
any day, other than a Saturday or Sunday, which is not a day on which banking
institutions or trust companies in such Place of Payment or other location are
generally authorized or required by law, regulation or executive order to remain
closed, except as may be otherwise specified as contemplated by Section 301.

        "COMMISSION" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the date of execution and delivery of this
Indenture such Commission is not existing and performing the duties now assigned
to it under the Trust Indenture Act, then the body, if any, performing such
duties at such time.

                                      -2-
<PAGE>
 
        "COMPANY" means the Person named as the "Company" in the first paragraph
of this Indenture 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 an Authorized Officer 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 be principally administered,
which office at the date of execution and delivery of this Indenture is located
at 101 Barclay Street - 21 West, New York, New York 10286.

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

        "CREDITOR" has the meaning specified in Section 312.

        "DEFAULTED INTEREST" has the meaning specified in Section 307.

        "DOLLAR" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States as at the time shall be legal tender for the
payment of public and private debts.

        "EVENT OF DEFAULT" has the meaning specified in Section 801.

        "GOVERNMENTAL AUTHORITY" means the government of the United States or of
any State or Territory thereof or of the District of Columbia or of any county,
municipality or other political subdivision of any of the foregoing, or any
department, agency, authority or other instrumentality of any of the foregoing.

        "GOVERNMENT OBLIGATIONS" means:

             (a)  direct obligations of, or obligations the principal of and
        interest on which are unconditionally guaranteed by, the United States
        and entitled to the benefit of the full faith and credit thereof; and

             (b)  certificates, depositary receipts or other instruments which
        evidence a direct ownership interest in obligations described in clause
        (a) above or in any specific interest or principal payments due in
        respect thereof; provided, however, that the custodian of such
        obligations or specific interest or principal payments shall be a bank
        or trust company (which may include the Trustee or any Paying Agent)
        subject to Federal or state supervision or examination with a combined
        capital and surplus of at least $50,000,000; and provided, further, that
        except as may be otherwise required by law, such custodian shall be
        obligated to pay to the holders of such certificates, depositary
        receipts or other instruments the full amount received by such custodian
        in respect of such obligations or specific payments and shall not be
        permitted to make any deduction therefrom.

        "GUARANTEE" means the guarantee agreement delivered from the Company to
a Trust, for the benefit of the holders of Preferred Securities issued by such
Trust.

        "HOLDER" means a Person in whose name a Security is registered in the
Security Register.

                                      -3-
<PAGE>
 
        "INDENTURE" means this instrument as originally executed and delivered
and 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 and shall include the terms of a particular series of
Securities established as contemplated by Section 301.

        "INTEREST PAYMENT DATE", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.

        "MATURITY", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as provided in such Security or in this Indenture, whether at the
Stated Maturity, by declaration of acceleration, upon call for redemption or
otherwise.

        "OFFICER'S CERTIFICATE" means a certificate signed by an Authorized
Officer and delivered to the Trustee.

        "OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel for the Company, but not an employee of the Trust, the Trustee, or other
counsel reasonably acceptable to the Trustee.

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

        (a)  Securities theretofore canceled by the Security Registrar or
   delivered to the Trustee for cancellation;

        (b)  Securities deemed to have been paid in accordance with Section 701;
   and

        (c)  Securities which have been paid pursuant to Section 306 or in
   exchange for or in lieu of which other Securities have been authenticated and
   delivered pursuant to this Indenture, other than any such Securities in
   respect of which there shall have been presented to the Trustee proof
   satisfactory to it and the Company that such Securities are held by a bona
   fide purchaser or purchasers in whose hands such Securities are valid
   obligations of the Company;

provided, however, that in determining whether or not the Holders of the
requisite principal amount of the Securities Outstanding under this Indenture,
or the Outstanding Securities of any series, have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or whether or not
a quorum is present at a meeting of Holders of Securities, Securities owned by
the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor (unless the Company, such Affiliate or such
obligor owns all Securities Outstanding under this Indenture, or all Outstanding
Securities of each such series, as the case may be, determined without regard to
this provision) 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 or
upon any such determination as to the presence of a quorum, only Securities
which the Trustee knows to be so owned shall be so disregarded; provided,
however, that Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor; and provided, further, that,
in the case of any Security the principal of which is payable from time to time
without presentment or surrender, the principal amount of such Security that
shall be deemed to be 

                                      -4-
<PAGE>
 
Outstanding at any time for all purposes of this Indenture shall be the original
principal amount thereof less the aggregate amount of principal thereof
theretofore paid.

        "PAYING AGENT" means any Person, including the Company, authorized by
the Company to pay the principal of, and premium, if any, or interest, if any,
on any Securities on behalf of the Company.

        "PERSON" means any individual, corporation, partnership, joint venture,
trust or unincorporated organization or any Governmental Authority.

        "PLACE OF PAYMENT", when used with respect to the Securities of any
series, means the place or places, specified as contemplated by Section 301, at
which, subject to Section 602, principal of and premium, if any, and interest,
if any, on the Securities of such series are payable.

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

        "PREFERRED SECURITIES" means any preferred securities issued by a Trust
or similar securities issued by permitted successors to such Trust in accordance
with the Trust Agreement pertaining to such Trust.

        "PROPERTY TRUSTEE" means The Bank of New York, as Trustee under the
Trust Agreement.

        "REDEMPTION DATE", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.

        "REDEMPTION PRICE", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.

        "REGULAR RECORD DATE" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.

        "RESPONSIBLE OFFICER", when used with respect to the Trustee, means any
officer of the Trustee assigned by the Trustee to administer its corporate trust
matters.

        "SECURITIES" has the meaning stated in the first recital of this
Indenture and more particularly means any securities authenticated and delivered
under this Indenture.

        "SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 305.

        "SENIOR INDEBTEDNESS" means all obligations (other than non-recourse
obligations and the indebtedness issued under this Indenture) of, or guaranteed
or assumed by, the Company for borrowed money, including both senior and
subordinated indebtedness for borrowed money (other than the Securities and
$72,164,950 principal amount of 8.25% Junior Subordinated Deferrable Interest
Debentures of the Company issued under its Junior Subordinated Indenture dated
as of October 1, 1996 with The Bank of New York, 

                                      -5-
<PAGE>
 
Trustee), or for the payment of money relating to any lease which is capitalized
on the consolidated balance sheet of the Company and its subsidiaries in
accordance with generally accepted accounting principles as in effect from time
to time, or evidenced by bonds, debentures, notes or other similar instruments
(other than trade accounts payable in the ordinary course of business), and in
each case, amendments, renewals, extensions, modifications and refundings of any
such indebtedness or obligations, whether existing as of the date of this
Indenture as originally executed and delivered or subsequently incurred by the
Company unless, in the case of any particular indebtedness, renewal, extension
or refunding, the instrument creating or evidencing the same or the assumption
or guarantee of the same expressly provides that such indebtedness, renewal,
extension or refunding is not superior in right of payment to or is pari passu
with the Securities; provided that the Company's obligations under the Guarantee
shall not be deemed to be Senior Indebtedness.

        "SPECIAL RECORD DATE" for the payment of any Defaulted Interest on the
Securities of any series means a date fixed by the Trustee pursuant to Section
307.

        "STATED MATURITY", when used with respect to any obligation or any
installment of principal thereof or interest thereon, means the date on which
the principal of such obligation or such installment of principal or interest is
stated in such Security to be due and payable (without regard to any provisions
for redemption, prepayment, acceleration, purchase or extension).

        "TRUST" means Atlantic Capital II, a statutory business trust created
under the laws of the State of Delaware, or any other Trust designated pursuant
to Section 301 hereof or any permitted successor under the Trust Agreement
pertaining to such Trust.

        "TRUST AGREEMENT" means the Amended and Restated Trust Agreement, dated
as of October 1, 1998, relating to Atlantic Capital II or an Amended and
Restated Trust Agreement relating to a Trust designated pursuant to Section 301
hereof, in each case, among the Company, as Depositor, the trustees named
therein and the several holders referred to therein as each such agreement may
be amended from time to time.

        "TRUST INDENTURE ACT" means, as of any time, the Trust Indenture Act of
1939, or any successor statute, as in effect at such time.

        "TRUSTEE" means the Person named as the "Trustee" in the first paragraph
of this Indenture until a successor Trustee shall have become such with respect
to one or more series of Securities pursuant to the applicable provisions of
this Indenture, and thereafter "Trustee" shall mean or include each Person who
is then a Trustee hereunder, and if at any time there is more than one such
Person, "Trustee" as used with respect to the Securities of any series shall
mean the Trustee with respect to Securities of that series.

        "UNITED STATES" means the United States of America, its Territories, its
possessions and other areas subject to its political jurisdiction.

SECTION 102.  COMPLIANCE CERTIFICATES AND OPINIONS.

        Except as otherwise expressly provided in this Indenture, 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 an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action (including any covenants
compliance with which constitutes a condition precedent) have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions 

                                      -6-
<PAGE>
 
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.

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

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

        (b)  a brief statement as to the nature and scope of the examination or
   investigation upon which the statements or opinions contained in such
   certificate or opinion are based;

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

        (d)  a statement as to whether, in the opinion of each such Person, 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 such Person may certify
or 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 certificate 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 such Officer's Certificate or opinion are
based are erroneous.  Any such certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, 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.

        Whenever, subsequent to the receipt by the Trustee of any Board
Resolution, Officer's Certificate, Opinion of Counsel or other document or
instrument, a clerical, typographical or other inadvertent or unintentional
error or omission shall be discovered therein, a new document or instrument may
be substituted therefor in corrected form with the same force and effect as if
originally filed in the corrected form and, irrespective of the date or dates of
the actual execution and/or delivery thereof, such substitute document or
instrument shall be deemed to have been executed and/or delivered as of the date
or dates required with respect to the document or instrument for which it is
substituted.  Anything in this Indenture to the contrary 

                                      -7-
<PAGE>
 
notwithstanding, if any such corrective document or instrument indicates that
action has been taken by or at the request of the Company which could not have
been taken had the original document or instrument not contained such error or
omission, the action so taken shall not be invalidated or otherwise rendered
ineffective but shall be and remain in full force and effect, except to the
extent that such action was a result of willful misconduct or bad faith. Without
limiting the generality of the foregoing, any Securities issued under the
authority of such defective document or instrument shall nevertheless be the
valid obligations of the Company entitled to the benefits of this Indenture
equally and ratably with all other Outstanding Securities, except as aforesaid.

SECTION 104.  ACTS OF HOLDERS.

        (a)    Any request, demand, authorization, direction, notice, consent,
   election, waiver or other action provided by this Indenture to be made, 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 an agent duly appointed in writing or, alternatively, may be embodied
   in and evidenced by the record of Holders voting in favor thereof, either in
   person or by proxies duly appointed in writing, at any meeting of Holders
   duly called and held in accordance with the provisions of Article Thirteen,
   or a combination of such instruments and any such record.  Except as herein
   otherwise expressly provided, such action shall become effective when such
   instrument or instruments or record or both are delivered to the Trustee and,
   where it is hereby expressly required, to the Company.  Such instrument or
   instruments and any such record (and the action embodied therein and
   evidenced thereby) are herein sometimes referred to as the "Act" of the
   Holders signing such instrument or instruments and so voting at any such
   meeting.  Proof of execution of any such instrument or of a writing
   appointing any such agent, or of the holding by any Person of a Security,
   shall be sufficient for any purpose of this Indenture and (subject to Section
   901) conclusive in favor of the Trustee and the Company, if made in the
   manner provided in this Section.  The record of any meeting of Holders shall
   be proved in the manner provided in Section 1306.

        (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
   or may be proved in any other manner which the Trustee and the Company deem
   sufficient.  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 principal amount and serial numbers of Securities held by any
   Person, and the date of holding the same, shall be proved by the Security
   Register.

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

        (e)  Until such time as written instruments shall have been delivered to
   the Trustee with respect to the requisite percentage of principal amount of
   Securities for the action contemplated by such instruments, any such
   instrument executed and delivered by or on behalf of a Holder may be revoked
   with respect to any or all of such Securities by written notice by such
   Holder or any subsequent Holder, proven in the manner in which such
   instrument was proven.

                                      -8-
<PAGE>
 
        (f)  Securities of any series authenticated and delivered after any Act
   of Holders may, and shall if required by the Trustee, bear a notation in form
   approved by the Trustee as to any action taken by such Act of Holders.  If
   the Company shall so determine, new Securities of any series so modified as
   to conform, in the opinion of the Trustee and the Company, to such action may
   be prepared and executed by the Company and authenticated and delivered by
   the Trustee in exchange for Outstanding Securities of such series.

        (g)  If the Company shall solicit from Holders any request, demand,
   authorization, direction, notice, consent, waiver or other Act, the Company
   may, at its option, fix in advance a record date for the determination of
   Holders entitled to give such request, demand, authorization, direction,
   notice, consent, waiver or other Act, but the Company shall have no
   obligation to do so.  If such a record date is fixed, such request, demand,
   authorization, direction, notice, consent, waiver or other Act may be given
   before or after such record date, but only the Holders of record at the close
   of business on the record date shall be deemed to be Holders for the purposes
   of determining whether Holders of the requisite proportion of the Outstanding
   Securities have authorized or agreed or consented to such request, demand,
   authorization, direction, notice, consent, waiver or other Act, and for that
   purpose the Outstanding Securities shall be computed as of the record date.

SECTION 105.  NOTICES, ETC. TO TRUSTEE AND COMPANY.

        Any request, demand, authorization, direction, notice, consent,
election, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with, the
Trustee by any Holder or by the Company, or 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 delivered personally to an officer or
other responsible employee of the addressee, or transmitted by facsimile
transmission or other direct written electronic means to such telephone number
or other electronic communications address as the parties hereto shall from time
to time designate, or transmitted by certified or registered mail, charges
prepaid, to the applicable address set opposite such party's name below or to
such other address as either party hereto may from time to time designate:

        If to the Trustee, to:

        The Bank of New York
        101 Barclay Street - 21 West
        New York, New York 10286
        Attention:  Corporate Trust Administration
        Telecopy:   (212) 815-5915

        If to the Company, to:

        Atlantic City Electric Company
        800 King Street
        Wilmington, Delaware  19899

        Attention:  Treasurer
        Telephone:  (302) 429-3011
        Telecopy:   (302) 429-3367

                                      -9-
<PAGE>
 
        Any communication contemplated herein shall be deemed to have been made,
given, furnished and filed if personally delivered, on the date of delivery, if
transmitted by facsimile transmission or other direct written electronic means,
on the date of transmission, and if transmitted by certified or registered mail,
on the date of receipt.

SECTION 106.  NOTICE TO HOLDERS OF SECURITIES; WAIVER.

        Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently
given, and shall be deemed given, to Holders if in writing and mailed, first-
class postage prepaid, to each Holder affected by such event, at the address of
such Holder as it appears in the Security 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.

        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 to Holders by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.  In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders.

        Any notice required by this Indenture may be waived in writing by the
Person entitled to receive such notice, either before or after the event
otherwise to be specified therein, 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.

SECTION 107.  CONFLICT WITH TRUST INDENTURE ACT.

        If any provision of this Indenture limits, qualifies or conflicts with
another provision hereof which is required or deemed to be included in this
Indenture by, or is otherwise governed by, any of the provisions of the Trust
Indenture Act, such other provision shall control; and if any provision hereof
otherwise conflicts with the Trust Indenture Act, the Trust Indenture Act shall
control.

SECTION 108.  EFFECT OF HEADINGS AND TABLE OF CONTENTS.

        The Article and Section headings in this Indenture 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
Trustee shall bind their respective successors and assigns, whether so expressed
or not.

SECTION 110.  SEPARABILITY CLAUSE.

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

                                      -10-
<PAGE>
 
SECTION 111.  BENEFITS OF INDENTURE.

