Document:

<PAGE>

                                                                     EXHIBIT 4.2

                                    INDENTURE

                                     between

                           PENN NATIONAL GAMING, INC.

                                       and

                      _________________________, as Trustee

                        Dated as of ______________, 2001

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                     PAGE

<S>                   <C>                                                                              <C>
ARTICLE I             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION...........................2
         Section 1.1       DEFINITIONS; INTERPRETATION..................................................2
         Section 1.2       COMPLIANCE CERTIFICATES AND OPINIONS........................................12
         Section 1.3       FORM OF DOCUMENTS DELIVERED TO TRUSTEE......................................13

ARTICLE II            DEBT SECURITY FORMS..............................................................13
         Section 2.1       FORMS GENERALLY.............................................................13
         Section 2.2       FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.............................14
         Section 2.3       SECURITIES IN GLOBAL FORM...................................................14

ARTICLE III           THE DEBT SECURITIES..............................................................15
         Section 3.1       AMOUNT UNLIMITED; ISSUABLE IN SERIES........................................15
         Section 3.2       DENOMINATIONS...............................................................18
         Section 3.3       EXECUTION, AUTHENTICATION, DELIVERY AND DATING..............................18
         Section 3.4       TEMPORARY DEBT SECURITIES; EXCHANGE OF TEMPORARY GLOBAL NOTES FOR DEFINITIVE
                           DEBT SECURITIES; GLOBAL NOTES REPRESENTING DEBT SECURITIES..................20
         Section 3.5       REGISTRATION, TRANSFER AND EXCHANGE.........................................22
         Section 3.6       MUTILATED, DESTROYED, LOST AND STOLEN DEBT SECURITIES.......................24
         Section 3.7       PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED..............................24
         Section 3.8       CANCELLATION................................................................26
         Section 3.9       COMPUTATION OF INTEREST.....................................................26
         Section 3.10      MANDATORY DISPOSITION OF DEBT SECURITIES PURSUANT TO GAMING LAWS............26

ARTICLE IV            SATISFACTION AND DISCHARGE.......................................................27
         Section 4.1       SATISFACTION AND DISCHARGE OF INDENTURE.....................................27
         Section 4.2       APPLICATION OF TRUST MONEY..................................................29

ARTICLE V             REMEDIES.........................................................................29
</TABLE>
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                     PAGE

<S>                   <C>                                                                              <C>

         Section 5.1       EVENTS OF DEFAULT...........................................................29
         Section 5.2       ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT..........................30
         Section 5.3       COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.............31
         Section 5.4       TRUSTEE MAY FILE PROOFS OF CLAIM............................................32
         Section 5.5       TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF DEBT SECURITIES............33
         Section 5.6       APPLICATION OF MONEY COLLECTED..............................................33
         Section 5.7       LIMITATION ON SUITS.........................................................34
         Section 5.8       UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST...35
         Section 5.9       RESTORATION OF RIGHTS AND REMEDIES..........................................35
         Section 5.10      RIGHTS AND REMEDIES CUMULATIVE..............................................35
         Section 5.11      DELAY OR OMISSION NOT WAIVER................................................35
         Section 5.12      CONTROL BY HOLDERS..........................................................35
         Section 5.13      WAIVER OF PAST DEFAULTS.....................................................36
         Section 5.14      UNDERTAKING FOR COSTS.......................................................36
         Section 5.15      WAIVER OF STAY OR EXTENSION LAWS............................................37

ARTICLE VI            THE TRUSTEE......................................................................37
         Section 6.1       CERTAIN DUTIES AND RESPONSIBILITIES.........................................37
         Section 6.2       NOTICE OF DEFAULTS..........................................................39
         Section 6.3       CERTAIN RIGHTS OF TRUSTEE...................................................39
         Section 6.4       NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBT SECURITIES.................40
         Section 6.5       MAY HOLD DEBT SECURITIES....................................................40
         Section 6.6       MONEY HELD IN TRUST.........................................................41
         Section 6.7       COMPENSATION AND REIMBURSEMENT..............................................41
         Section 6.8       DISQUALIFICATION; CONFLICTING INTERESTS.....................................41
         Section 6.9       CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.....................................42
         Section 6.10      RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR...........................42
         Section 6.11      ACCEPTANCE OF APPOINTMENT BY SUCCESSOR......................................44
</TABLE>
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                     PAGE

<S>                   <C>                                                                              <C>

         Section 6.12      MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.................45
         Section 6.13      PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY...........................45
         Section 6.14      APPOINTMENT OF AUTHENTICATING AGENT.........................................45

ARTICLE VII           HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY................................48
         Section 7.1       COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS...................48
         Section 7.2       PRESERVATION OF INFORMATION; COMMUNICATION TO HOLDERS.......................48
         Section 7.3       REPORTS BY TRUSTEE..........................................................50
         Section 7.4       REPORTS BY COMPANY..........................................................52

ARTICLE VIII          CONCERNING THE HOLDERS...........................................................53
         Section 8.1       ACTS OF HOLDERS.............................................................53
         Section 8.2       PROOF OF OWNERSHIP; PROOF OF EXECUTION OF INSTRUMENTS BY HOLDER.............53
         Section 8.3       PERSONS DEEMED OWNERS.......................................................54
         Section 8.4       REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND................................54

ARTICLE IX            HOLDERS' MEETINGS................................................................54
         Section 9.1       PURPOSES OF MEETINGS........................................................54
         Section 9.2       CALL OF MEETINGS BY TRUSTEE.................................................55
         Section 9.3       CALL OF MEETINGS BY COMPANY OR HOLDERS......................................55
         Section 9.4       QUALIFICATIONS FOR VOTING...................................................55
         Section 9.5       REGULATIONS.................................................................56
         Section 9.6       VOTING......................................................................56
         Section 9.7       NO DELAY OF RIGHTS BY MEETING...............................................57

ARTICLE X             CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.............................57
         Section 10.1      COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS........................57
         Section 10.2      SUCCESSOR CORPORATION SUBSTITUTED...........................................58
</TABLE>
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                     PAGE

<S>                   <C>                                                                              <C>

ARTICLE XI            SUPPLEMENTAL INDENTURES..........................................................58
         Section 11.1      SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS..........................58
         Section 11.2      SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.............................59
         Section 11.3      EXECUTION OF SUPPLEMENTAL INDENTURES........................................61
         Section 11.4      EFFECT OF SUPPLEMENTAL INDENTURES...........................................61
         Section 11.5      CONFORMITY WITH TRUST INDENTURE ACT.........................................61
         Section 11.6      REFERENCE IN DEBT SECURITIES TO SUPPLEMENTAL INDENTURES.....................61

ARTICLE XII           COVENANTS........................................................................61
         Section 12.1      PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST..................................61
         Section 12.2      OFFICER'S CERTIFICATE AS TO COMPLIANCE......................................62
         Section 12.3      MAINTENANCE OF OFFICE OR AGENCY.............................................62
         Section 12.4      MONEY FOR DEBT SECURITIES; PAYMENTS TO BE HELD IN TRUST.....................63
         Section 12.5      CORPORATE EXISTENCE.........................................................64
         Section 12.6      WAIVER OF CERTAIN COVENANTS.................................................64

ARTICLE XIII          REDEMPTION OF DEBT SECURITIES....................................................65
         Section 13.1      APPLICABILITY OF ARTICLE....................................................65
         Section 13.2      ELECTION TO REDEEM; NOTICE TO TRUSTEE.......................................65
         Section 13.3      SELECTION BY TRUSTEE OF DEBT SECURITIES TO BE REDEEMED......................65
         Section 13.4      NOTICE OF REDEMPTION........................................................66
         Section 13.5      DEPOSIT OF REDEMPTION PRICE.................................................67
         Section 13.6      DEBT SECURITIES PAYABLE ON REDEMPTION DATE..................................67
         Section 13.7      DEBT SECURITIES REDEEMED IN PART............................................67

ARTICLE XIV           SINKING FUNDS....................................................................68
         Section 14.1      APPLICABILITY OF ARTICLE....................................................68
         Section 14.2      SATISFACTION OF MANDATORY SINKING FUND PAYMENTS WITH DEBT SECURITIES........68
</TABLE>
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                     PAGE

<S>                   <C>                                                                              <C>

         Section 14.3      REDEMPTION OF DEBT SECURITIES FOR SINKING FUND..............................68

ARTICLE XV            DEFEASANCE.......................................................................70
         Section 15.1      APPLICABILITY OF ARTICLE....................................................70
         Section 15.2      DEFEASANCE UPON DEPOSIT OF MONEYS OR U.S. GOVERNMENT OBLIGATIONS............70
         Section 15.3      DEPOSITED MONEYS AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD INTRUST.........72
         Section 15.4      REPAYMENT TO COMPANY........................................................72

ARTICLE XVI           CONVERSION.......................................................................73
         Section 16.1      APPLICABILITY; CONVERSION PRIVILEGE.........................................73
         Section 16.2      CONVERSION PROCEDURE; CONVERSION PRICE; FRACTIONAL SHARES...................73
         Section 16.3      ADJUSTMENT OF CONVERSION PRICE FOR COMMON STOCK.............................74
         Section 16.4      CONSOLIDATION OR MERGER OF THE COMPANY......................................77
         Section 16.5      NOTICE OF ADJUSTMENT........................................................78
         Section 16.6      NOTICE IN CERTAIN EVENTS....................................................78
         Section 16.7      COMPANY TO RESERVE STOCK; REGISTRATION; LISTING.............................79
         Section 16.8      TAXES ON CONVERSION.........................................................80
         Section 16.9      CONVERSION AFTER RECORD DATE................................................80
         Section 16.10     COMPANY DETERMINATION FINAL.................................................80
         Section 16.11     TRUSTEE'S DISCLAIMER........................................................81

ARTICLE XVII          GUARANTEES.......................................................................81
         Section 17.1      APPLICABILITY OF ARTICLE....................................................81
         Section 17.2      OBLIGOR GUARANTEE...........................................................81
         Section 17.3      NATURE OF OBLIGOR GUARANTEE.................................................82
         Section 17.4      AUTHORIZATION...............................................................82
         Section 17.5      CERTAIN WAIVERS.............................................................83
         Section 17.6      NO SUBROGATION; CERTAIN AGREEMENTS..........................................84
         Section 17.7      BANKRUPTCY NO DISCHARGE.....................................................84
         Section 17.8      RIGHTS OF CONTRIBUTION......................................................85
</TABLE>
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                     PAGE

<S>                   <C>                                                                              <C>

         Section 17.9      LIMITATION ON LIABILITY.....................................................86
         Section 17.10     APPLICATION OF CERTAIN TERMS AND PROVISIONS TO THE GUARANTORS...............86
         Section 17.11     EXECUTION AND DELIVERY OF GUARANTEE.........................................87
         Section 17.12     GUARANTOR MAY CONSOLIDATE, ETC. ON CERTAIN TERMS............................87
         Section 17.13     RELEASE OF GUARANTORS.......................................................88
         Section 17.14     CERTAIN BANKRUPTCY EVENTS...................................................89

ARTICLE XVIII         MISCELLANEOUS....................................................................89
         Section 18.1      NOTICES, ETC., TO TRUSTEE AND COMPANY.......................................89
         Section 18.2      NOTICE TO HOLDERS; WAIVER...................................................89
         Section 18.3      CONFLICT WITH TRUST INDENTURE ACT...........................................90
         Section 18.4      COUNTERPARTS; EFFECT OF HEADINGS AND TABLE OF CONTENTS......................90
         Section 18.5      SUCCESSORS AND ASSIGNS......................................................91
         Section 18.6      SEPARABILITY CLAUSE.........................................................91
         Section 18.7      BENEFITS OF INDENTURE.......................................................91
         Section 18.8      GOVERNING LAW...............................................................91
         Section 18.9      LEGAL HOLIDAYS..............................................................91
         Section 18.10     NO RECOURSE AGAINST OTHERS..................................................91

EXHIBIT A - FORM OF REDEEMABLE OR NONREDEEMABLE DEBT
                     SECURITY
</TABLE>

<PAGE>

         INDENTURE dated as of _______ __, 2001, by and between PENN NATIONAL
GAMING, INC., a Pennsylvania corporation (the "Company"), having its principal
executive office at 825 Berkshire Blvd., Suite 200, Wyomissing, PA 19610, and
___________________ (together with any additional trustees to be added by
supplemental indenture pursuant to this Indenture, the "Trustee"), having its
Corporate Trust Office at _____________________.

                             RECITALS 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 debentures,
notes, bonds or other evidences of indebtedness (the "Debt Securities"), to be
issued in one or more series, as provided in this Indenture.

         This Indenture is subject to the provisions of the Trust Indenture Act
of 1939, as amended, that are deemed incorporated into this Indenture and shall,
to the extent applicable, be governed by such provisions.

         All things necessary have been done to make this Indenture a valid
agreement of the Company, in accordance with its terms.

         NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

                                    ARTICLE I
             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 1.1 DEFINITIONS; INTERPRETATION.

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

                                       2
<PAGE>

            (c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles or as provided with respect to any series of Debt Securities, and,
except as otherwise herein provided or as provided with respect to any series of
Debt Securities, the term "generally accepted accounting principles" or "GAAP"
with respect to any computation required or permitted hereunder with respect to
any series of Debt Securities, shall mean such as set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
have been approved by a significant segment of the accounting profession which
are in effect as of the date of determination;

            (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;

            (e) certain terms, used principally in Article Three or Article Six,
are defined in those respective Articles;

            (f) "or" is not exclusive and "including" is not limiting;

            (g) references in this Indenture to any agreement, other document or
law "as amended" or "as amended from time to time," or to "amendments" of any
document or law, shall include any amendments, supplements, replacements,
renewals or other modifications from time to time, provided in the case of
modifications to documents, such modifications are permissible hereunder;

            (h) references in this Indenture to any law include regulations
promulgated thereunder from time to time;

            (i) The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof; and

            (j) The term "Act" when used with respect to any holder, has the
meaning specified in Section 8.1.

         "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" (including, with correlative meanings, the terms "controlling,
"controlled by" and "under common control with") as used with respect to any
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
agreement or otherwise.

                                       3
<PAGE>

         "Authenticating Agent" has the meaning specified in Section 6.14.

         "Authorized Newspaper" means a newspaper in an official language of the
country of publication customarily published at least once a day, and
customarily published for at least five days in each calendar week, and of
general circulation in the place in connection with which the term is used or in
the financial community of such place. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any Business Day in such city.

         "Bankruptcy Code" means 11 U.S.C. (S)101 et seq., as amended from time
to time.

         "Beneficiary" has the meaning specified in Section 17.2.

         "Board of Directors" means either the board of directors of the Company
or any committee of that board or any other committee of the Company, duly
authorized by the board of directors of the Company to act hereunder.

         "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 any Place of Payment or any
other particular location referred to in this Indenture or in the Debt
Securities means any day which is not a Saturday, a Sunday or a legal holiday or
a day on which banking institutions or trust companies in that Place of Payment
or other location are authorized or obligated by law to close, except as
otherwise specified pursuant to Section 3.1.

         "Closing Price" of the Common Stock shall mean the average of the last
reported closing bid and asked prices on the Nasdaq National Market, or if the
Common Stock is not then listed on the Nasdaq National Market, then on the
principal exchange on which the Common Stock is listed.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "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 execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties on such date.

         "Common Depositary" has the meaning specified in Section 3.4(b).

                                       4
<PAGE>

         "Common Stock" shall mean the class of Common Stock, par value $0.01
per share, of the Company authorized at the date of this Indenture as originally
signed, or any other class of stock resulting from successive changes or
reclassifications of such Common Stock, and in any such case including any
shares thereof authorized after the date of this Indenture, and any other shares
of stock of the Company which do not have any priority in the payment of
dividends or upon liquidation over any other class of stock.

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

         "Company Request" and "Company Order" mean, respectively, a written
request or order signed in the name of the Company by the Chairman of the Board
of Directors, the President or an Executive or Senior Vice President and by the
Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the
Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.

         "Conversion Agent" means any Person authorized by the Company to
receive Debt Securities to be converted into Common Stock on behalf of the
Company. The Company initially authorizes the Trustee to act as Conversion Agent
for the Debt Securities on its behalf. The Company may at any time or from time
to time authorize one or more Persons to act as Conversion Agent in addition to
or in place of the Trustee with respect to any series of Debt Securities issued
under this Indenture.

         "Conversion Price" means, with respect to any series of Debt Securities
which are convertible into Common Stock, the price per share of Common Stock at
which the Debt Securities of such series are so convertible pursuant to Section
3.1 with respect to such series, as the same may be adjusted from time to time
in accordance with Section 16.3.

         "Corporate Trust Office" means the principal corporate trust office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of execution of this instrument is
located at ______________________.

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

         "Covenant defeasance option" has the meaning specified in Section 15.2.

         "Current Market Price" on any date shall mean the average of the daily
Closing Prices per share of Common Stock for any thirty (30) consecutive Trading
Days selected by the Company prior to the date in question, which thirty (30)
consecutive Trading Day period shall not commence more than forty-five (45)
Trading Days prior to the day in question; provided that with respect to Section
16.3(c), the "Current Market Price" of the Common Stock shall mean the average
of the daily Closing Prices per share of Common Stock for the five (5)
consecutive Trading Days ending on the date of the distribution

                                       5
<PAGE>

referred to in Section 16.3(c) (or if such date shall not be a Trading Day, on
the Trading Day immediately preceding such date).

         "Debt Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Debt Securities (including any Global
Note) authenticated and delivered under this Indenture; provided, however, that,
if at any time there is more than one Person acting as Trustee under this
Indenture, "Debt Securities" with respect to the Indenture as to which such
Person is Trustee shall have the meaning stated in the first recital of this
Indenture and shall more particularly mean Debt Securities authenticated and
delivered under this Indenture, exclusive, however, of Debt Securities of any
series as to which such Person is not Trustee.

         "Default" means any event that after notice or lapse of time, or both,
would become an Event of Default.

         "Defaulted Interest" has the meaning specified in Section 3.7(b).

         "Discharged" has the meaning specified in Section 15.2.

         "Discount Security" means any Debt Security which is issued with
"original issue discount" within the meaning of Section 1273(a) of the Code (or
any successor provision) and the regulations thereunder.

         "Dollar" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States that, at the time of payment, is legal tender for
the payment of public and private debts.

         "Event of Default" has the meaning specified in Section 5.1.

         "Floating Rate Security" means a Debt Security which provides for the
payment of interest at a variable rate determined periodically by reference to
an interest rate index or any other index specified pursuant to Section 3.1.

         "Funding Guarantor" has the meaning specified in Section 17.8(a).

         "Gaming Authority" means any governmental authority with regulatory
oversight of, authority to regulate or jurisdiction over any gaming businesses
or enterprises, including the Mississippi Gaming Commission, the Pennsylvania
State Horse Racing Commission, the Pennsylvania State Harness Racing Commission,
the West Virginia Racing Commission, the West Virginia Lottery Commission, the
New Jersey Racing Commission, the New Jersey Casino Control Commission, the
Louisiana Gaming Control Board, the Ontario Lottery and Gaming Corporation and
the Ontario Alcohol and Gaming Commission, with regulatory oversight of,
authority to regulate or jurisdiction over any racing or gaming operation (or
proposed gaming operations) owned, managed or operated by the Company or any
Guarantor.

                                       6
<PAGE>

         "Gaming Laws" means the gaming laws of a jurisdiction or jurisdictions
to which the Company or a subsidiary of the Company is, or may at any time after
the date of this Indenture be, subject, including all applicable provisions of
all: (1) constitutions, treatises, statutes or laws governing gaming operations
(including, without limitation, card club casinos and pari-mutuel race tracks)
and rules, regulations and ordinances of any Gaming Authority; (2) any
governmental approval relating to any gaming business (including pari-mutuel
betting) or enterprise; and (3) orders, decisions, judgments, awards and decrees
of any Gaming Authority.

         "Gaming Licenses" means every material license, material, franchise,
registration, or other material approval held by, or issued at any time after
the date of this Indenture, to the Company or any of its subsidiaries
authorizing the Company or any of its subsidiaries to own, lease, operate or
otherwise conduct or manage gaming (including pari-mutuel betting) in any state
or jurisdiction.

         "Global Note" means a registered Debt Security evidencing all or part
of a series of Debt Securities, including, without limitation, any temporary or
permanent Global Note.

         "Guaranteed Securities" has the meaning specified in Section 17.2.

         "Guarantor" means, with respect to the Debt Securities of any series,
any Person who has guaranteed the obligations of the Company under this
Indenture with respect to such series pursuant to Article 17, until released
from such guarantee pursuant to the terms of this Indenture.

         "Indenture" means this instrument as originally executed, or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and, unless the context otherwise requires, shall include the terms of a
particular series of Debt Securities as established pursuant to Section 3.1;
provided, however, that, if at any time more than one Person is acting as
Trustee under this instrument, "Indenture" shall mean, with respect to any one
or more series of Debt Securities for which such Person is Trustee, this
instrument as originally executed or as it may be supplemented or amended from
time to time by one or more indentures supplemental hereto entered into pursuant
to the applicable provisions hereof and shall include the terms of the, or
those, particular series of Debt Securities for which such Person is Trustee
established as contemplated by Section 3.1, exclusive, however, of any
provisions or terms which relate solely to other series of Debt Securities for
which such Person is Trustee, regardless of when such terms or provisions were
adopted, and exclusive of any provisions or terms adopted by means of one or
more indentures supplemental hereto executed and delivered after such Person had
become such Trustee but to which such Person, as such Trustee, was not a party.

         "Interest" when used with respect to a Discount Security which by its
terms bears interest only on a certain date, means interest payable after such
date.

                                       7
<PAGE>

         "Interest Payment Date" with respect to any Debt Security means the
Stated Maturity of an installment of interest on such Debt Security.

         "Joint Venture" means any partnership, corporation or other entity, in
which up to and including 50% of the partnership interests, outstanding voting
stock or other equity interests is owned, directly or indirectly, by the Company
and/or one or more subsidiaries.

         "Legal defeasance option" has the meaning specified in Section 17.2.

         "Mandatory sinking fund payment" has the meaning specified in Section
14.1.

         "Maturity" when used with respect to any Debt Security means the date
on which the principal of such Debt Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption, repayment or
repurchase at the option of the holder thereof or otherwise.

         "Maximum Net Worth" has the meaning specified in Section 17.8(b).

         "Net Worth" has the meaning specified in Section 17.8(b).

         "Obligations" has the meaning specified in Section 17.2.

         "Obligor" means the Company or any Guarantor.

         "Obligor Guarantee" has the meaning specified in Section 17.2.

         "Officers' Certificate" means a certificate signed by the Chairman of
the Board of Directors, the President or an Executive or Senior Vice President
and by the Treasurer, an Assistant Treasurer, the Controller, an Assistant
Controller, the Secretary or an Assistant Secretary of the Company and delivered
to the Trustee.

         "Opinion of Counsel" means a written opinion of counsel, who may be
counsel to the Company (including an employee or counsel to the Company or any
subsidiary of the Company).

         "Optional sinking fund payment" has the meaning specified in Section
14.1.

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

            (i) Debt Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;

                                       8
<PAGE>

            (ii) Debt Securities for whose payment or redemption (including
repayment at the option of the holder) money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the holders of such Debt
Securities; provided, however, that if such Debt Securities are to be redeemed,
then notice of such redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made and the date for
such redemption has passed;

            (iii) Debt Securities, except to the extent provided in Section
15.2, with respect to which the Company has effected defeasance as provided in
Article Fifteen;

            (iv) Debt Securities which have been issued pursuant to Section 3.6
or in exchange for or in lieu of which other Debt Securities have been
authenticated and delivered pursuant to this Indenture, other than any such Debt
Securities in respect of which there shall have been presented to the Trustee
proof satisfactory to it that such Debt Securities are held by a bona fide
purchaser in whose hands such Debt Securities are valid obligations of the
Company; and

            (v) Debt Securities converted into Common Stock pursuant to or in
accordance with this Indenture;

Provided, however, that in determining whether the holders of the requisite
principal amount of Debt Securities Outstanding have performed any Act
hereunder, Debt Securities owned by the Company or any other obligor upon the
Debt Securities or any Affiliate of the Company or of such other obligor shall
be disregarded and deemed not to be Outstanding (provided, that in connection
with any offer by the Company or any obligor to purchase Debt Securities, Debt
Securities rendered by a holder shall be Outstanding until the date of
purchase), except that, in determining whether the Trustee shall be protected in
relying upon any such Act, only Debt Securities which the Trustee knows to be so
owned shall be so disregarded. Debt 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 to act with respect to such Debt
Securities and that the pledgee is not the Company or any other obligor upon the
Debt Securities or any Affiliate of the Company or of such other obligor. In
determining whether the holders of the requisite principal amount of Outstanding
Debt Securities have performed any Act hereunder, the principal amount of a
Discount Security that shall be deemed to be Outstanding for such purpose shall
be the amount of the principal thereof that would be due and payable as of the
date of such determination upon a declaration of acceleration of the Maturity
thereof pursuant to Section 5.2.

         "Overdue Rate" when used with respect to any series of the Debt
Securities, means the rate designated as such in or pursuant to the Board
Resolution or the supplemental indenture, as the case may be, relating to such
series as contemplated by

                                       9
<PAGE>

Section 3.1.

         "Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Debt Securities on behalf
of the Company.

         "Permanent Global Note" shall have the meaning given such term in
Section 3.4(b).

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

         "Place of Payment" when used with respect to the Debt Securities of any
series means the place or places where the principal of (and premium, if any)
and interest on the Debt Securities of that series are payable as specified
pursuant to Section 3.1.

         "Predecessor Security" of any particular Debt Security means every
previous Debt Security evidencing all or a portion of the same debt as that
evidenced by such particular Debt Security; and, for the purposes of this
definition, any Debt Security authenticated and delivered under Section 3.6 in
lieu of a mutilated, lost, destroyed or stolen Debt Security shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Debt
Security.

         "Principal" includes, with respect to Debt Securities of any series,
principal payable upon redemption or repurchase of Debt Securities of such
series.

         "Redemption Date" means the date fixed for redemption of any Debt
Security pursuant to this Indenture.

         "Redemption Price" means, in the case of a Discount Security, the
amount of the principal thereof that would be due and payable as of the
Redemption Date upon a declaration of acceleration pursuant to Section 5.2, and
in the case of any other Debt Security, the principal amount thereof, plus, in
each case, premium, if any, and accrued and unpaid interest, if any, to the
Redemption Date.

         "Regular Record Date" for the interest payable on the Debt Securities
of any series on any Interest Payment Date means the date specified for the
purpose pursuant to Section 3.1 for such Interest Payment Date.

         "Responsible Officer" when used with respect to the Trustee means any
vice president, the secretary, any assistant secretary or any assistant vice
president or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular

                                       10
<PAGE>

corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.

         "Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5(a).

         "Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7(b).

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

         "Subsidiary" means (i) a corporation a majority of whose capital stock
with voting power, under ordinary circumstances, to elect directors is at the
time, directly or indirectly, owned by the Company or (ii) any other Person,
(other than a corporation) in which the Company, directly or indirectly, has at
least a majority ownership interest.

         "Successor corporation" has the meaning specified in Section 10.1(a).

         "Temporary Global Note" has the meaning specified in Section 3.4(b).

         "Trading Day" shall mean, with respect to the Common Stock, so long as
the Common Stock is listed or admitted to trading on the Nasdaq National Market
or a principal exchange, a day on which the Nasdaq National Market or such
principal exchange is open for the transaction of business.