        Nothing in this Indenture or the Securities, express or implied, shall
give to any Person, other than the parties hereto, their successors hereunder,
any Creditors, the Holders and, so long as the notice described in Section 1513
hereof has not been given, the holders of Senior Indebtedness, any benefit or
any legal or equitable right, remedy or claim under this Indenture; provided,
however, that for so long as any Preferred Securities remain outstanding, the
holders of such Preferred Securities, subject to certain limitations set forth
in this Indenture, may enforce the Company's obligations hereunder directly
against the Company as third party beneficiaries of this Indenture without first
proceeding against the Trust issuing such Preferred Securities or the Property
Trustee of the Trust.

SECTION 112.  GOVERNING LAW.

        This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflict of
laws principles.

SECTION 113.  LEGAL HOLIDAYS.

        In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Securities
other than a provision in Securities of any series, or in the indenture
supplemental hereto, Board Resolution or Officer's Certificate which establishes
the terms of the Securities of such series, which specifically states that such
provision shall apply in lieu of this Section) payment of interest or principal
and premium, if any, need not be made at such Place of Payment on such date, but
may be made on the next succeeding Business Day at such Place of Payment, except
that if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect, and in the same amount,  as if made on the Interest
Payment Date or Redemption Date, or at the Stated Maturity, as the case may be,
and, if such payment is made or duly provided for on such Business Day, no
interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be, to such Business Day.

                                      -11-
<PAGE>
 
                                  ARTICLE TWO

                                SECURITY FORMS

SECTION 201.  FORMS GENERALLY.

        The definitive Securities of each series shall be in substantially the
form or forms thereof established in the indenture supplemental hereto
establishing such series or in a Board Resolution establishing such series, or
in an Officer's Certificate pursuant to such supplemental indenture or Board
Resolution, in each case 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 the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities.  If the form or forms of Securities of any series
are established in a Board Resolution or in an Officer's Certificate pursuant to
a Board Resolution, such Board Resolution and Officer's Certificate, if any,
shall be delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities.

        Unless otherwise specified as contemplated by Section 301, the
Securities of each series shall be issuable in registered form without coupons.
The definitive Securities shall be produced in such manner as shall be
determined by the officers executing such Securities, as evidenced by their
execution thereof.

SECTION 202.  FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

        The Trustee's certificate of authentication shall be in substantially
the form set forth below:

               This is one of the Securities of the series designated therein
             referred to in the within-mentioned Indenture.


                            _________________________________
                            as Trustee


                            By: _____________________________
                                 Authorized Signatory


                                 ARTICLE THREE

                                The Securities


SECTION 301.  AMOUNT UNLIMITED; ISSUABLE IN SERIES.

                                      -12-
<PAGE>
 
        The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited; provided, however, that all
Securities shall be issued to a Trust in exchange for securities of such Trust
or to evidence loans by a Trust of the proceeds of the issuance of Preferred
Securities of such Trust plus the amount deposited by the Company with such
Trust from time to time.

        The Securities may be issued in one or more series.  Prior to the
authentication and delivery of Securities of any series there shall be
established by specification in an indenture supplemental hereto or in a Board
Resolution, or in an Officer's Certificate pursuant to an indenture supplemental
hereto or a Board Resolution:

        (a)  the title of the Securities of such series (which shall distinguish
   the Securities of such series from Securities of all other series);

        (b)  any limit upon the aggregate principal amount of the Securities of
   such series which may be authenticated and delivered under this Indenture
   (except for Securities authenticated and delivered upon registration of
   transfer of, or in exchange for, or in lieu of, other Securities of such
   series pursuant to Section 304, 305, 306, 406 or 1206 and except for any
   Securities which, pursuant to Section 303, are deemed never to have been
   authenticated and delivered hereunder);

        (c)  the Person or Persons (without specific identification) to whom
   interest on Securities of such series shall be payable on any Interest
   Payment Date, if other than the Persons in whose names such Securities (or
   one or more Predecessor Securities) are registered at the close of business
   on the Regular Record Date for such interest;

        (d)  the date or dates on which the principal of the Securities of such
   series is payable or any formulary or other method or other means by which
   such date or dates shall be determined, by reference or otherwise (without
   regard to any provisions for redemption, prepayment, acceleration, purchase
   or extension);

        (e)  the rate or rates at which the Securities of such series shall bear
   interest, if any (including the rate or rates at which overdue principal
   shall bear interest, if different from the rate or rates at which such
   Securities shall bear interest prior to Maturity, and, if applicable, the
   rate or rates at which overdue premium or interest shall bear interest, if
   any), or any formulary or other method or other means by which such rate or
   rates shall be determined, by reference or otherwise; the date or dates from
   which such interest shall accrue; the Interest Payment Dates on which such
   interest shall be payable and the Regular Record Date, if any, for the
   interest payable on such Securities on any Interest Payment Date; the right
   of the Company, if any, to extend the interest payment periods and the
   duration of any such extension as contemplated by Section 311; and the basis
   of computation of interest, if other than as provided in Section 310;

        (f)  the place or places at which or methods by which (i) the principal
   of and premium, if any, and interest, if any, on Securities of such series
   shall be payable, (ii) registration of transfer of Securities of such series
   may be effected, (iii) exchanges of Securities of such series may be effected
   and (iv) notices and demands to or upon the Company in respect of the
   Securities of such series and this Indenture may be served; the Security
   Registrar for such series; and, if such is the case, that the principal of
   such Securities shall be payable without presentment or surrender thereof;

        (g)  the period or periods within which, or the date or dates on which,
   the price or prices at which and the terms and conditions upon which the
   Securities of such series may be redeemed, in whole or in part, 

                                      -13-
<PAGE>
 
   at the option of the Company and any restrictions on such redemptions,
   including but not limited to a restriction on a partial redemption by the
   Company of the Securities of any series, resulting in delisting of such
   Securities from any national exchange;

        (h)  the obligation or obligations, if any, of the Company to redeem or
   purchase the Securities of such series pursuant to any sinking fund or other
   mandatory redemption provisions or at the option of a Holder thereof and the
   period or periods within which or the date or dates on which, the price or
   prices at which and the terms and conditions upon which such Securities shall
   be redeemed or purchased, in whole or in part, pursuant to such obligation,
   and applicable exceptions to the requirements of Section 404 in the case of
   mandatory redemption or redemption at the option of the Holder;

        (i)  the denominations in which Securities of such series shall be
   issuable if other than denominations of $25 and any integral multiple
   thereof;

        (j)  the currency or currencies, including composite currencies, in
   which payment of the principal of and premium, if any, and interest, if any,
   on the Securities of such series shall be payable (if other than in Dollars);

        (k)  if the principal of or premium, if any, or interest, if any, on the
   Securities of such series are to be payable, at the election of the Company
   or a Holder thereof, in a coin or currency other than that in which the
   Securities are stated to be payable, the period or periods within which and
   the terms and conditions upon which, such election may be made;

        (l)  if the principal of or premium, if any, or interest, if any, on the
   Securities of such series are to be payable, or are to be payable at the
   election of the Company or a Holder thereof, in securities or other property,
   the type and amount of such securities or other property, or the formulary or
   other method or other means by which such amount shall be determined, and the
   period or periods within which, and the terms and conditions upon which, any
   such election may be made;

        (m)  if the amount payable in respect of principal of or premium, if
   any, or interest, if any, on the Securities of such series may be determined
   with reference to an index or other fact or event ascertainable outside this
   Indenture, the manner in which such amounts shall be determined to the extent
   not established pursuant to clause (e) of this paragraph;

        (n)  if other than the principal amount thereof, the portion of the
   principal amount of Securities of such series which shall be payable upon
   declaration of acceleration of the Maturity thereof pursuant to Section 802;

        (o)  any Events of Default, in addition to those specified in Section
   801, with respect to the Securities of such series, and any covenants of the
   Company for the benefit of the Holders of the Securities of such series, in
   addition to those set forth in Article Six;

        (p)  the terms, if any, pursuant to which the Securities of such series
   may be converted into or exchanged for shares of capital stock or other
   securities of the Company or any other Person;

        (q)  the obligations or instruments, if any, which shall be considered
   to be Government Obligations in respect of the Securities of such series
   denominated in a currency other than Dollars or in a composite 

                                      -14-
<PAGE>
 
   currency, and any additional or alternative provisions for the reinstatement
   of the Company's indebtedness in respect of such Securities after the
   satisfaction and discharge thereof as provided in Section 701;

        (r)  if the Securities of such series are to be issued in global form,
   (i) any limitations on the rights of the Holder or Holders of such Securities
   to transfer or exchange the same or to obtain the registration of transfer
   thereof, (ii) any limitations on the rights of the Holder or Holders thereof
   to obtain certificates therefor in definitive form in lieu of temporary form
   and (iii) any and all other matters incidental to such Securities;

        (s)  if the Securities of such series are to be issuable as bearer
   securities, any and all matters incidental thereto which are not specifically
   addressed in a supplemental indenture as contemplated by clause (g) of
   Section 1201;

        (t)  to the extent not established pursuant to clause (r) of this
   paragraph, any limitations on the rights of the Holders of the Securities of
   such Series to transfer or exchange such Securities or to obtain the
   registration of transfer thereof; and if a service charge will be made for
   the registration of transfer or exchange of Securities of such series the
   amount or terms thereof;

        (u)  any exceptions to Section 113, or variation in the definition of
   Business Day, with respect to the Securities of such series;

        (v)  the designation of the Trust to which Securities of such series are
   to be issued; and

        (w)  any other terms of the Securities of such series not inconsistent
   with the provisions of this Indenture.

        All Securities of any one series shall be substantially identical,
except as to principal amount and date of issue and except as may be set forth
in the terms of such series as contemplated above.  The Securities of each
series shall be subordinated in right of payment to Senior Indebtedness as
provided in Article Fifteen.

SECTION 302.  DENOMINATIONS.

        Unless otherwise provided as contemplated by Section 301 with respect to
any series of Securities, the Securities of each series shall be issuable in
denominations of $25 and any integral multiple thereof.

SECTION 303.  EXECUTION, AUTHENTICATION, DELIVERY AND DATING.

        Unless otherwise provided as contemplated by Section 301 with respect to
any series of Securities, the Securities shall be executed on behalf of the
Company by an Authorized Officer and may have the corporate seal of the Company
affixed thereto or reproduced thereon attested by any other Authorized Officer
or by the Secretary or an Assistant Secretary of the Company.  The signature of
any or all of these officers on the Securities may be manual or facsimile.

        Securities bearing the manual or facsimile signatures of individuals who
were at the time of execution Authorized Officers or the Secretary or an
Assistant Secretary of the Company shall bind the Company, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices at
the date of original issue of such Securities.

                                      -15-
<PAGE>
 
        The Trustee shall authenticate and deliver Securities of a series, for
original issue, at one time or from time to time in accordance with the Company
Order referred to below, upon receipt by the Trustee of:

        (a)  the instrument or instruments establishing the form or forms and
   terms of such series, as provided in Sections 201 and 301;

        (b)  a Company Order requesting the authentication and delivery of such
   Securities and, to the extent that the terms of such Securities shall not
   have been established in an indenture supplemental hereto or in a Board
   Resolution, or in an Officer's Certificate pursuant to a supplemental
   indenture or Board Resolution, all as contemplated by Sections 201 and 301,
   establishing such terms;

        (c)  the Securities of such series, executed on behalf of the Company by
   an Authorized Officer;

        (d)  an Opinion of Counsel to the effect that:

             (i)  the form or forms of such Securities have been duly authorized
        by the Company and have been established in conformity with the
        provisions of this Indenture;

             (ii)  the terms of such Securities have been duly authorized by the
        Company and have been established in conformity with the provisions of
        this Indenture; and

             (iii)  such Securities, when authenticated and delivered by the
        Trustee and issued and delivered by the Company in the manner and
        subject to any conditions specified in such Opinion of Counsel, will
        have been duly issued under this Indenture and will constitute valid and
        legally binding obligations of the Company, entitled to the benefits
        provided by this Indenture, and enforceable against the Company in
        accordance with their terms, subject to the effects of bankruptcy,
        insolvency, fraudulent conveyance, reorganization, moratorium and other
        similar laws relating to or affecting creditors' rights generally,
        general equitable  principles (whether considered in a proceeding in
        equity or at law) and an implied covenant of good faith and fair
        dealing.

        If the form or terms of the Securities of any series have been
established by or pursuant to a Board Resolution or an Officer's Certificate as
permitted by Sections 201 or 301, the Trustee shall not be required to
authenticate such Securities if the issuance of such Securities pursuant to this
Indenture will materially or adversely affect the Trustee's own rights, duties
or immunities under the Securities and this Indenture or otherwise in a manner
that is not reasonably acceptable to the Trustee.

        Unless otherwise specified as contemplated by Section 301 with respect
to any series of Securities, each Security shall be dated the date of its
authentication.

        Unless otherwise specified as contemplated by Section 301 with respect
to any series of Securities, no Security shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form provided
for herein executed by the Trustee or an Authenticating Agent by manual
signature, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Security shall have been authenticated and
delivered hereunder to the Company, or any Person acting on its behalf, but
shall never have been issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section 309
together with a written statement (which need not comply with Section 

                                      -16-
<PAGE>
 
102 and need not be accompanied by an Opinion of Counsel) stating that such
Security has never been issued and sold by the Company, for all purposes of this
Indenture such Security shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits hereof.

SECTION 304.  TEMPORARY SECURITIES.

        Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may determine, as evidenced
by their execution of such Securities; provided, however, that temporary
Securities need not recite specific redemption, sinking fund, conversion or
exchange provisions.

        Unless otherwise specified as contemplated by Section 301 with respect
to the Securities of any series, after the preparation of definitive Securities
of such series, the temporary Securities of such series shall be exchangeable,
without charge to the Holder thereof, for definitive Securities of such series
upon surrender of such temporary Securities at the office or agency of the
Company maintained pursuant to Section 602 in a Place of Payment for such
Securities.  Upon such surrender of temporary Securities for such exchange, the
Company shall, except as aforesaid, execute and the Trustee shall authenticate
and deliver in exchange therefor definitive Securities of the same series, of
authorized denominations and of like tenor and aggregate principal amount.

        Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series and of like
tenor authenticated and delivered hereunder.

SECTION 305.  REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.

        The Company shall cause to be kept in each office designated pursuant to
Section 602, with respect to the Securities of each series, a register (all
registers kept in accordance with this Section being collectively referred to as
the "Security Register") in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Securities of
such series and the registration of transfer thereof.  The Company shall
designate one Person to maintain the Security Register for the Securities of
each series on a consolidated basis, and such Person is referred to herein, with
respect to such series, as the "Security Registrar."  Anything herein to the
contrary notwithstanding, the Company may designate one or more of its offices
as an office in which a register with respect to the Securities of one or more
series shall be maintained, and the Company may designate itself the Security
Registrar with respect to one or more of such series.  The Security Register
shall be open for inspection by the Trustee and the Company at all reasonable
times.

        Except as otherwise specified as contemplated by Section 301 with
respect to the Securities of any series, upon surrender for registration of
transfer of any Security of such series at the office or agency of the Company
maintained pursuant to Section 602 in a Place of Payment for such series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series, of authorized denominations and of like tenor and aggregate
principal amount.

        Except as otherwise specified as contemplated by Section 301 with
respect to the Securities of any series, any Security of such series may be
exchanged at the option of the Holder, for one or more new Securities of the
same series, of authorized denominations and of like tenor and aggregate
principal amount, upon surrender 

                                      -17-
<PAGE>
 
of the Securities to be exchanged at any such office or agency. Whenever any
Securities are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive.

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

        Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company, the Trustee or the Security
Registrar) be duly endorsed or shall be accompanied by a written instrument of
transfer in form satisfactory to the Company, the Trustee or the Security
Registrar, as the case may be, duly executed by the Holder thereof or his
attorney duly authorized in writing.

        Unless otherwise specified as contemplated by Section 301 with respect
to Securities of any series, no service charge shall be made for any
registration of transfer or exchange of Securities, but 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
Securities, other than exchanges pursuant to Section 304, 406 or 1206 not
involving any transfer.

        The Company shall not be required to execute or to provide for the
registration of transfer of or the exchange of (a) Securities of any series
during a period of 15 days immediately preceding the date of the mailing of any
notice of redemption of such Securities called for redemption or (b) any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.

SECTION 306.  MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.

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

        If there shall be delivered to the Company and the Trustee (a) evidence
to their satisfaction of the ownership of and the destruction, loss or theft of
any Security and (b) such security or indemnity as may be reasonably 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 Security is held by a
Person purporting to be the owner of such Security, the Company shall execute
and the Trustee shall authenticate and deliver, in lieu of any such destroyed,
lost or stolen Security, a new Security of the same series, and of like tenor
and principal amount and bearing a number not contemporaneously outstanding.

        Notwithstanding the foregoing, in case any such mutilated, destroyed,
lost or stolen Security has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a new Security, pay such
Security.

        Upon the issuance of any new Security 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
reasonable expenses (including the fees and expenses of the Trustee) connected
therewith.

        Every new Security of any series issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the 

                                      -18-
<PAGE>
 
destroyed, lost or stolen Security shall be at any time enforceable by anyone
other than the Holder of such new Security, and any such new Security shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of such series duly issued hereunder.

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

SECTION 307.  PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.

        Unless otherwise specified as contemplated by Section 301 with respect
to the Securities of any series, interest on any Security 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 Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.

        Subject to Section 311, any interest on any Security of any series 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 related 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 (a) or (b) below:

        (a)  The Company may elect to make payment of any Defaulted Interest to
   the Persons in whose names the Securities of such series (or their respective
   Predecessor Securities) are registered at the close of business on a date
   (herein called a "Special Record Date") for the payment of such Defaulted
   Interest, which shall be fixed in the following manner.  The Company shall
   notify the Trustee in writing of the amount of Defaulted Interest proposed to
   be paid on each Security of such series and the date of the proposed 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 on or prior to the date of the proposed payment, such money when
   deposited to be held in trust for the benefit of the Persons entitled to such
   Defaulted Interest as in this clause provided.  Thereupon the Trustee 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 promptly cause notice of the proposed payment
   of such Defaulted Interest and the Special Record Date therefor to be mailed,
   first-class postage prepaid, to each Holder of Securities of such series at
   the address of such Holder as it appears in the Security 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 Securities of such series (or their respective Predecessor
   Securities) are registered at the close of business on such Special Record
   Date.

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

                                      -19-
<PAGE>
 
        Subject to the foregoing provisions of this Section and Section 305,
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.

SECTION 308.  PERSONS DEEMED OWNERS.

        Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and premium, if
any, and (subject to Sections 305 and 307) interest, if any, on such Security
and for all other purposes whatsoever, whether or not such Security be overdue,
and neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.

SECTION 309.  CANCELLATION BY SECURITY REGISTRAR.

        All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Security
Registrar, be delivered to the Security Registrar and, if not theretofore
canceled, shall be promptly canceled by the Security Registrar.  The Company may
at any time deliver to the Security Registrar for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever or which the Company shall not have issued and
sold, and all Securities so delivered shall be promptly canceled by the Security
Registrar.  No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Indenture.  All canceled Securities held by the Security
Registrar shall be disposed of in accordance with the customary procedures of
the Security Registrar as at the time of disposition shall be in effect (which
may or may not include destruction of the certificate or certificates evidencing
such Securities).  The Security Registrar shall promptly deliver evidence of any
cancellation of a Security in accordance with this Section 309 to the Trustee
and the Company.

SECTION 310.  COMPUTATION OF INTEREST.

        Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year consisting of twelve 30-day months and
for any period shorter than a full month, on the basis of the actual number of
days elapsed in such period.

SECTION 311.  EXTENSION OF INTEREST PAYMENT.

        The Company shall have the right at any time, so long as the Company is
not in default in the payment of interest on the Securities of any series
hereunder, to extend interest payment periods on all Securities of one or more
series, if so specified as contemplated by Section 301 with respect to such
Securities and upon such terms as may be specified as contemplated by Section
301 with respect to such Securities.

SECTION 312.  PAYMENT OF EXPENSES.

        The Company, as issuer of the Securities, shall pay all debts and
obligations (other than with respect to the securities of a Trust) and all
costs, liabilities and expenses of a Trust (including, but not limited to, all
costs, liabilities, expenses and indemnities under Section 8.06 of the Trust
Agreement dated as of October 1, 1998 and the comparable provisions of any other
Trust Agreement, all costs, liabilities and expenses relating 

                                      -20-
<PAGE>
 
to the organization of a Trust, the fees and expenses of the Property Trustee,
the Delaware Trustee and the Administrative Trustees and all costs, liabilities
and expenses relating to the operation of the Trust (other than with respect to
payments due to the holders of the securities of a Trust pursuant to the terms
of such securities)) and to pay any and all taxes, duties, assessments or other
governmental charges of whatever nature (other than United States withholding
taxes) imposed by the United States or any other taxing authority, so that the
net amounts received and retained by a Trust after paying such fees, costs,
expenses, liabilities, debts and obligations will be equal to the amounts a
Trust would have received and retained had no such fees, costs, expenses,
liabilities, debts and obligations been incurred by or imposed on a Trust. The
foregoing obligations of the Company are for the benefit of, and shall be
enforceable by, any person to whom such fees, costs, expenses, liabilities,
debts and obligations are owed (each a "Creditor") whether or not such Creditor
has received notice thereof. Any such Creditor may enforce such obligations of
the Company directly against the Company, and the Company irrevocably waives any
right or remedy to require that any such Creditor take any action against a
Trust or any other person before proceeding against the Company. The Company
shall execute such additional agreements as may be necessary to give full effect
to the foregoing. The provisions of this Section 312 shall survive the
termination for any reason of this Indenture.


                                 ARTICLE FOUR

                           Redemption of Securities

SECTION 401.  APPLICABILITY OF ARTICLE.

        Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of such
series) in accordance with this Article.

SECTION 402.  ELECTION TO REDEEM; NOTICE TO TRUSTEE.

        The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution or an Officer's Certificate.  The Company shall, at least
45 days prior to the Redemption Date fixed by the Company (unless a shorter
notice shall be satisfactory to the Trustee), notify the Trustee in writing of
such Redemption Date and of the principal amount of such Securities to be
redeemed.  In the case of any redemption of Securities (a) prior to the
expiration of any restriction on such redemption provided in the terms of such
Securities or elsewhere in this Indenture or (b) pursuant to an election of the
Company which is subject to a condition specified in the terms of such
Securities, the Company shall furnish the Trustee with an Officer's Certificate
evidencing compliance with such restriction or condition.

                                      -21-
<PAGE>
 
SECTION 403.  SELECTION OF SECURITIES TO BE REDEEMED.

        If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected by the Trustee from the
Outstanding Securities of such series not previously called for redemption, by
such method as shall be provided for any particular series, or, in the absence
of any such provision, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to the minimum authorized denomination for Securities of such series or
any integral multiple thereof) of the principal amount of Securities of such
series of a denomination larger than the minimum authorized denomination for
Securities of such series; provided, however, that if, as indicated in an
Officer's Certificate, the Company shall have offered to purchase all or any
principal amount of the Securities then Outstanding of any series, and less than
all of such Securities as to which such offer was made shall have been tendered
to the Company for such purchase, the Trustee, if so directed by Company Order,
shall select for redemption all or any principal amount of such Securities which
have not been so tendered.

        The Trustee shall promptly notify the Company and the Security Registrar
in writing of the Securities selected for redemption and, in the case of any
Securities selected to be redeemed in part, 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 Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.

SECTION 404.  NOTICE OF REDEMPTION.

        Notice of redemption shall be given in the manner provided in Section
106 to the Holders of the Securities to be redeemed not less than 30 nor more
than 60 days prior to the Redemption Date.

        All notices of redemption shall state:

        (a)  the Redemption Date,

        (b)  the Redemption Price,

        (c)  if less than all the Securities of any series are to be redeemed,
   the identification of the particular Securities to be redeemed and the
   portion of the principal amount of any Security to be redeemed in part,

        (d)  that on the Redemption Date the Redemption Price, together with
   accrued interest, if any, to the Redemption Date, will become due and payable
   upon each such Security to be redeemed and, if applicable, that interest
   thereon will cease to accrue on and after said date,

        (e)  the place or places where such Securities are to be surrendered for
   payment of the Redemption Price and accrued interest, if any, unless it shall
   have been specified as contemplated by Section 301 with respect to such
   Securities that such surrender shall not be required,

        (f)  that the redemption is for a sinking or other fund, if such is the
   case, and

        (g)  such other matters as the Company shall deem desirable or
   appropriate.

                                      -22-
<PAGE>
 
        Unless otherwise specified with respect to any Securities in accordance
with Section 301, with respect to any notice of redemption of Securities at the
election of the Company, unless, upon the giving of such notice, such Securities
shall be deemed to have been paid in accordance with Section 701, such notice
may state that such redemption shall be conditional upon the receipt by the
Paying Agent or Agents for such Securities, on or prior to the date fixed for
such redemption, of money sufficient to pay the principal of and premium, if
any, and interest, if any, on such Securities and that if such money shall not
have been so received such notice shall be of no force or effect and the Company
shall not be required to redeem such Securities.  In the event that such notice
of redemption contains such a condition and such money is not so received, the
redemption shall not be made and within a reasonable time thereafter notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made,
and the Paying Agent or Agents for the Securities otherwise to have been
redeemed shall promptly return to the Holders thereof any of such Securities
which had been surrendered for payment upon such redemption.

        Notice of redemption of Securities to be redeemed at the election of the
Company, and any notice of non-satisfaction of a condition for redemption as
aforesaid, shall be given by the Company or, at the Company's request, by the
Security Registrar in the name and at the expense of the Company.  Notice of
mandatory redemption of Securities shall be given by the Security Registrar in
the name and at the expense of the Company.

SECTION 405.  SECURITIES PAYABLE ON REDEMPTION DATE.

        Notice of redemption having been given as aforesaid, and the conditions,
if any, set forth in such notice having been satisfied, the Securities or
portions thereof 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, in the case of an unconditional notice of redemption, the Company shall
default in the payment of the Redemption Price and accrued interest, if any)
such Securities or portions thereof, if interest-bearing, shall cease to bear
interest.  Upon surrender of any such Security for redemption in accordance with
such notice, such Security or portion thereof shall be paid by the Company at
the Redemption Price, together with accrued interest, if any, to the Redemption
Date; provided, however, that no such surrender shall be a condition to such
payment if so specified as contemplated by Section 301 with respect to such
Security; and provided, further, that except as otherwise specified as
contemplated by Section 301 with respect to such Security, any installment of
interest on any Security the Stated Maturity of which installment is on or prior
to the Redemption Date shall be payable to the Holder of such Security, or one
or more Predecessor Securities, registered as such at the close of business on
the related Regular Record Date according to the terms of such Security and
subject to the provisions of Section 307.

SECTION 406.  SECURITIES REDEEMED IN PART.

        Upon the surrender of any Security which is to be redeemed only in part
at a Place of Payment therefor (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), the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security, without service charge,
a new Security or Securities of the same series, of any authorized denomination
requested by such Holder and of like tenor and in aggregate principal amount
equal to and in exchange for the unredeemed portion of the principal of the
Security so surrendered.

                                      -23-
<PAGE>
 
                                 ARTICLE FIVE

                                 Sinking Funds

SECTION 501.  APPLICABILITY OF ARTICLE.

        The provisions of this Article shall be applicable to any sinking fund
for the retirement of the Securities of any series, except as otherwise
specified as contemplated by Section 301 for Securities of such series.

        The minimum amount of any sinking fund payment provided for by the terms
of Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment."  If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 502.  Each sinking fund payment shall be applied to the redemption of
Securities of the series in respect of which it was made as provided for by the
terms of such Securities.

SECTION 502.  SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.

        The Company (a) may deliver to the Trustee Outstanding Securities (other
than any previously called for redemption) of a series in respect of which a
mandatory sinking fund payment is to be made and (b) may apply as a credit
Securities of such series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities or Outstanding Securities purchased by the Company, in each case in
satisfaction of all or any part of such mandatory sinking fund payment with
respect to the Securities of such series; provided, however, that no Securities
shall be applied in satisfaction of a mandatory sinking fund payment if such
Securities shall have been previously so applied.  Securities so applied shall
be received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such mandatory sinking fund payment shall be reduced
accordingly.

SECTION 503.  REDEMPTION OF SECURITIES FOR SINKING FUND.

        Not less than 45 days prior to each sinking fund payment date for the
Securities of any series, the Company shall deliver to the Trustee an Officer's
Certificate specifying:

        (a)  the amount of the next succeeding mandatory sinking fund payment
   for such series;

        (b)  the amount, if any, of the optional sinking fund payment to be made
   together with such mandatory sinking fund payment;

        (c)  the aggregate sinking fund payment;

        (d)  the portion, if any, of such aggregate sinking fund payment which
   is to be satisfied by the payment of cash; and

                                      -24-
<PAGE>
 
        (e)  the portion, if any, of such aggregate sinking fund payment which
   is to be satisfied by delivering and crediting Securities of such series
   pursuant to Section 502 and stating the basis for such credit and that such
   Securities have not previously been so credited, and the Company shall also
   deliver to the Trustee any Securities to be so delivered.

If the Company shall not have delivered such Officer's Certificate and, to the
extent applicable, all such Securities, on or prior to the 45th day prior to
such sinking fund payment date, the sinking fund payment for such series in
respect of such sinking fund payment date shall be made entirely in cash in the
amount of the mandatory sinking fund payment.  Not less than 30 days before each
such sinking fund payment date the Trustee shall select the Securities to be
redeemed upon such sinking fund payment date in the manner specified in Section
403 and cause notice of the redemption thereof to be given in the name of and at
the expense of the Company in the manner provided in Section 404.  Such notice
having been duly given, the redemption of such Securities shall be made upon the
terms and in the manner stated in Sections 405 and 406.


                                  ARTICLE SIX

                                   Covenants

SECTION 601.  PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.

        The Company shall pay the principal of and premium, if any, and
interest, if any, on the Securities of each series in accordance with the terms
of such Securities and this Indenture.

SECTION 602.  MAINTENANCE OF OFFICE OR AGENCY.

        The Company shall maintain in each Place of Payment for the Securities
of each series an office or agency where payment of such Securities shall be
made, where the registration of transfer or exchange of such Securities may be
effected and where notices and demands to or upon the Company in respect of such
Securities and this Indenture may be served.  The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of each such office or agency and prompt notice to the Holders of any such
change in the manner specified in Section 106.  If at any time the Company shall
fail to maintain any such required office or agency in respect of Securities of
any series, or shall fail to furnish the Trustee with the address thereof,
payment of such Securities shall be made, registration of transfer or exchange
thereof may be effected and notices and demands in respect thereof may be served
at the Corporate Trust Office of the Trustee, and the Company hereby appoints
the Trustee as its agent for all such purposes in any such event.

        The Company may also from time to time designate one or more other
offices or agencies with respect to the Securities of one or more series, for
any or all of the foregoing purposes and may from time to time rescind such
designations; provided, however, that, unless otherwise specified as
contemplated by Section 301 with respect to the Securities of such series, no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency for such purposes in each Place of
Payment for such Securities in accordance with the requirements set forth above.
The Company shall give prompt written notice to the Trustee, and prompt notice
to the Holders in the manner specified in Section 106, of any such designation
or rescission and of any change in the location of any such other office or
agency.

                                      -25-
<PAGE>
 
        Anything herein to the contrary notwithstanding, any office or agency
required by this Section may be maintained at an office of the Company, in which
event the Company shall perform all functions to be performed at such office or
agency.

SECTION 603.  MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.

        If the Company shall at any time act as its own Paying Agent with
respect to the Securities of any series, it shall, on or before each due date of
the principal of and premium, if any, and interest, if any, on any of such
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and premium or interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided. The Company shall promptly notify the Trustee of any
failure by the Company (or any other obligor on such Securities) to make any
payment of principal of or premium, if any, or interest, if any, on such
Securities.