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

         "Trust Indenture Act" means the Trust Indenture Act of 1939, as it may
be amended from time to time.

         "U.S. Depositary" means a clearing agency registered under the
Securities Exchange Act of 1934, as amended, or any successor thereto, which
shall in either case be designated by the Company pursuant to Section 3.1 until
a successor U.S. Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "U.S. Depositary" shall mean or
include each Person who is then a U.S. Depositary hereunder, and if at any time
there is more than one such Person, then "U.S.

                                       11
<PAGE>

Depositary" as used with respect to the Debt Securities of any series shall mean
the U.S. Depositary with respect to the Debt Securities of that series.

         "U.S. Government Obligations" has the meaning specified in
Section 15.2.

         "Vice President" includes, with respect to the Company, any Executive
or Senior Vice President and includes, with respect to the Trustee, any Vice
President, whether or not designated by a number or word or words added before
or after the title "Vice President."

SECTION 1.2 COMPLIANCE CERTIFICATES AND OPINIONS.

         Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions 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 (other than certificates
provided pursuant to Section 12.2) shall include:

            (a) a statement that each individual 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 individual, such
individual has made such examination or investigation as is necessary to enable
that individual 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
individual, such condition or covenant has been complied with. provided,
however, that with respect to matters of law, an Officers' Certificate may be
based upon an Opinion of Counsel, unless the signers know, or in the exercise of
reasonable care should know, that such Opinion of Counsel is erroneous, and
provided, further, that with respect to matters of fact an Opinion of Counsel
may rely on an Officers' Certificate or certificates of public

                                       12
<PAGE>

officials, unless the signer knows, or in the exercise of reasonable care should
know, that any such document is erroneous.

SECTION 1.3 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.

         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.

                                   ARTICLE II

                               DEBT SECURITY FORMS

SECTION 2.1 FORMS GENERALLY.

         The Debt Securities of each series shall be substantially in the form
of Exhibit A hereto or in such other form as shall be established in or pursuant
to a Board Resolution or one or more indentures supplemental hereto, and shall
have 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 or designation and such legends or
endorsements placed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Indenture, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any securities exchange on which any series of the
Debt Securities may be listed, or to conform to usage, all as determined by the
officers executing such Debt Securities as conclusively evidenced by their
execution such Debt Securities. If the form of Debt Securities (or any Global
Note) of any series is established in or pursuant to a Board Resolution, a copy
of such Board Resolution shall be delivered to the Trustee, together with an
Officers' Certificate setting forth the form of such series, at or prior to the
delivery of the Company Order contemplated by Section 3.3 for the authentication
and delivery of such Debt Securities (or any such Global Note).

         Subject to Section 3.4, the definitive Debt Securities of each series
shall be printed, lithographed or engraved or produced by any combination of
these methods on steel engraved borders or may be produced in any other manner,
all as determined by the officers executing such Debt Securities, as
conclusively evidenced by their execution of such Debt Securities.

                                       13
<PAGE>

SECTION 2.2 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

         The form of the Trustee's certificate of authentication to be borne by
the Debt Securities shall be substantially as follows:

         TRUSTEE'S CERTIFICATE OF AUTHENTICATION

         This is one of the series of Debt Securities issued under the within
mentioned Indenture.

         [NAME OF TRUSTEE], as Trustee

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

SECTION 2.3 SECURITIES IN GLOBAL FORM.

         If any Debt Security of a series is issued as a Global Note, such
Global Note may provide that it shall represent the aggregate amount of
Outstanding Debt Securities from time to time endorsed thereon and may also
provide that the aggregate amount of Outstanding Debt Securities represented
thereby may from time to time be reduced to reflect exchanges. Any endorsement
of a Global Note to reflect the amount, or any increase or decrease in the
amount, of Outstanding Debt Securities represented thereby shall be made by the
Trustee and in such manner as shall be specified in such Global Note. Any
instructions by the Company with respect to a Global Note, after its initial
issuance, shall be in writing but need not comply with Section 1.2.

         Global Notes may be issued in either registered or bearer form and in
either temporary or permanent form. Permanent Global Notes will be issued in
definitive form.

         Every Global Note authenticated and delivered hereunder shall bear a
legend in substantially the following form:

         THIS DEBT SECURITY IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS DEBT SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR
EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE
DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY DEBT SECURITY
AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR
OR IN LIEU OF, THIS DEBT SECURITY SHALL BE A GLOBAL NOTE SUBJECT TO THE
FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.

                                       14
<PAGE>

                                   ARTICLE III

                               THE DEBT SECURITIES

SECTION 3.1 AMOUNT UNLIMITED; ISSUABLE IN SERIES.

         The aggregate principal amount of Debt Securities that may be
authenticated and delivered under this Indenture is unlimited. The Debt
Securities may be issued in one or more series. There shall be established in or
pursuant to a Board Resolution and (subject to Section 3.3) set forth in an
Officers' Certificate, or established in one or more indentures supplemental
hereto, prior to the issuance of Debt Securities of any series:

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

            (b) The aggregate principal amount of such series of Debt Securities
and any limit on the aggregate principal amount of the Debt Securities of the
series which may be authenticated and delivered under this Indenture (except for
Debt Securities authenticated and delivered upon transfer of, or in exchange
for, or in lieu of, other Debt Securities of such series pursuant to Sections
3.4, 3.5, 3.6, 11.6 or 13.7);

            (c) The percentage of the principal amount at which the Debt
Securities of such series will be issued and, if other than the principal amount
thereof, the portion of the principal amount thereof payable upon declaration of
acceleration of the maturity or upon redemption thereof or the method by which
such portion shall be determined;

            (d) The date or dates on which, or periods during which, the Debt
Securities of the series may be issued, and the date or dates or the method by
which such date or dates will be determined, on which the principal of (and
premium, if any, on) the Debt Securities of such series are or may be payable
(which, if so provided in such Board Resolution or supplemental indenture, may
be determined by the Company from time to time as set forth in the Debt
Securities of the series issued from time to time);

            (e) The rate or rates (which may be fixed or variable) at which the
Debt Securities of the series shall bear interest, if any, or the method by
which such rate or rates shall be determined, the date or dates from which such
interest, if any, shall accrue or the method by which such date or dates shall
be determined (which, in either case or both, if so provided in such Board
Resolution or supplemental indenture, may be determined by the Company from time
to time and set forth in the Debt Securities of the series issued from time to
time) and the circumstances, if any, in which the Company may defer interest
payments; and the Interest Payment Dates on which such interest shall be payable
(or the method of determination thereof), and the Regular Record Dates, if any,
for the interest payable on such Interest Payment Dates and the notice, if any,
to

                                       15
<PAGE>

holders regarding the determination of interest, the manner of giving such
notice, the basis upon which interest shall be calculated if other than that of
a 360-day year of twelve 30-day months and any conditions or contingencies as to
the payment of interest in cash or otherwise, if any;

            (f) The place or places, if any, in addition to or instead of the
Corporate Trust Office of the applicable Trustee where the principal of (and
premium, if any) and interest on Debt Securities of the series shall be payable
and where such Debt Securities may be surrendered for conversion or registration
of transfer or exchange; the extent to which, or the manner in which, any
interest payable on any Global Note on an Interest Payment Date will be paid, if
other than in the manner provided in Section 3.7; the extent, if any, to which
the provisions of the last sentence of Section 12.1 shall apply to the Debt
Securities of the series; and the manner in which any principal of, or premium,
if any, on, any Global Note will be paid, if other than as set forth elsewhere
herein and whether any Global Note will require any notation to evidence payment
of principal or interest;

            (g) The obligation, if any, of the Company to redeem, repay,
purchase or offer to purchase Debt Securities of the series pursuant to any
mandatory redemption, sinking fund or analogous provisions or upon other
conditions or at the option of the holder thereof and the period or periods
within which or the dates on which, the prices at which and the terms and
conditions upon which the Debt Securities of the series shall be redeemed,
repaid, purchased or offered to be purchased, in whole or in part, pursuant to
such obligation;

            (h) The right, if any, of the Company to redeem the Debt Securities
of such series at its option 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 Debt Securities may be redeemed, if any, in whole or in part,
at the option of the Company or otherwise;

            (i) The denominations of such Debt Securities if other than
denominations of $1,000 and any integral multiple thereof (except as provided in
Section 3.4);

            (j) Whether the Debt Securities of the series are to be issued as
Discount Securities and the amount of discount with which such Debt Securities
may be issued and, if other than the principal amount thereof, the portion of
the principal amount of Debt Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to Section
5.2;

            (k) Additional provisions, if any, for the defeasance or discharge
of certain of the Company's obligations with respect to Debt Securities of the
series, which provisions may be in addition to, or in substitution for, or in
modification of (or any combination of the foregoing), the provisions of the
Indenture;

                                       16
<PAGE>

            (l) Whether provisions for payment of additional amounts or tax
redemptions shall apply and, if such provisions shall apply, such provisions;

            (m) The date as of which any Debt Securities of the series shall be
dated, if other than as set forth in Section 3.3;

            (n) If the amount of payments of principal of (and premium, if any)
or interest on the Debt Securities of the series may be determined with
reference to an index, including, but not limited to, an index based on a
Currency or Currencies other than that in which the Debt Securities are
denominated or payable, or any other type of index, the manner in which such
amounts shall be determined;

            (o) The applicable Overdue Rate, if any;

            (p) If the Debt Securities of the series do not bear interest, the
applicable dates for purposes of Section 7.1;

            (q) Any addition to, or modification or deletion of, any Event of
Default or covenant provided for in this Indenture with respect to Debt
Securities of the series;

            (r) Whether the Debt Securities of the series shall be issued in
whole or in part in the form of one or more Global Notes and, in such case, the
U.S. Depositary or any Common Depositary for such Global Note or Notes; and the
manner in which and the circumstances under which Global Notes representing Debt
Securities of the series may be exchanged for Debt Securities in definitive
form, if other than, or in addition to, the manner and circumstances specified
in Section 3.4(c);

            (s) The designation, if any, of any depositaries, trustees (other
than the Trustee), Paying Agents, Authenticating Agents, Conversion Agents,
Security Registrars (other than the Trustee) or other agents with respect to the
Debt Securities of such series; (t) If the Debt Securities of such series will
be issuable in definitive form only upon receipt of certain certificates or
other documents or upon satisfaction of certain conditions, the form and terms
of such certificates, documents or conditions;

            (u) Whether the Debt Securities of such series will be convertible
into shares of Common Stock or other securities or property of the Company, and,
if so, the terms and conditions, which may be in addition to or in lieu of the
provisions contained in this Indenture, upon which such Debt Securities will be
so convertible, including the conversion price and the conversion period;

            (v) The portion of the principal amount of the Debt Securities which
will be payable upon declaration of acceleration of the maturity thereof, if
other than the principal amount thereof;

                                       17
<PAGE>

            (w) The terms, if any, on which the Debt Securities of such series
will be subordinate to other debt of the Company;

            (x) Any listing or intended listing of the Debt Securities on a
securities exchange.

            (y) The provisions, if any, relating to any security provided for
the Debt Securities of such series;

            (z) The provisions, if any, relating to any guarantees of the Debt
Securities; and

            (aa) Any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).

         All Debt Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to such Board Resolution and (subject to Section 3.3) set forth in such
Officers' Certificate, or in any such indenture supplemental hereto. All Debt
Securities of any one series need not be issued at the same time, and unless
otherwise provided, a series may be reopened for issuance of additional Debt
Securities of such series.

         If any of the terms of a series of Debt Securities is established in or
pursuant to a Board Resolution, a copy of such Board Resolution shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.

SECTION 3.2 DENOMINATIONS.

         In the absence of any specification pursuant to Section 3.1 with
respect to the Debt Securities of any series, the Debt Securities of such series
shall be issuable only as Debt Securities in denominations of $1,000 and any
integral multiple thereof and shall be payable only in Dollars.

SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.

         The Debt Securities of any series shall be executed on behalf of the
Company by its Chairman of the Board of Directors, its President, one of its
Executive or Senior Vice Presidents or its Treasurer, under its corporate seal
reproduced thereon and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers may be manual or facsimile.

         Debt Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices

                                       18
<PAGE>

prior to the authentication and delivery of such Debt Securities or did not hold
such offices at the date of such Debt Securities.

         At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Debt Securities of any series, executed
by the Company, to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Debt Securities, and the Trustee in
accordance with the Company Order shall authenticate and deliver such Debt
Securities. If all the Debt Securities of any one series are not to be issued at
one time and if a Board Resolution or supplemental indenture relating to such
series shall so permit, such Company Order may set forth procedures acceptable
to the Trustee for the issuance of such Debt Securities such as interest rate,
Stated Maturity, date of issuance and date from which interest, if any, shall
accrue. If any Debt Security shall be represented by a permanent Global Note,
then, for purposes of this Section and Section 3.4, the notation of a beneficial
owner's interest therein upon original issuance of such Debt Security or upon
exchange of a portion of a temporary Global Note shall be deemed to be delivery
in connection with the original issuance of such beneficial owner's interest in
such permanent Global Note.

         The Trustee shall be entitled to receive, and (subject to Section 6.1)
shall be fully protected in relying upon, prior to the authentication and
delivery of the Debt Securities of such series, (i) the supplemental indenture
or the Board Resolution by or pursuant to which the form and terms of such Debt
Securities have been approved, (ii) an Officers' Certificate stating that all
conditions precedent provided for in the Indenture have been complied with and
that, to the best knowledge of the signers of such certificates, no Event of
Default with respect to any of the Debt Securities shall have occurred and be
continuing and (iii) an Opinion of Counsel substantially to the effect that:

            (a) the form and terms of such Debt Securities, have been
established in conformity with the provisions of this Indenture; and

            (b) such Debt Securities, when completed by appropriate insertions
and executed and delivered by the Company to the Trustee in accordance with the
Indenture, authenticated and delivered by the Trustee in accordance with this
Indenture and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, subject to applicable bankruptcy, insolvency, fraudulent transfer
and similar laws affecting creditors' rights generally and to general principles
of equity (regardless of whether enforcement is sought in a proceeding in equity
or at law).

         The Trustee shall not be required to authenticate such Debt Securities
if the issuance of such Debt Securities pursuant to this Indenture will affect
the Trustee's own rights, duties or immunities under the Debt Securities and
this Indenture in a manner which is not reasonably acceptable to the Trustee.

                                       19
<PAGE>

         Each Debt Security shall be dated the date of its authentication.

         No Debt Security shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Debt
Security a certificate of authentication substantially in one of the forms
provided for herein duly executed by the Trustee or by an Authenticating Agent,
and such certificate upon any Debt Security shall be conclusive evidence, and
the only evidence, that such Debt Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Debt Security shall have been duly
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Debt Security to the Trustee for cancellation
as provided in Section 3.8 together with a written statement (which need not
comply with Section 1.2) stating that such Debt Security has never been issued
and sold by the Company, for all purposes of this Indenture such Debt Security
shall be deemed never to have been authenticated and delivered hereunder and
shall never be entitled to the benefits of this Indenture.

SECTION 3.4 TEMPORARY DEBT SECURITIES; EXCHANGE OF TEMPORARY GLOBAL NOTES FOR
            DEFINITIVE DEBT SECURITIES; GLOBAL NOTES REPRESENTING DEBT
            SECURITIES.

            (a) Pending the preparation of definitive Debt Securities of any
series, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Debt Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination for Debt Securities of such series, substantially of the tenor of
the definitive Debt Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Debt Securities may determine, as conclusively evidenced
by their execution of such Debt Securities. Every such temporary Debt Security
shall be executed by the Company and shall be authenticated and delivered by the
Trustee upon the same conditions and in substantially the same manner, and with
the same effect, as the definitive Debt Securities in lieu of which they are
issued.

         Except in the case of temporary Debt Securities in global form (which
shall be exchanged in accordance with the provisions of the following
paragraphs), if temporary Debt Securities of any series are issued, the Company
will cause definitive Debt Securities of such series to be prepared without
unreasonable delay. After the preparation of definitive Debt Securities of such
series, the temporary Debt Securities of such series shall be exchangeable for
definitive Debt Securities of such series, of a like Stated Maturity and with
like terms and provisions, upon surrender of the temporary Debt Securities of
such series at the office or agency of the Company in a Place of Payment for
such series, without charge to the holder, except as provided in Section 3.5 in
connection with a transfer. Upon surrender for cancellation of any one or more
temporary Debt Securities of any series, the Company shall execute and the
Trustee shall authenticate and

                                       20
<PAGE>

deliver in exchange therefor a like principal amount of definitive Debt
Securities of the same series of authorized denominations and of a like Stated
Maturity and like terms and provisions. Until so exchanged, the temporary Debt
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Debt Securities of such series.

            (b) If the Company shall establish pursuant to Section 3.1 that the
Debt Securities of a series are to be issued in whole or in part in the form of
one or more Global Notes, then the Company shall execute and the Trustee shall,
in accordance with Section 3.3 and the Company Order with respect to such
series, authenticate and deliver one or more Global Notes in temporary
("Temporary Global Note") or permanent ("Permanent Global Note") form that (i)
shall represent and shall be denominated in an amount equal to the aggregate
principal amount of the Outstanding Debt Securities of such series to be
represented by one or more Global Notes, (ii) shall be registered in the name of
the U.S. Depositary for such Global Note or Notes or the nominee of such
depositary, and (iii) shall bear a legend substantially as set forth in Section
2.3.

         Notwithstanding any other provision of this Section or Section 3.5,
unless and until it is exchanged in whole or in part for Debt Securities in
definitive form, a Global Note representing all or a portion of the Registered
Securities of a series may not be transferred except as a whole by the U.S.
Depositary for such series to a nominee of such depositary or by a nominee of
such depositary to such depositary or another nominee of such depositary or by
such depositary or any such nominee to a successor U.S. Depositary for such
series or a nominee of such successor depositary.

         If at any time the U.S. Depositary for the Debt Securities of a series
notifies the Company that it is unwilling or unable to continue as U.S.
Depositary for the Debt Securities of such series or if at any time the U.S.
Depositary for Debt Securities of a series shall no longer be a clearing agency
registered and in good standing under the Securities Exchange Act of 1934, as
amended, or other applicable statute or regulation, the Company shall appoint a
successor U.S. Depositary with respect to the Debt Securities of such series. If
a successor U.S. Depositary for the Debt Securities of such series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such condition, the Company will execute, and the Trustee,
upon receipt of a Company Order for the authentication and delivery of
definitive Debt Securities of such series, will authenticate and deliver, Debt
Securities of such series in definitive form in an aggregate principal amount
equal to the principal amount of the Global Note or Notes representing such
series in exchange for such Global Note or Notes.

         The Company may at any time and in its sole discretion determine that
the Debt Securities of any series issued in the form of one or more Global Notes
shall no longer be represented by such Global Note or Notes. In such event, the
Company will execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of

                                       21
<PAGE>

definitive Debt Securities of such series, will authenticate and deliver, Debt
Securities of such series in definitive form and in an aggregate principal
amount equal to the principal amount of the Global Note or Notes representing
such series in exchange for such Global Note or Notes.

         If the Debt Securities of any series shall have been issued in the form
of one or more Global Notes and if an Event of Default with respect to the Debt
Securities of such series shall have occurred and be continuing, the Company
will promptly execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive Debt Securities of such series, will
authenticate and deliver, Debt Securities of such series in definitive form and
in an aggregate principal amount equal to the principal amount of the Global
Note or Notes representing such series in exchange for such Global Note or
Notes.

         If specified by the Company pursuant to Section 3.1 with respect to
Debt Securities of a series, the U.S. Depositary for such series of Debt
Securities may surrender a Global Note for such series of Debt Securities in
exchange in whole or in part for Debt Securities of such series in definitive
form on such terms as are acceptable to the Company and such depositary.
Thereupon, the Company shall execute and the Trustee shall authenticate and
deliver, without charge:

                  (i) to each Person specified by the U.S. Depositary a new Debt
Security or Securities of the same series, of any authorized denomination as
requested by such Person in an aggregate principal amount equal to and in
exchange for such Person's beneficial interest in the Global Note; and

                  (ii) to the U.S. Depositary a new Global Note in a
denomination equal to the difference, if any, between the principal amount of
the surrendered Global Note and the aggregate principal amount of Debt
Securities delivered to holders thereof.

         Upon the exchange of a Global Note for Debt Securities in definitive
form, such Global Note shall be cancelled by the Trustee. Debt Securities issued
in exchange for a Global Note pursuant to this subsection (c) shall be
registered in such names and in such authorized denominations as the U.S.
Depositary for such Global Note, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Debt Securities to the Persons in whose names such Debt
Securities are so registered.

SECTION 3.5 REGISTRATION, TRANSFER AND EXCHANGE.

            (a) The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the registers maintained in such office and in any
other office or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as

                                       22
<PAGE>

it may prescribe, the Company shall provide for the registration of Debt
Securities and of transfers and exchanges of Debt Securities. The Trustee is
hereby appointed "Security Registrar" for the purpose of registering Debt
Securities and registering transfers and exchanges of Debt Securities as herein
provided; provided, however, that the Company may appoint co-Security Registrars
or the terms of any series of Debt Securities may provide otherwise.

         Upon surrender for registration of transfer of any Debt Security of any
series at the office or agency of the Company maintained for such purpose, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee, one or more new Debt Securities of the same
series of like aggregate principal amount of such denominations as are
authorized for Debt Securities of such series and of a like Stated Maturity and
with like terms and conditions.

         Except as otherwise provided in Section 3.4 and this Section 3.5, at
the option of the holder, Debt Securities of any series may be exchanged for
other Debt Securities of the same series of like aggregate principal amount and
of a like Stated Maturity and with like terms and conditions, upon surrender of
the Debt Securities to be exchanged at such office or agency. Whenever any Debt
Securities are surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Debt Securities which the holder
making the exchange is entitled to receive.

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

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

         No service charge will be made for any transfer or exchange of Debt
Securities except as provided in Section 3.4(b) or 3.6. 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, transfer or exchange of Debt
Securities, other than those expressly provided in this Indenture to be made at
the Company's own expense or without expense or without charge to the holders.

         The Company shall not be required (i) to register, transfer or exchange
Debt Securities of any series during a period beginning at the opening of
business 15 days before the day of the transmission of a notice of redemption of
Debt Securities of such series selected for redemption under Section 13.3 and
ending at the close of business on the day of such transmission, or (ii) to
register, transfer or exchange any Debt Security so

                                       23
<PAGE>

selected for redemption in whole or in part, except the unredeemed portion of
any Debt Security being redeemed in part.

SECTION 3.6 MUTILATED, DESTROYED, LOST AND STOLEN DEBT SECURITIES.

         If (i) any mutilated Debt Security is surrendered to the Trustee at its
Corporate Trust Office, or (ii) the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any Debt Security, and
there is delivered to the Company and the Trustee such security or indemnity as
may be required by them to save each of them and any Paying Agent harmless, and
neither the Company nor the Trustee receives notice that such Debt Security has
been acquired by a bona fide purchaser, then the Company shall execute and upon
Company Request, the Trustee shall authenticate and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Debt Security, a new
Debt Security of the same series of like Stated Maturity and with like terms and
conditions and like principal amount, bearing a number not contemporaneously
Outstanding.

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

         Upon the issuance of any new Debt 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 respect thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

         Every new Debt Security of any series issued pursuant to this Section
shall constitute an original additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Debt Security shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Debt Securities of
that 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 Debt Securities.

SECTION 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.

            (a) Interest on any Debt 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 such Debt Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest notwithstanding the cancellation of such Debt Security upon any
transfer or exchange subsequent to the Regular Record Date. Unless otherwise
specified as contemplated by Section 3.1 with

                                       24
<PAGE>

respect to the Debt Securities of any series, payment of interest on Debt
Securities shall be made at the place or places specified pursuant to Section
3.1 or, at the option of the Company, by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register
or, if provided pursuant to Section 3.1, by wire transfer to an account
designated by the registered holder.

            (b) Any interest on any Debt Security 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 registered
holder on the relevant Regular Record Date by virtue of his having been such
registered holder, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in clause (1) or (2) below:

                  (1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names such Debt Securities (or their respective
Predecessor Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each such Debt Security 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 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. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to the holders
of such Debt Securities at their addresses as they appear in the Security
Register, not less than 15 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid to the
Persons in whose names such Debt Securities (or their respective Predecessor
Securities) are registered at the close of business on such Special Record Date
and shall no longer be payable pursuant to the following clause (2).

                  (2) The Company may make payment of any Defaulted Interest on
Debt Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Debt 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.

                                       25
<PAGE>

            (c) Subject to the foregoing provisions of this Section, each Debt
Security delivered under this Indenture upon transfer of, in exchange for, or in
lieu of, any other Debt Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Debt Security.

SECTION 3.8 CANCELLATION.

         Unless otherwise specified pursuant to Section 3.1 for Debt Securities
of any series, all Debt Securities surrendered for payment, redemption,
transfer, exchange or credit against any sinking fund surrendered for payment or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee. All Debt Securities so delivered shall be promptly
cancelled by the Trustee. The Company may at any time deliver to the Trustee for
cancellation any Debt Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Debt Securities previously authenticated hereunder which the
Company has not issued, and all Debt Securities so delivered shall be promptly
cancelled by the Trustee. No Debt Securities shall be authenticated in lieu of
or in exchange for any Debt Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture. All cancelled Debt Securities
held by the Trustee shall be delivered to the Company upon Company Request. The
acquisition of any Debt Securities by the Company shall not operate as a
redemption or satisfaction of the indebtedness represented thereby unless and
until such Debt Securities are surrendered to the Trustee for cancellation.
Permanent Global Notes shall not be destroyed until exchanged in full for
definitive Debt Securities or until payment thereon is made in full.

SECTION 3.9 COMPUTATION OF INTEREST.

         Except as otherwise specified pursuant to Section 3.1 for Debt
Securities of any series, interest on the Debt Securities of each series shall
be computed on the basis of a 360-day year of twelve 30-day months.

SECTION 3.10 MANDATORY DISPOSITION OF DEBT SECURITIES PURSUANT TO GAMING LAWS.

         Each holder and beneficial owner, by accepting or otherwise acquiring
an interest in the Debt Securities, shall be deemed to have agreed that if the
Gaming Authority of any jurisdiction in which the Company or any of its
subsidiaries conducts or proposes to conduct gaming requires that a Person who
is a holder or beneficial owner must be licensed, qualified or found suitable
under the applicable Gaming Laws, such holder or beneficial owner shall apply
for a license, qualification or a finding of suitability within the required
time period. If such Person fails to apply or become licensed or qualified or is
found unsuitable, then the Company shall have the right, at its option,
notwithstanding any other provision of this Indenture (i) to require such Person
to dispose of its Debt Securities or beneficial interest therein within 30 days
of receipt of notice of the

                                       26
<PAGE>

Company's election or such earlier date as may be requested or prescribed by
such Gaming Authority or (ii) to redeem such Debt Securities at a redemption
price equal to 100% of the principal amount thereof, plus accrued and unpaid
interest to the earlier of the redemption date and the date of the finding of
unsuitability, which may be less than 30 days following the notice of redemption
if so requested or prescribed by the Gaming Authority, or such lesser amount as
may be required by applicable law or by order of any Gaming Authority. The
Company shall notify the Trustee in writing of any such redemption as soon as
practicable. The Company shall not be responsible for any costs or expenses any
such holder or beneficial owner may incur in connection with its application for
a license, qualification or a finding of suitability. Notwithstanding any other
provision of this Indenture, immediately upon the imposition of a requirement to
dispose of Debt Securities by a Gaming Authority, such Person shall, to the
extent required by applicable Gaming Law, have no further right (i) to exercise,
directly or indirectly, through any trustee, nominee or any other person or
entity, any right conferred by the Debt Securities or (ii) to receive any
interest, dividends or any other distributions or payments with respect to the
Debt Securities or any remuneration in any form with respect to the Debt
Securities from the Company or the Trustee, except the redemption price.