        Whenever the Company shall have one or more Paying Agents for the
Securities of any series, it shall, on or before each due date of the principal
of and premium, if any, and interest, if any, on such Securities, deposit with
such Paying Agents sums sufficient (without duplication) to pay the principal
and premium or interest so becoming due, such sum to be held in trust for the
benefit of the Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company shall promptly notify the
Trustee of any failure by it so to act.

        The Company shall cause each Paying Agent for the Securities of any
series, other than the Company or the Trustee, 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 shall:

        (a)  hold all sums held by it for the payment of the principal of and
   premium, if any, or interest, if any, on such Securities 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;

        (b)  give the Trustee notice of any failure by the Company (or any other
   obligor upon such Securities) to make any payment of principal of or premium,
   if any, or interest, if any, on such Securities; and

        (c)  at any time during the continuance of any such default, upon the
   written request of the Trustee, forthwith pay to the Trustee all sums so held
   in trust by such Paying Agent and furnish to the Trustee such information as
   it possesses regarding the names and addresses of the Persons entitled to
   such sums.

        The Company may at any time 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, if so
stated in a Company Order delivered to the Trustee, in accordance with the
provisions of Article Seven; 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.

        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, if any, on any Security 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 

                                      -26-
<PAGE>
 
trust; and, upon such payment or discharge, the Holder of such Security shall,
as an unsecured general creditor and not as a Holder of an Outstanding Security,
look only to the Company for payment of the amount so due and payable and
remaining unpaid, 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 payment to the Company, may
at the expense of the Company cause to be mailed, on one occasion only, notice
to such Holder 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
mailing, any unclaimed balance of such money then remaining will be paid to the
Company.

SECTION 604.  CORPORATE EXISTENCE.

        Subject to the rights of the Company under Article Eleven, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence.

SECTION 605.  MAINTENANCE OF PROPERTIES.

        The Company shall cause (or, with respect to property owned in common
with others, make reasonable effort to cause) all its properties used or useful
in the conduct of its business to be maintained and kept in good condition,
repair and working order and shall cause (or, with respect to property owned in
common with others, make reasonable effort to cause) to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as,
in the judgment of the Company, may be necessary so that the business carried on
in connection therewith may be properly conducted; provided, however, that
nothing in this Section shall prevent the Company from discontinuing, or causing
the discontinuance of, the operation and maintenance of any of its properties if
such discontinuance is, in the judgment of the Company, desirable in the conduct
of its business.

SECTION 606.  ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.

        Not later than September 15 in each year, commencing September 15, 1999,
the Company shall deliver to the Trustee an Officer's Certificate which need not
comply with Section 102, executed by the principal executive officer, the
principal financial officer or the principal accounting officer of the Company,
as to such officer's knowledge of the Company's compliance with all conditions
and covenants under this Indenture, such compliance to be determined without
regard to any period of grace or requirement of notice under this Indenture.

                                      -27-
<PAGE>
 
SECTION 607.  WAIVER OF CERTAIN COVENANTS.

        The Company may omit in any particular instance to comply with any term,
provision or condition set forth in (a) Section 602 or any additional covenant
or restriction specified with respect to the Securities of any series, as
contemplated by Section 301, if before the time for such compliance the Holders
of at least a majority in aggregate principal amount of the Outstanding
Securities of all series with respect to which compliance with Section 602 or
such additional covenant or restriction is to be omitted, considered as one
class, shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such term, provision or condition
and (b) Section 604, 605 or Article Eleven if before the time for such
compliance the Holders of at least a majority in principal amount of Securities
Outstanding under this Indenture shall, by Act of such Holders, either waive
such compliance in such instance or generally waive compliance with such term,
provision or condition; but, in the case of (a) or (b), no such waiver shall
extend to or affect such term, provision 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 term,
provision or condition shall remain in full force and effect; provided, however,
that so long as a Trust holds Securities of any series, such Trust may not waive
compliance or waive any default in compliance by the Company with any covenant
or other term contained in this Indenture or the Securities of such series
without the approval of the holders of at least a majority in aggregate
liquidation preference of the outstanding Preferred Securities issued by such
Trust affected, obtained as provided in the Trust Agreement pertaining to such
Trust.

SECTION 608.  RESTRICTION ON PAYMENT OF DIVIDENDS.

        So long as any Preferred Securities of any series remain outstanding,
the Company shall not declare or pay any dividend on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Company's
capital stock, or make any guarantee payments with respect to the foregoing
(other than payments under the Guarantee relating to such Preferred Securities)
if at such time (a) the Company shall be in default with respect to its payment
or other obligations under the Guarantee relating to such Preferred Securities,
(b) there shall have occurred and be continuing a payment default (whether
before or after expiration of any period of grace) or an Event of Default
hereunder or (c) the Company shall have elected to extend any interest payment
period as provided in Section 311, and any such period, or any extension
thereof, shall be continuing.

SECTION 609.  MAINTENANCE OF TRUST EXISTENCE.

        So long as Preferred Securities of any series remain outstanding, the
Company shall (i) maintain direct or indirect ownership of all interests in the
Trust which issued such Preferred Securities, other than such Preferred
Securities, (ii) not voluntarily (to the extent permitted by law) dissolve,
liquidate or wind up such Trust, except in connection with a distribution of the
Securities to the holders of the Preferred Securities in liquidation of such
Trust, (iii) remain the sole Depositor under the Trust Agreement (the
"Depositor") of such Trust and timely perform in all material respects all of
its duties as Depositor of such Trust, and (iv) use reasonable efforts to cause
such Trust to remain a business trust and otherwise continue to be treated as a
grantor trust for Federal income tax purposes provided that any permitted
successor to the Company under this Indenture may succeed to the Company's
duties as Depositor of such Trust; and provided further that the Company may
permit such Trust to consolidate or merge with or into another business trust or
other permitted successor under the Trust Agreement pertaining to such Trust so
long as the Company agrees to comply with this Section 609 with respect to such
successor business trust or other permitted successor.

                                      -28-
<PAGE>
 
                                 ARTICLE SEVEN

                          Satisfaction and Discharge

SECTION 701.  DEFEASANCE.

        Any Security or Securities, or any portion of the principal amount
thereof, shall be deemed to have been paid for all purposes of this Indenture,
and the entire indebtedness of the Company in respect thereof shall be deemed to
have been satisfied and discharged, if there shall have been irrevocably
deposited with the Trustee or any Paying Agent (other than the Company), in
trust:

        (a)  money in an amount which shall be sufficient, or

        (b)  in the case of a deposit made prior to the Maturity of such
   Securities or portions thereof, Government Obligations, which shall not
   contain provisions permitting the redemption or other prepayment thereof at
   the option of the issuer thereof, the principal of and the interest on which
   when due, without any regard to reinvestment thereof, will provide moneys
   which, together with the money, if any, deposited with or held by the Trustee
   or such Paying Agent, shall be sufficient, or

        (c)  a combination of (a) or (b) which shall be sufficient,

to pay when due the principal of and premium, if any, and interest, if any, due
and to become due on such Securities or portions thereof on or prior to
Maturity; provided, however, that in the case of the provision for payment or
redemption of less than all the Securities of any series, such Securities or
portions thereof shall have been selected by the Trustee as provided herein and,
in the case of a redemption, the notice requisite to the validity of such
redemption shall have been given or irrevocable authority shall have been given
by the Company to the Trustee to give such notice, under arrangements
satisfactory to the Trustee; and provided, further, that the Company shall have
delivered to the Trustee and such Paying Agent:

             (i)  if such deposit shall have been made prior to the Maturity of
        such Securities, a Company Order stating that the money and Government
        Obligations deposited in accordance with this Section shall be held in
        trust, as provided in Section 703; and

             (ii)  if Government Obligations shall have been deposited, an
        Opinion of Counsel that the obligations so deposited constitute
        Government Obligations and do not contain provisions permitting the
        redemption or other prepayment at the option of the issuer thereof, and
        an opinion of an independent public accountant of nationally recognized
        standing, selected by the Company, to the effect that the requirements
        set forth in clause (b) above have been satisfied; and

             (iii)  An Opinion of Counsel to the effect that the Holders of such
        Securities will not recognize income, gain or loss for federal income
        tax purposes as a result of the satisfaction and discharge of the
        Company's indebtedness in respect of such Securities, and such Holders
        will be subject to federal income taxation on the same amounts and in
        the same manner and at the same times as if such satisfaction and
        discharge had occurred.

        Upon the deposit of money or Government Obligations, or both, in
accordance with this Section, together with the documents required by clauses
(i), (ii) and (iii) above, the Trustee shall, upon receipt of a Company Request,
acknowledge in writing that the Security or Securities or portions thereof with
respect to 

                                      -29-
<PAGE>
 
which such deposit was made are deemed to have been paid for all purposes of
this Indenture and that the entire indebtedness of the Company in respect
thereof has been satisfied and discharged as contemplated in this Section. In
the event that all of the conditions set forth in the preceding paragraph shall
have been satisfied in respect of any Securities or portions thereof except
that, for any reason, the Opinion of Counsel specified in clause (iii) shall not
have been delivered, such Securities or portions thereof shall nevertheless be
deemed to have been paid for all purposes of this Indenture, and the Holders of
such Securities or portions thereof shall nevertheless be no longer entitled to
the benefits of this Indenture or of any of the covenants of the Company under
Article Six (except the covenants contained in Sections 602 and 603) or any
other covenants made in respect of such Securities or portions thereof as
contemplated by Section 301, but the indebtedness of the Company in respect of
such Securities or portions thereof shall not be deemed to have been satisfied
and discharged prior to Maturity for any other purpose, and the Holders of such
Securities or portions thereof shall continue to be entitled to look to the
Company for payment of the indebtedness represented thereby; and, upon Company
Request, the Trustee shall acknowledge in writing that such Securities or
portions thereof are deemed to have been paid for all purposes of this
Indenture.

        If payment at Stated Maturity of less than all of the Securities of any
series is to be provided for in the manner and with the effect provided in this
Section, the Security Registrar shall select such Securities, or portions of
principal amount thereof, in the manner specified by Section 403 for selection
for redemption of less than all the Securities of a series.

        In the event that Securities which shall be deemed to have been paid for
purposes of this Indenture, and, if such is the case, in respect of which the
Company's indebtedness shall have been satisfied and discharged, all as provided
in this Section do not mature and are not to be redeemed within the 60-day
period commencing with the date of the deposit of moneys or Government
Obligations, as aforesaid, the Company shall, as promptly as practicable, give a
notice, in the same manner as a notice of redemption with respect to such
Securities, to the Holders of such Securities to the effect that such deposit
has been made and the effect thereof.

        Notwithstanding that any Securities shall be deemed to have been paid
for purposes of this Indenture, as aforesaid, the obligations of the Company and
the Trustee in respect of such Securities under Sections 304, 305, 306, 312,
404, 503 (as to notice of redemption), 602, 603, 907 and 915 and this Article
Seven shall survive.

        The Company shall pay, and shall indemnify the Trustee or any Paying
Agent with which Government Obligations shall have been deposited as provided in
this Section against, any tax, fee or other charge imposed on or assessed
against such Government Obligations or the principal or interest received in
respect of such Government Obligations, including, but not limited to, any such
tax payable by any entity deemed, for tax purposes, to have been created as a
result of such deposit.

        Anything herein to the contrary notwithstanding, (a) if, at any time
after a Security would be deemed to have been paid for purposes of this
Indenture, and, if such is the case, the Company's indebtedness in respect
thereof would be deemed to have been satisfied or discharged, pursuant to this
Section (without regard to the provisions of this paragraph), the Trustee or any
Paying Agent, as the case may be, shall be required to return the money or
Government Obligations, or combination thereof, deposited with it as aforesaid
to the Company or its representative under any applicable Federal or State
bankruptcy, insolvency or other similar law, such Security shall thereupon be
deemed retroactively not to have been paid and any satisfaction and discharge of
the Company's indebtedness in respect thereof shall retroactively be deemed not
to have been effected, and such Security shall be deemed to remain Outstanding
and (b) any satisfaction and discharge of the Company's indebtedness in respect
of any Security shall be subject to the provisions of the last paragraph of
Section 603.

                                      -30-
<PAGE>
 
SECTION 702.  SATISFACTION AND DISCHARGE OF INDENTURE.

        This Indenture shall upon Company Request cease to be of further effect
(except as hereinafter expressly provided), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when

        (a)  no Securities remain Outstanding hereunder; and

        (b) the Company has paid or caused to be paid all other sums payable
   hereunder by the Company;

provided, however, that if, in accordance with the last paragraph of Section
701, any Security, previously deemed to have been paid for purposes of this
Indenture, shall be deemed retroactively not to have been so paid, this
Indenture shall thereupon be deemed retroactively not to have been satisfied and
discharged, as aforesaid, and to remain in full force and effect, and the
Company shall execute and deliver such instruments as the Trustee shall
reasonably request to evidence and acknowledge the same.

        Notwithstanding the satisfaction and discharge of this Indenture as
aforesaid, the obligations of the Company and the Trustee under Sections 304,
305, 306, 312, 404, 503 (as to notice of redemption), 602, 603, 907 and 915 and
this Article Seven shall survive.

        Upon satisfaction and discharge of this Indenture as provided in this
Section, the Trustee shall assign, transfer and turn over to the Company,
subject to the lien provided by Section 907, any and all money, securities and
other property then held by the Trustee for the benefit of the Holders of the
Securities other than money and Government Obligations held by the Trustee
pursuant to Section 703.

SECTION 703.  APPLICATION OF TRUST MONEY.

        Neither the Government Obligations nor the money deposited pursuant to
Section 701, nor the principal or interest payments on any such Government
Obligations, shall be withdrawn or used for any purpose other than, and shall be
held in trust for, the payment of the principal of and premium, if any, and
interest, if any, on the Securities or portions of principal amount thereof in
respect of which such deposit was made, all subject, however, to the provisions
of Section 603; provided, however, that, so long as there shall not have
occurred and be continuing an Event of Default any cash received from such
principal or interest payments on such Government Obligations, if not then
needed for such purpose, shall, to the extent practicable, be invested in
Government Obligations of the type described in clause (b) in the first
paragraph of Section 701 maturing at such times and in such amounts as shall be
sufficient to pay when due the principal of and premium, if any, and interest,
if any, due and to become due on such Securities or portions thereof on and
prior to the Maturity thereof, and interest earned from such reinvestment shall
be paid over to the Company as received, free and clear of any trust, lien or
pledge under this Indenture except the lien provided by Section 907; and
provided, further, that, so long as there shall not have occurred and be
continuing an Event of Default, any moneys held in accordance with this Section
on the Maturity of all such Securities in excess of the amount required to pay
the principal of and premium, if any, and interest, if any, then due on such
Securities shall be paid over to the Company free and clear of any trust, lien
or pledge under this Indenture except the lien provided by Section 907; and
provided, further, that if an Event of Default shall have occurred and be
continuing, moneys to be paid over to the Company pursuant to this Section shall
be held until such Event of Default shall have been waived or cured.

                                      -31-
<PAGE>
 
                                 ARTICLE EIGHT

                          Events of Default; Remedies

SECTION 801.  EVENTS OF DEFAULT.

        "Event of Default", wherever used herein with respect to Securities of
any series, means any one of the following events:

        (a)  failure to pay interest, if any, on any Security of such series
   within 30 days after the same becomes due and payable (whether or not payment
   is prohibited by the provisions of Article Fifteen hereof); provided,
   however, that a valid extension of the interest payment period by the Company
   as contemplated in Section 311 of this Indenture shall not constitute a
   failure to pay interest for this purpose; or

        (b)  failure to pay the principal of or premium, if any, on any Security
   of such series at its Maturity (whether or not payment is prohibited by the
   provisions of Article Fifteen hereof); or

        (c)  failure to perform or breach of any covenant or warranty of the
   Company in this Indenture (other than a covenant or warranty a default in the
   performance of which or breach of which is elsewhere in this Section
   specifically dealt with or which has expressly been included in this
   Indenture solely for the benefit of one or more series of Securities other
   than such series) 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 10% in principal amount of
   the Outstanding Securities of such series, 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, unless the Trustee, or the Trustee
   and the Holders of a principal amount of Securities of such series not less
   than the principal amount of Securities the Holders of which gave such
   notice, as the case may be, shall agree in writing to an extension of such
   period prior to its expiration; provided, however, that the Trustee, or the
   Trustee and the Holders of such principal amount of Securities of such
   series, as the case may be, shall be deemed to have agreed to an extension of
   such period if corrective action is initiated by the Company within such
   period and is being diligently pursued; or

        (d)  the entry by a court having jurisdiction in the premises of (1) a
   decree or order for relief in respect of the Company in an involuntary case
   or proceeding under any applicable Federal or State bankruptcy, insolvency,
   reorganization or other similar law or (2) a decree or order adjudging the
   Company a bankrupt or insolvent, or approving as properly filed a petition by
   one or more Persons other than the Company seeking reorganization,
   arrangement, adjustment or composition of or in respect of the Company under
   any applicable Federal or State law, or appointing a custodian, receiver,
   liquidator, assignee, trustee, sequestrator or other similar official for the
   Company or for any substantial part of its property, or ordering the winding
   up or liquidation of its affairs, and any such decree or order for relief or
   any such other decree or order shall have remained unstayed and in effect for
   a period of 90 consecutive days; or

        (e)  the commencement by the Company 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 in a 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 

                                      -32-
<PAGE>
 
   or to the appointment of or taking possession by a custodian, receiver,
   liquidator, assignee, trustee, sequestrator or similar official of the
   Company or of any substantial part of its property, or the making by it of an
   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
   authorization of such action by the Board of Directors; or

        (f)  any other Event of Default specified with respect to Securities of
   such series.

SECTION 802.  ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

        If an Event of Default due to the default in payment of principal of, or
interest on, any series of Securities or due to the default in the performance
or breach of any other covenant or warranty of the Company applicable to the
Securities of such series but not applicable to all outstanding Securities shall
have occurred and be continuing, either the Trustee or the Holders of not less
than 25% in principal amount of the Securities of such series may then declare
the principal of all Securities of such series and interest accrued thereon to
be due and payable immediately; provided, however, that, in the case of the
Securities of a series issued to a Trust, if, upon an Event of Default, the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series fail to declare the principal of all the
Securities of that series to be immediately due and payable, the holders of at
least 25% in aggregate liquidation amount of the corresponding series of
Preferred Securities then outstanding shall have such right by a notice in
writing to the Company and the Trustee; and upon any such declaration such
principal amount (or specified amount) of and the accrued interest on all the
Securities of such series shall become immediately due and payable (provided
that the payment of principal and interest on such Securities shall remain
subordinated to the extent provided in Article Fifteen hereof). If an Event of
Default due to default in the performance of any other of the covenants or
agreements herein applicable to all Outstanding Securities or an Event of
Default specified in Section 801(d) or (e) shall have occurred and be
continuing, either the Trustee or the Holders of not less than 25% in principal
amount of all Securities then Outstanding (considered as one class), and not the
Holders of the Securities of any one of such series, may declare the principal
of all Securities and interest accrued thereon to be due and payable immediately
and upon any such declaration such principal amount (or specified amount) of and
the accrued interest on all the Securities of such series shall become
immediately due and payable (provided that the payment of principal and interest
on such Securities shall remain subordinated to the extent provided in Article
Fifteen hereof).

        At any time after such a declaration of acceleration with respect to
Securities of any series shall have been made and before a judgment or decree
for payment of the money due shall have been obtained by the Trustee as
hereinafter in this Article provided, the Event or Events of Default giving rise
to such declaration of acceleration shall, without further act, be deemed to
have been waived, and such declaration and its consequences shall, without
further act, be deemed to have been rescinded and annulled, if

        (a)  the Company shall have paid or deposited with the Trustee a sum
   sufficient to pay

             (i)  all overdue interest on all Securities of such series;

             (ii)  the principal of and premium, if any, on any Securities of
        such series which have become due otherwise than by such declaration of
        acceleration and interest thereon at the rate or rates prescribed
        therefor in such Securities;

             (iii)  to the extent that payment of such interest is lawful,
        interest upon overdue interest, if any, at the rate or rates prescribed
        therefor in such Securities;

             (iv)  all amounts due to the Trustee under Section 907;

                                      -33-
<PAGE>
 
        and

        (b)  any other Event or Events of Default with respect to Securities of
   such series, other than the nonpayment of the principal of Securities of such
   series which shall have become due solely by such declaration of
   acceleration, shall have been cured or waived as provided in Section 813.

No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.

SECTION 803.  COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.

        If an Event of Default described in clause (a) or (b) of Section 801
shall have occurred and be continuing, the Company shall, upon demand of the
Trustee, pay to it, for the benefit of the Holders of the Securities of the
series with respect to which such Event of Default shall have occurred, the
whole amount then due and payable on such Securities for principal and premium,
if any, and interest, if any, and, to the extent permitted by law, interest on
premium, if any, and on any overdue principal and interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover any amounts due to the Trustee under
Section 907.

        If the Company shall fail 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, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Securities
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 such
Securities, wherever situated.

        If an Event of Default with respect to Securities of any series shall
have occurred and be continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities of
such series 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 804.  TRUSTEE MAY FILE PROOFS OF CLAIM.

        In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,

        (a)  to file and prove a claim for the whole amount of principal,
   premium, if any, and interest, if any, owing and unpaid in respect of the
   Securities and to file such other papers or documents as may be necessary or
   advisable in order to have the claims of the Trustee (including any claim for
   amounts due to the Trustee under Section 907) and of the Holders allowed in
   such judicial proceeding, and

                                      -34-
<PAGE>
 
        (b)  to collect and receive any moneys or other property payable or
   deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amounts due it under Section 907.

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

SECTION 805.  TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.

        All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities 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, its agents and counsel, be for the
ratable benefit of the Holders in respect of which such judgment has been
recovered.

SECTION 806.  APPLICATION OF MONEY COLLECTED.

        Subject to the provisions of Article Fifteen, 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, if any, upon
presentation of the Securities in respect of which or for the benefit of which
such money shall have been collected and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:

        FIRST:  To the payment of all amounts due the Trustee under Section 907;

        SECOND:  To the payment of the amounts then due and unpaid upon the
   Securities for principal of and premium, if any, and interest, if any, 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 Securities for principal, premium, if any, and
   interest, if any, respectively; and

        THIRD:  To the payment of the remainder, if any, to the Company or to
   whomsoever may be lawfully entitled to receive the same or as a court of
   competent jurisdiction may direct.

SECTION 807.  LIMITATION ON SUITS.

        No Holder 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:

        (a)  such Holder shall have previously given written notice to the
   Trustee of a continuing Event of Default with respect to the Securities of
   such series;

                                      -35-
<PAGE>
 
        (b)  the Holders of not less than a majority in aggregate principal
   amount of the Outstanding Securities of all series in respect of which an
   Event of Default shall have occurred and be continuing, considered as one
   class, 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;

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

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

        (e)  no direction inconsistent with such written request shall have been
   given to the Trustee during such 60-day period by the Holders of a majority
   in aggregate principal amount of the Outstanding Securities of all series in
   respect of which an Event of Default shall have occurred and be continuing,
   considered as one class;

it being understood and intended that no one or more of such 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 of
such Holders or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.

SECTION 808.  UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
Premium and Interest.

        Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and premium, if any, and (subject to Section 307 and
311) interest, if any, on such Security on the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.  Any holder of
related Preferred Securities shall have the right to institute suit for the
enforcement of any such payment to such holder with respect to Securities
relating to such Preferred Securities having a principal amount equal to the
aggregate liquidation preference amount of the related Preferred Securities held
by such holder.

SECTION 809.  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 shall have been
discontinued or abandoned for any reason, or shall have 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, and Trustee and such
Holder shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and such Holder
shall continue as though no such proceeding had been instituted.

                                      -36-
<PAGE>
 
SECTION 810.  RIGHTS AND REMEDIES CUMULATIVE.

        Except as otherwise provided in the last paragraph of 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 811.  DELAY OR OMISSION NOT WAIVER.

        No delay or omission of the Trustee or of any Holder 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 812.  CONTROL BY HOLDERS OF SECURITIES.

        If an Event of Default shall have occurred and be continuing in respect
of a series of Securities, the Holders of a majority in principal amount of the
Outstanding Securities of such series 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, with respect
to the Securities of such series; provided, however, that if an Event of Default
shall have occurred and be continuing with respect to more than one series of
Securities, the Holders of a majority in aggregate principal amount of the
Outstanding Securities of all such series, considered as one class, shall have
the right to make such direction, and not the Holders of the Securities of any
one of such series; and provided, further, that such direction shall not be in
conflict with any rule of law or with this Indenture.  The Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with such
direction.  Before proceeding to exercise any right or power hereunder at the
direction of such Holders, the Trustee shall be entitled to receive from such
Holders reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with any such direction.

SECTION 813.  WAIVER OF PAST DEFAULTS.

        The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default:

        (a)  in the payment of the principal of or premium, if any, or interest,
   if any, on any Security of such series, or

        (b)  in respect of a covenant or provision hereof which under Section
   1202 cannot be modified or amended without the consent of the Holder of each
   Outstanding Security of such series affected;

provided, however, that so long as a Trust holds the Securities of any series,
such Trust may not waive any past default without the consent of at least a
majority in aggregate liquidation preference of the outstanding Preferred
Securities issued by such Trust affected, obtained as provided in the Trust
Agreement pertaining to such Trust.

                                      -37-
<PAGE>
 
        Upon any such waiver, such default shall cease to exist, and any and all
Events 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 814.  UNDERTAKING FOR COSTS.

        The Company and the Trustee agree, and each Holder by his acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; provided,
however, that the provisions of this Section shall not apply to any suit
instituted by the Company, to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% in aggregate principal amount of the Outstanding Securities of all
series in respect of which such suit may be brought, considered as one class, or
to any suit instituted by any Holder for the enforcement of the payment of the
principal of or premium, if any, or interest, if any, on any Security on or
after the Stated Maturity or Maturities expressed in such Security (or, in the
case of redemption, on or after the Redemption Date).

SECTION 815.  WAIVER OF STAY OR EXTENSION LAWS.

        The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.


                                 ARTICLE NINE

                                  The Trustee

SECTION 901.  CERTAIN DUTIES AND RESPONSIBILITIES.

        (a)  Except during the continuance of an Event of Default,

             (i)  the Trustee undertakes to perform such duties and only such
        duties as are specifically set forth in this Indenture, and no implied
        covenants or obligations shall be read into this Indenture against the
        Trustee; and

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

                                      -38-
<PAGE>
 
        required to be furnished to the Trustee, the Trustee shall be under a
        duty to examine the same to determine whether or not they conform to the
        requirements of this Indenture.

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

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

             (i)  this Subsection shall not be construed to limit the effect of
        Subsection (a) of this Section;

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

             (iii)  the Trustee shall not be liable with respect to any action
        taken or omitted to be taken by it in good faith in accordance with the
        direction of Holders pursuant to Section 812 relating to the time,
        method and place of conducting any proceeding for any remedy available
        to the Trustee, or exercising any trust or power conferred upon the
        Trustee, under this Indenture with respect to the Securities of such
        series.

        (d)  No provision of this Indenture shall require the Trustee to expend
   or risk its own funds or otherwise incur any financial liability 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 against such risk or liability
   is not reasonably assured to it.

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

SECTION 902.  NOTICE OF DEFAULTS.

        The Trustee shall give notice of any default hereunder with respect to
the Securities of any series to the Holders of Securities of such series in the
manner and to the extent required to do so by the Trust Indenture Act, unless
such default shall have been cured or waived; provided, however, that in the
case of any default of the character specified in Section 801(c), no such notice
to Holders shall be given until at least 45 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 903.  CERTAIN RIGHTS OF TRUSTEE.

        Subject to the provisions of Section 901 and to the applicable
provisions of the Trust Indenture Act:

        (a)  the Trustee may rely and shall be protected in acting or refraining
   from acting in good faith upon any resolution, certificate, statement,
   instrument, opinion, report, notice, request, direction, consent, 
   

                                      -39-
<PAGE>
 
   order, bond, debenture, note, other evidence of indebtedness or other paper
   or document reasonably 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, or as otherwise
   expressly provided herein, and any resolution of the Board of Directors may
   be sufficiently evidenced by a Board Resolution;

        (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 upon an Officer's Certificate;

        (d)  the Trustee may consult with counsel and the 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 Holder pursuant to this Indenture, unless such Holder shall have
   offered to the Trustee reasonable security or indemnity against the costs,
   expenses and liabilities which might be incurred by it in compliance with
   such request or direction;

        (f)  the Trustee shall not be bound to make any investigation into the
   facts or matters stated in any resolution, certificate, statement,
   instrument, opinion, report, notice, request, direction, consent, order,
   bond, debenture, note, other evidence of indebtedness or other paper or
   document, but the Trustee, in its discretion, may make such further inquiry
   or investigation into such facts or matters as it may see fit, and, if the
   Trustee shall determine to make such further inquiry or investigation, it
   shall (subject to applicable legal requirements) be entitled to examine,
   during normal business hours, the books, records and premises of the Company,
   personally or by agent or attorney;

        (g)  the Trustee may execute any of the trusts or powers hereunder or
   perform any duties hereunder either directly or by or through agents or
   attorneys 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; and

        (h)  the Trustee shall not be charged with knowledge of any default or
   Event of Default, as the case may be, with respect to the Securities of any
   series for which it is acting as Trustee unless either (i) a Responsible
   Officer of the Trustee shall have actual knowledge of the default or Event of
   Default, as the case may be, or (ii) written notice of such default or Event
   of Default, as the case may be, shall have been given to the Trustee by the
   Company, any other obligor on such Securities or by any Holder of such
   Securities.

SECTION 904.  NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.

        The recitals contained herein and in the Securities (except the
Trustee's certificates of authentication) shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes
responsibility for their correctness.  The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities.  Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.

                                      -40-
<PAGE>
 
SECTION 905.  MAY HOLD SECURITIES.

        Each of the Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and (subject to
Sections 908 and 913) may otherwise deal with the Company with the same rights
it would have if it were not the Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.

SECTION 906.  MONEY HELD IN TRUST.

        Money held by the Trustee in trust hereunder need not be segregated from
other funds, except to the extent required by law.  The Trustee shall be under
no liability for interest on any money received by it hereunder except as
expressly provided herein or otherwise agreed with, and for the sole benefit of,
the Company.

SECTION 907.  COMPENSATION AND REIMBURSEMENT.

        The Company shall

        (a)  pay to the Trustee from time to time reasonable compensation for
   all services rendered by it hereunder (which compensation shall not be
   limited by any provision of law in regard to the compensation of a trustee of
   an express trust);

        (b)  except as otherwise expressly provided herein, reimburse the
   Trustee upon its request for all reasonable expenses (including any costs of
   collection), disbursements and advances reasonably incurred or made by the
   Trustee in accordance with any provision of this Indenture (including the
   reasonable compensation and the expenses and disbursements of its agents and
   counsel), except to the extent that any such expense, disbursement or advance
   may be attributable to the Trustee's negligence, wilful misconduct or bad
   faith; and

        (c)  indemnify the Trustee for, and hold it harmless from and against,
   any and all losses, liabilities, demands, claims, causes of action or
   expenses (including reasonable attorneys' fees and expenses) incurred by it
   arising out of or in connection with the acceptance or administration of the
   trust or trusts hereunder or the performance of its duties hereunder,
   including the reasonable costs and expenses of defending itself against any
   claim or liability in connection with the exercise or performance of any of
   its powers or duties hereunder, except to the extent any such loss,
   liability, demand, claim, cause of action or expense may be attributable to
   its negligence, wilful misconduct or bad faith. At the option of the Trustee,
   the Company shall assume the defense of the Trustee with counsel acceptable
   to the Trustee.