                                   ARTICLE IV

                           SATISFACTION AND DISCHARGE

SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE.

         This Indenture shall, upon Company Request, cease to be of further
effect with respect to any series of Debt Securities specified in such Company
Request (except as to any surviving rights of registration of transfer or
exchange of such Debt Securities herein expressly provided for and rights to
receive payments of principal (and premium, if any) and interest on such Debt
Securities) and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when:

            (a) either

                  (1) all Debt Securities of such series theretofore
authenticated and delivered (other than (i) Debt Securities which have been
destroyed, lost or stolen and which have been replaced or paid as provided in
Section 3.6, and (ii) Debt Securities of such series for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such trust, as
provided in Section 12.4) have been delivered to the Trustee for cancellation;
or

                                       27
<PAGE>

                  (2) all Debt Securities of such series not theretofore
delivered to the Trustee for cancellation,

                        a. have become due and payable, or

                        b. will become due and payable at their Stated Maturity
within one year, or

                        c. are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice by the Trustee
in the name, and at the expense, of the Company, or (iv) the Company either
complies with any other condition or terms specified pursuant to Section 3.1, or
if not so specified in the case of (i), (ii) or (iii) of this subclause (a), has
irrevocably deposited or caused to be deposited with the Trustee as trust funds
in trust for such purpose an amount sufficient to pay and discharge the entire
indebtedness on such Debt Securities for principal (and premium, if any) and
interest to the date of such deposit (in the case of Debt Securities which have
become due and payable) or to the Stated Maturity or Redemption Date, as the
case may be; provided, however, in the event a petition for relief under the
Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or other similar law, is
filed with respect to the Company within 91 days after the deposit and the
Trustee is required to return the deposited money to the Company, the
obligations of the Company under this Indenture with respect to such Debt
Securities shall not be deemed terminated or discharged;

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

            (c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this Indenture
with respect to such series have been complied with; and (d) the Company has
delivered to the Trustee an Opinion of Counsel or a ruling by the Internal
Revenue Service to the effect that holders of the Debt Securities of the series
will not recognize income, gain or loss for Federal income tax purposes as a
result of such deposit and discharge.

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Trustee to any Authenticating Agent under Section 6.14, the obligations of
the Company under Section 12.1, and, if money shall have been deposited with the
Trustee pursuant to subclause (2) of clause (a) of this Section, the obligations
of the Trustee under Section 4.2 and Section 15.4 shall survive.

                                       28
<PAGE>

SECTION 4.2       APPLICATION OF TRUST MONEY.

         Subject to the provisions of the last paragraph of Section 12.4, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in trust
and applied by it, in accordance with the provisions of the Debt Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee.

                                    ARTICLE V

                                    REMEDIES

SECTION 5.1 EVENTS OF DEFAULT.

         "Event of Default" wherever used herein with respect to Debt Securities
of any series means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law, pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):

            (a) default in the payment of any interest upon any Debt Security of
such series when it becomes due and payable, and continuance of such default for
a period of 30 days; or

            (b) default in the payment of the principal of (and premium, if any,
on) any Debt Security of such series at its Maturity; or

            (c) default in the deposit of any sinking fund payment, when and as
due by the terms of a Debt Security of such series; or

            (d) default in the performance, or breach, of any covenant or
warranty of any Obligor in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which expressly has been included in this Indenture
solely for the benefit of Debt Securities of a series other than such series),
and continuance of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Company by the Trustee
or to the Company and the Trustee by the holders of at least 25% in principal
amount of the Outstanding Debt 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; or

                                       29
<PAGE>

            (e) the entry of a decree or order for relief in respect of the
Company by a court having jurisdiction in the premises in an involuntary case
under the federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or a
decree or order adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any applicable federal or
state law, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its affairs,
and the continuance of any such decree or order unstayed and in effect for a
period of 90 consecutive days; or

            (f) the commencement by the Company of a voluntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or the
consent by it to the entry of an order for relief in an involuntary case under
any such law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other 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 its creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such action; or

            (g) any other Event of Default or variations in the foregoing Events
of Default provided with respect to Debt Securities of that series pursuant to
Section 3.1.

SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

         If an Event of Default with respect to Debt Securities of any series at
the time Outstanding occurs and is continuing, then in every such case the
Trustee or the holders of not less than 25% in principal amount of the
Outstanding Debt Securities of such series may declare the principal amount (or,
if any Debt Securities of such series are Discount Securities, such portion of
the principal amount of such Discount Securities as may be specified in the
terms of such Discount Securities) of all the Debt Securities of such series to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by holders), and upon any such declaration such principal
amount (or specified amount) plus accrued and unpaid interest (and premium, if
payable) shall become immediately due and payable. Upon payment of such amount
all obligations of the Company in respect of the payment of principal of the
Debt Securities of such series shall terminate.

         At any time after such a declaration of acceleration with respect to
Debt Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the holders of at least a majority in principal amount of the
Outstanding Debt Securities of such

                                       30
<PAGE>

series, by written notice to the Company and the Trustee, may rescind and annul
such declaration and its consequences if:

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

                  (1) all overdue installments of interest on all Debt
Securities of such series,

                  (2) the principal of (and premium, if any, on) any Debt
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 Debt Securities,

                  (3) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest on each Debt Security of such
series at the Overdue Rate, and

                  (4) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel;

            (b) All Events of Default with respect to Debt Securities of such
series, other than the nonpayment of the principal of Debt Securities of such
series which has become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 5.13.

No such rescission and waiver shall affect any subsequent default or impair any
right consequent thereon.

SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.

The Company covenants that, if:

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

            (b) default is made in the payment of principal of (or premium, if
any, on) any Debt Security at the Maturity thereof, or

            (c) default is made in the making or satisfaction of any sinking
fund payment or analogous obligation when the same becomes due pursuant to the
terms of the

                                       31
<PAGE>

Debt Securities of any series, then the Company will, upon demand of the
Trustee, pay to it, for the benefit of the holders of such Debt Securities, the
amount then due and payable on such Debt Securities for the principal (and
premium, if any) and interest, if any, and, to the extent that payment of such
interest shall be legally enforceable, interest upon the overdue principal (and
premium, if any) and upon overdue installments of interest, at the Overdue Rate;
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.

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

         If an Event of Default with respect to Debt Securities of any series
occurs and is continuing, then the Trustee may, in its discretion, proceed to
protect and enforce its rights and the rights of the holders of Debt 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 5.4 TRUSTEE MAY FILE PROOFS OF CLAIM.

         In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceedings, or any voluntary or involuntary case under the federal
bankruptcy laws, as now or hereafter constituted, relative to the Company, any
Guarantor or any other obligor upon the Debt Securities, of a particular series
or the property of the Company, any Guarantor or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of such Debt
Securities shall then be due and payable as therein expressed or by declaration
of acceleration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company, any Guarantor or any obligor 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 (or,
if the Debt Securities of such series are Discount Securities, such portion of
the principal amount as may be due and payable with respect to such series
pursuant to a declaration in accordance with Section 5.2) (and premium, if any)
and interest owing and unpaid in respect of the Debt Securities of such series
and to file such other papers or documents as

                                       32
<PAGE>

may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and of the holders of such
Debt Securities allowed in such judicial proceeding, and

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

and any receiver, assignee, trustee, custodian, liquidator, sequestrator (or
other similar official) in any such proceeding is hereby authorized by each such
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 such holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.7.

         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 Debt
Securities of such series 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 5.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF DEBT SECURITIES.

         All rights of action and claims under this Indenture or the Debt
Securities of any series may be prosecuted and enforced by the Trustee without
the possession of any of such Debt 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 of the Debt Securities in
respect of which such judgment has been recovered.

SECTION 5.6 APPLICATION OF MONEY COLLECTED.

         Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (and premium,
if any) or interest, upon presentation of the Debt Securities of any series in
respect of which money has 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 6.7.

         SECOND: To the payment of the amounts then due and unpaid for principal
of

                                       33
<PAGE>

(and premium, if any) and interest on the Debt Securities of such series, 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 Debt Securities for principal (and premium, if any) and
interest, respectively; and

         THIRD:  The balance, if any, to the Person or Persons entitled thereto.

SECTION 5.7 LIMITATION ON SUITS.

         No holder of any Debt Security of any series 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 has previously given written notice to the Trustee
of a continuing Event of Default with respect to such series;

            (b) the holders of not less than 25% in principal amount of the
Outstanding Debt Securities of such series 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 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 has failed to institute any such proceeding; and

            (e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the holders of at least a
majority in principal amount of the Outstanding Debt Securities of such series;

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 such
holders or of the holders of Outstanding Debt Securities of any other series, 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.
For the protection and enforcement of the provisions of this Section 5.7, each
and every holder of Debt Securities of any series and the Trustee for such
series shall be entitled to such relief as can be given at law or in equity.

                                       34
<PAGE>

SECTION 5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
            INTEREST.

         Notwithstanding any other provision in this Indenture, the holder of
any Debt 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 3.7 and 3.10) interest on such Debt Security on the respective Stated
Maturity or Maturities expressed in such Debt Security (or, in the case of
redemption, on the Redemption Date) and to institute suit for the enforcement of
any such payment and interest thereon, and such right shall not be impaired
without the consent of such holder.

SECTION 5.9 RESTORATION OF RIGHTS AND REMEDIES.

         If the Trustee or any holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such holder, then and in every such case the Company, the
Trustee and the holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the holders shall continue
as though no such proceeding had been instituted.

SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE.

         Except as otherwise expressly provided elsewhere in this Indenture, 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 5.11 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 any
acquiescence therein. Every right and remedy given by this Indenture 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 5.12 CONTROL BY HOLDERS.

         The holders of at least a majority in principal amount of the
Outstanding Debt Securities of any 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

                                       35
<PAGE>

or power conferred on the Trustee with respect to the Debt Securities of such
series, provided that:

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

            (b) subject to the provisions of Section 6.1, the Trustee shall have
the right to decline to follow any such direction if the Trustee in good faith
shall, by a Responsible Officer or Responsible Officers of the Trustee,
determine that the proceeding so directed would be unjustly prejudicial to the
holders of Debt Securities of such series not joining in any such direction; and

            (c) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.

SECTION 5.13 WAIVER OF PAST DEFAULTS.

         The holders of not less than a majority in aggregate principal amount
of the Outstanding Debt Securities of any series, by notice to the Trustee, may,
on behalf of the holders of all Debt 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 on any Debt Security of such series, or in the payment of any sinking
fund installment or analogous obligation with respect to the Debt Securities of
such series, or

            (b) in respect of a covenant or provision hereof which, pursuant to
Article 11, cannot be modified or amended without the consent of the holder of
each Outstanding Debt Security of such series affected.

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

SECTION 5.14 UNDERTAKING FOR COSTS.

         All parties to this Indenture agree, and each holder of any Debt
Security 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 other than the Trustee 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,

                                       36
<PAGE>

but the provisions of this Section shall not apply 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 principal amount of the Outstanding Debt Securities
of any series, or to any suit instituted by any holder of a Debt Security for
the enforcement of the payment of the principal of (or premium, if any) or
interest on such Debt Security on or after the respective Stated Maturity or
Maturities expressed in such Debt Security (or, in the case of redemption, on or
after the Redemption Date).

SECTION 5.15 WAIVER OF STAY OR EXTENSION LAWS.

         Each Obligor 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 each Obligor (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 VI

                                   THE TRUSTEE

SECTION 6.1 CERTAIN DUTIES AND RESPONSIBILITIES.

            (a) Except during the continuance of an Event of Default with
respect to the Debt Securities of any series,

                           (1) 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

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

                                       37
<PAGE>

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

            (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

                           (1) This subsection shall not be construed to limit
                  the effect of subsection (a) of this Section;

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

                           (3) The Trustee shall not be liable with respect to
                  any action taken, suffered or omitted to be taken by it with
                  respect to Debt Securities of any series in good faith in
                  accordance with the direction of the holders of at least a
                  majority in principal amount of the Outstanding Debt
                  Securities of such series 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;

                           (4) The Trustee shall not be required 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; and

                           (5) The Trustee shall comply with any order or
                  directive of a Gaming Authority that the Trustee submit an
                  application for any license, finding of suitability or other
                  approval pursuant to any Gaming Law and will cooperate fully
                  and completely in any proceeding related to such application.

                           (d) 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.

                                       38
<PAGE>

SECTION 6.2 NOTICE OF DEFAULTS.

         Within 90 days after the occurrence of any default hereunder with
respect to Debt Securities of any series, the Trustee shall give notice to all
holders of Debt Securities of such series of such default hereunder known to the
Trustee, unless such default shall have been cured or waived; provided, however,
that, except in the case of a default in the payment of the principal of (or
premium, if any) or interest on any Debt Security of such series or in the
payment of any sinking fund installment with respect to Debt Securities of such
series, the Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determine
that the withholding of such notice is in the interest of the holders of Debt
Securities of such series; and provided, further, that in the case of any
default of the character specified in Section 5.1(d) with respect to Debt
Securities of such series no such notice to holders shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to Debt Securities of such
series.

         Notice given pursuant to this Section 6.2 shall be transmitted by mail:

            (a) to all registered holders, as the names and addresses of the
registered holders appear in the Security Register; and

            (b) to each holder of a Debt Security of any series whose name and
address appear in the information preserved at the time by the Trustee in
accordance with Section 7.2(a) of this Indenture.

SECTION 6.3 CERTAIN RIGHTS OF TRUSTEE.

         Except as otherwise provided in Section 6.1:

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

            (b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors shall 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 Officers' Certificate;

                                       39
<PAGE>

            (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 of the holders of Debt Securities of any series pursuant to this Indenture,
unless such holders shall have offered to the Trustee security or indemnity
reasonably satisfactory to it 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 be entitled to
examine the books, records and premises of the Company, personally or by agent
or attorney; and

            (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.

SECTION 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBT SECURITIES

         The recitals contained herein and in the Debt Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Debt Securities of any series. The Trustee shall not be
accountable for the use or application by the Company of any Debt Securities or
the proceeds thereof.

SECTION 6.5 MAY HOLD DEBT SECURITIES.

         The Trustee, any Paying Agent, the Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Debt Securities and, subject to Sections 6.8 and 6.13, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Security Registrar or such other agent.

                                       40
<PAGE>

SECTION 6.6 MONEY HELD IN TRUST.

         Money held by the Trustee or any Paying Agent in trust hereunder need
not be segregated from other funds except to the extent required by law. Neither
the Trustee nor any Paying Agent shall be under any liability for interest on
any money received by it hereunder except as otherwise agreed with the Company.

SECTION 6.7 COMPENSATION AND REIMBURSEMENT.

         The Company agrees:

            (a) to 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, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the reasonable expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and

            (c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
this trust or performance of its duties hereunder, including the 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.

         As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a claim prior to the Debt Securities, upon
all property and funds held or collected by the Trustee as such, except funds
held in trust for the payment of amounts due on the Debt Securities.

         The obligations of the Company under this Section 6.7 to compensate and
indemnify the Trustee for reasonable expenses, disbursements and advances shall
constitute additional indebtedness under this Indenture and shall survive the
satisfaction and discharge of this Indenture.

SECTION 6.8 DISQUALIFICATION; CONFLICTING INTERESTS.

         If the Trustee has or shall acquire a conflicting interest within the
meaning of Section 310 of the Trust Indenture Act, the Trustee shall either
eliminate such conflicting interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Indenture. To the extent permitted by the

                                       41
<PAGE>

Trust Indenture Act, the Trustee shall not be deemed to have conflicting
interest with respect to the Debt Securities of any series by virtue of being
Trustee with respect to the Debt Securities of any particular series of Debt
Securities other than that series.

SECTION 6.9 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

         There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any state thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $100,000,000, subject to supervision or examination by federal,
state or District of Columbia authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. Neither the Company nor any person directly or
indirectly controlling, controlled by, or under common control with the Company
shall serve as Trustee upon any Debt Securities.

SECTION 6.10 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 under Section 6.11.

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

            (c) The Trustee may be removed at any time with respect to the Debt
Securities of any series and a successor Trustee appointed by Act of the holders
of at least a majority in principal amount of the Outstanding Debt Securities of
such series, delivered to the Trustee and to the Company.

            (d) If at any time:

                           (1) the Trustee shall fail to comply with Section 6.8
                  with respect to the Debt Securities of any series after
                  written request therefor by the Company or by any holder who
                  has been a bona fide holder of a Debt Security of such series
                  for at least six months, or

                                       42
<PAGE>

                           (2) the Trustee shall cease to be eligible under
                  Section 6.9 with respect to the Debt Securities of any series
                  and shall fail to resign after written request therefor by the
                  Company or by any such holder, or

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

then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee with respect to all Debt Securities, or (ii) subject to Section 5.14,
any holder who has been a bona fide holder of a Debt Security of any series for
at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee for the Debt Securities of such series.

            (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, with
respect to the Debt Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Debt Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the Debt 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 Debt Securities of any particular series) and shall
comply with the applicable requirements of Section 6.11. If, within one year
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Debt Securities of any series
shall be appointed by Act of the holders of at least a majority in principal
amount of the Outstanding Debt 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, become the successor Trustee
with respect to the Debt Securities of such series and, to that extent,
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Debt Securities of any series shall have been so
appointed by the Company or the holders of such series and accepted appointment
in the manner hereinafter provided, any holder who has been a bona fide holder
of a Debt Security of such series for at least six months may, subject to
Section 5.14, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Debt Securities of such series.

            (f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Debt Securities of any series and
each appointment of a successor Trustee with respect to the Debt Securities of
any series in the manner and to the extent provided in Section 18.2 to the
holders of Debt Securities of

                                       43
<PAGE>

such series. Each notice shall include the name of the successor Trustee with
respect to the Debt Securities of such series and the address of its Corporate
Trust Office.

SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

            (a) In the case of an appointment hereunder of a successor Trustee
with respect to all Debt Securities, each 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, but, on
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring
Trustee, and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder, subject
nevertheless to its claim, if any, provided for in Section 6.7.

            (b) In case of the appointment hereunder of a successor Trustee with
respect to the Debt Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the Debt
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) 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
Debt Securities of that or those series to which the appointment of such
successor Trustee relates, (2) if the retiring Trustee is not retiring with
respect to all Debt 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 Debt 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 (3) 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 any 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 other trust or trusts hereunder administered by any other such Trustee; and,
upon the execution and delivery of any such supplemental indenture, the
resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and 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 Debt Securities of that
or those series to which the appointment of such successor Trustee relates, but,
on request of the Company or any successor Trustee, such retiring Trustee shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with

                                       44
<PAGE>

respect to the Debt 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 and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (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 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.

         Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Debt 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 Debt Securities so authenticated
with the same effect as if such successor Trustee had itself authenticated such
Debt Securities. In case any Debt Securities shall not have been authenticated
by such predecessor Trustee, any such successor Trustee may authenticate and
deliver such Debt Securities, in either its own name or that of its predecessor
Trustee, with the full force and effect which this Indenture provides for the
certificate of authentication of the Trustee.

SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

         If and when the Trustee shall be or become a creditor of the Company
(or any Guarantor or other obligor upon the Debt Securities), the Trustee shall
be subject to the provisions of Section 311 of the Trust Indenture Act regarding
the collection of such claims against the Company (or any such Guarantor or
other obligor). A Trustee that has resigned or been removed shall be subject to
and comply with said Section 311 to the extent required thereby.

SECTION 6.14 APPOINTMENT OF AUTHENTICATING AGENT.

         As long as any Debt Securities of a series remain Outstanding, upon a
Company Request, there shall be an authenticating agent (the "Authenticating
Agent") appointed,

                                       45
<PAGE>

for such period as the Company shall elect, by the Trustee for such series of
Debt Securities to act as its agent on its behalf and subject to its direction
in connection with the authentication and delivery of each series of Debt
Securities for which it is serving as Trustee. Debt Securities of each such
series authenticated by such Authenticating Agent shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as
if authenticated by such Trustee. Wherever reference is made in this Indenture
to the authentication and delivery of Debt Securities of any series by the
Trustee for such series or to the Trustee's certificate of authentication, such
reference shall be deemed to include authentication and delivery on behalf of
the Trustee for such series by an Authenticating Agent for such series and a
certificate of authentication executed on behalf of such Trustee by such
Authenticating Agent, except that only the Trustee may authenticate Debt
Securities upon original issuance and pursuant to Section 3.6 hereof. Such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States of America or of any state,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $100,000,000 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 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 any 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 any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency business
of any Authenticating Agent, shall continue to be the Authenticating Agent with
respect to all series of Debt Securities for which it served as Authenticating
Agent without the execution or filing of any paper or any further act on the
part of the Trustee for such series or such Authenticating Agent. Any
Authenticating Agent may at any time, and if it shall cease to be eligible
shall, resign by giving written notice of resignation to the applicable Trustee
and to the Company.

         Upon receiving such a notice of resignation or upon such a termination,
or in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.14 with respect to one or more
or all series of Debt Securities, the Trustee for such series shall, upon
Company Request, appoint a successor Authenticating Agent, and the Company shall
provide notice of such appointment to all holders of Debt Securities of such
series in the manner and to the extent provided in Section 18.2. Any successor
Authenticating Agent, upon acceptance of its appointment hereunder, shall become
vested with all rights, powers, duties and responsibilities of its

                                       46
<PAGE>

predecessor hereunder, with like effect as if originally named as Authenticating
Agent herein. The Trustee for the Debt Securities of such series agrees to pay
to the Authenticating Agent for such series from time to time reasonable
compensation for its services, and the Trustee shall be entitled to be
reimbursed for such payment, subject to the provisions of Section 6.7. The
Authenticating Agent for the Debt Securities of any series shall have no
responsibility or liability for any action taken by it as such at the direction
of the Trustee for such series, except arising out of its negligence or willful
misconduct.

         If an appointment with respect to one or more series is made pursuant
to this Section, the Debt Securities of such series may have endorsed thereon,
in addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:

         This is one of the series of Debt Securities issued under the within
mentioned Indenture.

         [NAME OF TRUSTEE] As Trustee

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

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

                                       47
<PAGE>

                                   ARTICLE VII

                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 7.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.

         The Company will furnish or cause to be furnished to the Trustee with
respect to Debt Securities of each series for which it acts as Trustee:

            (a) semi-annually on a date not more than 15 days after each Regular
Record Date with respect to an Interest Payment Date, if any, for the Debt
Securities of such series (or on semi-annual dates in each year to be determined
pursuant to Section 3.1 if the Debt Securities of such series do not bear
interest), a list, in such form as the Trustee may reasonably require, of the
names and addresses of the registered holders as of the date 15 days next
preceding each such Regular Record Date (or such semi-annual dates, as the case
may be); and

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

Provided, however, that if and so long as the Trustee shall be the Security
Registrar for such series, no such list need be furnished.

SECTION 7.2 PRESERVATION OF INFORMATION; COMMUNICATION TO HOLDERS.

            (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of holders
contained in the most recent list furnished to the Trustee as provided in
Section 7.1 received by it in the capacity of Paying Agent (if so acting)
hereunder, and filed with it within the two preceding years pursuant to Section
7.3(c)(2).

         The Trustee may destroy any list furnished to it as provided in Section
7.1 upon receipt of a new list so furnished, destroy any information received by
it as Paying Agent (if so acting) hereunder upon delivering to itself as
Trustee, not earlier than 45 days after an Interest Payment Date, a list
containing the names and addresses of the holders obtained from such information
since the delivery of the next previous list, if any, destroy any list delivered
to itself as Trustee which was compiled from information received by it as
Paying Agent (if so acting) hereunder upon the receipt of a new list so
delivered, and destroy, not earlier than two years after filing, any information
filed with it pursuant to Section 7.3(c)(2).

                                       48
<PAGE>

            (b) If three or more holders (hereinafter referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Debt Security for a period
of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other holders
of Debt Securities of a particular series (in which case the applicants must
hold Debt Securities of such series) or with all holders of Debt Securities with
respect to their rights under this Indenture or under the Debt Securities and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, at its election, either

                  (i) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 7.2(a), or

                  (ii) inform such applicants as to the approximate number of
holders of Debt Securities of such series or of all Debt Securities, as the case
may be, whose names and addresses appear in the information preserved at the
time by the Trustee in accordance with Section 7.2(a), and as to the approximate
cost of mailing to such holders the form of proxy or other communication,
specified in such application.

         If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon written request of such applicants, mail to
the holders of Debt Securities of such series or all holders, as the case may
be, whose names and addresses appear in the information preserved at the time by
the Trustee in accordance with Section 7.2(a), a copy of the form of proxy or
other communication which is specified in such request, with reasonable
promptness after a tender to the Trustee of the material to be mailed and of
payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five Business Days after such tender, the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interests of the holders
of Debt Securities of such series or all holders, as the case may be, or would
be in violation of applicable law. Such written statement shall specify the
basis of such opinion. If the Commission, after opportunity for a hearing upon
the objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if after the entry of an order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail copies of
such material to all such holders with reasonable promptness after the entry of
such order and the renewal of such tender; otherwise the Trustee shall be
relieved of any obligation or duty to such applicants respecting their
application.

            (c) Every holder of Debt Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee

                                       49
<PAGE>

shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the holders in accordance with Section 7.2(b),
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing of any material
pursuant to a request made under Section 7.2(b).

SECTION 7.3 REPORTS BY TRUSTEE.

            (a) Within 60 days after [DATE] of each year, commencing with the
first [DATE] after the first issuance of Debt Securities pursuant to this
Indenture, the Trustee shall, to the extent required by the Trust Indenture Act,
transmit to all holders of Debt Securities of any series with respect to which
it acts as Trustee, in the manner hereinafter provided in this Section 7.3, a
brief report dated such date with respect to any of the following events which
may have occurred within the previous 12 months (but if no such event has
occurred within such period, no report need be transmitted):

                  (1) any change to its eligibility under Section 6.9 and its
qualifications under Section 6.8;

                  (2) the creation of or any material change to a relationship
specified in paragraph (1) through (10) of Section 310(b) of the Trust Indenture
Act;

                  (3) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making thereof)
made by the Trustee (as such) which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may claim a lien or charge,
prior to that of the Debt Securities of such series, on any property or funds
held or collected by it as Trustee, except that the Trustee shall not be
required (but may elect) to report such advances if such advances so remaining
unpaid aggregate not more than 1/2 of 1% of the principal amount of the
Outstanding Debt Securities of such series on the date of such report;

                  (4) any change to the amount, interest rate and maturity date
of all other indebtedness owing by the Company (or any other obligor on the Debt
Securities of such series) to the Trustee in its individual capacity, on the
date of such report, with a brief description of any property held as collateral
security therefor, except an indebtedness based upon a creditor relationship
arising in any manner described in Section 311(b) of the Trust Indenture Act;

                  (5) any change to the property and funds, if any, physically
in the possession of the Trustee as such on the date of such report;

                  (6) any additional issue of Debt Securities which the Trustee
has not previously reported; and

                                       50
<PAGE>

                  (7) any action taken by the Trustee in the performance of its
duties hereunder which it has not previously reported and which, in its opinion,
materially affects the Debt Securities of such series, except action in respect
of a default, notice of which has been or is to be withheld by the Trustee in
accordance with Section 6.2.