        As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such other than property
and funds held in trust under Section 703 (except as otherwise provided in
Section 703).  "Trustee" for purposes of this Section shall include any
predecessor Trustee; provided, however, that the negligence, wilful misconduct
or bad faith of any Trustee hereunder shall not affect the rights of any other
Trustee hereunder.

        In addition to the rights provided to the Trustee pursuant to the
provisions of the immediately preceding paragraph of this Section 907, when the
Trustee incurs expenses or renders services in connection with an Event of
Default specified in Section 801(d) or Section 801(e), the expenses (including
the reasonable charges and expenses of its counsel) and the compensation for the
services are intended to constitute expenses of administration under any
applicable Federal or State bankruptcy, insolvency or other similar law.

                                      -41-
<PAGE>
 
        The provisions of this Section 907 shall survive the termination for any
reason of this Indenture.

SECTION 908.  DISQUALIFICATION; CONFLICTING INTERESTS.

        If the Trustee shall have or acquire any conflicting interest within the
meaning of the Trust Indenture Act, it shall either eliminate such conflicting
interest or resign to the extent, in the manner and with the effect, and subject
to the conditions, provided in the Trust Indenture Act and this Indenture.  For
purposes of Section 310(b)(1) of the Trust Indenture Act and to the extent
permitted thereby, the Trustee, in its capacity as trustee in respect of the
Securities of any series, shall not be deemed to have a conflicting interest
arising from its capacity as trustee in respect of the Securities of any other
series, under any Guarantee, or as trustee under the Junior Subordinated
Indenture dated as of October 1, 1996, the Amended and Restated Trust Agreement
dated as of October 1, 1996 and the Guarantee Agreement dated as of October 1,
1996, relating to the Company's 8.25% Junior Subordinated Deferrable Interest
Debentures.  Each Trust Agreement and each Guarantee pertaining to each Trust
shall be deemed to be specifically described in this Indenture for the purposes
of clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.

SECTION 909.  CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

        There shall at all times be a Trustee hereunder which shall be

        (a)  a corporation organized and doing business or other Person
   permitted by the Commission authorized under the laws of the United States,
   any State or Territory thereof or the District of Columbia, authorized under
   such laws to exercise corporate trust powers, having a combined capital and
   surplus of at least $50,000,000 and subject to supervision or examination by
   Federal or State authority, or

        (b)  if and to the extent permitted by the Commission by rule,
   regulation or order upon application, a corporation or other Person organized
   and doing business under the laws of a foreign government, authorized under
   such laws to exercise corporate trust powers, having a combined capital and
   surplus of at least $50,000,000 or the Dollar equivalent of the applicable
   foreign currency and subject to supervision or examination by authority of
   such foreign government or a political subdivision thereof substantially
   equivalent to supervision or examination applicable to United States
   institutional trustees,

and, in either case, qualified and eligible under this Article and the Trust
Indenture Act.  If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of such supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.  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 910.  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 911.

        (b)  The Trustee may resign at any time with respect to the Securities
   of one or more series by giving written notice thereof to the Company.  If
   the instrument of acceptance by a successor Trustee 

                                      -42-
<PAGE>
 
   required by Section 911 shall not have been delivered to the 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 with respect to the Securities of such series.

        (c)  The Trustee may be removed at any time with respect to the
   Securities of any series by Act of the Holders of a majority in principal
   amount of the Outstanding Securities of such series delivered to the Trustee
   and to the Company; provided, however, that so long as any Preferred
   Securities remain outstanding, the Trust which issued such Preferred
   Securities shall not execute any Act to remove the Trustee without the
   consent of the holders of a majority in aggregate liquidation preference of
   Preferred Securities issued by such Trust outstanding, obtained as provided
   in the Trust Agreement pertaining to such Trust.

        (d)  If at any time:

          (i)  the Trustee shall fail to comply with Section 908 after written
        request therefor by the Company or by any Holder who has been a bona
        fide Holder for at least six months, or

          (ii)  the Trustee shall cease to be eligible under Section 909 and
        shall fail to resign after written request therefor by the Company or by
        any such Holder, or

          (iii)  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, (x) the Company by a Board Resolution may remove the
Trustee with respect to all Securities or (y) subject to Section 814, any Holder
who has been a bona fide Holder 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 with respect to all Securities and
the appointment of a successor Trustee or Trustees.

        (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
   (other than as contemplated in clause (y) in subsection (d) of this Section),
   with respect to the Securities of one or more series, the Company, by a Board
   Resolution, shall promptly appoint a successor Trustee or Trustees with
   respect to the Securities of that or those series (it being understood that
   any such successor Trustee may be appointed with respect to the Securities of
   one or more or all of such series and that at any time there shall be only
   one Trustee with respect to the Securities of any particular series) and
   shall comply with the applicable requirements of Section 911.  If, within one
   year after such resignation, removal or incapability, or the occurrence of
   such vacancy, a successor Trustee with respect to the Securities of any
   series shall be appointed by Act of the Holders of a majority in principal
   amount of the Outstanding Securities of such series 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 911, become the successor Trustee with respect to the
   Securities of such series and to that extent supersede the successor Trustee
   appointed by the Company.  If no successor Trustee with respect to the
   Securities of any series shall have been so appointed by the Company or the
   Holders and accepted appointment in the manner required by Section 911, any
   Holder who has been a bona fide Holder of a Security of such series for at
   least six months may, on behalf of itself and all others similarly situated,
   petition any court of competent jurisdiction for the appointment of a
   successor Trustee with respect to the Securities of such series.

                                      -43-
<PAGE>
 
        (f)  So long as no event which is, or after notice or lapse of time, or
   both, would become, an Event of Default shall have occurred and be
   continuing, and except with respect to a Trustee appointed by Act of the
   Holders of a majority in principal amount of the Outstanding Securities
   pursuant to subsection (e) of this Section, if the Company shall have
   delivered to the Trustee (i) a Board Resolution appointing a successor
   Trustee, effective as of a date specified therein, and (ii) an instrument of
   acceptance of such appointment, effective as of such date, by such successor
   Trustee in accordance with Section 911, the Trustee shall be deemed to have
   resigned as contemplated in subsection (b) of this Section, the successor
   Trustee shall be deemed to have been appointed by the Company pursuant to
   subsection (e) of this Section and such appointment shall be deemed to have
   been accepted as contemplated in Section 911, all as of such date, and all
   other provisions of this Section and Section 911 shall be applicable to such
   resignation, appointment and acceptance except to the extent inconsistent
   with this subsection (f).

        (g)  The Company (or, should the Company fail so to act promptly, the
   successor Trustee at the expense of the Company) shall give notice of each
   resignation and each removal of the Trustee with respect to the Securities of
   any series and each appointment of a successor Trustee with respect to the
   Securities of any series by mailing written notice of such event by first-
   class mail, postage prepaid, to all Holders of Securities of such series as
   their names and addresses appear in the Security Register.  Each notice shall
   include the name of the successor Trustee with respect to the Securities of
   such series and the address of its corporate trust office.

SECTION 911.  ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

        (a)  In case of the appointment hereunder of a successor Trustee with
   respect to the Securities of all series, every such successor Trustee so
   appointed 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; provided, however that on the request of the Company or the
   successor Trustee, such retiring Trustee shall, upon payment of all sums owed
   to it, 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.

        (b)  In case of the appointment hereunder of a successor Trustee with
   respect to the Securities of one or more (but not all) series, the Company,
   the retiring Trustee and each successor Trustee with respect to the
   Securities of one or more series shall execute and deliver an indenture
   supplemental hereto wherein each successor Trustee shall accept such
   appointment and which (i) shall contain such provisions as shall be necessary
   or desirable to transfer and confirm to, and to vest in, each successor
   Trustee all the rights, powers, trusts and duties of the retiring Trustee
   with respect to the Securities of that or those series to which the
   appointment of such successor Trustee relates, (ii) if the retiring Trustee
   is not retiring with respect to all Securities, shall contain such provisions
   as shall be deemed necessary or desirable to confirm that all the rights,
   powers, trusts and duties of the retiring Trustee with respect to the
   Securities of that or those series as to which the retiring Trustee is not
   retiring shall continue to be vested in the retiring Trustee and (iii) shall
   add to or change any of the provisions of this Indenture as shall be
   necessary to provide for or facilitate the administration of the trusts
   hereunder by more than one Trustee, it being understood that nothing herein
   or in such supplemental indenture shall constitute such Trustees co-trustees
   of the same trust and that each such Trustee shall be trustee of a trust or
   trusts hereunder separate and apart from any trust or trusts hereunder
   administered by any other such Trustee; and upon the execution and delivery
   of such supplemental indenture the resignation or removal of the retiring
   Trustee shall become effective to the extent provided therein and 

                                      -44-
<PAGE>
 
   each 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 with respect to the Securities of that or those series to
   which the appointment of such successor Trustee relates; provided, however
   that on request of the Company or any successor Trustee, such retiring
   Trustee, upon payment of all sums owed to it, shall duly assign, transfer and
   deliver to such successor Trustee all property and money held by such
   retiring Trustee hereunder with respect to the Securities of that or those
   series to which the appointment of such successor Trustee relates.

        (c)  Upon request of any such successor Trustee, the Company shall
   execute any instruments which fully vest in and confirm to such successor
   Trustee all such rights, powers and trusts referred to in subsection (a) or
   (b) of this Section, as the case may be.

        (d)  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 912.  MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.

        Any corporation or other Person into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or other
Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or other Person succeeding to all
or substantially all the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation or other Person
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 Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.

SECTION 913.  PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

        If the Trustee shall be or become a creditor of the Company or any other
obligor upon the Securities (other than by reason of a relationship described in
Section 311(b) of the Trust Indenture Act), the Trustee shall be subject to any
and all applicable provisions of the Trust Indenture Act regarding the
collection of claims against the Company or such other obligor.  For purposes of
Section 311(b) of the Trust Indenture Act:

        (a) the term "cash transaction" means any transaction in which full
   payment for goods or securities sold is made within seven days after delivery
   of the goods or securities in currency or in checks or other orders drawn
   upon banks or bankers and payable upon demand;

        (b) the term "self-liquidating paper" means any draft, bill of exchange,
   acceptance or obligation which is made, drawn, negotiated or incurred by the
   Company for the purpose of financing the purchase, processing, manufacturing,
   shipment, storage or sale of goods, wares or merchandise and which is secured
   by documents evidencing title to, possession of, or a lien upon, the goods,
   wares or merchandise or the receivables or proceeds arising from the sale of
   the goods, wares or merchandise previously constituting the security,
   provided the security is received by the Trustee simultaneously with the
   creation of the creditor relationship with the Company arising from the
   making, drawing, negotiating or incurring of the draft, bill of exchange,
   acceptance or obligation.

                                      -45-
<PAGE>
 
SECTION 914.  CO-TRUSTEES AND SEPARATE TRUSTEES.

        At any time or times, for the purpose of meeting the legal requirements
of any applicable jurisdiction, the Company and the Trustee shall have power to
appoint, and, upon the written request of the Trustee or of the Holders of at
least 25% in principal amount of the Securities then Outstanding, the Company
shall for such purpose join with the Trustee in the execution and delivery of
all instruments and agreements necessary or proper to appoint, one or more
Persons approved by the Trustee either to act as co-trustee, jointly with the
Trustee, or to act as separate trustee, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such Person or
Persons, in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section.  If the
Company does not join in such appointment within 15 days after the receipt by it
of a request so to do, or if an Event of Default shall have occurred and be
continuing, the Trustee alone shall have power to make such appointment.

        Should any written instrument or instruments from the Company be
required by any co-trustee or separate trustee so appointed to more fully
confirm to such co-trustee or separate trustee such property, title, right or
power, any and all such instruments shall, on request, be executed, acknowledged
and delivered by the Company.

        Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following conditions:

        (a)  the Securities shall be authenticated and delivered, and all
   rights, powers, duties and obligations hereunder in respect of the custody of
   securities, cash and other personal property held by, or required to be
   deposited or pledged with, the Trustee hereunder, shall be exercised solely,
   by the Trustee;

        (b)  the rights, powers, duties and obligations hereby conferred or
   imposed upon the Trustee in respect of any property covered by such
   appointment shall be conferred or imposed upon and exercised or performed
   either by the Trustee or by the Trustee and such co-trustee or separate
   trustee jointly, as shall be provided in the instrument appointing such co-
   trustee or separate trustee, except to the extent that under any law of any
   jurisdiction in which any particular act is to be performed, the Trustee
   shall be incompetent or unqualified to perform such act, in which event such
   rights, powers, duties and obligations shall be exercised and performed by
   such co-trustee or separate trustee;

        (c)  the Trustee at any time, by an instrument in writing executed by
   it, with the concurrence of the Company, may accept the resignation of or
   remove any co-trustee or separate trustee appointed under this Section, and,
   if an Event of Default shall have occurred and be continuing, the Trustee
   shall have power to accept the resignation of, or remove, any such co-trustee
   or separate trustee without the concurrence of the Company.  Upon the written
   request of the Trustee, the Company shall join with the Trustee in the
   execution and delivery of all instruments and agreements necessary or proper
   to effectuate such resignation or removal.  A successor to any co-trustee or
   separate trustee so resigned or removed may be appointed in the manner
   provided in this Section;

        (d)  no co-trustee or separate trustee hereunder shall be personally
   liable by reason of any act or omission of the Trustee, or any other such
   trustee hereunder; and

        (e)  any Act of Holders delivered to the Trustee shall be deemed to have
   been delivered to each such co-trustee and separate trustee.

   SECTION 915.  APPOINTMENT OF AUTHENTICATING AGENT.

                                      -46-
<PAGE>
 
          The Trustee may appoint an Authenticating Agent or Agents with respect
to the Securities of one or more series, which shall be authorized to act on
behalf of the Trustee to authenticate Securities of such series issued upon
original issuance and upon exchange, registration of transfer or partial
redemption thereof or pursuant to Section 306, and Securities 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 Securities 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 Agent.  Each
Authenticating Agent shall be acceptable to the Company and shall at all times
be a corporation organized and doing business under the laws of the United
States, any State or territory 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 corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation 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.  Any successor Authenticating
Agent upon acceptance of its appointment hereunder 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 under the provisions of this Section.

          The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, in accordance
with, and subject to the provisions of Section 907.

          The provisions of Sections 308, 904 and 905 shall be applicable to
each Authenticating Agent.

                                      -47-
<PAGE>
 
          If an appointment with respect to the Securities of one or more series
shall be made pursuant to this Section, the Securities of such series may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication substantially in the following form:

          This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.

 
                              -------------------------------
                              As Trustee


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

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

          If all of the Securities of a series may not be originally issued at
one time, and if the Trustee does not have an office capable of authenticating
Securities upon original issuance located in a Place of Payment where the
Company wishes to have Securities of such series authenticated upon original
issuance, the Trustee, if so requested by the Company in writing (which writing
need not comply with Section 102 and need not be accompanied by an Opinion of
Counsel), shall appoint, in accordance with this Section and in accordance with
such procedures as shall be acceptable to the Trustee, an Authenticating Agent
having an office in a Place of Payment designated by the Company with respect to
such series of Securities.


                                  ARTICLE TEN

               Holders' Lists and Reports by Trustee and Company

SECTION 1001.  LISTS OF HOLDERS.

          Semiannually, not later than January 15 and July 15 in each year,
commencing January 15, 1999, and at such other times as the Trustee may request
in writing, the Company shall furnish or cause to be furnished to the Trustee
information as to the names and addresses of the Holders, and the Trustee shall
preserve such information and similar information received by it in any other
capacity and afford to the Holders access to information so preserved by it, all
to such extent, if any, and in such manner as shall be required by the Trust
Indenture Act; provided, however, that no such list need be furnished so long as
the Trustee shall be the Security Registrar.

SECTION 1002.  REPORTS BY TRUSTEE.

                                      -48-
<PAGE>
 
          (a)  The Trustee shall transmit to the 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.  Such of those reports as are required to be transmitted by the Trustee
pursuant to Section 313(a) of the Trust Indenture Act shall be so transmitted
within 60 days after July 1 of each year, commencing July 1, 1999.