            (b) The Trustee shall transmit by mail to all holders of Debt
Securities of any series (whose names and addresses appear in the information
preserved at the time by the Trustee in accordance with Section 7.2 (a)) for
which it acts as the Trustee, as hereinafter provided, a brief report with
respect to the character and amount of any advances (and if the Trustee elects
so to state, the circumstances surrounding the making thereof) made by the
Trustee (as such) since the date of the last report transmitted pursuant to
subsection (a) of this Section (or if no such report has yet been so
transmitted, since the date of execution of this instrument) for the
reimbursement of which it claims or may claim a lien or charge, prior to that of
the Debt Securities of such series, on property or funds held or collected by it
as Trustee, and which it has not previously reported pursuant to this
subsection, except that the Trustee for each series shall not be required (but
may elect) to report such advances if such advances remaining unpaid at any time
aggregate 10% or less of the principal amount of the Debt Securities of such
series Outstanding at such time, such report to be transmitted within 90 days
after such time.

            (c) Gaming License Requirements. To the extent required by Gaming
Laws the Trustee will provide any applicable Gaming Authority with:

                  (1) copies of all notices, reports and other written
communications which the Trustee gives to holders of Debt Securities;

                  (2) a list of holders of Debt Securities promptly after the
original issuance of the Debt Securities, eight months and two months prior to
the expiration date of each then-current Gaming License held by the Company or
its subsidiaries, and upon demand;

                  (3) notice of any Event of Default under this Indenture or of
any Default, any acceleration of the indebtedness evidenced or secured hereby,
the institution of any legal actions or proceedings before any court or
governmental authority in respect of this Indenture and any rescission,
annulment or waiver in respect of an Event of Default;

                  (4) notice of the removal or resignation of the Trustee within
five Business Days thereof;

                  (5) notice of any transfer or assignment of rights under this
Indenture (but no transfers or assignments of the Debt Securities) within five
Business Days thereof; and

                                       51
<PAGE>

                  (6) a copy of any amendment to the Debt Securities or this
Indenture within five Business Days of the effectiveness thereof.

         The notice specified in clause (3) above shall be in writing and,
except as set forth below, shall be given within five Business Days after the
trustee has transmitted the notice required by Section 6.2. In the case of any
notice in respect of any Event of Default, such notice shall be accompanied by a
copy of any notice from the holders of the Debt Securities, or a representative
thereof or the Trustee, to the Company and, if accompanied by any such notice to
the Company, shall be given simultaneously with the giving of any such notice to
the Company. In the case of any legal actions or proceedings, such notice shall
be accompanied by a copy of the complaint or other initial pleading or document.

         The Trustee shall in accordance with the limitations set forth herein
cooperate with any applicable Gaming Authority in order to provide such Gaming
Authority with information and documentation relevant to compliance with clause
(3) above and as otherwise required by any applicable Gaming Law.

         The Company will advise the Trustee of the expiration date of any
then-current Gaming License held by the Company or its subsidiaries at least
nine months prior to the expiration thereof and the Trustee until so advised may
assume that such Gaming License has not expired.

            (d) Reports pursuant to this Section 7.3 shall be transmitted by
mail:

                  (1) to all holders of Debt Securities, as the names and
addresses of such holders of Debt Securities appear in the Security Register;
and

                  (2) except in the cases of reports pursuant to subsection (b)
of this Section 7.3, to each holder of a Debt Security of any series whose name
and address appear in the information preserved at the time by the Trustee in
accordance with Section 7.2(a).

            (e) A copy of each such report shall, at the time of such
transmission to holders, be filed by the Trustee with each stock exchange upon
which any Debt Securities of such series are listed, with the Commission and
also with the Company. The Company will notify the Trustee when any series of
Debt Securities are listed on any stock exchange.

SECTION 7.4 REPORTS BY COMPANY.

         Unless otherwise specified with respect to a particular series of Debt
Securities pursuant to Section 3.1, the Company will file with the Trustee,
within 15 days after the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports which the Company may be required

                                       52
<PAGE>

to file with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended.

                                  ARTICLE VIII

                             CONCERNING THE HOLDERS

SECTION 8.1 ACTS OF HOLDERS.

         Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by holders of
Debt Securities 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 or
proxy duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee, and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the holders
signing such instrument or instruments. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Outstanding Debt Securities of any series may take any Act, the
fact that the holders of such specified percentage have joined therein may be
evidenced (a) by the instrument or instruments executed by holders in person or
by agent or proxy appointed in writing, or (b) by the record of holders voting
in favor thereof at any meeting of such holders duly called and held in
accordance with the provisions of Article 9, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of holders.

SECTION 8.2 PROOF OF OWNERSHIP; PROOF OF EXECUTION OF INSTRUMENTS BY HOLDER.

         The ownership of Debt Securities of any series shall be proved by the
Security Register for such series or by a certificate of the Security Registrar
for such series.

         Subject to the provisions of Sections 6.1, 6.3 and 9.5, proof of the
execution of a writing appointing an agent or proxy and of the execution of any
instrument by a holder or his agent or proxy shall be sufficient and conclusive
in favor of the Trustee and the Company if made in the following manner:

         The fact and date of the execution by any such person of any instrument
may be proved by the certificate of any notary public or other officer
authorized to take acknowledgements of deeds, that the Person executing such
instrument acknowledged to him the execution thereof, or by an affidavit of a
witness to such execution sworn to before any such notary or other such officer.
Where such execution is by an officer of a corporation or association or a
member of a partnership on behalf of such corporation, association or
partnership, as the case may be, or by any other Person acting in a

                                       53
<PAGE>

representative capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.

         The record of any holders' meeting shall be proved in the manner
provided in Section 9.6.

         The Trustee may in any instance require further proof with respect to
any of the matters referred to in this Section so long as the request is a
reasonable one.

SECTION 8.3 PERSONS DEEMED OWNERS.

         The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name any Debt Security is registered as the owner
of such Debt Security for the purpose of receiving payment of the principal of
(and premium, if any) and (subject to Section 3.7) interest, if any, on such
Debt Security and for all other purposes whatsoever, whether or not such Debt
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. All payments
made to any holder, or upon his order, shall be valid, and, to the extent of the
sum or sums paid, effectual to satisfy and discharge the liability for moneys
payable upon such Debt Security.

SECTION 8.4 REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND.

         At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 8.1, of the taking of any Act by the holders of the
percentage in aggregate principal amount of the Outstanding Debt Securities
specified in this Indenture in connection with such Act, any holder of a Debt
Security the number, letter or other distinguishing symbol of which is shown by
the evidence to be included in the Debt Securities the holders of which have
consented to such Act may, by filing written notice with the Trustee at the
Corporate Trust Office and upon proof of ownership as provided in Section 8.2,
revoke such Act so far as it concerns such Debt Security. Except as aforesaid,
any such Act taken by the holder of any Debt Security shall be conclusive and
binding upon such holder and, subject to the provisions of Section 5.8, upon all
future holders of such Debt Security and of any Debt Securities issued on
transfer or in lieu thereof or in exchange or substitution therefor,
irrespective of whether or not any notation in regard thereto is made upon such
Debt Security or such other Debt Securities.

                                   ARTICLE IX

                                HOLDERS' MEETINGS

SECTION 9.1 PURPOSES OF MEETINGS.

         A meeting of holders of any or all series may be called at any time and
from time

                                       54
<PAGE>

to time pursuant to the provisions of this Article 9 for any of the following
purposes:

            (a) to give any notice to the Company or to the Trustee for such
series, or to give any directions to the Trustee for such series, or to consent
to the waiving of any default hereunder and its consequences, or to take any
other action authorized to be taken by holders pursuant to any of the provisions
of Article 5;

            (b) to remove the Trustee for such series and appoint a successor
Trustee pursuant to the provisions of Article 6;

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

            (d) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of the Outstanding
Debt Securities of any one or more or all series, as the case may be, under any
other provision of this Indenture or under applicable law.

SECTION 9.2 CALL OF MEETINGS BY TRUSTEE.

         The Trustee for any series may at any time call a meeting of holders of
such series to take any action specified in Section 9.1, to be held at such time
or times and at such place or places as the Trustee for such series shall
determine. Notice of every meeting of the holders of any series, 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 to holders of such series in the
manner and to the extent provided in Section 18.2. Such notice shall be given
not less than 10 days nor more than 90 days prior to the date fixed for the
meeting.

SECTION 9.3 CALL OF MEETINGS BY COMPANY OR HOLDERS.

         In case at any time the Company, pursuant to a Board Resolution, or the
holders of at least 10% in aggregate principal amount of the Outstanding Debt
Securities of a series or of all series, as the case may be, shall have
requested the Trustee for such series to call a meeting of holders of any or all
such series 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 10 days after the receipt of such request, then
the Company or such holders may determine the time or times and the place or
places for such meetings and may call such meetings to take any action
authorized in Section 9.1, by giving notice thereof as provided in Section 9.2.

SECTION 9.4 QUALIFICATIONS FOR VOTING.

         To be entitled to vote at any meeting of holders, a Person shall be (a)
a holder of a Debt Security of the series with respect to which such meeting is
being held or (b) a

                                       55
<PAGE>

Person appointed by an instrument in writing as agent or proxy by such holder.
The only Persons who shall be entitled to be present or to speak at any meeting
of holders shall be the Persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee for the series with respect to which
such meeting is being held and its counsel and any representatives of the
Company and its counsel.

SECTION 9.5 REGULATIONS.

         Notwithstanding any other provisions of this Indenture, the Trustee for
any series may make such reasonable regulations as it may deem advisable for any
meeting of holders of such series, in regard to proof of the holding of Debt
Securities of such series 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.

         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 of such series as provided in Section 9.3, in which case
the Company or the holders 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 at least a majority vote of the
meeting.

         Subject to the provisos in the definition of "Outstanding," at any
meeting each holder of a Debt Security of the series with respect to which such
meeting is being held or proxy therefor shall be entitled to one vote for each
$1,000 principal amount (or such other amount as shall be specified as
contemplated by Section 3.1) of Debt Securities of such series held or
represented by such holder; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Debt 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 other than by virtue of
Outstanding Debt Securities of such series held by him or her or instruments in
writing duly designating him or her as the person to vote on behalf of holders
of Debt Securities of such series. Any meeting of holders with respect to which
a meeting was duly called pursuant to the provisions of Section 9.2 or 9.3 may
be adjourned from time to time by at least a majority of such holders present
and the meeting may be held as so adjourned without further notice.

SECTION 9.6 VOTING.

         The vote upon any resolution submitted to any meeting of holders of a
series of Debt Securities with respect to which such meeting is being held shall
be by written ballots on which shall be subscribed the signatures of such
holders or of their representatives by proxy and the serial number or numbers of
the Debt Securities held or represented by them. The permanent chairman of the
meeting shall appoint two

                                       56
<PAGE>

inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record in duplicate of the proceedings of each meeting of holders shall be taken
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 transmitted as provided in Section
9.2. The record shall show the serial numbers of the Debt Securities voting in
favor of or against any resolution. The record shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one of
the duplicates shall be delivered to the Company and the other to the Trustee to
be preserved by the Trustee.

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

SECTION 9.7 NO DELAY OF RIGHTS BY MEETING.

         Nothing contained in this Article 9 shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of holders or any rights
expressly or impliedly conferred hereunder to make such call, any hindrance or
delay in the exercise of any right or rights conferred upon or reserved to the
Trustee or to any holder under any of the provisions of this Indenture or of the
Debt Securities of any series.

                                   ARTICLE X

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 10.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.

         The Company shall not consolidate with, merge with or into, or sell,
assign, convey, transfer or lease its properties and assets substantially in
their entirety (computed on a consolidated basis) to any Person, unless:

            (a) either (A) the Company is the surviving entity or (B) the
successor or transferee (the "successor corporation") is a corporation organized
and 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, all of the obligations of the
Company under the Debt Securities and this Indenture;

            (b) immediately after giving effect to such transaction, no Event of
Default or Default shall exist; and

                                       57
<PAGE>

            (c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger, conveyance, transfer or lease and such supplemental indenture comply
with this provision and that all conditions precedent herein provided for
relating to such transaction have been complied with.

SECTION 10.2 SUCCESSOR CORPORATION SUBSTITUTED.

         Upon any consolidation with or merger into any other corporation, or
any conveyance, transfer or lease of the properties and assets of the Company
substantially in their entirety in accordance with Section 10.1, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation had been
named as the Company herein.

                                   ARTICLE XI

                             SUPPLEMENTAL INDENTURES

SECTION 11.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.

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

            (a) to evidence the succession of another corporation to the rights
of any Obligor and the assumption by such successor of the covenants and
obligations of any Obligor contained herein and in the Debt Securities; or

            (b) to add to the covenants, agreements or obligations of any
Obligor for the benefit of the holders of all or any series of Debt Securities
(and if such covenants are to be for the benefit of less than all series,
stating that such covenants are expressly being included solely for the benefit
of such series), or to surrender any right or power herein conferred upon the
Company; or

            (c) to add any additional Events of Default (and if such Events of
Default are to be applicable to less than all series, stating that such Events
of Default are expressly being included solely to be applicable to such
series);or

            (d) to add to, change or eliminate any of the provisions of this
Indenture, provided that any such addition, change or elimination shall become
effective

                                       58
<PAGE>

only when there is no Outstanding Debt Security of any series created prior to
the execution of such supplemental indenture which is entitled to the benefit of
such provision and as to which such supplemental indenture would apply; or

            (e) to secure the Debt Securities of any series or to provide that
any of the Company's obligations under any series of the Debt Securities or this
Indenture shall be guaranteed and the terms and conditions for the release or
substitution of such security or guarantee; or

            (f) to supplement any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the defeasance and
discharge of any series of Debt Securities pursuant to Article 4 or 14, provided
that any such action shall not adversely affect the interests of the holders of
Debt Securities of such series or any other series of Debt Securities in any
material respect; or

            (g) to establish the form or terms of Debt Securities, of any series
as permitted by Sections 2.1 and 3.1; or

            (h) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to one or more series of Debt
Securities, 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; or

            (i) to comply with the requirements of the Commission in connection
with the qualification of this Indenture under the Trust Indenture Act;

            (j) 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 provisions with respect to matters or questions arising under
this Indenture which shall not be inconsistent with any provision of this
Indenture; provided such other provisions shall not adversely affect the
interests of the holders of Outstanding Debt Securities of any series created
prior to the execution of such supplemental indenture in any material respect.

         The terms of any document entered into pursuant to this Section shall
be subject to prior approval, if required, of any applicable Gaming Authority.

SECTION 11.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.

         With the written consent of the holders of not less than at least a
majority in principal amount of the Outstanding Debt Securities of each series
affected by such supplemental indenture, by Act of said holders delivered to the
Company and the Trustee, the relevant Obligors when authorized by a Board
Resolution, and the Trustee may enter

                                       59
<PAGE>

into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or of modifying in any manner the rights of the holders under
this Indenture of such Debt Securities; provided, however, that no such
supplemental indenture shall, without the consent of the holder of each
Outstanding Debt Security of each such series affected thereby,

            (a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Debt Security, or reduce the
principal amount thereof or the rate (or extend the time for payment) of
interest thereon or any premium payable upon redemption thereof, or reduce the
amount of the principal of a Discount Security that would be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to Section
5.2, or impair the right to institute suit for the enforcement of any payment on
or after the Stated Maturity thereof (or, in the case of redemption, on or after
the Redemption Date), or alter any redemption provisions in a manner adverse to
the holders of such series of Debt Securities or adversely affect the right to
convert any Debt Security into shares of Common Stock or other securities or
property of the Company as may be provided pursuant to Section 3.1; or

            (b) reduce the percentage in principal amount of the Outstanding
Debt Securities of any series, the consent of whose holders is required for any
supplemental indenture, or the consent of whose holders is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture; or

            (c) modify any of the provisions of this Section, Section 5.13, or
Section 12.6, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the holder of each Outstanding Debt Security of each series 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 6.11 and 11.1(9).

         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 supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture with respect to one or more particular series
of Debt Securities, or which modifies the rights of the holders of Debt
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
Debt Securities of any other series.

         The terms of any document entered into pursuant to this Section shall
be subject

                                       60
<PAGE>

to prior approval, if required, of any applicable Gaming Authority.

SECTION 11.3 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 6.1) 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 adversely affects
the Trustee's own rights, duties or immunities under this Indenture or otherwise
in a material way.

SECTION 11.4 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 Debt Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.

SECTION 11.5 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 11.6 REFERENCE IN DEBT SECURITIES TO SUPPLEMENTAL INDENTURES.

         Debt 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 Debt Securities of any series so modified as to conform, in
the opinion of the Trustee and the Board of Directors, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for Outstanding Debt Securities of such
series.

                                   ARTICLE XII

                                    COVENANTS

SECTION 12.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.

         The Company covenants and agrees for the benefit of each series of Debt

                                       61
<PAGE>

Securities, that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Debt Securities in accordance with the terms of the
Debt Securities and this Indenture. If so provided in the terms of any series of
Debt Securities established as provided in Section 3.1, the interest, if any,
due in respect of any temporary Global Note or permanent Global Note, together
with any additional amounts payable in respect thereof, as provided in the terms
and conditions of such Debt Security, shall be payable only upon presentation of
such Debt Security to the Trustee for notation thereon of the payment of such
interest.

SECTION 12.2 OFFICER'S CERTIFICATE AS TO COMPLIANCE.

         Unless otherwise specifically provided for with respect to any series
of Debt Securities under Section 3.1, the Company will deliver to the Trustee,
within 120 days after the end of each fiscal year, a certificate of the
principal executive officer, principal financial officer or principal accounting
officer of the Company stating whether or not, to the knowledge of the signer
thereof, the Obligors are in compliance with all covenants and conditions under
this Indenture, and, in the event of any noncompliance, specifying such
noncompliance and the nature and status thereof of which such signer may have
knowledge. For purposes of this Section, such compliance shall be determined
without regard to any period of grace or requirement of notice provided under
this Indenture.

SECTION 12.3 MAINTENANCE OF OFFICE OR AGENCY.

         The Company will maintain in each Place of Payment for such series an
office or agency where Debt Securities of that series may be presented or
surrendered for payment, where Debt Securities of that series may be surrendered
for registration of transfer or exchange, where Debt Securities of that series
that are convertible may be surrendered for conversion, if applicable, and where
notices and demands to or upon the Company in respect of the Debt Securities of
that series and this Indenture may be served. If the Debt Securities of any
series are listed on any stock exchange located outside the United States and
such stock exchange shall so require, the Company will maintain a Paying Agent
for the Debt Securities of that series in any required city located outside the
United States, as the case may be, so long as the Debt Securities of that series
are listed on such exchange, and subject to any laws or regulations applicable
thereto, in a Place of Payment for that series located outside the United States
an office or agency where any Debt Securities of that series may be surrendered
for registration of transfer, where Debt Securities of that series may be
surrendered for exchange or redemption and where notices and demands to or upon
the Company in respect of the Debt Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee and the Company hereby appoints the Trustee as its agent
to receive all presentations, surrenders, notices

                                       62
<PAGE>

and demands.

         The Company may also from time to time designate different or
additional offices or agencies to be maintained for such purposes (in or outside
of such Place of Payment), and may from time to time rescind any such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligations described in the preceding
paragraph. The Company will give prompt written notice to the Trustee of any
such additional designation or rescission of designation and any change in the
location of any such different or additional office or agency.

SECTION 12.4 MONEY FOR DEBT SECURITIES; PAYMENTS TO BE HELD IN TRUST.

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

         Whenever the Company shall have one or more Paying Agents with respect
to any series of Debt Securities, it will, by or on each due date of the
principal (and premium, if any) or interest on any Debt Securities of such
series, deposit with any such Paying Agent a sum sufficient to pay the principal
(and premium, if any) or interest so becoming due, such sum to be held in trust
for the benefit of the Persons entitled thereto, and (unless any such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.

         The Company will cause each Paying Agent with respect to any series of
Debt Securities other than 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 will:

            (a) hold all sums held by it for the payment of the principal of
(and premium, if any) or interest on Debt Securities of such series 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 default by the Company (or any
other obligor upon the Debt Securities of such series) in the making of any
payment of principal (and premium, if any) or interest on the Debt Securities of
such series; and

                                       63
<PAGE>

            (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.

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

         Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Debt Security of any series 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 upon Company Request, or (if then held
by the Company) shall be discharged from such trust; and the holder of such Debt
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be transmitted in the manner and to the extent
provided by Section 18.2, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification, any unclaimed balance of such money then remaining
will be repaid to the Company.

SECTION 12.5 CORPORATE EXISTENCE.

         Subject to Article 10, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate existence of each of its Subsidiaries; provided,
however, that the Company shall not be required to preserve the corporate
existence of any Subsidiary if the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company.

SECTION 12.6 WAIVER OF CERTAIN COVENANTS.

         Any Obligor may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 12.1 and 12.3 through 12.5
(and, if so specified pursuant to Section 3.1, any other covenant not set forth
herein and specified pursuant to Section 3.1 to be applicable to the Debt
Securities of any series, except as otherwise provided pursuant to Section 3.1)
with respect to the Debt Securities of any series if before the time for such
compliance the holders of at least at least a majority in

                                       64
<PAGE>

principal amount of the Outstanding Debt Securities of such series shall, by Act
of such holders, either waive such compliance in such instance or generally
waive compliance with such term, provision or condition, but no such waiver
shall extend to or affect such term, provision or condition except to the extent
expressly so 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.

                                  ARTICLE XIII

                          REDEMPTION OF DEBT SECURITIES

SECTION 13.1 APPLICABILITY OF ARTICLE.

         Debt Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified pursuant to Section 3.1 for Debt Securities of any series)
in accordance with this Article.

SECTION 13.2 ELECTION TO REDEEM; NOTICE TO TRUSTEE.

         The election of the Company to redeem any Debt Securities shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Company of less than all of the Debt Securities of any series pursuant to
Section 13.3, the Company shall, at least 30 days before the Redemption Date
fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date and of the principal amount
of Debt Securities of such series to be redeemed. In the case of any redemption
of Debt Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Debt Securities or elsewhere in this Indenture,
the Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restrictions.

SECTION 13.3      SELECTION BY TRUSTEE OF DEBT SECURITIES TO BE REDEEMED.

         If less than all the Debt Securities of any series are to be redeemed
at the election of the Company, the particular Debt Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Trustee, from the Outstanding Debt Securities of such series not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 denominations for Debt Securities of such series or any
integral multiple thereof) of the principal amount of Debt Securities of such
series in a denomination larger than $1,000 denominations. The portions of the
principal amount of Debt Securities so selected for partial redemption shall be
in denominations of $1,000 or any integral multiple thereof, except as otherwise
set forth in the applicable

                                       65
<PAGE>

form of Debt Securities. In any case when more than one Debt Security of such
series is registered in the same name, the Trustee, in its discretion, may treat
the aggregate principal amount so registered as if it were represented by one
Debt Security of such series.

         The Trustee shall promptly notify the Company and the Security
Registrar (if other than itself) in writing of the Debt Securities selected for
redemption and, in the case of any Debt Securities selected for partial
redemption, the principal amount thereof to be redeemed.

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

SECTION 13.4 NOTICE OF REDEMPTION.

         Notice of redemption shall be given by the Company, or at the Company's
request, by the Trustee in the name and at the expense of the Company, not less
than 30 days and not more than 60 days prior to the Redemption Date to the
holders of Debt Securities of any series to be redeemed in whole or in part
pursuant to this Article 13, in the manner provided in Section 18.2. Any notice
so given shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. Failure to give such notice, or any defect in
such notice to the holder of any Debt Security of a series designated for
redemption, in whole or in part, shall not affect the sufficiency of any notice
of redemption with respect to the holder of any other Debt Security of such
series.

         All notices of redemption shall state:

            (a) the Redemption Date,

            (b) the Redemption Price,

            (c) that Debt Securities of such series are being redeemed by the
Company pursuant to provisions contained in this Indenture or the terms of the
Debt Securities of such series or a supplemental indenture establishing such
series, if such be the case, together with a brief statement of the facts
permitting such redemption,

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

            (e) that on the Redemption Date the Redemption Price will become due
and payable upon each such Debt Security to be redeemed, and that interest
thereon, if any, shall cease to accrue on and after said date,

                                       66
<PAGE>

            (f) the Place or Places of Payment where such Debt Securities are to
be surrendered for payment of the Redemption Price, and

            (g) that the redemption is for a sinking fund, if such is the case.

SECTION 13.5 DEPOSIT OF REDEMPTION PRICE.

         On or prior to the Redemption Date for any Debt Securities, the Company
shall deposit with the Trustee or with a Paying Agent (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust as provided in
Section 12.4) an amount of money in the Currency or Currencies in which such
Debt Securities are denominated (except as provided pursuant to Section 3.1)
sufficient to pay the Redemption Price of such Debt Securities or any portions
thereof which are to be redeemed on that date.

SECTION 13.6 DEBT SECURITIES PAYABLE ON REDEMPTION DATE.

         Notice of redemption having been given as aforesaid, any Debt
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price (except as otherwise specified pursuant to
Section 3.1 or 3.4), and from and after such date (unless the Company shall
default in the payment of the Redemption Price) such Debt Securities shall cease
to bear interest. Upon surrender of any such Debt Security for redemption in
accordance with said notice, such Debt Security shall be paid by the Company at
the Redemption Price; provided, however, that, unless otherwise specified as
contemplated by Section 3.1, installments of interest on Debt Securities which
have a Stated Maturity on or prior to the Redemption Date for such Debt
Securities shall be payable according to the terms of such Debt Securities and
the provisions of Section 3.7.

         If any Debt Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Debt Security.

SECTION 13.7 DEBT SECURITIES REDEEMED IN PART.

         Any Debt Security which is to be redeemed only in part shall be
surrendered at the Corporate Trust Office or such other office or agency of the
Company as is specified pursuant to Section 3.1 with, if the Company, the
Security Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by, the holder thereof or such holder's
attorney duly authorized in writing, and the Company shall execute, and the
Trustee shall authenticate and deliver to the holder of such Debt Security
without service charge, a new Debt Security or Debt Securities of the same
series, of like tenor and form, of any authorized denomination as requested by
such holder in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Debt Security so surrendered. In the
case of a Debt Security providing appropriate

                                       67
<PAGE>

space for such notation, at the option of the holder thereof, the Trustee, in
lieu of delivering a new Debt Security or Debt Securities as aforesaid, may make
a notation on such Debt Security of the payment of the redeemed portion thereof.

                                   ARTICLE XIV

                                  SINKING FUNDS

SECTION 14.1 APPLICABILITY OF ARTICLE.

         The provisions of this Article shall be applicable to any sinking fund
for the retirement of Debt Securities of a series except as otherwise specified
pursuant to Section 3.1 for Debt Securities of such series.

         The minimum amount of any sinking fund payment provided for by the
terms of Debt 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 Debt Securities of any series is herein referred to as an
"optional sinking fund payment." If provided for by the terms of Debt Securities
of any series, the amount of any cash sinking fund payment may be subject to
reduction as provided in Section 14.2. Each sinking fund payment shall be
applied to the redemption of Debt Securities of any series as provided for by
the terms of Debt Securities of such series.