          (b)  A copy of each such report shall, at the time of such
transmission to the Holders, be filed by the Trustee with each stock exchange
upon which the Securities are listed, with the Commission and with the Company.
The Company shall notify the Trustee when any Securities shall have been listed
on any stock exchange.

SECTION 1003.  REPORTS TO THE TRUSTEE.  The Company shall provide to the Trustee
such documents, reports, compliance certificates and information as may be
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required thereby.  The Company shall notify the Trustee of the
listing of any Securities on any securities exchange.  Delivery of such reports,
information and documents by the Company to the Trustee is for informational
purposes only and the Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company's compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely exclusively
on certificates of officers.


                                ARTICLE ELEVEN

              Consolidation, Merger, Conveyance or Other Transfer

SECTION 1101.  COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.

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

          (a)  the corporation formed by such consolidation or into which the
     Company is merged or the Person which acquires by conveyance or transfer,
     or which leases, the properties and assets of the Company substantially as
     an entirety shall be a Person organized and validly existing under the laws
     of the United States, 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, if
     any, on all Outstanding Securities and the performance of every covenant of
     this Indenture on the part of the Company to be performed or observed;

          (b)  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 occurred and be continuing; and

          (c)  the Company shall have delivered to the Trustee an Officer's
     Certificate and an Opinion of Counsel, each stating that such
     consolidation, merger, conveyance, or other 

                                      -49-
<PAGE>
 
     transfer or lease and such supplemental indenture comply with this Article
     and that all conditions precedent herein provided for relating to such
     transactions have been complied with.

SECTION 1102.  SUCCESSOR CORPORATION SUBSTITUTED.

          Upon any consolidation by the Company with or merger by the Company
into any other corporation or any conveyance, or other transfer or lease of the
properties and assets of the Company substantially as an entirety in accordance
with Section 1101, the successor corporation formed by such consolidation or
into which the Company is merged or the Person to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities Outstanding hereunder.


                                ARTICLE TWELVE

                            Supplemental Indentures

SECTION 1201.  SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.

          Without the consent of any Holders, the Company and the Trustee, 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:

          (a)  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 Securities, all as provided in Article Eleven; or

          (b)  to add one or more covenants of the Company or other provisions
     for the benefit of all Holders or for the benefit of the Holders of, or to
     remain in effect only so long as there shall be Outstanding, Securities of
     one or more specified series, or to surrender any right or power herein
     conferred upon the Company; or

          (c)  to add any additional Events of Default with respect to all or
     any series of Securities Outstanding hereunder; or

          (d)  to change or eliminate any provision of this Indenture or to add
     any new provision to this Indenture; provided, however, that if such
     change, elimination or addition shall adversely affect the interests of the
     Holders of Securities of any series Outstanding on the date of such
     indenture supplemental hereto in any material respect, such change,
     elimination or addition shall become effective with respect to such series
     only pursuant to the provisions of Section 1202 hereof or when no Security
     of such series remains Outstanding; or

          (e)  to provide collateral security for all but not part of the
     Securities; or

                                      -50-
<PAGE>
 
          (f)  to establish the form or terms of Securities of any series as
     contemplated by Sections 201 and 301; or

          (g)  to provide for the authentication and delivery of bearer
     securities and coupons appertaining thereto representing interest, if any,
     thereon and for the procedures for the registration, exchange and
     replacement thereof and for the giving of notice to, and the solicitation
     of the vote or consent of, the holders thereof, and for any and all other
     matters incidental thereto; or

          (h)  to evidence and provide for the acceptance of appointment
     hereunder by a separate or successor Trustee with respect to the Securities
     of one or more series and to add to or change any of the provisions of this
     Indenture as shall be necessary to provide for or facilitate the
     administration of the trusts hereunder by more than one Trustee, pursuant
     to the requirements of Section 911(b); or

          (i)  to provide for the procedures required to permit the Company to
     utilize, at its option, a noncertificated system of registration for all,
     or any series of, the Securities; or

          (j)  to change any place or places where (i) the principal of and
     premium, if any, and interest, if any, on all or any series of Securities
     shall be payable, (ii) all or any series of Securities may be surrendered
     for registration of transfer, (iii) all or any series of Securities may be
     surrendered for exchange and (iv) notices and demands to or upon the
     Company in respect of all or any series of Securities and this Indenture
     may be served; or

          (k)  to cure any ambiguity, to correct or supplement any provision
     herein which may be defective or inconsistent with any other provision
     herein, or to make any other changes to the provisions hereof or to add
     other provisions with respect to matters or questions arising under this
     Indenture, provided that such other changes or additions shall not
     adversely affect the interests of the Holders of Securities of any series
     in any material respect.

          Without limiting the generality of the foregoing, if the Trust
Indenture Act as in effect at the date of the execution and delivery of this
Indenture or at any time thereafter shall be amended and

               (x)  if any such amendment shall require one or more changes to
          any provisions hereof or the inclusion herein of any additional
          provisions, or shall by operation of law be deemed to effect such
          changes or incorporate such provisions by reference or otherwise, this
          Indenture shall be deemed to have been amended so as to conform to
          such amendment to the Trust Indenture Act, and the Company and the
          Trustee may, without the consent of any Holders, enter into an
          indenture supplemental hereto to effect or evidence such changes or
          additional provisions; or

               (y)  if any such amendment shall permit one or more changes to,
          or the elimination of, any provisions hereof which, at the date of the
          execution and delivery hereof or at any time thereafter, are required
          by the Trust Indenture Act to be contained herein, this Indenture
          shall be deemed to have been amended to effect such changes or
          elimination, and the Company and the Trustee may, without 

                                      -51-
<PAGE>
 
          the consent of any Holders, enter into an indenture supplemental
          hereto to evidence such amendment hereof.

SECTION 1202.  SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.

          With the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities of all series then Outstanding
under this Indenture, considered as one class, 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 modifying
in any manner the rights of the Holders of Securities of such series under the
Indenture; provided, however, that if there shall be Securities of more than one
series Outstanding hereunder and if a proposed supplemental indenture shall
directly affect the rights of the Holders of Securities of one or more, but less
than all, of such series, then the consent only of the Holders of a majority in
aggregate principal amount of the Outstanding Securities of all series so
directly affected, considered as one class, shall be required; and provided,
further, that no such supplemental indenture shall:

          (a)  change the Stated Maturity of the principal of, or any
     installment of principal of or interest on (except as provided in Section
     311 hereof), any Security, or reduce the principal amount thereof or the
     rate of interest thereon (or the amount of any installment of interest
     thereon) or change the method of calculating such rate or reduce any
     premium payable upon the redemption thereof, or change the coin or currency
     (or other property), in which any Security or any premium or the interest
     thereon is payable, or impair the right to institute suit for the
     enforcement of any such payment on or after the Stated Maturity of any
     Security (or, in the case of redemption, on or after the Redemption Date),
     without, in any such case, the consent of the Holder of such Security, or

          (b)  reduce the percentage in principal amount of the Outstanding
     Securities of any series (or, if applicable, in liquidation preference of
     any series of Preferred Securities), the consent of the Holders of which is
     required for any such supplemental indenture, or the consent of the Holders
     of which is required for any waiver of compliance with any provision of
     this Indenture or of any default hereunder and its consequences, or reduce
     the requirements of Section 1304 for quorum or voting, without, in any such
     case, the consent of the Holders of each Outstanding Security of such
     series, or

          (c)  modify any of the provisions of this Section, Section 607 or
     Section 813 with respect to the Securities of any series, except to
     increase the percentages in principal amount referred to in this Section or
     such other Sections or to provide that other provisions of this Indenture
     cannot be modified or waived without the consent of the Holder of each
     Outstanding Security 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, or the deletion of this proviso, in accordance with the
     requirements of Sections 911(b) and 1201(h).

Notwithstanding the foregoing, so long as any of the Preferred Securities remain
outstanding, the Trustee may not consent to a supplemental indenture under this
Section 1202 without the prior consent, obtained as provided in a Trust
Agreement pertaining to a Trust which issued such Preferred 

                                      -52-
<PAGE>
 
Securities, of the holders of not less than a majority in aggregate liquidation
preference of all Preferred Securities issued by such Trust affected, considered
as one class, or, in the case of changes described in clauses (a), (b) and (c)
above, 100% in aggregate liquidation preference of all such Preferred Securities
then outstanding which would be affected thereby, considered as one class. A
supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

          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.  A waiver by a
Holder of such Holder's right to consent under this Section shall be deemed to
be a consent of such Holder.

SECTION 1203.  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 901) shall be fully protected in relying upon, 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 affects the
Trustee's own rights, duties, immunities or liabilities under this Indenture or
otherwise.

SECTION 1204.  EFFECT OF SUPPLEMENTAL INDENTURES.

          Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.  Any supplemental indenture permitted by this Article
may restate this Indenture in its entirety, and, upon the execution and delivery
thereof, any such restatement shall supersede this Indenture as theretofore in
effect for all purposes.

SECTION 1205.  CONFORMITY WITH TRUST INDENTURE ACT.

          Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.

SECTION 1206.  REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.

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

                                      -53-
<PAGE>
 
SECTION 1207.  MODIFICATION WITHOUT SUPPLEMENTAL INDENTURE.

          If the terms of any particular series of Securities shall have been
established in a Board Resolution or an Officer's Certificate as contemplated by
Section 301, and not in an indenture supplemental hereto, additions to, changes
in or the elimination of any of such terms may be effected by means of a
supplemental Board Resolution or Officer's Certificate, as the case may be,
delivered to, and accepted in writing by, the Trustee; provided, however, that
such supplemental Board Resolution or Officer's Certificate shall not be
accepted by the Trustee or otherwise be effective unless all conditions set
forth in this Indenture which would be required to be satisfied if such
additions, changes or elimination were contained in a supplemental indenture
shall have been appropriately satisfied.  Upon the acceptance thereof by the
Trustee, any such supplemental Board Resolution or Officer's Certificate shall
be deemed to be a "supplemental indenture" for purposes of Section 1204 and
1206.


                               ARTICLE THIRTEEN

                  Meetings of Holders; Action Without Meeting

SECTION 1301.  PURPOSES FOR WHICH MEETINGS MAY BE CALLED.

          A meeting of Holders of Securities of one or more, or all, series may
be called at any time and from time to time pursuant to this Article to make,
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be made, given or taken by
Holders of Securities of such series.

SECTION 1302.  CALL, NOTICE AND PLACE OF MEETINGS.

          (a)  The Trustee may at any time call a meeting of Holders of
     Securities of one or more, or all, series for any purpose specified in
     Section 1301, to be held at such time and at such place in the Borough of
     Manhattan, The City of New York, as the Trustee shall determine, or, with
     the approval of the Company, at any other place.  Notice of every such
     meeting, setting forth the time and the place of such meeting and in
     general terms the action proposed to be taken at such meeting, shall be
     given, in the manner provided in Section 106, not less than 21 nor more
     than 180 days prior to the date fixed for the meeting.

          (b)  If the Trustee shall have been requested to call a meeting of the
     Holders of Securities of one or more, or all, series by the Company or by
     the Holders of 33% in aggregate principal amount of all of such series,
     considered as one class, for any purpose specified in Section 1301, by
     written request setting forth in reasonable detail the action proposed to
     be taken at the meeting, and the Trustee shall not have given the notice of
     such meeting within 21 days after receipt of such request or shall not
     thereafter proceed to cause the meeting to be held as provided herein, then
     the Company or the Holders of Securities of such series in the amount above
     specified, as the case may be, may determine the time and the place in the
     Borough of Manhattan, The City of New York, or in such other place as shall
     be determined or approved by the Company, for such meeting and may call
     such meeting for such purposes by giving notice thereof as provided in
     subsection (a) of this Section.

                                      -54-
<PAGE>
 
          (c)  Any meeting of Holders of Securities of one or more, or all,
     series shall be valid without notice if the Holders of all Outstanding
     Securities of such series are present in person or by proxy and if
     representatives of the Company and the Trustee are present, or if notice is
     waived in writing before or after the meeting by the Holders of all
     Outstanding Securities of such series, or by such of them as are not
     present at the meeting in person or by proxy, and by the Company and the
     Trustee.

SECTION 1303.  PERSONS ENTITLED TO VOTE AT MEETINGS.

          To be entitled to vote at any meeting of Holders of Securities of one
or more, or all, series a Person shall be (a) a Holder of one or more
Outstanding Securities of such series, or (b) a Person appointed by an
instrument in writing as proxy for a Holder or Holders of one or more
Outstanding Securities of such series by such Holder or Holders.  The only
Persons who shall be entitled to attend any meeting of Holders of Securities of
any series shall be the Persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.

SECTION 1304.  QUORUM; ACTION.

          The Persons entitled to vote a majority in aggregate principal amount
of the Outstanding Securities of the series with respect to which a meeting
shall have been called as hereinbefore provided, considered as one class, shall
constitute a quorum for a meeting of Holders of Securities of such series;
provided, however, that if any action is to be taken at such meeting which this
Indenture expressly provides may be taken by the Holders of a specified
percentage, which is less than a majority, in principal amount of the
Outstanding Securities of such series, considered as one class, the Persons
entitled to vote such specified percentage in principal amount of the
Outstanding Securities of such series, considered as one class, shall constitute
a quorum.  In the absence of a quorum within one hour of the time appointed for
any such meeting, the meeting shall, if convened at the request of Holders of
Securities of such series, be dissolved.  In any other case the meeting may be
adjourned for such period as may be determined by the chairman of the meeting
prior to the adjournment of such meeting.  In the absence of a quorum at any
such adjourned meeting, such adjourned meeting may be further adjourned for such
period as may be determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting.  Except as provided by Section 1305(e),
notice of the reconvening of any meeting adjourned for more than 30 days shall
be given as provided in Section 1302(a) not less than 10 days prior to the date
on which the meeting is scheduled to be reconvened.  Notice of the reconvening
of an adjourned meeting shall state expressly the percentage, as provided above,
of the principal amount of the Outstanding Securities of such series which shall
constitute a quorum.

          Except as limited by Section 1202, any resolution presented to a
meeting or adjourned meeting duly reconvened at which a quorum is present as
aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in aggregate principal amount of the Outstanding Securities of the
series with respect to which such meeting shall have been called, considered as
one class; provided, however, that, except as so limited, any resolution with
respect to any action which this Indenture expressly provides may be taken by
the Holders of a specified percentage, which is less than a majority, in
principal amount of the Outstanding Securities of such series, considered as one
class, may be adopted at a meeting or an adjourned meeting duly reconvened and
at which a quorum 

                                      -55-
<PAGE>
 
is present as aforesaid by the affirmative vote of the Holders of such specified
percentage in principal amount of the Outstanding Securities of such series,
considered as one class.

          Any resolution passed or decision taken at any meeting of Holders of
Securities duly held in accordance with this Section shall be binding on all the
Holders of Securities of the series with respect to which such meeting shall
have been held, whether or not present or represented at the meeting.

SECTION 1305.  ATTENDANCE AT MEETINGS; DETERMINATION OF VOTING RIGHTS;
                     CONDUCT AND ADJOURNMENT OF MEETINGS.

          (a)  Attendance at meetings of Holders of Securities may be in person
     or by proxy; and, to the extent permitted by law, any such proxy shall
     remain in effect and be binding upon any future Holder of the Securities
     with respect to which it was given unless and until specifically revoked by
     the Holder or future Holder of such Securities before being voted.

          (b)  Notwithstanding any other provisions of this Indenture, the
     Trustee may make such reasonable regulations as it may deem advisable for
     any meeting of Holders of Securities in regard to proof of the holding of
     such Securities and of the appointment of proxies and in regard to the
     appointment and duties of inspectors of votes, the submission and
     examination of proxies, certificates and other evidence of the right to
     vote, and such other matters concerning the conduct of the meeting as it
     shall deem appropriate.  Except as otherwise permitted or required by any
     such regulations, the holding of Securities shall be proved in the manner
     specified in Section 104 and the appointment of any proxy shall be proved
     in the manner specified in Section 104.  Such regulations may provide that
     written instruments appointing proxies, regular on their face, may be
     presumed valid and genuine without the proof specified in Section 104 or
     other proof.