SECTION 14.2 SATISFACTION OF MANDATORY SINKING FUND PAYMENTS WITH DEBT
             SECURITIES.

         In lieu of making all or any part of a mandatory sinking fund payment
with respect to any Debt Securities of a series in cash, the Company may at its
option, at any time no more than sixteen months and no less than 45 days prior
to the date on which such sinking fund payment is due, deliver to the Trustee
Debt Securities of such series theretofore purchased or otherwise acquired by
the Company, except Debt Securities of such series which have been redeemed
through the application of mandatory sinking fund payments pursuant to the terms
of the Debt Securities of such series, accompanied by a Company Order
instructing the Trustee to credit such obligations and stating that the Debt
Securities of such series were originally issued by the Company by way of bona
fide sale or other negotiation for value, provided that such Debt Securities
shall not have been previously so credited. Such Debt Securities shall be
received and credited for such by the Trustee at the Redemption Price specified
in such Debt Securities for redemption through operation of the sinking fund and
the amount of such mandatory sinking fund payment shall be reduced accordingly.

SECTION 14.3 REDEMPTION OF DEBT SECURITIES FOR SINKING FUND.

         Not less than 60 days prior to each sinking fund payment date for any
series of

                                       68
<PAGE>

Debt Securities (unless a shorter period shall be satisfactory to the Trustee),
the Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next ensuing sinking fund payment for that series pursuant to the
terms of that series, the portion thereof, if any, which is to be satisfied by
payment of cash (except as provided pursuant to Section 3.1) and the portion
thereof, if any, which is to be satisfied by delivering and crediting Debt
Securities of such series pursuant to Section 14.2 and whether the Company
intends to exercise its rights to make a permitted optional sinking fund payment
with respect to such series. Such certificate shall be irrevocable and, upon its
delivery, the Company shall be obligated to make the cash payment or payments
therein referred to, if any, on or before the next succeeding sinking fund
payment date. In the case of the failure of the Company to deliver such
certificate, the sinking fund payment due on the next succeeding sinking fund
payment date for such series shall be paid entirely in cash and shall be
sufficient to redeem the principal amount of the Debt Securities of such series
subject to a mandatory sinking fund payment without the right to deliver or
credit Debt Securities as provided in Section 14.2 and without the right to make
any optional sinking fund payment with respect to such series at such time.

         Any sinking fund payment or payments (mandatory or optional) made in
cash plus any unused balance of any preceding sinking fund payments made with
respect to the Debt Securities of any particular series shall be applied by the
Trustee (or by the Company if the Company is acting as its own Paying Agent) on
the sinking fund payment date on which such payment is made (or, if such payment
is made before a sinking fund payment date, on the sinking fund payment date
immediately following the date of such payment) to the redemption of Debt
Securities of such series at the Redemption Price specified in such Debt
Securities with respect to the sinking fund. Any sinking fund moneys not so
applied or allocated by the Trustee (or by the Company if the Company is acting
as its own Paying Agent) to the redemption of Debt Securities shall be added to
the next sinking fund payment received by the Trustee (or if the Company is
acting as its own Paying Agent, segregated and held in trust as provided in
Section 12.4) for such series and, together with such payment (or such amount so
segregated) shall be applied in accordance with the provisions of this Section.
Any and all sinking fund moneys with respect to the Debt Securities of any
particular series held by the Trustee (or if the Company is acting as its own
Paying Agent, segregated and held in trust as provided in Section 12.4) on the
last sinking fund payment date with respect to Debt Securities of such series
and not held for the payment or redemption of particular Debt Securities of such
series shall be applied by the Trustee (or by the Company if the Company is
acting as its own Paying Agent), together with other moneys, if necessary, to be
deposited (or segregated) sufficient for the purpose, to the payment of the
principal of the Debt Securities of such series at Maturity.

         The Trustee shall select or cause to be selected the Debt Securities to
be redeemed upon such sinking fund payment date in the manner specified in
Section 13.3 and the Company shall cause notice of the redemption thereof to be
given in the manner provided in Section 13.4. Such notice having been duly
given, the redemption of such Debt

                                       69
<PAGE>

Securities shall be made upon the terms and in the manner stated in Section
13.6.

         On or before each sinking fund payment date, the Company shall pay to
the Trustee (or, if the Company is acting as its own Paying Agent, the Company
shall segregate and hold in trust as provided in Section 12.4) in cash a sum,
equal to the principal and any interest accrued to the Redemption Date for Debt
Securities or portions thereof to be redeemed on such sinking fund payment date
pursuant to this Section.

                                   ARTICLE XV

                                   DEFEASANCE

SECTION 15.1 APPLICABILITY OF ARTICLE.

         Except as otherwise provided in Section 15.2 or as provided pursuant to
Section 3.1 with respect to a particular series of Debt Securities, the Company
may terminate its obligations under the Debt Securities of any series and this
Indenture with respect to Debt Securities of such series as set forth in Section
15.2.

SECTION 15.2 DEFEASANCE UPON DEPOSIT OF MONEYS OR U.S. GOVERNMENT OBLIGATIONS.

         At the Company's option, either (a) the Company shall be deemed to have
been Discharged (as defined below) from its obligations with respect to Debt
Securities of any series ("legal defeasance option") or (b) the Company shall
cease to be under any obligation to comply with any term, provision or condition
set forth in Sections 10.1, 12.2 and 12.4 with respect to Debt Securities of any
series (and, to the extent so specified pursuant to Section 3.1, any other
obligation of the Company or restrictive covenant added for the benefit of such
series pursuant to Section 3.1) ("covenant defeasance option") at any time after
the applicable conditions set forth below have been satisfied:

            (a) The Company shall have deposited or caused to be deposited
irrevocably with the Trustee as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the holders of the Debt
Securities of such series (i) money in an amount, or (ii) U.S. Government
Obligations (as defined below) which through the payment of interest and
principal in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, money in an amount, or
(iii) a combination of (i) and (ii), sufficient, in the opinion (with respect to
(i) and (ii)) of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge each installment of principal (including any mandatory sinking
fund payments) of and premium, if any, and interest on, the Outstanding Debt
Securities of such series on the dates such installments of interest or
principal and premium are due;

                                       70
<PAGE>

            (b) Such deposit shall not cause the Trustee with respect to the
Debt Securities of that series to have a conflicting interest as defined in
Section 6.8 and for purposes of the Trust Indenture Act with respect to the Debt
Securities of any series;

            (c) Such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or instrument
to which the Company is a party or by which it is bound;

            (d) If the Debt Securities of such series are then listed on any
national securities exchange or the NASD automated quotation system, or the
Company shall have delivered to the Trustee an Opinion of Counsel or a letter or
other document from such exchange or the NASD automated quotation system to the
effect that the Company's exercise of its option under this Section would not
cause such Debt Securities to be delisted;

            (e) No Event of Default or Default with respect to the Debt
Securities of such series shall have occurred and be continuing on the date of
such deposit and, with respect to the legal defeasance option only, no Event of
Default under Section 5.1(f) or Section 5.1(g) or event which with the giving of
notice or lapse of time, or both, would become an Event of Default under Section
5.1(f) or Section 5.1(g) shall have occurred and be continuing on the 91st day
after such date (and such defeasance shall not become effective until such 91st
day); and

            (f) The Company shall have delivered to the Trustee an Opinion of
Counsel or a ruling from the Internal Revenue Service to the effect that the
holders of the Debt Securities of such series will not recognize income, gain or
loss for United States Federal income tax purposes as a result of such deposit,
defeasance or Discharge. Notwithstanding the foregoing, if the Company exercises
its covenant defeasance option and an Event of Default under Section 5.1(f) or
Section 5.1(g) or event which, with the giving of notice or lapse of time, or
both, would become an Event of Default under Section 5.1(f) or Section 5.1(g)
shall have occurred and be continuing on the 91st day after the date of such
deposit, the obligations of the Company referred to under the definition of
covenant defeasance option with respect to such Debt Securities shall be
reinstated.

         "Discharged" means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under, the
Debt Securities of such series and to have satisfied all the obligations under
this Indenture relating to the Debt Securities of such series (and the Trustee,
at the expense of the Company, shall execute proper instruments acknowledging
the same), except (A) the rights of holders of Debt Securities of such series to
receive, from the trust fund described in clause (1) above, payment of the
principal of (and premium, if any) and interest on such Debt Securities when
such payments are due, (B) the Company's obligations with respect to the Debt
Securities of such series under Sections 3.4(a), 3.5, 3.6, 12.3 and 15.3 and (C)
the rights, powers, trusts, duties and immunities of the Trustee hereunder.

                                       71
<PAGE>

         "U.S. Government Obligations" means securities that are (i) direct
obligations of the United States for the payment of which its full faith and
credit is pledged, or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States, which, in either case under clauses (i) or (ii), are not callable
or redeemable at the option of the issuer thereof, and shall also include
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such custodian for the
account of the holder of a depository receipt; provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of interest on or principal of the U.S. Government Obligation evidenced by such
depository receipt.

SECTION 15.3 DEPOSITED MONEYS AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD
             INTRUST.

         All moneys and U.S. Government Obligations deposited with the Trustee
pursuant to Section 15.2 in respect of Debt Securities of a series shall be held
in trust and applied by it, in accordance with the provisions of such Debt
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the holders of such Debt Securities, of all sums due
and to become due thereon for principal (and premium, if any) and interest, if
any, but such money need not be segregated from other funds except to the extent
required by law.

SECTION 15.4 REPAYMENT TO COMPANY.

         The Trustee and any Paying Agent shall promptly pay or return to the
Company upon Company Request any moneys or U.S. Government Obligations held by
them at any time that are not required for the payment of the principal of (and
premium, if any) and interest on the Debt Securities of any series for which
money or U.S. Government Obligations have been deposited pursuant to Section
15.2.

         The provisions of the last paragraph of Section 12.4 shall apply to any
money held by the Trustee or any Paying Agent under this Article that remains
unclaimed for two years after the Maturity of any series of Debt Securities for
which money or U.S. Government Obligations have been deposited pursuant to
Section 15.2.

                                       72
<PAGE>

                                   ARTICLE XVI

                                   CONVERSION

SECTION 16.1 APPLICABILITY; CONVERSION PRIVILEGE.

         Except as otherwise specified pursuant to Section 3.1 for Debt
Securities of any series, the provisions of this Article 16 shall be applicable
to any Debt Securities that are convertible into Common Stock. If so provided
pursuant to Section 3.1 with respect to the Debt Securities of any series, the
holder of a Debt Security of such series shall have the right, at such holder's
option, to convert, in accordance with the terms of such series of Debt
Securities and this Article 16, all or any part (in a denomination of, unless
otherwise specified pursuant to Section 3.1 with respect to Debt Securities of
such series, $1,000 in principal amount or any integral multiple thereof) of
such Debt Security into shares of Common Stock or, as to any Debt Securities
called for redemption, at any time prior to the time and date fixed for such
redemption (unless the Company shall default in the payment of the Redemption
Price, in which case such right shall not terminate at such time and date).

SECTION 16.2 CONVERSION PROCEDURE; CONVERSION PRICE; FRACTIONAL SHARES.

            (a) Each Debt Security to which this Article is applicable shall be
convertible at the office of the Conversion Agent, and at such other place or
places, if any, specified pursuant to Section 3.1 with respect to the Debt
Securities of such series, into fully paid and nonassessable shares (calculated
to the nearest 1/100th of a share) of Common Stock. The Debt Securities will be
converted into shares of Common Stock at the Conversion Price therefor. No
payment or adjustment shall be made in respect of dividends on the Common Stock
or accrued interest on a converted Debt Security except as described in Section
16.9. The Company may, but shall not be required, in connection with any
conversion of Debt Securities, to issue a fraction of a share of Common Stock
and, if the Company shall determine not to issue any such fraction, the Company
shall, subject to Section 16.3(d), make a cash payment (calculated to the
nearest cent) equal to such fraction multiplied by the Closing Price of the
Common Stock on the last Trading Day prior to the date of conversion.

            (b) Before any holder of a Debt Security shall be entitled to
convert the same into Common Stock, such holder shall surrender such Debt
Security duly endorsed to the Company or in blank at the office of the
Conversion Agent or at such other place or places, if any, specified pursuant to
Section 3.1, and shall give written notice to the Company at said office or
place that such holder elects to convert the same and shall state in writing
therein the principal amount of Debt Securities to be converted and the name or
names (with addresses) in which such holder wishes the certificate or
certificates for Common Stock to be issued; provided, however, that no Debt
Security or

                                       73
<PAGE>

portion thereof shall be accepted for conversion unless the principal amount of
such Debt Security or such portion, when added to the principal amount of all
other Debt Securities or portions thereof then being surrendered by the holder
thereof for conversion, exceeds the then-effective Conversion Price with respect
thereto. If more than one Debt Security shall be surrendered for conversion at
one time by the same holder, the number of full shares of Common Stock which
shall be deliverable upon conversion shall be computed on the basis of the
aggregate principal amount of the Debt Securities (or specified portions thereof
to the extent permitted thereby) so surrendered. Subject to the next succeeding
sentence, the Company will, as soon as practicable thereafter, issue and deliver
at said office or place to such holder of a Debt Security, or to such holder's
nominee or nominees, certificates for the number of full shares of Common Stock
to which such holder shall be entitled as aforesaid, together, subject to the
last sentence of paragraph (a) above, with cash in lieu of any fraction of a
share to which such holder would otherwise be entitled. The Company shall not be
required to deliver certificates for shares of Common Stock while the stock
transfer books for such stock or the Security Register are duly closed for any
purpose, but certificates for shares of Common Stock shall be issued and
delivered as soon as practicable after the opening of such books or Security
Register. A Debt Security shall be deemed to have been converted as of the close
of business on the date of the surrender of such Debt Security for conversion as
provided above, and the Person or Persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Stock as of the close of business on such date.
In case any Debt Security shall be surrendered for partial conversion, the
Company shall execute and the Trustee shall authenticate and deliver to or upon
the written order of the holder of the Debt Securities so surrendered, without
charge to such holder (subject to the provisions of Section 16.8), a new Debt
Security or Securities in authorized denominations in an aggregate principal
amount equal to the unconverted portion of the surrendered Debt Security.

SECTION 16.3 ADJUSTMENT OF CONVERSION PRICE FOR COMMON STOCK.

         The Conversion Price with respect to any Debt Security which is
convertible into Common Stock shall be adjusted from time to time as follows:

            (a) In case the Company shall, at any time or from time to time
while any of such Debt Securities are outstanding, (i) pay a dividend in shares
of its Common Stock to holders of Common Stock, (ii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock, (iii)
subdivide its outstanding shares of Common Stock into a greater number of shares
of Common Stock or (iv) make a distribution in shares of Common Stock to holders
of Common Stock, then the Conversion Price in effect immediately before such
action shall be adjusted so that the holders of such Debt Securities, upon
conversion thereof into Common Stock immediately following such event, shall be
entitled to receive the kind and amount of

                                       74
<PAGE>

shares of Common Stock of the Company which they would have owned or been
entitled to receive upon or by reason of such event if such Debt Securities had
been converted immediately before the record dated (or, if no record date, the
effective date) for such event. An adjustment made pursuant to this Section
16.3(a) shall become effective retroactively immediately after the record date
in the case of a dividend or distribution and shall become effective
retroactively immediately after the effective date in the case of a subdivision
or combination. For the purposes of this Section 16.3(a), each holder of Debt
Securities shall be deemed to have failed to exercise any right to elect the
kind or amount of securities receivable upon the payment of any such dividend,
subdivision, combination or distribution (provided, that if the kind or amount
of securities receivable upon such dividend, subdivision, combination or
distribution is not the same for each nonelecting share, then the kind and
amount of securities or other property receivable upon such dividend,
subdivision, combination or distribution for each nonelecting share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
nonelecting shares).

            (b) In case the Company shall, at any time or from time to time
while any of such Debt Securities are outstanding, issue rights or warrants to
all holders of shares of its Common Stock entitling them (for a period expiring
within 45 days after the record date for such issuance) to subscribe for or
purchase shares of Common Stock (or securities convertible into shares of Common
Stock) at a price per share less than the Current Market Price of the Common
Stock at such record date (treating the price per share of the securities
convertible into Common Stock as equal to (x) the sum of (i) the price for a
unit of the security convertible into Common Stock and (ii) any additional
consideration initially payable upon the conversion of such security into Common
Stock divided by (y) the number of shares of Common Stock initially underlying
such convertible security), the Conversion Price with respect to such Debt
Securities shall be adjusted so that it shall equal the price determined by
dividing the Conversion Price in effect immediately prior to the date of
issuance of such rights or warrants by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding on the date of issuance of
such rights or warrants plus the number of additional shares of Common Stock
offered for subscription or purchase (or into which the convertible securities
so offered are initially convertible), and the denominator of which shall be the
number of shares of Common Stock outstanding on the date of issuance of
securities which the aggregate offering price of the total number of shares of
securities so offered for subscription or purchase (or the aggregate purchase
price of the convertible securities so offered plus the aggregate amount of any
additional consideration initially payable upon conversion of such securities
into Common Stock) would purchase at such Current Market Price of the Common
Stock. Such adjustment shall become effective retroactively immediately after
the record date for the determination of stockholders entitled to receive such
rights or warrants.

            (c) In the case the Company shall, at any time or from time to time
while any of such Debt Securities are outstanding, distribute to all holders of
shares of its

                                       75
<PAGE>

Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation and
the Common Stock is not changed or exchanged) cash, evidences of its
indebtedness, securities or assets (excluding (i) regular periodic cash
dividends in amounts, if any, determined from time to time by the Board of
Directors, (ii) dividends payable in shares of Common Stock for which adjustment
is made under Section 16.3(a) or (iii) rights or warrants to subscribe for or
purchase securities of the Company (excluding those referred to in Section
16.3(b)), then in each such case the Conversion Price with respect to such Debt
Securities shall be adjusted so that it shall equal the price determined by
dividing the Conversion Price in effect immediately prior to the date of such
distribution by a fraction, the numerator of which shall be the Current Market
Price of the Common Stock on the record date referred to below, and the
denominator of which shall be such Current Market Price of the Common Stock less
the then fair market value (as determined by the Board of Directors of the
Company, whose determination shall be conclusive) of the portion of the cash or
assets or evidences of indebtedness or securities so distributed or of such
subscription rights or warrants applicable to one share of Common Stock
(provided that such denominator shall never be less than 1.0); provided,
however, that no adjustment shall be made with respect to any distribution of
rights to purchase securities of the Company if a holder of Debt Securities
would otherwise be entitled to receive such rights upon conversion at any time
of such Debt Securities into Common Stock unless such rights are subsequently
redeemed by the Company, in which case such redemption shall be treated for
purposes of this Section as a dividend on the Common Stock. Such adjustment
shall become effective retroactively immediately after the record date for the
determination of stockholders entitled to receive such distribution; and in the
event that such distribution is not so made, the Conversion Price shall again be
adjusted to the Conversion Price which would then be in effect if such record
date had not been fixed.

            (d) The Company shall be entitled to make such additional
adjustments in the Conversion Price, in addition to those required by
subsections 16.3(a), 16.3(b), and 16.3(c), as shall be necessary in order that
any dividend or distribution of Common Stock, any subdivision, reclassification
or combination of shares of Common Stock or any issuance of rights or warrants
referred to above shall not be taxable to the holders of Common Stock for United
States federal income tax purposes.

            (e) In any case in which this Section 16.3 shall require that any
adjustment be made effective as of or retroactively immediately following a
record date, the Company may elect to defer (but only for five (5) Trading Days
following the filing of the statement referred to in Section 16.5) issuing to
the holder of any Debt Securities converted after such record date the shares of
Common Stock and other capital stock of the Company issuable upon such
conversion over and above the shares of Common Stock and other capital stock of
the Company issuable upon such conversion on the basis of the Conversion Price
prior to adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to

                                       76
<PAGE>

receive such additional shares upon the occurrence of the event requiring such
adjustment.

            (f) All calculations under this Section 16.3 shall be made to the
nearest cent or one-hundredth of a share of security, with one-half cent and
0.005 of a share, respectively, being rounded upward. Notwithstanding any other
provision of this Section 16.3, the Company shall not be required to make any
adjustment of the Conversion Price unless such adjustment would require an
increase or decrease of at least 1% of such price. Any lessor adjustment shall
be carried forward and shall be made at the time of, and together with, the next
subsequent adjustment which, together with any adjustment or adjustments so
carried forward, shall amount to an increase or decrease of at least 1% in such
price. Any adjustments under this Section 16.3 shall be made successively
whenever an event requiring such an adjustment occurs.

            (g) In the event that at any time, as a result of an adjustment made
pursuant to this Section 16.3, the holder of any Debt Security thereafter
surrendered for conversion shall become entitled to receive any shares of stock
of the Company other than shares of Common Stock into which the Debt Securities
originally were convertible, the Conversion Price of such other shares so
receivable upon conversion of any such Debt Security shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock contained in
subparagraphs (a) through (f) of this Section 16.3, and the provisions of
Sections 16.1, 16.2 and 16.4 through 16.9 with respect to the Common Stock shall
apply on like or similar terms to any such other shares and the determination of
the Board of Directors as to any such adjustment shall be conclusive.

            (h) No adjustment shall be made pursuant to this Section: (i) if the
effect thereof would be to reduce the Conversion Price below the par value (if
any) of the Common Stock or (ii) subject to 16.3(e) hereof, with respect to any
Debt Security that is converted prior to the time such adjustment otherwise
would be made.

SECTION 16.4 CONSOLIDATION OR MERGER OF THE COMPANY.

         In case of either (a) any consolidation or merger to which the Company
is a party, other than a merger or consolidation in which the company is the
surviving or continuing corporation and which does not result in a
reclassification of, or change (other than a change in par value or from par
value to no par value or from no par value to par value, as a result of a
subdivision or combination) in, outstanding shares of Common Stock or (b) any
sale or conveyance of all or substantially all of the property and assets of the
Company to another Person, each Debt Security then outstanding shall be
convertible from and after such merger, consolidation, sale or conveyance of
property and assets into the kind and amount of shares of stock or other
securities and property (including cash) receivable upon such consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
into which such Debt Securities would have been converted immediately prior to
such consolidation, merger, sale or conveyance, subject to

                                       77
<PAGE>

adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article Sixteen (and assuming such holder of
Common Stock failed to exercise his rights of election, if any, as to the kind
or amount of securities, cash or other property (including cash) receivable upon
such consolidation, merger, sale or conveyance (provided that, if the kind or
amount of securities, cash or other property (including cash) receivable upon
such consolidation, merger, sale or conveyance is not the same for each
nonelecting share, then the kind and amount of securities, cash or other
property (including cash) receivable upon such consolidation, merger, sale or
conveyance for each nonelecting share shall be deemed to be the kind and amount
so receivable per share by a plurality of the nonelecting shares or
securities)). The Company shall not enter into any of the transactions referred
to in clause (a) or (b) of the preceding sentence unless effective provision
shall be made so as to give effect to the provisions set forth in this Section
16.4. The provisions of this Section 16.4 shall apply similarly to successive
consolidations, mergers, sales or conveyances.

SECTION 16.5 NOTICE OF ADJUSTMENT.

         Whenever an adjustment in the Conversion Price with respect to a series
of Debt Securities is required:

            (a) the Company shall forthwith place on file with the Trustee and
any Conversion Agent for such Securities a certificate of the Treasurer of the
Company, stating the adjusted Conversion Price determined as provided herein and
setting forth in reasonable detail such facts as shall be necessary to show the
reason for and the manner of computing such adjustment, such certificate to be
conclusive evidence that the adjustment is correct; and

            (b) a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall forthwith be given by the
Company, or at the Company's request, by the Trustee in the name and at the
expense of the Company, in the manner provided in Section 18.2. Any notice so
given shall be conclusively presumed to have been duly given, whether or not the
holder receives such notice.

SECTION 16.6 NOTICE IN CERTAIN EVENTS.

         In case:

            (a) of a consolidation or merger to which the Company is a party and
for which approval of any shareholders of the Company is required, or of the
sale or conveyance to another Person or entity or group of Persons or entities
acting in concert as a partnership, limited partnership, syndicate or other
group (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended) of all or substantially all of the property and assets of the
Company; or

                                       78
<PAGE>

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

            (c) of any action triggering an adjustment of the Conversion Price
pursuant to this Article Sixteen;

         Then, in each case, the Company shall cause to be filed with the
Trustee and the Conversion Agent for the applicable Debt Securities, and shall
cause to be given, to the holders of record of applicable Debt Securities in the
manner provided in Section 18.2, at least fifteen (15) days prior to the
applicable date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of any distribution or grant of rights or
warrants triggering an adjustment to the Conversion Price pursuant to this
Article Sixteen, or, if a record is not to be taken, the date as of which the
holders of record or Common Stock entitled to such distribution, rights or
warrants are to be determined, or (y) the date on which any reclassification,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding up
triggering an adjustment to the Conversion Price pursuant to this Article 16 is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such reclassification,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding up.

         Failure to give such notice or any defect therein shall not affect the
legality or validity of the proceedings described in clause (a), (b), or (c) of
this Section.

SECTION 16.7 COMPANY TO RESERVE STOCK; REGISTRATION; LISTING.

            (a) The Company shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the conversion of the Debt Securities, such
number of its duly authorized shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all applicable outstanding Debt
Securities into such Common Stock at any time (assuming that, at the time of the
computation of such number of shares or securities, all such Debt Securities
would be held by a single holder); provided, however, that nothing contained
herein shall preclude the Company from satisfying its obligations in respect of
the conversion of the Debt Securities by delivery of purchased shares of Common
Stock which are held in the treasury of the Company. The Company shall from time
to time, in accordance with the laws of the Commonwealth of Pennsylvania, use
its best efforts to cause the authorized amount of the Common Stock to be
increased if the aggregate of the authorized amount of the Common Stock
remaining unissued and the issued shares of such Common Stock in its treasury
(other than any such shares reserved for issuance in any other connection) shall
not be sufficient to permit the conversion of all Debt Securities.

                                       79
<PAGE>

            (b) If any shares of Common Stock which would be issuable upon
conversion of Debt Securities hereunder require registration with or approval of
any governmental authority before such shares or securities may be issued upon
such conversion, the Company will in good faith and as expeditiously as possible
endeavor to cause such shares or securities to be duly registered or approved,
as the case may be. The Company will endeavor to list the shares of Common Stock
required to be delivered upon conversion of the Debt Securities prior to such
delivery upon the principal national securities exchange upon, or the NASD
automated quotation system through, which the outstanding Common Stock is listed
at the time of such delivery.

SECTION 16.8 TAXES ON CONVERSION.

         The Company shall pay any and all documentary, stamp or similar issue
or transfer taxes that may be payable in respect of the issue or delivery of
shares of Common Stock on conversion of Debt Securities pursuant hereto. The
Company shall not, however, be required to pay any such tax which may be payable
in respect of any transfer involved in the issue or delivery of shares of Common
Stock or the portion, if any, of the Debt Securities which are not so converted
in a name other than that in which the Debt Securities so converted were
registered, and no such issue or delivery shall be made unless and until the
Person requesting such issue has paid to the Company the amount of such tax or
has established to the satisfaction of the Company that such tax has been paid.

SECTION 16.9 CONVERSION AFTER RECORD DATE.