          (c)  The Trustee shall, by an instrument in writing, appoint a
     temporary chairman of the meeting, unless the meeting shall have been
     called by the Company or by Holders as provided in Section 1302(b), in
     which case the Company or the Holders of Securities of the series calling
     the meeting, as the case may be, shall in like manner appoint a temporary
     chairman.  A permanent chairman and a permanent secretary of the meeting
     shall be elected by vote of the Persons entitled to vote a majority in
     aggregate principal amount of the Outstanding Securities of all series
     represented at the meeting, considered as one class.

          (d)  At any meeting each Holder or proxy shall be entitled to one vote
     for each $1 principal amount of Securities held or represented by him;
     provided, however, that no vote shall be cast or counted at any meeting in
     respect of any Security challenged as not Outstanding and ruled by the
     chairman of the meeting to be not Outstanding.  The chairman of the meeting
     shall have no right to vote, except as a Holder of a Security or proxy.

          (e)  Any meeting duly called pursuant to Section 1302 at which a
     quorum is present may be adjourned from time to time by Persons entitled to
     vote a majority in aggregate principal amount of the Outstanding Securities
     of all series represented at the meeting, considered as one class; and the
     meeting may be held as so adjourned without further notice.

                                      -56-
<PAGE>
 
SECTION 1306.  COUNTING VOTES AND RECORDING ACTION OF MEETINGS.

          The vote upon any resolution submitted to any meeting of Holders shall
be by written ballots on which shall be subscribed the signatures of the Holders
or of their representatives by proxy and the principal amounts and serial
numbers of the Outstanding Securities, of the series with respect to which the
meeting shall have been called, held or represented by them.  The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports of all
votes cast at the meeting.  A record of the proceedings of each meeting of
Holders shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1302 and, if
applicable, Section 1304.  Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting.  Any record so signed and verified shall be conclusive evidence
of the matters therein stated.

SECTION 1307.  ACTION WITHOUT MEETING.

          In lieu of a vote of Holders at a meeting as hereinbefore contemplated
in this Article, any request, demand, authorization, direction, notice, consent,
waiver or other action may be made, given or taken by Holders by written
instruments as provided in Section 104.


                               ARTICLE FOURTEEN

        Immunity of Incorporators, Stockholders, Officers and Directors

SECTION 1401.  LIABILITY SOLELY CORPORATE.

          No recourse shall be had for the payment of the principal of or
premium, if any, or interest, if any, on any Securities, or any part thereof, or
for any claim based thereon or otherwise in respect thereof, or of the
indebtedness represented thereby, or upon any obligation, covenant or agreement
under this Indenture, against any incorporator, stockholder, officer or
director, as such, past, present or future of the Company or of any predecessor
or successor corporation (either directly or through the Company or a
predecessor or successor corporation), whether by virtue of any constitutional
provision, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly agreed and understood that this
Indenture and all the Securities are solely corporate obligations, and that no
personal liability whatsoever shall attach to, or be incurred by, any
incorporator, stockholder, officer or director, past, present or future, of the
Company or of any predecessor or successor corporation, either directly or
indirectly through the Company or any predecessor or successor corporation,
because of the indebtedness hereby authorized or under or by reason of any of
the obligations, covenants or agreements contained in this Indenture or in any
of the Securities or to be implied herefrom or therefrom, and that any such
personal liability is hereby expressly waived and released as a condition of,
and as part of the consideration for, the execution of this Indenture and the
issuance of the Securities.

                                      -57-
<PAGE>
 
                                ARTICLE FIFTEEN

                          Subordination of Securities

SECTION 1501.  SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS.

          The Company, for itself, its successors and assigns, covenants and
agrees, and each Holder of the Securities of each series, by its acceptance
thereof, likewise covenants and agrees, that the payment of the principal of and
premium, if any, and interest, if any, on each and all of the Securities is
hereby expressly subordinated and subject to the extent and in the manner set
forth in this Article, in right of payment to the prior payment in full of all
Senior Indebtedness.

          Each Holder of the Securities of each series, by its acceptance
thereof, authorizes and directs the Trustee on its behalf to take such action as
may be necessary or appropriate to effectuate the subordination as provided in
this Article, and appoints the Trustee its attorney-in-fact for any and all such
purposes.

SECTION 1502.  PAYMENT OVER OF PROCEEDS OF SECURITIES.

          In the event (a) of any insolvency or bankruptcy proceedings or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or a substantial part of its property, or of any
proceedings for liquidation, dissolution or other winding up of the Company,
whether or not involving insolvency or bankruptcy, or (b) subject to the
provisions of Section 1503, that (i) a default shall have occurred with respect
to the payment of principal of or interest on or other monetary amounts due and
payable on any Senior Indebtedness, or (ii) there shall have occurred a default
(other than a default in the payment of principal or interest or other monetary
amounts due and payable) in respect of any Senior Indebtedness, as defined
therein or in the instrument under which the same is outstanding, permitting the
holder or holders thereof to accelerate the maturity thereof (with notice or
lapse of time, or both), and such default shall have continued beyond the period
of grace, if any, in respect thereof, and, in the cases of subclauses (i) and
(ii) of this clause (b), such default shall not have been cured or waived or
shall not have ceased to exist, or (c) that the principal of and accrued
interest on the Securities of any series shall have been declared due and
payable pursuant to Section 801 and such declaration shall not have been
rescinded and annulled as provided in Section 802, then:

             (1)  the holders of all Senior Indebtedness shall first be entitled
          to receive payment of the full amount due thereon, or provision shall
          be made for such payment in money or money's worth, before the Holders
          of any of the Securities are entitled to receive a payment on account
          of the principal of or interest on the indebtedness evidenced by the
          Securities, including, without limitation, any payments made pursuant
          to Articles Four and Five;

             (2)  any payment by, or distribution of assets of, the Company of
          any kind or character, whether in cash, property or securities, to
          which any Holder or the Trustee would be entitled except for the
          provisions of this Article, shall be paid or delivered by the person
          making such payment or distribution, whether a trustee in bankruptcy,
          a receiver or liquidating 

                                      -58-
<PAGE>
 
          trustee or otherwise, directly to the holders of such Senior
          Indebtedness or their representative or representatives or to the
          trustee or trustees under any indenture under which any instruments
          evidencing any of such Senior Indebtedness may have been issued,
          ratably according to the aggregate amounts remaining unpaid on account
          of such Senior Indebtedness held or represented by each, to the extent
          necessary to make payment in full of all Senior Indebtedness remaining
          unpaid after giving effect to any concurrent payment or distribution
          (or provision therefor) to the holders of such Senior Indebtedness,
          before any payment or distribution is made to the Holders of the
          indebtedness evidenced by the Securities or to the Trustee under this
          Indenture; and

             (3)  in the event that, notwithstanding the foregoing, any payment
          by, or distribution of assets of, the Company of any kind or
          character, whether in cash, property or securities, in respect of
          principal of or interest on the Securities or in connection with any
          repurchase by the Company of the Securities, shall be received by the
          Trustee or any Holder before all Senior Indebtedness is paid in full,
          or provision is made for such payment in money or money's worth, such
          payment or distribution in respect of principal of or interest on the
          Securities or in connection with any repurchase by the Company of the
          Securities shall be paid over to the holders of such Senior
          Indebtedness or their representative or representatives or to the
          trustee or trustees under any indenture under which any instruments
          evidencing any such Senior Indebtedness may have been issued, ratably
          as aforesaid, for application to the payment of all Senior
          Indebtedness remaining unpaid until all such Senior Indebtedness shall
          have been paid in full, after giving effect to any concurrent payment
          or distribution (or provision therefor) to the holders of such Senior
          Indebtedness.

          Notwithstanding the foregoing, at any time after the 123rd day
following the date of deposit of cash or Government Obligations pursuant to
Section 701 (provided all conditions set out in such Section shall have been
satisfied), the funds so deposited and any interest thereon will not be subject
to any rights of holders of Senior Indebtedness including, without limitation,
those arising under this Article Fifteen; provided that no event described in
clauses (d) and (e) of Section 801 with respect to the Company has occurred
during such 123-day period.

          For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan or reorganization or readjustment which are subordinate
in right of payment to all Senior Indebtedness which may at the time be
outstanding to the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article.  The consolidation of the
Company with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in Article Eleven hereof
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
the purposes of this Section 1502 if such other corporation shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the conditions
stated in 

                                      -59-
<PAGE>
 
Article Eleven hereof. Nothing in Section 1501 or in this Section 1502 shall
apply to claims of, or payments to, (i) the Trustee under or pursuant to Section
907 or (ii) any Creditor under or pursuant to Section 312.

SECTION 1503.  DISPUTES WITH HOLDERS OF CERTAIN SENIOR INDEBTEDNESS.

          Any failure by the Company to make any payment on or perform any other
obligation in respect of Senior Indebtedness, other than any indebtedness
incurred by the Company or assumed or guaranteed, directly or indirectly, by the
Company for money borrowed (or any deferral, renewal, extension or refunding
thereof) or any other obligation as to which the provisions of this Section
shall have been waived by the Company in the instrument or instruments by which
the Company incurred, assumed, guaranteed or otherwise created such indebtedness
or obligation, shall not be deemed a default under clause (b) of Section 1502 if
(i) the Company shall be disputing its obligation to make such payment or
perform such obligation and (ii) either (A) no final judgment relating to such
dispute shall have been issued against the Company which is in full force and
effect and is not subject to further review, including a judgment that has
become final by reason of the expiration of the time within which a party may
seek further appeal or review, or (B) in the event that a judgment that is
subject to further review or appeal has been issued, the Company shall in good
faith be prosecuting an appeal or other proceeding for review and a stay or
execution shall have been obtained pending such appeal or review.

SECTION 1504.  SUBROGATION.

          Senior Indebtedness shall not be deemed to have been paid in full
unless the holders thereof shall have received cash (or securities or other
property satisfactory to such holders) in full payment of such Senior
Indebtedness then outstanding.  Subject to the prior payment in full of all
Senior Indebtedness, the rights of the Holders of the Securities shall be
subrogated to the rights of the holders of Senior Indebtedness to receive any
further payments or distributions of cash, property or securities of the Company
applicable to the holders of the Senior Indebtedness until all amounts owing on
the Securities shall be paid in full; and such payments or distributions of
cash, property or securities received by the Holders of the Securities, by
reason of such subrogation, which otherwise would be paid or distributed to the
holders of such Senior Indebtedness shall, as between the Company, its creditors
other than the holders of Senior Indebtedness, and the Holders, be deemed to be
a payment by the Company to or on account of Senior Indebtedness, it being
understood that the provisions of this Article are and are intended solely for
the purpose of defining the relative rights of the Holders, on the one hand, and
the holders of the Senior Indebtedness, on the other hand.

                                      -60-
<PAGE>
 
SECTION 1505.  OBLIGATION OF THE COMPANY UNCONDITIONAL.

          Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders the principal of and interest on the Securities as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the Holders and creditors of the Company
other than the holders of Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or any Holder 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 in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy.

          Upon any payment or distribution of assets or securities of the
Company referred to in this Article, the Trustee and the Holders shall be
entitled to rely upon any order or decree of a court of competent jurisdiction
in which such dissolution, winding up, liquidation or reorganization proceedings
are pending for the purpose of ascertaining the persons entitled to participate
in such 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 1506.  PRIORITY OF SENIOR INDEBTEDNESS UPON MATURITY.

          Upon the maturity of the principal of any Senior Indebtedness by lapse
of time, acceleration or otherwise, all matured principal of Senior Indebtedness
and interest and premium, if any, thereon shall first be paid in full before any
payment of principal or premium, if any, or interest, if any, is made upon the
Securities or before any Securities can be acquired by the Company or any
sinking fund payment is made with respect to the Securities (except that
required sinking fund payments may be reduced by Securities acquired before such
maturity of such Senior Indebtedness).

SECTION 1507.  TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS.

          The Trustee shall be entitled to all rights set forth in this Article
with respect to any Senior Indebtedness at any time held by it, to the same
extent as any other holder of Senior Indebtedness. Nothing in this Article shall
deprive the Trustee of any of its rights as such holder.

                                      -61-
<PAGE>
 
SECTION 1508.  NOTICE TO TRUSTEE TO EFFECTUATE SUBORDINATION.

          Notwithstanding the provisions of this Article or any other provision
of the Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the making of any payment of moneys
to or by the Trustee unless and until the Trustee shall have received written
notice thereof from the Company, from a Holder or from a holder of any Senior
Indebtedness or from any representative or representatives of such holder and,
prior to the receipt of any such written notice, the Trustee shall be entitled,
subject to Section 901, in all respects to assume that no such facts exist;
provided, however, that, if prior to the fifth Business Day preceding the date
upon which by the terms hereof any such moneys may become payable for any
purpose, or in the event of the execution of an instrument pursuant to Section
702 acknowledging satisfaction and discharge of this Indenture, then if prior to
the second Business Day preceding the date of such execution, the Trustee shall
not have received with respect to such moneys the notice provided for in this
Section, then, anything herein contained to the contrary notwithstanding, the
Trustee may, in its discretion, receive such moneys and/or apply the same to the
purpose for which they were received, and shall not be affected by any notice to
the contrary, which may be received by it on or after such date; provided,
however, that no such application shall affect the obligations under this
Article of the persons receiving such moneys from the Trustee.

SECTION 1509.  MODIFICATION, EXTENSION, ETC. OF SENIOR INDEBTEDNESS.

          The holders of Senior Indebtedness may, without affecting in any
manner the subordination of the payment of the principal of and premium, if any,
and interest, if any, on the Securities, at any time or from time to time and in
their absolute discretion, agree with the Company to change the manner, place or
terms of payment, change or extend the time of payment of, or renew or alter,
any Senior Indebtedness, or amend or supplement any instrument pursuant to which
any Senior Indebtedness is issued, or exercise or refrain from exercising any
other of their rights under the Senior Indebtedness including, without
limitation, the waiver of default thereunder, all without notice to or assent
from the Holders or the Trustee.

SECTION 1510.  TRUSTEE HAS NO FIDUCIARY DUTY TO HOLDERS OF SENIOR INDEBTEDNESS.

          With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and objectives as
are specifically set forth in this Indenture, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee.  The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if it shall mistakenly pay over or deliver to the
Holders or the Company or any other Person, money or assets to which any holders
of Senior Indebtedness shall be entitled by virtue of this Article or otherwise.

                                      -62-
<PAGE>
 
SECTION 1511.  PAYING AGENTS OTHER THAN THE TRUSTEE.

          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 shall otherwise
require) 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 Sections 1507, 1508 and 1510 shall not apply to the Company if it acts as
Paying Agent.

SECTION 1512.  RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT IMPAIRED.

          No right of any present or future holder of Senior Indebtedness to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Company 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.

SECTION 1513.  EFFECT OF SUBORDINATION PROVISIONS; TERMINATION.

          Notwithstanding anything contained herein to the contrary, other than
as provided in the immediately succeeding sentence, all the provisions of this
Indenture shall be subject to the provisions of this Article, so far as the same
may be applicable thereto.

          Notwithstanding anything contained herein to the contrary, the
provisions of this Article Fifteen shall be of no further effect, and the
Securities shall no longer be subordinated in right of payment to the prior
payment of Senior Indebtedness, if the Company shall have delivered to the
Trustee a notice to such effect.  Any such notice delivered by the Company shall
not be deemed to be a supplemental indenture for purposes of Article Twelve.

                             _________________________

          This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

                                      -63-
<PAGE>
 
          IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.


                         ATLANTIC CITY ELECTRIC COMPANY


                         By:________________________________________
                            Senior Vice President and
                            Chief Financial Officer


                         THE BANK OF NEW YORK, Trustee


                         By:__________________________________________

                                      -64-