         If any Debt Securities are surrendered for conversion subsequent to the
record date preceding an Interest Payment Date but on or prior to such Interest
Payment Date (except Debt Securities called for redemption on a Redemption Date
between such record date and Interest Payment Date), the holder of such Debt
Securities at the close of business on such record date shall be entitled to
receive the interest payable on such Debt Securities on such Interest Payment
Date notwithstanding the conversion thereof. Debt Securities surrendered for
conversion during the period from the close of business on any record date next
preceding any Interest Payment Date to the opening of business on such Interest
Payment Date shall (except in the case of Debt Securities which have been called
for redemption on a Redemption Date within such period) be accompanied by
payment in New York Clearing House funds or other funds of an amount equal to
the interest payable on such Interest Payment Date on the Debt Securities being
surrendered for conversion. Except as provided in this Section 16.9, no
adjustments in respect of payments of interest on Debt Securities surrendered
for conversion or any dividends or distributions of interest on the Common Stock
issued upon conversion shall be made upon the conversion of any Debt Securities.

SECTION 16.10 COMPANY DETERMINATION FINAL.

         Any determination that the Company or the Board of Directors must make

                                       80
<PAGE>

pursuant to this Article is conclusive.

SECTION 16.11 TRUSTEE'S DISCLAIMER.

         The Trustee has no duty to determine when an adjustment under this
Article should be made, how it should be made or what it should be. The Trustee
makes no representation as to the validity or value of any securities or assets
issued upon conversion of Debt Securities. The Trustee shall not be responsible
for the Company's failure to comply with this Article. Each Conversion Agent
other than the Company shall have the same protection under this Section as the
Trustee.

                                  ARTICLE XVII

                                   GUARANTEES

SECTION 17.1 APPLICABILITY OF ARTICLE.

         The provisions of this Article shall be applicable to any series of
Debt Securities which is to be guaranteed by one or more Guarantors.

SECTION 17.2 OBLIGOR GUARANTEE.

         The Guarantors unconditionally and jointly and severally guarantee and
promise to pay to the holders and the Trustee (each a "Beneficiary"), on demand
made at any time while an Event of Default exists, in lawful money of the United
States of America, any and all Obligations of the Company from time to time owed
to the Beneficiaries (the "Obligor Guarantee"). The term "Obligations" means any
and all present and future obligations and liabilities of the Company of every
type and description to the Beneficiaries under this Indenture and the Debt
Securities of the series such Guarantors have guaranteed (the "Guaranteed
Securities"), whether for principal, premium (if any), interest, expenses,
indemnities or other amounts, in each case whether due or not due, absolute or
contingent, voluntary or involuntary, liquidated or unliquidated, determined or
undetermined, now or hereafter existing, renewed or restructured, whether or not
from time to time decreased or extinguished and later increased, created or
incurred, whether or not arising after the commencement of a proceeding under
the Bankruptcy Code (including post-petition interest) and whether or not
allowed or allowable as a claim in any such proceeding, and whether or not
recovery of any such obligation or liability may be barred by a statute of
limitations or such obligation or liability may otherwise be unenforceable. All
Obligations shall be conclusively presumed to have been created in reliance on
the Obligor Guarantee. The Obligor Guarantee is a continuing Guarantee of the
Obligations and, except as otherwise provided in this Indenture, may not be
revoked and shall not otherwise terminate unless and until any and all
Obligations have been indefeasibly paid and performed in full.

                                       81
<PAGE>

SECTION 17.3 NATURE OF OBLIGOR GUARANTEE.

         The liability of each Guarantor under the Obligor Guarantee is
independent of and not in consideration of or contingent upon the liability of
the Company or any other Obligor, and a separate action or actions may be
brought and prosecuted against any Guarantor, whether or not any action is
brought or prosecuted against the Company or any other Obligor or whether the
Company or any other Obligor is joined in any such action or actions. The
Obligor Guarantee given by each Guarantor shall be construed as a continuing,
absolute and unconditional Guarantee of payment (and not merely of collection)
without regard to:

            (a) the legality, validity or enforceability of the Debt Securities
or this Indenture, any of the Obligations, any security or Obligor Guarantee
given by any other Guarantor;

            (b) any defense (other than payment), set-off or counterclaim that
may at any time be available to the Company or any other Obligor against, and
any right of setoff at any time held by, any Beneficiary; or

            (c) any other circumstance whatsoever (with or without notice to or
knowledge of any Guarantor or any other Obligor), whether or not similar to any
of the foregoing, that constitutes, or might be construed to constitute, an
equitable or legal discharge of the Company or any other Obligor, in bankruptcy
or in any other instance.

         Any payment by any Obligor or other circumstance that operates to toll
any statute of limitations applicable to such Obligor shall also operate to toll
the statute of limitations applicable to each Guarantor.

SECTION 17.4 AUTHORIZATION.

         Each Guarantor authorizes each Beneficiary, without notice or further
assent by such Guarantor, and without affecting any Guarantor's liability
hereunder (regardless of whether any subrogation or similar right that such
Guarantor may have or any other right or remedy of such Guarantor is
extinguished or impaired), from time to time to do any or all of the following :

            (a) permit the Company to increase or create Obligations, or
terminate, release, compromise, subordinate, extend, accelerate or otherwise
change the amount or time, manner or place of payment of, or rescind any demand
for payment or acceleration of, the Obligations or any part thereof, consent or
enter into supplemental indentures or otherwise amend the terms and conditions
of the Guaranteed Securities or this Indenture or any provision thereof,

            (b) take and hold any collateral from the Company or any other
Person, perfect or refrain from perfecting a lien on any collateral, and
exchange, enforce,

                                       82
<PAGE>

subordinate, release (whether intentionally or unintentionally), or take or fail
to take any other action in respect of, any collateral or lien or any part
thereof;

            (c) exercise in such manner and order as it elects in its sole
discretion, fail to exercise, waive, suspend, terminate or suffer expiration of,
any of the remedies or rights of such Beneficiary against the Company or any
other Obligor in respect of any Obligations or any security;

            (d) release, add or settle with any Obligor in respect of the
Obligor Guarantee or the Obligations;

            (e) accept partial payments on the Obligations and apply any and all
payments or recoveries from such Obligor to such of the Obligations as any
Beneficiary may elect in its sole discretion, whether or not such Obligations
are secured or guaranteed;

            (f) refund at any time, at such Beneficiary's sole discretion, any
payments or recoveries received by such Beneficiary in respect of any
Obligations; and

            (g) otherwise deal with the Company or any other Obligor as such
Beneficiary may elect in its sole discretion.

SECTION 17.5 CERTAIN WAIVERS.

         Each Guarantor waives:

            (a) the right to require the Beneficiaries to proceed against the
Company or any other Obligor, to proceed against or exhaust any collateral or to
pursue any other remedy in any Beneficiary's power whatsoever and the right to
have the property of the Company or any other Obligor first applied to the
discharge of the Obligations;

            (b) all rights and benefits under applicable law purporting to
reduce a Guarantor's obligations in proportion to the obligation of the
principal or providing that the obligation of a surety or Guarantor must neither
be larger nor in other respects more burdensome than that of the principal;

            (c) the benefits of any statute of limitations affecting the
Obligations or any Guarantor's liability hereunder;

            (d) any requirement of marshaling or any other principle of election
of remedies;

                                       83
<PAGE>

            (e) any right to assert against any Beneficiary any defense (legal
or equitable), set-off, counterclaim and other right that any Guarantor may now
or any time hereafter have against the Company or any other Obligor;

            (f) presentment, demand for payment or performance (including
diligence in making demands hereunder), notice of dishonor or nonperformance,
protest, acceptance and notice of acceptance of the Obligor Guarantee, and,
except to the extent expressly required by the Guaranteed Securities or this
Indenture, all other notices of any kind, including (i) notice of any action
taken or omitted by the Beneficiaries in reliance hereon, (ii) notice of any
default by the Company or any other Obligor, (iii) notice that any portion of
the Obligations is due, (iv) notice of any action against the Company or any
other Obligor, or any enforcement or other action with respect to any
collateral, or the assertion of any right of any Beneficiary hereunder; and

            (g) all defenses that at any time may be available to any Guarantor
by virtue of any valuation, stay, moratorium or other law now or hereafter in
effect.

SECTION 17.6 NO SUBROGATION; CERTAIN AGREEMENTS.

            (a) Each Guarantor waives any and all rights of subrogation,
indemnity or reimbursement, and any and all benefits of and rights to enforce
any power, right or remedy that any beneficiary may now or hereafter have in
respect of the obligations against the company or any other obligor (other than
rights of contribution from other guarantors), and any and all other rights and
claims (as defined in the bankruptcy code) any guarantor may have against the
company, under applicable law or otherwise, at law or in equity, by reason of
any payment under the obligor guarantee, unless and until the obligations shall
have been paid in full.

            (b) Each Guarantor assumes the responsibility for being and keeping
itself informed of the financial condition of each other Obligor and of all
other circumstances bearing upon the risk of nonpayment of the Obligations or
the Obligor Guarantee of any other Guarantor that diligent inquiry would reveal,
and agrees that the Beneficiaries shall have no duty to advise any Guarantor of
information regarding such condition or any such circumstances.

SECTION 17.7 BANKRUPTCY NO DISCHARGE.

            (a) Without limiting Section 17.3, the Obligor Guarantee shall not
be discharged or otherwise affected by any bankruptcy, reorganization or similar
proceeding commenced by or against the Company or any other Obligor, including
(i) any discharge of, or bar or stay against collecting, all or any part of the
Obligations in or as a result of any such proceeding, whether or not assented to
by any Beneficiary, (ii) any disallowance of all or any portion of any
Beneficiary's claim for repayment of the Obligations, (iii) any use of cash or
other collateral in any such proceeding, (iv) any agreement or stipulation as to
adequate protection in any such proceeding, (v) any failure by any Beneficiary
to file

                                       84
<PAGE>

or enforce a claim against the Company or any other Obligor or its estate in any
bankruptcy or reorganization case, (vi) any amendment, modification, stay or
cure of any Beneficiary's rights that may occur in any such proceeding, (vii)
any election by any Beneficiary under Section 1112(b)(2) of the Bankruptcy Code,
or (viii) any borrowing or grant of a lien under Section 364 of the Bankruptcy
Code. Each Guarantor understands and acknowledges that by virtue of the Obligor
Guarantee, it has specifically assumed any and all risks of any such proceeding
with respect to the Company and each other Obligor.

            (b) Notwithstanding anything in this Article 17 to the contrary, any
Event of Default under the Guaranteed Securities or Section 5.1 of this
Indenture shall render all Obligations automatically due and payable for
purposes of the Obligor Guarantee, without demand on the part of the Trustee or
any Holder.

            (c) Notwithstanding anything to the contrary herein contained, the
Obligor Guarantee shall continue to be effective or be reinstated, as the case
may be, if at any time any payment, or any part thereof, of any or all of the
Obligations is rescinded, invalidated, declared to be fraudulent or preferential
or otherwise required to be restored or returned by any Beneficiary in
connection with any bankruptcy, reorganization or similar proceeding involving
the Company, any other Obligor or otherwise or if any Beneficiary elects to
return any such payment or proceeds or any part thereof in its sole discretion,
all as though such payment had not been made or such proceeds not been received.

SECTION 17.8 RIGHTS OF CONTRIBUTION.

            (a) In order to provide for just and equitable contribution among
the Guarantors in connection with the respective Obligor Guarantees, the
Guarantors have agreed among themselves that if any Guarantor satisfies some or
all of the Obligations of the Company guaranteed by it hereunder (a "Funding
Guarantor"), the Funding Guarantor shall be entitled to contribution from the
other Guarantors that have positive Maximum Net Worth (as defined below) for all
payments made by the Funding Guarantor in satisfying such Obligations, so that
each Guarantor that remains obligated under it Subsidiary Guarantee at the time
that a Funding Guarantor makes such payment (a "Remaining Guarantor") and has a
positive Maximum Net Worth shall bear a portion of such payment equal to the
percentage that such Remaining Guarantor's Maximum Net Worth bears to the
aggregate Maximum Net Worth of all Remaining Guarantors that have positive
Maximum Net Worth.

            (b) For purposes of this Section 17.8, the following terms are
defined as set forth below:

         "Net Worth" means, with respect to any Guarantor, the amount, as of any
date of calculation, by which the sum of such Person's assets (including
subrogation, indemnity, contribution, reimbursement and similar rights that such
Guarantor may have),

                                       85
<PAGE>

determined on the basis of a "fair valuation" or their "fair salable value"
(whichever is the applicable test under Section 548 and other relevant
provisions of Bankruptcy Code, and the relevant state fraudulent conveyance or
transfer laws) is greater than the amount that will be required to pay all of
such Person's debts, in each case matured or unmatured, contingent or otherwise,
as of the date of calculation, but excluding liabilities arising under its
Obligor Guarantee and excluding, to the maximum extent permitted by applicable
law with the objective of avoiding rendering such Person insolvent, liabilities
subordinated to the Obligations under such Obligor Guarantees arising out of
loans or advances made to such Person by any other Person.

         "Maximum Net Worth" means, with respect to any Guarantor, the greatest
of the Net Worths calculated as of the following dates: (A) the date of which
the Guarantor becomes a Guarantor hereunder, (B) the date on which such
Guarantor expressly reaffirms its Subsidiary Guarantee, (C) the date on which
demand for payment is made on such Guarantor hereunder, (D) the date on which
payment is made by such Guarantor hereunder or (E) the date on which any
judgment, order or decree is entered requiring such Guarantor to make payment
hereunder or in respect hereof.

         The meaning of the terms "fair valuation" and "fair salable value" and
the calculation of assets and liabilities shall be determined and made in
accordance with the relevant provisions of any Bankruptcy Code and applicable
state fraudulent conveyance or transfer laws.

SECTION 17.9 LIMITATION ON LIABILITY.

         If the obligations of any Guarantor hereunder otherwise would be
subject to avoidance under Section 548 of the Bankruptcy Code or any applicable
state law relating to fraudulent conveyances or fraudulent transfers, taking
into consideration such Guarantor's (i) rights of reimbursement and indemnity
from the Company with respect to amounts paid by such Guarantor and (ii) rights
of contribution from other Guarantors pursuant to Section 17.8, then such
obligations hereby are reduced to the largest amount that would make them not
subject to such avoidance. Any Person asserting that such Guarantor's
obligations are so avoidable shall have the burden (including the burden of
production and persuasion) of proving (a) that, without giving effect to this
paragraph, such Guarantor's obligations hereunder would be avoidable and (b) the
extent to which such obligations are reduced by operation of this paragraph.

SECTION 17.10 APPLICATION OF CERTAIN TERMS AND PROVISIONS TO THE GUARANTORS.

            (a) For purposes of any provision of this Indenture which provides
for the delivery by any Guarantor of an Officer's Certificate and/or an Opinion
of Counsel, the definitions of such terms in Section 1.01 shall apply to such
Subsidiary Guarantor as if references therein to the Company were references to
such Guarantor.

                                       86
<PAGE>

            (b) Any request, direction, order or demand which by any provision
of this Indenture is to be made by any Guarantor, shall be sufficient if
evidenced as described in Section 18.2 as if references therein to the Company
were references to such Guarantor.

            (c) Upon any demand, request or application by any Guarantor to the
Trustee to take any action under this Indenture, such Guarantor shall furnish to
the Trustee such certificates and opinions as are required in Section 1.02
hereof as if all references therein to the Company were references to such
Guarantor.

SECTION 17.11 EXECUTION AND DELIVERY OF GUARANTEE.

         Each Guarantor shall be deemed to have signed on each Debt Security
issued hereunder any required notation of guarantee to the same extent as if the
signature of such Guarantor appeared on such Debt Security. The delivery of any
Debt Security by the Trustee, after the authentication thereof hereunder, shall
constitute due delivery of the Obligor Guarantee set forth in Section 17.2 on
behalf of each Guarantor. The notation of a guarantee set forth on any Debt
Security shall be null and void and of no further effect with respect to the
Obligor Guarantee of any Guarantor which, pursuant to Section 17.12 or Section
17.13, is released from such Guarantee.

SECTION 17.12 GUARANTOR MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.

            (a) Nothing contained in this Indenture or in any of the Debt
Securities shall prevent any consolidation or merger of a Guarantor with or into
the Company or any other Guarantor. Upon any such consolidation or merger, the
Obligor Guarantee (as set forth in Section 17.2) of the Guarantor which is not
the survivor of the merger or consolidation, shall be released and shall no
longer have any force or effect.

            (b) Nothing contained in this Indenture shall prevent any sale or
conveyance of assets of any Guarantor (whether or not constituting all or
substantially all of the assets of such Guarantor) to any Person, provided that
the Company shall comply with any applicable terms of this Indenture, and
provided further that, subject to Section 17.13, in the event that all of the
assets of a Guarantor are sold or conveyed, the Obligor Guarantee of such
Guarantor (as set forth in Section 17.2) shall be released and shall no longer
have any force or effect.

            (c) Except as provided in Section 17.12(a) or Section 17.13, each
Guarantor shall not, directly or indirectly, consolidate with or merge with or
into another Person, unless (i) either (a) the Guarantor is the continuing
entity or (b) the resulting or surviving entity is a corporation organized under
the laws of the United States, any state thereof or the District of Columbia and
expressly assumes by supplemental indenture all of the obligations of the
Guarantor in connection with the Debt Securities and this Indenture; (ii) no
Default or Event of Default would occur as a consequence of (after

                                       87
<PAGE>

giving effect, on a pro forma basis, to) such transaction; and (iii) the
Guarantor has delivered to the Trustee an Officers' Certificate and an Opinion
of Counsel, each stating that such consolidation or merger and if a supplemental
indenture is required, such supplemental indenture comply with this Indenture
and that all conditions precedent herein relating to such transaction have been
satisfied.

            (d) Upon any consolidation or merger of a Guarantor in accordance
with Section 17.12, the successor corporation formed by such consolidation or
into which the Guarantor is merger shall succeed to, and be substituted for, and
may exercise every right and power of, the Guarantor under this Indenture with
the same effect as if such successor corporation had been named herein a the
Guarantor, and when a successor corporation duly assumes all of the obligations
of the Guarantor pursuant hereto and pursuant to the Debt Securities, the
Guarantor shall be released from such obligations.

SECTION 17.13 RELEASE OF GUARANTORS.

            (a) Without further notice or action being required by any Person,
but subject to Section 10.1, any Guarantor, and each Subsidiary of such
Guarantor that is also a Guarantor, shall be fully and conditionally released
and discharged from all obligations under its Obligor Guarantee and this
Indenture, upon (i) the sale or other disposition of all of the assets or
properties of such Guarantor, or 50% or more of the equity interests of any such
Guarantor or Persons other than the Company and their Subsidiaries or (ii) the
consolidation or merger of any such Guarantor with any Person other than the
Company or a Subsidiary of the Company, if, as a result of such consolidation or
merger, Persons other than the Company and their Subsidiaries beneficially own
more than 50% of the capital stock of such Guarantor, provided, that, in either
such case, the proceeds of any such sale, disposition, merger or consolidation
are applied in accordance with this Indenture; or (iii) a defeasance as provided
in Article 15 hereof.

            (b) The releases and discharges set forth in Section 17.13(a) shall
be effective (i) in the case of releases and discharges effected pursuant to
clause (i) or (ii) of Section 17.13(a) by virtue of a sale, disposition,
consolidation or merger, on the date of consummation thereof and (ii) in the
case of releases and discharges effected pursuant to clause (iii) of Section
17.13(a), upon the date of defeasance. At the written request of the Company,
the Trustee shall promptly execute and deliver appropriate instruments in forms
reasonably acceptable to the Company evidencing and further implementing any
releases and discharges pursuant to the foregoing provisions. If the Company
desires the instruments evidencing or implementing any releases or discharges to
be executed prior to the effectiveness of such releases and discharges as set
forth above, necessary to cause the effectiveness of such releases and
discharges, as specified in the first sentence of this Section 17.13.

            (c) Notwithstanding the foregoing provisions of this Article 17, (i)
any Guarantor whose Obligor Guarantee would otherwise be released pursuant to
the provisions of this Section 17.13 may elect, by written notice to the
Trustee, to maintain

                                       88
<PAGE>

such Obligor Guarantee in effect notwithstanding the event or events that
otherwise would cause the release of such Obligor Guarantee (which election to
maintain such guarantee in effect may be conditional or for a limited period of
time), and (ii) any Subsidiary of the Company which is not a Guarantor may
elect, by written notice to the Trustee, to become a Guarantor (which election
may be conditional or for a limited period of time).

SECTION 17.14 CERTAIN BANKRUPTCY EVENTS.

         Each Guarantor hereby covenants and agrees, to the fullest extent that
it may do so under applicable law, that in the event of the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Company, such
Guarantor shall not file (or join in any filing of), or otherwise seek to
participate in the filing of, any motion or request seeking to stay or to
prohibit (even temporarily) execution on the Obligor Guarantee and hereby waives
and agrees not to take the benefit of any such stay of execution.

                                 ARTICLE XVIII

                                  MISCELLANEOUS

SECTION 18.1 NOTICES, ETC., TO TRUSTEE AND COMPANY.

         Any Act of holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:

            (a) the Trustee by any holder or by the Company shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trust Department, or

            (b) the Company by the Trustee or by any holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid or airmail postage prepaid if
sent from outside the United States, to the Company addressed to it at the
address of its principal office specified in the first paragraph of this
instrument, to the attention of its Treasurer, or at any other address
previously furnished in writing to the Trustee by the Company.

         Any such Act or other document shall be in the English language, except
that any published notice may be in an official language of the country of
publication.

SECTION 18.2 NOTICE TO HOLDERS; WAIVER.

         When this Indenture provides for notice to holders of any event, such
notice shall be sufficiently given to holders (unless otherwise herein expressly
provided) if in writing

                                       89
<PAGE>

and mailed, first-class postage prepaid, to such holders as their names and
addresses appear in the Security Register, within the time prescribed; provided,
however, that, in any case, any notice to holders of Floating Rate Securities
regarding the determination of a periodic rate of interest, if such notice is
required pursuant to Section 3.1, shall be sufficiently given if given in the
manner specified pursuant to Section 3.1.

         In the event of suspension of regular mail service or by reason of any
other cause it shall be impracticable to give notice by mail, such notification
as shall be given with the approval of the Trustee shall constitute sufficient
notice for every purpose hereunder.

         In the event of suspension of publication of any Authorized Newspapers
or by reason of any other cause it shall be impracticable to give notice by
publication, such notification as shall be given with the approval of the
Trustee shall constitute sufficient notice for every purpose hereunder.

         Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance on such waiver. 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, and any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given. In any case
where notice to holders is given by publication, any defect in any notice so
published as to any particular holder shall not affect the sufficiency of such
notice with respect to other holders, and any notice which is published in the
manner herein provided shall be conclusively presumed to have been duly given.

SECTION 18.3 CONFLICT WITH TRUST INDENTURE ACT.

         If any provision hereof limits, qualifies or conflicts with the duties
imposed on any person by the provisions of Sections 310 to 317, inclusive, of
the Trust Indenture Act, such imposed duties shall control.

SECTION 18.4 COUNTERPARTS; EFFECT OF HEADINGS AND TABLE OF CONTENTS.

         This Indenture may be executed in any number of counterparts, each of
which when executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Indenture. The Article and
Section headings herein and in the Table of Contents are for convenience only
and shall not affect the construction hereof.

                                       90
<PAGE>

SECTION 18.5 SUCCESSORS AND ASSIGNS.

         All covenants and agreements in this Indenture by the parties hereto
shall bind their respective successors and assigns and inure to the benefit of
their permitted successors and assigns, whether so expressed or not.

SECTION 18.6 SEPARABILITY CLAUSE.

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

SECTION 18.7 BENEFITS OF INDENTURE.

         Nothing in this Indenture or in the Debt Securities, express or
implied, shall give to any Person, other than the parties hereto, any Security
Registrar, any Paying Agent and their successors hereunder, and the holders, any
benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 18.8 GOVERNING LAW.

         This Indenture and the Debt Securities shall be deemed to be contracts
made and to be performed entirely in the State of New York, and for all purposes
shall be governed by and construed in accordance with the internal laws of said
State without regard to the conflicts of law rules of said State.

SECTION 18.9 LEGAL HOLIDAYS.

         Unless otherwise specified pursuant to Section 3.1 or in any Debt
Security, in any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Debt Security of any series shall not be a Business Day at any
Place of Payment for the Debt Securities of that series, then (notwithstanding
any other provision of this Indenture or of the Debt Securities) payment of
principal (and premium, if any) or interest 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 with the same force and effect as if made on the Interest
Payment Date, Redemption Date or at the Stated Maturity, and 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 if such payment is made or duly provided for on such Business Day.

SECTION 18.10 NO RECOURSE AGAINST OTHERS.

         No direct or indirect incorporator, employee, shareholder, director or
officer, as such, past, present or future of the Company or any successor
corporation or any of the Company's Affiliates, shall have any personal
liability in respect of the obligations of the

                                       91
<PAGE>

Company under the Debt Securities or this Indenture, either directly or through
the Company, by reason of his, her or its status as such incorporator,
shareholder, employee, director or officer. Each holder by accepting a Debt
Security waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of the Debt Securities.

                                       92
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.

--------------------------------------------------------------------------------
                                             PENN NATIONAL GAMING, INC.
--------------------------------------------------------------------------------

                                             By:
                                                --------------------------
                                                Name:
                                                     ---------------------
                                                Title:                    [SEAL]
                                                      --------------------

--------------------------------------------------------------------------------
Attest:

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

--------------------------------------------------------------------------------
                                             [NAME OF TRUSTEE], as Trustee

                                             By:
                                                --------------------------
                                                Name:
                                                     ---------------------
                                                Title:                    [SEAL]
                                                      --------------------

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

Attest:

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

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

                                       93
<PAGE>

                                                                       EXHIBIT A

               [FORM OF REDEEMABLE OR NONREDEEMABLE DEBT SECURITY]

                             [FACE OF DEBT SECURITY]

         [THIS DEBT SECURITY IS A GLOBAL NOTE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE THEREOF. THIS DEBT SECURITY MAY NOT BE TRANSFERRED TO, OR
REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON
OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE
REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
EVERY DEBT SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER
OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS DEBT SECURITY SHALL BE A GLOBAL NOTE
SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.]

         [IF THIS DEBT SECURITY IS AN ORIGINAL ISSUE DISCOUNT DEBT SECURITY,
INSERT--FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE UNITED STATES INTERNAL
REVENUE CODE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THIS DEBT SECURITY IS
_____% OF ITS PRINCIPAL AMOUNT, THE ISSUE DATE IS __________, 20__ [AND] THE
YIELD TO MATURITY IS ____ %. THE METHOD USED TO DETERMINE THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT APPLICABLE TO THE SHORT ACCRUAL PERIOD OF __________, 20__ TO
________, 20__, IS ____% OF THE PRINCIPAL AMOUNT OF THIS DEBT SECURITY.]

         PENN NATIONAL GAMING, INC. [DESIGNATION OF SERIES]

No.__________      $__________

         PENN NATIONAL GAMING, INC., a Pennsylvania corporation (herein referred
to as the "Company," which term includes any successor corporations under the
Indenture referred to on the reverse hereof), for value received, hereby
promises to pay to _____________________ or registered assigns the principal sum
of _____________________ Dollars on ___________ (the "Stated Maturity Date") [OR
INSERT DATE FIXED FOR EARLIER REDEMPTION (the "Redemption Date" and, together
with the Stated Maturity Date with respect to principal repayable on such date,
the "Maturity Date")].

         [IF THE DEBT SECURITY IS TO BEAR INTEREST PRIOR TO MATURITY,
INSERT--and to pay interest thereon from _____________________ or from the most
recent interest payment date to which interest has been paid or duly provided
for, semi-annually on _________________ and ________________ in each year (each,
an "Interest Payment Date"), commencing _________________, at the rate of _____%
per annum, until the principal hereof is paid or duly provided for. The interest
so payable, and

                                       i
<PAGE>

punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Holder in whose name this Debt
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which shall be the
_______________ or _______________ (whether or not a Business Day, as defined
below), as the case may be, next preceding such Interest Payment Date [at the
office or agency of the Company maintained for such purpose; PROVIDED, HOWEVER,
that such interest may be paid, at the Company's option, by mailing a check to
such Holder at his or her registered address or by transfer of funds to an
account maintained by such Holder within the United States]. Any such interest
not so punctually paid or duly provided for shall forthwith cease to be payable
to the Holder on such Regular Record Date, and may be paid to the Holder in
whose name this Debt Security (or one or more Predecessor Debt Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Debt Securities of this series not less than 15 days prior
to such Special Record Date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Debt Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in the Indenture.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.]

         [IF THE DEBT SECURITY IS NOT TO BEAR INTEREST PRIOR TO MATURITY,
INSERT-- The principal of this Debt Security shall not bear interest except in
the case of a default in payment of principal upon acceleration, upon redemption
or at the [Stated] Maturity Date and in such case the overdue principal of this
Debt Security shall bear interest at the rate of _________% per annum (to the
extent that the payment of such interest shall be legally enforceable), which
shall accrue from the date of such default in payment to the date payment of
such principal has been made or duly provided for. Interest on any overdue
principal shall be payable on demand. Any such interest on any overdue principal
that is not so paid on demand shall bear interest at the rate of _____% per
annum (to the extent that the payment of such interest shall be legally
enforceable), which shall accrue from the date of such demand for payment to the
date payment of such interest has been made or duly provided for, and such
interest shall also be payable on demand.]

         The principal of this Debt Security payable on the [Stated] Maturity
Date [or the principal of, premium, if any, and, if the Redemption Date is not
an Interest Payment Date, interest on this Debt Security payable on the
Redemption Date] will be paid against presentation of this Debt Security at the
office or agency of the Company maintained for that purpose in ____________, in
such coin or currency of the United States as at the time of payment is legal
tender for the payment of public and private debts.

         Interest payable on this Debt Security on any Interest Payment Date and
on the [Stated] Maturity Date [or Redemption Date, as the case may be,] will
include interest accrued from and including the next preceding Interest Payment
Date in respect of which interest has been paid or duly provided for (or from
and including ____________, if no interest has been paid on this Debt Security)
to but excluding such Interest Payment Date or the [Stated] Maturity Date [or
Redemption Date, as the case may be]. If any Interest

                                       ii
<PAGE>

Payment Date or the [Stated] Maturity Date [or Redemption Date] falls on a day
that is not a Business Day, principal, premium, if any, and/or interest payable
with respect to such Interest Payment Date or [Stated] Maturity Date [or
Redemption Date, as the case may be,] will be paid on the next succeeding
Business Day with the same force and effect as if it were paid on the date such
payment was due, and no interest shall accrue on the amount so payable for the
period from and after such Interest Payment Date or [Stated] Maturity Date [or
Redemption Date, as the case may be]. "Business Day" means any day, other than a
Saturday or Sunday, on which banking institutions or trust companies in
[__________] are authorized to close.

         [IF THIS DEBT SECURITY IS A GLOBAL DEBT SECURITY, INSERT--All payments
of principal, premium, if any, and interest in respect of this Debt Security
will be made by the Company in immediately available funds.]

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

         Unless the Certificate of Authentication hereon has been executed by
the Trustee by manual signature of one of its authorized signatories, this Debt
Security shall not be entitled to any benefit under the Indenture, or be valid
or obligatory for any purpose.

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

--------------------------------------------------------------------------------
                                             PENN NATIONAL GAMING, INC.
--------------------------------------------------------------------------------

                                             By:
                                                --------------------------
                                                Name:
                                                     ---------------------
                                                Title:                    [SEAL]
                                                      --------------------

--------------------------------------------------------------------------------
Attest:

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

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

                                      iii
<PAGE>

         [Reverse of Debt Security]

         PENN NATIONAL GAMING, INC.

         This Debt Security is one of a duly authorized issue of securities of
the Company, issued and to be issued in one or more series under an Indenture,
dated as of ___________, 2001 (herein called the "Indenture") between the
Company and __________________, as Trustee (herein called the "Trustee," which
term includes any successor trustee under the Indenture with respect to the
series of which this Debt Security is a part), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Debt Securities, and of the
terms upon which the Debt Securities are, and are to be, authenticated and
delivered. This Debt Security is one of the duly authorized series of Debt
Securities designated on the face hereof (collectively, the "Debt Securities"),
[IF APPLICABLE, INSERT-- and the aggregate principal amount of the securities to
be issued under such series is limited to $________ (except for Debt Securities
authenticated and delivered upon transfer of, or in exchange for, or in lieu of
other Debt Securities).] All terms used in this Debt Security which are defined
in the Indenture shall have the meanings assigned to them in the Indenture.

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

         [IF APPLICABLE, INSERT--The Debt Securities may not be redeemed prior
to the [Stated] Maturity Date.]

         The rights of each Holder and any beneficial owner of the Debt
Securities are subject to the Gaming Laws and requirements of the Gaming
Authorities. Each holder and beneficial owner, by accepting or otherwise
acquiring an interest in the Debt Securities, shall be deemed to have agreed
that if the Gaming Authority of any jurisdiction in which the Company or any of
its subsidiaries conducts or proposes to conduct gaming requires that a Person
who is a holder or beneficial owner must be licensed, qualified or found
suitable under the applicable Gaming Laws, such holder or beneficial owner shall
apply for a license, qualification or a finding of suitability within the
required time period. If such Person fails to apply or become licensed or
qualified or is found unsuitable, then the Company shall have the right, at its
option, notwithstanding any other provision of this Indenture (i) to require
such Person to dispose of its Debt Securities or beneficial interest therein
within 30 days of receipt of notice of the Company's election or such earlier
date as may be requested or prescribed by such Gaming Authority or (ii) to
redeem such Debt Securities at a redemption price equal to 100% of the principal
amount thereof, plus accrued and unpaid interest to the earlier of the
redemption date and the date of the finding of unsuitability, which may be less
than 30 days following the notice of redemption if so requested or prescribed by
the Gaming Authority, or such lesser amount as may be required by applicable law
or by order of any Gaming Authority. The Company shall notify the Trustee in
writing of any such

<PAGE>

redemption as soon as practicable. The Company shall not be responsible for any
costs or expenses any such holder or beneficial owner may incur in connection
with its application for a license, qualification or a finding of suitability.
Notwithstanding any other provision of this Indenture, immediately upon the
imposition of a requirement to dispose of Debt Securities by a Gaming Authority,
such Person shall, to the extent required by applicable Gaming Law, have no
further right (i) to exercise, directly or indirectly, through any trustee,
nominee or any other person or entity, any right conferred by the Debt
Securities or (ii) to receive any interest, dividends or any other distributions
or payments with respect to the Debt Securities or any remuneration in any form
with respect to the Debt Securities from the Company or the Trustee, except the
redemption price.

         [IF APPLICABLE, INSERT--The Debt Securities are subject to redemption
[(a) [IF APPLICABLE, INSERT--on ______________ in any year commencing with the
year ____ and ending with the year ____ through operation of the sinking fund
for this series at a Redemption Price equal to 100% of the principal amount and
(b)] [IF APPLICABLE, INSERT--at any time [on or after _______________], as a
whole or in part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount): If redeemed on or
before ___________, ____% and if redeemed during the 12-month period beginning
______________ of the years indicated, at the Redemption Prices indicated below.

Year  Redemption Price  Year  Redemption Price

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

and thereafter at a Redemption Price equal to ____% of the principal amount,
together, in the case of any such redemption [IF APPLICABLE, INSERT--(whether
through operation of the sinking fund or otherwise)], with accrued interest to
the Redemption Date; PROVIDED, HOWEVER, that installments of interest on this
Debt Security whose Stated Maturity is on or prior to such Redemption Date will
be payable to the Holder of this Debt Security, or one or more Predecessor Debt
Securities, of record at the close of business on the relevant Record Dates
referred to on the face hereof, all as provided in the Indenture.]

         [IF APPLICABLE, INSERT--The Debt Securities are subject to redemption
(a) on ____________ in any year commencing with the year ____ and ending with
the year through operation of the sinking fund for this series at the Redemption
Prices for redemption through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table below and (b) at any
time on or after __________], as a whole or in part, at the election of the
Company, at the Redemption Prices for redemption otherwise than through
operation of the sinking fund (expressed as percentages of the principal amount)
set forth in the table below:

        If redeemed during the 12-month period beginning of the years indicated,

                                       v
<PAGE>

--------------------------------------------------------------------------------
Redemption Price for
Redemption Otherwise Than
Through Operation of the
Sinking Fund                    Redemption Price for Redemption
                                Through Operation of Sinking Fund          Year
--------------------------------------------------------------------------------

[                                                                           ]

and thereafter at a Redemption Price equal to ___% of the principal amount,
together, in the case of any such redemption (whether through operation of the
sinking fund or otherwise), with accrued interest to the Redemption Date;
PROVIDED, HOWEVER, that installments of interest on this Debt Security whose
Stated Maturity is on or prior to such Redemption Date will be payable to the
Holder of this Debt Security, or one or more Predecessor Debt Securities, of
record at the close of business on the relevant record dates referred to on the
face hereof, all as provided in the Indenture.]

         [IF APPLICABLE, INSERT--Notwithstanding the foregoing, the Company may
not, prior to __________ redeem any Debt Securities as contemplated by [clause
(b) of] the preceding paragraph as a part of, or in anticipation of, any
refunding operation by the application, directly or indirectly, of money
borrowed having an interest cost to the Company (calculated in accordance with
generally accepted financial practice) of less than ____% per annum.]

         [IF APPLICABLE, INSERT--The sinking fund for the Debt Securities
provides for the redemption on __________ in each year, beginning with the year
____ and ending with the year ____, of [not less than] $___] [("mandatory
sinking fund") and not more than $_______] aggregate principal amount of the
Debt Securities. [The Debt Securities acquired or redeemed by the Company
otherwise than through [mandatory] sinking fund payments may be credited against
subsequent [mandatory] sinking fund payments otherwise required to be made in
the [DESCRIBE ORDER] order in which they become due.]]

         Notice of redemption will be given by mail to Holders of Debt
Securities, not less than 30 nor more than 60 days prior to the Redemption Date,
all as provided in the Indenture.

         In the event of redemption of the Debt Security in part only, a new
Debt Security or Debt Securities for the unredeemed portion hereof shall be
issued in the name of the Holder hereof upon the cancellation hereof.

         [IF APPLICABLE, INSERT CONVERSION PROVISIONS SET FORTH IN ANY BOARD
RESOLUTION OR INDENTURE SUPPLEMENTAL TO THE INDENTURE.]

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company

                                       vi
<PAGE>

and the rights of the Holders of the Debt Securities under the Indenture
at any time by the Company and the Trustee with the consent of the Holders of
not less than at least a majority of the aggregate principal amount of all Debt
Securities issued under the indenture at the time Outstanding and affected
thereby. The Indenture also contains provisions permitting the Holders of not
less than at least a majority of the aggregate principal amount of the
Outstanding Debt Securities, on behalf of the Holders of all such Debt
Securities, to waive compliance by the Company with certain provisions of the
Indenture. Furthermore, provisions in the Indenture permit the Holders of not
less than at least a majority of the aggregate principal amount, in certain
instances, of the Outstanding Debt Securities of any series to waive, on behalf
of all of the Holders of Debt Securities of such series, certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Debt Security shall be conclusive and binding upon such Holder
and upon all future Holders of this Debt Security and other Debt Securities
issued upon the registration of transfer hereof or in exchange therefore or in
lieu hereof, whether or not notation of such consent or waiver is made upon this
Debt Security.

         No reference herein to the Indenture and no provision of this Debt
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Debt Security at the times, rates and in
the coin or currency, herein prescribed.

         As provided in the Indenture and subject to certain limitations therein
[and herein] set forth, the transfer of this Debt Security is registrable in the
Security Register of the Company upon surrender of this security for
registration of transfer at the office or agency of the Company in any place
where the principal of (and premium, if any) and interest on this Debt Security
are payable, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or by his attorney duly authorized in writing,
and thereupon one or more new Debt Securities, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.

         As provided in the Indenture and subject to certain limitations therein
[and herein] set forth, this Debt Security is exchangeable for a like aggregate
principal amount of Debt Securities of different authorized denominations but
otherwise having the same terms and conditions, as requested by the Holder
hereof surrendering the same.

         The Debt Securities of this series are issuable only in registered form
[without coupons] in denominations of $________ and any integral multiple
thereof. No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Prior to
due presentment of this Debt 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 this Debt Security is registered as the owner hereof for all
purposes, whether or not this Debt Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.

                                      vii
<PAGE>

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

         [IF APPLICABLE, INSERT--The obligations of the Company under the
Indenture shall be guaranteed as set forth in the Indenture.]

         [IF APPLICABLE, INSERT--The obligations of the Company under the
Indenture shall be secured as set forth in the Indenture.]

         The Indenture and the Debt Securities shall be governed by and
construed in accordance with the laws of the State of California applicable to
agreements made and to be performed entirely in such State.

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

         This is one of the series of Debt Securities issued under the
within-mentioned Indenture.

--------------------------------------------------------------------------------
                                             [NAME OF TRUSTEE], as Trustee

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

                                      viiiExhibit 4.1

                          CELLEGY PHARMACEUTICALS, INC.
                         COMMON STOCK PURCHASE AGREEMENT

         THIS COMMON STOCK PURCHASE  AGREEMENT  (this  "Agreement")  is made and
entered into as of June 6, 2001, by and among Cellegy  Pharmaceuticals,  Inc., a
California  corporation (the "Company"),  and the parties listed on the Schedule
of Investors separately delivered to the Investors (the "Schedule of Investors")
(each  hereinafter  individually  referred to as an "Investor" and  collectively
referred to as the "Investors").

         1.     AGREEMENT TO PURCHASE AND SELL STOCK.

                1.1  Authorization.  As of the Closing  (as  defined  below) the
Company will have authorized the issuance,  pursuant to the terms and conditions
of this Agreement,  of up to 2,747,143  shares of the Company's Common Stock, no
par value (the "Common Stock").

                1.2 Agreement to Purchase and Sell.  The Company  agrees to sell
to each  Investor at the Closing,  and each Investor  agrees,  severally and not
jointly,  to purchase  from the Company at the Closing,  the number of shares of
Common Stock for the aggregate  price set forth beside such  Investor's  name on
the Schedule of Investors, at the price per share for such Investor set forth on
the  Schedule  of  Investors.  The  shares of Common  Stock  purchased  and sold
pursuant to this Agreement will be collectively  hereinafter  referred to as the
"Purchased Shares."

         2.  CLOSING.

                2.1 The Closing.  The purchase and sale of the Purchased  Shares
will take  place at the  offices of  Fenwick & West LLP,  Two Palo Alto  Square,
Suite 800, Palo Alto, California,  at 2:00 p.m. Pacific Time, on June 7, 2001 or
at such other time and place as the  Company  and  Investors  who have agreed to
purchase a majority of the Purchased  Shares listed on the Schedule of Investors
mutually  agree upon (which time and place are referred to in this  Agreement as
the "Closing"),  provided that the closing may not be delayed for more than five
business days without the consent of all Investors. At the Closing, the Investor
will purchase the number of Purchased  Shares hereunder shown on the Schedule of
Investors against delivery to the Investor (or its designated  custodian) by the
Company of a certificate  representing such Purchased Shares.  The full purchase
price for such Purchased  Shares shall be paid at Closing by (i) a check payable
to the Company's order,  (ii) wire transfer of funds to the Company or (iii) any
combination of the foregoing.

         3.  REPRESENTATIONS  AND WARRANTIES OF THE COMPANY.  The Company hereby
represents and warrants to Investor that,  except as set forth in the Disclosure
Schedule and  Schedule of  Exceptions  (the  "Disclosure  Schedule")  separately
delivered by the

<PAGE>

Company  to the  Investors  (which  Disclosure  Schedule  shall be  deemed to be
representations  and  warranties  to the  Investors  by the  Company  under this
Section and to qualify  each of the  representations  and  warranties  set forth
herein),  the  statements in the following  paragraphs of this Section 3 are all
true and correct:

                  3.1 Organization, Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the  State of  California,  and has all  requisite  corporate  power and
authority  to conduct  its  business  as  currently  conducted.  The  Company is
qualified to do business as a foreign  corporation  in each  jurisdiction  where
failure to be so qualified would have a material adverse effect on the business,
assets,  financial  condition or results of  operations or assets of the Company
(the "Business") (such effect referred to as a "Material Adverse Effect").

                  3.2   Capitalization.   Immediately  before  the  Closing  the
capitalization of the Company will consist of the following:

                           (a) Preferred Stock. A total of 5,000,000  authorized
shares of Preferred Stock, no par value per share (the "Preferred Stock"),  none
of which are issued and outstanding.

                           (b) Common Stock.  A total of  25,000,000  authorized
shares of Common Stock, of which approximately 13,888,302 shares were issued and
outstanding as of May 31, 2001.

                           (c) Options,  Warrants,  Reserved Shares. Except for:
(i) the approximately 2,482,908 shares of Common Stock issuable upon exercise of
options  outstanding as of May 31, 2001, (ii)  approximately  16,083  additional
shares of Common Stock  reserved for issuance under the Company's 1995 Directors
Stock Option Plan, (iii) approximately 706,588 additional shares of Common Stock
reserved for issuance  under the Company's  1995 Equity  Incentive Plan and (iv)
warrants to purchase an  aggregate  of  approximately  617,700  shares of Common
Stock, there are not outstanding any options, warrants, rights or agreements for
the purchase or acquisition  from the Company of any shares of its capital stock
or any securities convertible into or ultimately exchangeable or exercisable for
any shares of the Company's capital stock.

                  3.3 Subsidiaries.  Except for Cellisis Pharmaceuticals,  Inc.,
Cellegy Australia Pty Ltd, Cellegy  International  Holdings Ltd., and Cellegy UK
Limited, each of which is not a "significant subsidiary" as defined in Rule 1-02
of Regulation  S-X, the Company does not  presently own or control,  directly or
indirectly,  any interest in any other  corporation,  partnership,  trust, joint
venture, association, or other entity.

                  3.4 Due Authorization;  No Violation.  All corporate action on
the part of the Company and its officers,  directors and shareholders  necessary
for the  authorization,  execution and delivery of, and the  performance  of all
obligations  of the  Company  under,  this  Agreement,  and  the  authorization,
issuance,  reservation for issuance and delivery of all of the Purchased  Shares
being sold under this  Agreement,  has been taken or will be taken  prior to the
Closing,  and

                                      -2-

<PAGE>

this  Agreement  constitutes  a valid  and  legally  binding  obligation  of the
Company, enforceable against the Company in accordance with its terms, except as
enforceability  may  be  limited  by  (i)  applicable  bankruptcy,   insolvency,
reorganization or other laws of general application relating to or affecting the
enforcement of creditors'  rights  generally and (ii) the effect of rules of law
governing  the  availability  of  equitable  remedies.  Neither  the  execution,
delivery or performance by the Company of this Agreement nor the consummation by
the Company of the  transactions  contemplated  hereby will (i) conflict with or
result in a breach of any provision of the Restated Articles of Incorporation of
the Company (the  "Restated  Articles") or the Company's  Bylaws,  (ii) conflict
with,  result in a  violation  or breach of, or cause a default (or give rise to
any right of termination,  cancellation or acceleration) under any of the terms,
conditions or provisions of any agreement, instrument or obligation to which the
Company is a party,  which default would have a Material Adverse Effect or (iii)
violate  any  law,  statute,  rule  or  regulation  or  judgment,  order,  writ,
injunction or decree of any governmental  authority,  in each case applicable to
the  Company  or its  properties  or assets and  which,  individually  or in the
aggregate,  would have a Material Adverse Effect. The business and operations of
the Company have been conducted in accordance  with all applicable  laws,  rules
and  regulations of all  governmental  authorities,  except for such  violations
which  would not,  individually  or in the  aggregate,  have a Material  Adverse
Effect.

                  3.5  Valid  Issuance  of Stock.  The  Purchased  Shares,  when
issued,  sold and delivered in accordance  with the terms of this  Agreement for
the consideration  provided for herein,  will be duly and validly issued,  fully
paid and  nonassessable and free and clear of all pledges,  liens,  encumbrances
and  restrictions  (other than those arising  under federal or state  securities
laws as a  result  of the  private  placement  of the  Purchased  Shares  to the
Investors)  and are not subject to  preemptive  or other  similar  rights of any
shareholder of the Company.

                  3.6  Governmental  Consents.  No consent,  approval,  order or
authorization of, or registration,  qualification,  designation,  declaration or
filing with, any federal,  state or local governmental  authority on the part of
the Company is required in connection  with the valid  execution and delivery of
this Agreement,  the offer,  sale and issuance of the Purchased  Shares,  or the
consummation of the  transactions  contemplated  by this  Agreement,  except for
qualifications  or filings  under the  Securities  Act of 1933,  as amended (the
"Act") and the applicable rules and regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") under the Act, and all
other  applicable  securities  laws as may be  required in  connection  with the
transactions  contemplated by this Agreement.  All such  qualifications  will be
effective  on the  Closing,  and all  such  filings  be  made  within  the  time
prescribed by law.

                  3.7 Absence of Changes. After the respective dates as of which
information is given in the Company's  Proxy Statement for the annual meeting of
shareholders  held on May 31, 2001, the Company's Annual Report on Form 10-K for
the year ended  December 31, 2000,  and the Company's  Quarterly  Report on Form
10-Q for the  quarter  ended  March  31,  2001,  respectively  (such  documents,
together  with  the  Disclosure  Schedule,   referred  to  collectively  as  the
"Disclosure  Documents"),  there has not been (i) any material adverse change in
the Business,  (ii) any transaction  that is material to the Company,  (iii) any
obligation,  direct or contingent,  that is material to the Company, incurred by
the Company, (iv) any change in the outstanding indebtedness of the Company that
is material  to the  Company,  (v) any  dividend  declared,  paid or

                                      -3-

<PAGE>

made on the capital stock of the Company or (vi) any loss or damage  (whether or
not insured) to the property of the Company which has been sustained which could
reasonably be expected to have a Material Adverse Effect.

                  3.8 Litigation.  There is no action, suit, proceeding,  claim,
arbitration or investigation ("Action") pending (or, to the Company's knowledge,
currently threatened) against the Company, its activities, properties or assets,
which (i) might prevent the consummation of the transactions contemplated hereby
or (ii) if adversely  resolved  against the Company could  adversely  affect the
validity or  enforceability  of, or the  authority  or ability of the Company to
perform its obligations under, this Agreement,  or would have a Material Adverse
Effect.

                  3.9 NASDAQ Listing.  The Company's  Common Stock is registered
pursuant to Section  12(g) of the  Securities  Exchange Act of 1934,  as amended
(the  "Exchange  Act") and is listed on The Nasdaq Stock Market,  Inc.  National
Market  (the  "Nasdaq  National  Market"),  and the  Company has taken no action
designed to, or likely to have the effect of,  terminating  the  registration of
the Common Stock under the Exchange Act or de-listing  the Common Stock from the
Nasdaq  National  Market,  nor  to  the  Company's  knowledge  is  the  National
Association  of  Securities  Dealers,  Inc.  ("NASD")  currently   contemplating
terminating such listing. The Company and the Common Stock meet the criteria for
continued  listing and trading on the Nasdaq National Market.  The Company shall
use its best efforts to comply with all requirements of the National Association
of Securities Dealers, Inc. with respect to the issuance of the Purchased Shares
and the listing thereof on the Nasdaq National Market.  In furtherance  thereof,
the Company shall use its best efforts to take such actions as may be necessary,
and as soon as practicable  and in no event later than 30 days after the Closing
Date, to file with the Nasdaq  National  Market an application or other document
required by the Nasdaq  National  Market and pay within the required time period
all  applicable  fees for the  listing of the  Purchased  Shares with the Nasdaq
National Market and shall provide evidence of such filing to the Investors.  The
Company  knows of no reason why the  Purchased  Shares will not be eligible  for
listing on the Nasdaq National Market.

                  3.10  Exchange Act Filings.  The Company has filed in a timely
manner all reports and other  information  required to be filed ("Filings") with
the Commission pursuant to the Exchange Act during the preceding twelve calendar
months.  On their  respective  dates of  filing,  the  Filings  complied  in all
material  respects with the  requirements of the Exchange Act, and the published
rules  and  regulations  of the  Commission  promulgated  thereunder.  On  their
respective dates of filing,  the Filings did not include any untrue statement of
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein,  in light of the circumstances in which they were made, not
misleading, and all financial statements contained in the Filings fairly present
the financial  position of the Company on the dates of such  statements  and the
results  of  operations  for the  periods  covered  thereby in  accordance  with
generally accepted  accounting  principles  consistently  applied throughout the
periods involved and prior periods,  except as otherwise  indicated in the notes
to such financial statements.

                  3.11 Disclosure.  The  representations  and warranties made by
the  Company in this  Agreement  (including  the  Disclosure  Schedule)  and the
Filings  when read  together do not

                                      -4-

<PAGE>

contain  any  untrue  statement  of a  material  fact and do not omit to state a
material fact necessary to make the statements herein as a whole not misleading.

                  3.12  Governmental  Permits,  Etc. The Company  possesses  all
licenses,  franchises,  governmental  approvals,  permits or other  governmental
authorizations (collectively, "Authorizations") relating to the operation of the
Business,  except for those Authorizations the failure of which to possess would
not,  separately or in the aggregate,  have a Material  Adverse  Effect.  To the
Company's knowledge after reasonable investigation, the Company is in compliance
with the terms of all Authorizations and all laws,  ordinances,  regulations and
decrees which to the Company's knowledge are applicable to the Business,  except
for such non-compliance  which does not, separately or in the aggregate,  have a
Material Adverse Effect.

                  3.13  Insurance.  The  Company is covered  by  insurance  with
companies  the  Company  believes  to be  responsible  and in such  amounts  and
covering  such  risks as it  believes  to be  adequate  for the  conduct  of its
Business  and the value of its  properties  and as is  customary  for  companies
engaged  in  similar  businesses  in  similar  industries.  The  Company  has no
knowledge  that any such  carrier  has  grounds  or intends to cancel or fail to
renew such policies.

                  3.14 Intellectual  Property. The Company owns or possesses the
patents, patent rights, licenses,  inventions,  copyrights,  know-how (including
trade  secrets  and  other  unpatented   and/or   unpatentable   proprietary  or
confidential  information,  systems or procedures) and other rights or interests
in items of intellectual  property that are material to the Business as operated
by it (the "Patent and Proprietary Rights"),  except where the failure to own or
possess such rights would not have a Material  Adverse  Effect;  the Company has
not received notice of any asserted rights with respect to any of the Patent and
Proprietary  Rights  which,  if  determined  unfavorably  with  respect  to  the
interests of the Company would have a Material  Adverse Effect;  and the Company
has not received notice or is otherwise aware of any infringement of or conflict
with asserted  rights of others with respect to any of the Patent or Proprietary
Rights,  which  infringement  or  conflict  (if the  subject of any  unfavorable
decision, ruling or finding),  individually or in the aggregate, would result in
a Material Adverse Effect.

                  3.15  Financial  Statements.  The financial  statements of the
Company and the related  notes  thereto  included  in the  Disclosure  Documents
present fairly, in accordance with generally accepted accounting principles, the
financial position of the Company as of the dates indicated,  and the results of
its operations and cash flows for the periods therein specified.  Such financial
statements  (including the related notes) have been prepared in accordance  with
generally  accepted   accounting   principles  applied  on  a  consistent  basis
throughout  the  periods  therein  specified,  subject in the case of  unaudited
financial statements, to normal year-end audit adjustments.

                  3.16 Internal  Accounting  Controls.  The Company  maintains a
system of  internal  accounting  controls  sufficient,  in the  judgment  of the
Company's  board  of  directors,   to  provide  reasonable  assurance  that  (i)
transactions  are executed in accordance with  management's  general or specific
authorizations,   (ii)   transactions   are  recorded  as  necessary  to  permit
preparation  of financial  statements  in  conformity  with  generally  accepted
accounting  principles  and to maintain  asset  accountability,  (iii) access to
assets is permitted  only in accordance  with

                                      -5-

<PAGE>

management's   general  or  specific   authorization,   and  (iv)  the  recorded
accountability  for assets is compared  with the existing  assets at  reasonable
intervals and appropriate action is taken with respect to any differences.

                  3.17 Title.  The Company has good and marketable  title in fee
simple to all real property and personal  property owned by it which is material
to the  business  of the  Company,  in each case free and clear of all liens and
encumbrances,  except for liens that do not materially  affect the value of such
property and do not interfere  with the use made and proposed to be made of such
property by the Company or for equipment leases or operating leases entered into
in the  ordinary  course  of the  Company's  business.  Any  real  property  and
facilities  held  under  lease  by the  Company  are  held  by it  under  valid,
subsisting and enforceable  leases, with such exceptions as are not material and
do not interfere  with the use made and proposed to be made of such property and
facilities by the Company

         4.  REPRESENTATIONS,  WARRANTIES  AND CERTAIN  AGREEMENTS OF INVESTORS.
Each Investor  hereby  represents and warrants to, and agrees with, the Company,
that:

                  4.1  Authorization.  All  corporate  action on the part of the
Investor  and  its  officers,  directors  and  stockholders  necessary  for  the
authorization, execution and delivery of, and the performance of all obligations
of the Investor  under,  this Agreement has been taken or will be taken prior to
the  Closing,  and  this  Agreement  constitutes  a valid  and  legally  binding
obligation of the Investor,  enforceable against the Investor in accordance with
its terms, except as enforceability may be limited by (i) applicable bankruptcy,
insolvency,  reorganization or other laws of general application  relating to or
affecting the enforcement of creditors'  rights generally and (ii) the effect of
rules of law governing the availability of equitable remedies.

                  4.2  Purchase  for Own  Account.  The  Purchased  Shares to be
purchased by such Investor  hereunder  will be acquired for  investment for such
Investor's  own account,  not as a nominee or agent,  and not with a view to the
public resale or  distribution  thereof  within the meaning of the Act, and such
Investor has no present intention of selling,  granting any participation in, or
otherwise  distributing  the same.  If not an  individual,  such  Investor  also
represents  that such  Investor has not been formed for the specific  purpose of
acquiring Purchased Shares.

                  4.3  Disclosure  of  Information.  The Investor has received a
copy of the Disclosure  Documents and has received or has had full access to all
the  information  it  considers  necessary  or  appropriate  to make an informed
investment  decision with respect to the Purchased Shares to be purchased by the
Investor under this  Agreement.  Investor  further has had an opportunity to ask
questions  and  receive  answers  from  the  Company  regarding  the  terms  and
conditions  of the  offering of the  Purchased  Shares and to obtain  additional
information  (to the extent the  Company  possessed  such  information  or could
acquire it  without  unreasonable  effort or  expense)  necessary  to verify any
information  furnished to the Investor or to which the Investor had access.  The
foregoing,  however, does not in any way limit or modify the representations and
warranties made by the Company in Section 3.

                                      -6-

<PAGE>

                  4.4 Investment Experience.  Such Investor understands that the
purchase of the Purchased Shares involves  substantial risk. Such Investor:  (i)
has  experience  as an investor in  securities  of companies in the  development
stage and acknowledges  that such Investor is able to fend for itself,  can bear
the economic risk of such Investor's  investment in the Purchased Shares and has
such  knowledge  and  experience  in  financial  or business  matters  that such
Investor is capable of evaluating the merits and risks of this investment in the
Purchased  Shares and  protecting  its own  interests  in  connection  with this
investment and/or (ii) has a preexisting personal or business  relationship with
the Company and certain of its officers,  directors or controlling  persons of a
nature and duration  that enables  such  Investor to be aware of the  character,
business acumen and financial circumstances of such persons.

                  4.5 Accredited  Investor Status.  Unless  otherwise  expressly
indicated on the Schedule of Investors to this  Agreement,  such  Investor is an
"accredited  investor" within the meaning of Regulation D promulgated  under the
Act.

                  4.6 Restricted Securities.  Such Investor understands that the
Purchased  Shares are  characterized  as "restricted  securities"  under the Act
inasmuch  as they are being  acquired  from the  Company  in a  transaction  not
involving a public offering and that under the Act and the Rules and Regulations
such securities may be resold without registration under the Act only in certain
limited  circumstances.  In this connection,  such Investor represents that such
Investor is familiar with Rule 144 of the Commission and  understands the resale
limitations imposed thereby and by the Act.

                  4.7 Further  Limitations  on  Disposition.  Without in any way
limiting the  representations  set forth above, such Investor further agrees not
to make any disposition of all or any portion of the Purchased Shares unless and
until:

                           (a) there is then in effect a registration  statement
under the Act covering such proposed disposition and such disposition is made in
accordance with such  registration  statement and the provisions of Section 7 of
this Agreement; or

                           (b) (i) such Investor shall have notified the Company
of the  proposed  disposition  and  shall  have  furnished  the  Company  with a
statement of the circumstances  surrounding the proposed  disposition,  and (ii)
such Investor shall have furnished the Company,  at the expense of such Investor
or its transferee,  with an opinion of counsel,  reasonably  satisfactory to the
Company,  that such disposition will not require registration of such securities
under the Act.

                  Notwithstanding  the  provisions  of  paragraphs  (a)  and (b)
above, no such  registration  statement or opinion of counsel shall be required:
(i) for any routine transfer of any Purchased Shares in compliance with Rule 144
or Rule 144A  (except  that an opinion of counsel may be required for other than
routine Rule 144 transactions),  or (ii) for any transfer of Purchased Shares by
an Investor that is a partnership,  limited liability  corporation  ("LLC") or a
corporation  to (A) a  partner  of  such  partnership,  member  of  such  LLC or
shareholder of such corporation,  or (B) the estate of any such partner,  member
or shareholder,  or (iii) for the transfer by gift, will or intestate succession
by any Investor to his or her spouse or lineal  descendants  or

                                      -7-

<PAGE>

ancestors or any trust for any of the foregoing;  provided,  that in each of the
foregoing  cases the transferee  agrees in writing to be subject to the terms of
this Section 4 (other than Section 4.5) to the same extent as if the  transferee
were an original Investor hereunder.

                  4.8 Legends. It is understood that the certificates evidencing
the Purchased Shares will bear the legends set forth below:

                           (a) THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN
REGISTERED  UNDER THE SECURITIES  ACT OF 1933, AS AMENDED (THE "ACT"),  OR UNDER
THE  SECURITIES  LAWS  OF  CERTAIN  STATES.  THESE  SECURITIES  ARE  SUBJECT  TO
RESTRICTIONS ON TRANSFERABILITY  AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED  UNDER THE ACT AND THE  APPLICABLE  STATE  SECURITIES  LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  INVESTORS SHOULD BE AWARE THAT
THEY MAY BE  REQUIRED  TO BEAR THE  FINANCIAL  RISKS OF THIS  INVESTMENT  FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE  SATISFACTORY  TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.

                           (b) THE  SHARES  EVIDENCED  BY THIS  CERTIFICATE  ARE
SUBJECT TO THE PROVISIONS OF, AND MAY HAVE CERTAIN  REGISTRATION RIGHTS PURSUANT
TO, THE PROVISIONS OF A PURCHASE  AGREEMENT  BETWEEN THE COMPANY AND THE HOLDER,
WHICH MAY RESTRICT THE TRANSFER OF SUCH SHARES IN CERTAIN CIRCUMSTANCES.  A COPY
OF SUCH AGREEMENT MAY BE OBTAINED,  WITHOUT CHARGE,  AT THE COMPANY'S  PRINCIPAL
OFFICE.

         The legends set forth in (a) and (b) above  shall,  upon the request of
an Investor, be promptly removed by the Company from any certificate  evidencing
Purchased  Shares  upon  delivery to the Company of an opinion of counsel to the
Investor, reasonably satisfactory to the Company, that the legended security can
be freely transferred in a public sale without a registration statement being in
effect  under  the Act  and in  compliance  with  exemption  requirements  under
applicable  state securities laws and that such transfer will not jeopardize the
exemption or exemptions from  registration  pursuant to which the Company issued
the Purchased Shares; provided,  however, that no such opinion shall be required
in  connection  with  routine  sales of Purchased  Shares  pursuant to the Shelf
Registration Statement (as defined below) or routine requests for legend removal
where the Purchased Shares can be sold by an Investor pursuant to the provisions
of Rule 144(k). In connection with any such opinion,  the Investor shall provide
such certifications as may be reasonably be deemed necessary for the delivery of
such opinion.

                  4.9 Resale  Restrictions.  The Investor will not, prior to the
effectiveness of the Shelf Registration Statement (as defined below) directly or
indirectly offer, sell,  contract or grant an option to sell, pledge,  encumber,
or otherwise dispose of or otherwise  transfer,  or enter into any swap or other
arrangement that transfers to another,  in whole or in part, any of the economic

                                      -8-

<PAGE>

consequences of ownership of (whether any such transaction described above is to
be settled by  delivery  of Common  Stock or such other  securities,  in cash or
otherwise)  (a  "Disposition"),  any  Purchased  Shares  (other  than to donees,
shareholders or partners of the Investor who agree to be similarly  bound),  and
after the effective date of the Shelf  Registration  Statement the Investor will
not make any Disposition of Purchased Shares in violation of the Securities Act.

         5. CONDITIONS TO INVESTOR'S OBLIGATIONS AT CLOSING.

                  5.1 Closing.  The obligations of each Investor under Section 2
of this Agreement to purchase the Purchased Shares at the Closing are subject to
the  fulfillment or waiver,  on or before the Closing,  of each of the following
conditions,  and the  Company  shall use all  reasonable  efforts  to cause such
conditions to be satisfied on or before the Closing:

                           5.1.1  Representations  and Warranties  True. Each of
the  representations  and warranties of the Company contained in Section 3 shall
be true and correct in all  material  respects on and as of the Closing with the
same effect as though such  representations  and warranties had been made on and
as of the Closing.

                           5.1.2  Performance.  The Company shall have performed
and complied in all  material  respects  with all  agreements,  obligations  and
conditions  contained  in this  Agreement  that are  required to be performed or
complied  with by it on or before  the  Closing  and  shall  have  obtained  all
approvals,  consents and  qualifications  necessary to complete the purchase and
sale described herein.

                           5.1.3 Compliance Certificate.  The Company shall have
delivered to the Investors at the Closing a certificate  signed on its behalf by
its President,  Chief Executive  Officer,  or Chief Financial Officer certifying
that the conditions specified in Sections 5.1.1 and 5.1.2 have been fulfilled.

                           5.1.4 Registration;  Securities Exemptions. The offer
and sale of the  Purchased  Shares to the Investors  pursuant to this  Agreement
shall  be  exempt  from  the  registration  requirements  under  the Act and the
California  Corporate  Securities  Law  of  1968,  as  amended,  and  the  rules
thereunder (the "Law") and the registration and/or qualification requirements of
all other applicable state securities laws.

                           5.1.5 No  Material  Change.  There shall have been no
material adverse change in the Business from the date of this Agreement.

                           5.1.6 Opinion of Counsel.  The  Investors  shall have
received  an  opinion of counsel  to the  Company  substantially  in the form of
Exhibit A attached hereto.

                                      -9-

<PAGE>

         6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.

                  6.1.  Closing.  The  obligations  of the  Company  under  this
Agreement  to sell the  Purchased  Shares to the  Investors  at the  Closing are
subject to the  fulfillment  or waiver on or before  the  Closing of each of the
following conditions by the Investor, and each Investor shall use all reasonable
efforts to cause such conditions to be satisfied on or before the Closing:

                           6.1.1    Representations    and    Warranties.    The
representations  and warranties of the Investor  contained in Section 4 shall be
true and correct in all material respects on and as of the Closing with the same
effect as though such  representations and warranties had been made on and as of
the Closing.

                           6.1.2 Payment of Purchase  Price.  The Investor shall
have  delivered  to the  Company the  purchase  price for the  Purchased  Shares
specified for such  Investor on the Schedule of Investors  attached  hereto,  in
accordance  with the provisions of Section 2, subject to the Company's  delivery
of certificates for such shares.

                           6.1.3 Registration;  Securities Exemptions. The offer
and sale of the  Purchased  Shares to the  Investor  pursuant to this  Agreement
shall be exempt from the  registration  requirements  under the Act and shall be
exempt  from  the  qualification  requirements  of the Law and the  registration
and/or qualification requirements of all other applicable state securities laws.

         7. REGISTRATION RIGHTS.

                  7.1 Definitions. For purposes of this Agreement:

                           (a) Form S-3.  The term  "Form  S-3"  means such form
under the Act as is in effect on the date hereof or any  successor  registration
form under the Act subsequently adopted by the Commission that permits inclusion
or  incorporation  of substantial  information  by reference to other  documents
filed by the Company with the Commission.

                           (b) Holder.  The term "Holders" shall mean holders of
Registrable Securities that have registration rights pursuant to this Agreement.

                           (c) Registration. The terms "register," "registered,"
and  "registration"  refer to a registration  effected by preparing and filing a
registration  statement  in  compliance  with the Act,  and the  declaration  or
ordering of effectiveness of such registration statement.

                           (d)  Registrable  Securities.  The term  "Registrable
Securities"  means:  (1) all of the Purchased  Shares,  (2) any shares of Common
Stock of the Company issued as a dividend or other distribution with respect to,
or in exchange for or in replacement of, any of the Purchased Shares and (3) any
additional shares issued pursuant to Section 7.2(a); provided, however, that the
term  "Registrable  Securities" shall exclude in all events (and such securities
shall not constitute  "Registrable  Securities") (i) any Registrable  Securities
sold or  transferred  by a person in a  transaction  in which  the  registration
rights  granted under this  Agreement  are not

                                      -10-

<PAGE>

assigned  in  accordance  with  the  provisions  of  this  Agreement,  (ii)  any
Registrable  Securities  sold in a public  offering  pursuant to a  registration
statement  filed with the  Commission or sold  pursuant to Rule 144  promulgated
under the Act ("Rule 144") or (iii) as to any Holder, the Registrable Securities
held by such Holder if all of such  Registrable  Securities can be publicly sold
without volume restriction within a three-month period pursuant to Rule 144.

                           (e) Prospectus:  The term "Prospectus" shall mean the
prospectus  included in any Shelf  Registration  Statement  (including,  without
limitation,  a prospectus that discloses  information  previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule  430A  promulgated  under the  Act),  as  amended  or  supplemented  by any
prospectus supplement (including,  without limitation, any prospectus supplement
with  respect to the terms of the  offering  of any  portion of the  Registrable
Securities  covered  by  such  Shelf  Registration  Statement),  and  all  other
amendments  and   supplements  to  the  Prospectus,   including   post-effective
amendments,  and  all  material  incorporated  by  reference  or  deemed  to  be
incorporated by reference in such Prospectus.

                           (f) Shelf Registration Statement. See Section 7.2(a).

                  7.2 Form S-3 Shelf Registration.

                                    (a) Registration.  The Company shall prepare
and file with the  Commission  within 45 days  following the Closing and use its
best efforts (i) to have declared  effective as soon as  practicable  thereafter
(but in any event within 120 days after the Closing),  a registration  statement
on Form S-3 (or,  if the  Company  is not then  eligible  to use Form S-3,  then
another  appropriate form) providing for the resale by the Holders of all of the
Registrable  Securities  (the "Shelf  Registration  Statement"),  (ii) cause the
Purchased Shares to be listed on the Nasdaq National Market, and (iii) provide a
transfer agent and registrar for all securities registered pursuant to the Shelf
Registration  Statement  and a CUSIP number for all such  securities.  The Shelf
Registration  Statement may include securities other than those held by Holders.
If the  Shelf  Registration  Statement  is not filed  within  45 days  after the
Closing  Date,  or is not  declared  effective  by  October 6, 2001 and does not
remain effective for 45 continuous days after its effective date (except for the
duration of any Blackout Notice as described in Section 7.2(b) below),  then the
Investors holding  Registrable  Securities shall be entitled to receive from the
Company (pro rata in accordance with their ownership of Registrable  Securities)
an  aggregate  number of shares of  Common  Stock  equal to 1% of the  number of
Purchased  Shares for each month (and  prorated  for any  partial  month)  after
October 6, 2001, that the Shelf Registration Statement is not declared effective
(or does not remain  effective),  up to a maximum  aggregate amount of 5% of the
Purchased  Shares.  The  Company  shall use its best  efforts  to keep the Shelf
Registration  Statement  continuously  effective  (subject  to Section  7.2(b)),
pursuant to the Act and the Rules and Regulations promulgated thereunder,  until
the earlier to occur (i) the second  anniversary of the Closing Date, (ii) as to
a particular  Holder, the date on which the Holder may sell all Shares then held
by the Holder without  restriction  by the volume  limitations of Rule 144(e) of
the Securities  Act, and (iii) such time as all  Registrable  Securities held by
such Holder have been sold (A) pursuant to the Shelf Registration Statement, (B)
to or through a broker or dealer or  underwriter in a public  distribution  or a
public  securities  transaction,  and/or (C) in a  transaction  exempt  from the
registration  and prospectus  delivery  requirements of the Securities

                                      -11-

<PAGE>

Act under Section 4(1) thereof so that all transfer restrictions and restrictive
legends with respect thereto,  if any, are removed upon the consummation of such
sale.  In the event  that the Shelf  Registration  Statement  shall  cease to be
effective,  the  Company  shall  promptly  prepare  and file a new  registration
statement covering the Registrable  Securities and shall use its best efforts to
have such registration  statement  declared  effective as soon as possible.  Any
such registration statement shall be considered a "Shelf Registration Statement"
hereunder.

                           (b)  Blackout  Notice.  In the  event  (i)  that  the
Company  concludes  that it is  necessary  for the  Company  to  supplement  the
Prospectus or make an  appropriate  filing under the Exchange Act so as to cause
the  Prospectus  to  become  current,  or  (ii)  that,  in the  judgment  of the
President,  Chief Executive  Officer or the Company's Board of Directors,  it is
advisable to suspend use of the Prospectus for a discrete  period of time due to
undisclosed  pending  corporate  developments or pending public filings with the
Commission (which need not be described in detail),  the Company shall deliver a
written  notice  (the  "Blackout  Notice")  to the  Holder to the  effect of the
foregoing and, upon delivery of the Blackout  Notice,  the Holder shall not sell
any Purchased Shares or any other securities of the Company that are held by the
Holder,  shall not otherwise engage in any other Disposition with respect to the
Company's  securities,  and shall not  disclose  to any third  party that such a
notice has been given or the contents of the notice.  Such  restrictions on sale
of the Registrable Securities shall cease upon the Holder's receipt of copies of
the supplemented or amended Prospectus, or at such time as the Holder is advised
in writing by the Company that the  Prospectus  may be used, and at such time as
the Holder has received  copies of any additional or  supplemental  filings that
are  incorporated  or deemed  incorporated  by reference in such  Prospectus and
which are required to be delivered as part of the Prospectus. In any event, such
restrictions shall terminate no later than 45 days after the date of delivery of
the Blackout  Notice.  If the Company has delivered a Blackout  Notice within 90
days of the date that it delivers another Blackout Notice pursuant this section,
then the  45-day  time  period  set  forth in the  preceding  sentence  shall be
shortened so that the  restrictions  imposed by the Blackout Notice shall expire
no later than 10 days after delivery of such Blackout Notice.

                           (c)  Expenses.  The  registration  fees and  expenses
incurred by the Company in connection with the Shelf Registration  Statement and
actions taken by the Company in connection with any Blackout Notice,  including,
without  limitation,  all registration,  qualification and filing fees, printing
expenses,  escrow fees, fees and disbursements of counsel for the Company,  blue
sky fees and  expenses,  and the  expense of any special  audits  incident to or
required by any such registration,  shall be borne by the Company.  Holder shall
be responsible for any fees and expenses of its counsel or other advisers.

                  7.3  Obligations of the Company.  The Company shall furnish to
the  Holder  such  number of copies of a  Prospectus,  including  a  preliminary
Prospectus,  in  conformity  with the  requirements  of the Act,  and such other
documents  (including  supplements  or prospectus  amendments) as the Holder may
reasonably  request in order to facilitate the public sale or other  disposition
of  the  Registrable   Securities   owned  by  it  that  are  included  in  such
registration.  In addition,  whenever required to effect the registration of any
Registrable Securities under this Agreement, the Company shall, as expeditiously
as reasonably possible:

                                      -12-

<PAGE>

                           (a) Use its best  efforts to (i) register and qualify
the  securities  covered  by  such  registration   statement  under  such  other
securities  or Blue  Sky  laws of such  jurisdictions  as  shall  be  reasonably
requested  by the Holder,  provided  that the  Company  shall not be required in
connection  therewith or as a condition  thereto to qualify to do business or to
file  a  general   consent  to  service  of  process  in  any  such   states  or
jurisdictions,  (ii) to keep such registration or qualification in effect for so
long as the Shelf  Registration  Statement remains in effect,  and (iii) to take
any other  action which may be  reasonably  necessary or advisable to enable the
Holders to consummate the disposition in such jurisdictions of the securities to
be sold by the Holders,  consistent with the plan of  distribution  described in
the prospectus  included in the Shelf  Registration  Statement,  except that the
Company  shall not for any such  purpose be required to qualify  generally to do
business  as a  foreign  corporation  in  any  jurisdiction  where  it is not so
qualified,  or to subject  itself to  taxation in any such  jurisdiction,  or to
execute a general consent to service of process in effecting such  registration,
qualification or compliance, unless the Company is already subject to service in
such  jurisdiction  and except as may be required by the Act or applicable rules
or regulations thereunder.

                           (b) Notify the Holder  promptly (i) of any request by
the Commission or any other federal or state  governmental  authority during the
period  of  effectiveness   of  a  registration   statement  for  amendments  or
supplements  to  such  registration  statement  or  related  prospectus  or  for
additional  information,  (ii) of the  issuance by the  Commission  or any other
federal  or state  governmental  authority  of any  stop  order  suspending  the
effectiveness  of a registration  statement or the initiation of any proceedings
for that  purpose and (iii) of the  receipt by the  Company of any  notification
with  respect  to  the  suspension  of  the   qualification  or  exemption  from
qualification of any of the Registrable  Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose.

                           (c)  Make  every  reasonable  effort  to  obtain  the
withdrawal of any order suspending the  effectiveness of the Shelf  Registration
Statement at the earliest possible time.

                           (d) Use its best  efforts  to cause  all  Registrable
Securities to be listed on each securities  exchange or market, if any, on which
equity securities issued by the company are then listed.

                  7.4 Furnish Information.  It shall be a condition precedent to
the  obligations of the Company to take any action  pursuant to Section 7.2 that
the Holder  shall  furnish to the Company  such  information  regarding  it, the
Registrable  Securities  held by it, and the intended  method of  disposition of
such  securities as shall be required to timely effect the  registration  of its
Registrable Securities.

                  7.5 Indemnification. For the purposes of this Section 7.5, the
term  "registration  statement"  shall  include any final  Prospectus,  exhibit,
supplement, amendment or other document included in, filed as part of, deemed to
be a part of, or otherwise relating to the Shelf Registration Statement referred
to in this Section 7. In the event any Registrable  Securities are included in a
registration statement under this Agreement:

                                      -13-

<PAGE>

                           (a) By the Company.  To the extent  permitted by law,
the Company  will  indemnify  and hold  harmless  the Holder,  the  officers and
directors,  trustees,  each  person,  if any,  who  controls  the Holder and any
underwriter for each (as defined in the Act) (such persons and entities referred
to as "Holder Indemnified Parties"),  against any losses,  expenses,  damages or
liabilities  (including  in  settlement  of any  claim) to which they may become
subject  under  the Act,  the  Exchange  Act or other  federal  or state  law (a
"Loss"), insofar as such Losses (or actions in respect thereof) arise out of any
claim,  action or  proceeding  brought by a third party  arising out of or based
upon any of the following  statements,  omissions or violations  (collectively a
"Violation"):

                           (i) any untrue  statement or alleged untrue statement
                  of a material  fact  contained  in a  registration  statement,
                  filed pursuant to this Section 7;

                           (ii) the  omission or alleged  omission to state in a
                  registration  statement  filed  pursuant  to this  Section 7 a
                  material fact required to be stated  therein,  or necessary to
                  make the statements therein not misleading; or

                           (iii)  any  violation  or  alleged  violation  by the
                  Company of the Act,  the  Exchange  Act,  any federal or state
                  securities law or any rule or regulation promulgated under the
                  Act, the Exchange Act or any federal or state  securities law,
                  in each case in connection  with the offering  covered by such
                  registration statement;

                           (iv)  any  failure  by the  Company  to  fulfill  any
                  undertaking included in a registration statement;

                           (v)  any  material  breach  of  any   representation,
                  warranty or covenant made by the Company in this Agreement;

and the Company will  reimburse each Holder  Indemnified  Party for any legal or
other  expenses  reasonably  incurred by them, as incurred,  in connection  with
investigating or defending or settling,  compromising or paying an award granted
in any proceeding relating to any such Violation;  provided,  however,  that the
indemnity agreement contained in this subsection shall not apply to amounts paid
in  settlement  of any such Loss,  if such  settlement  is effected  without the
consent of the Company, nor shall the Company be liable in any such case for any
such Loss to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in  conformity  with written  information  furnished
expressly for use in connection with such  registration  statement by the Holder
Indemnified Party; and provided further, that the Company will not be liable for
the  reasonable  legal fees and  expenses of more than one counsel to the Holder
Indemnified Parties.

                           (b) By the Holder.  To the extent  permitted  by law,
each Holder (severally and not jointly with any other Holder) will indemnify and
hold harmless the Company, each of its directors,  each of its officers who have
signed the  registration  statement,  and each

                                      -14-

<PAGE>

person,  if any, who  controls  the Company  within the meaning of the Act (such
persons and entities referred to as "Company  Indemnified  Parties") against any
Losses to which such Company  Indemnified  Parties may become  subject under the
Act, the Exchange Act or other federal or state law,  insofar as such Losses (or
actions in respect  thereto)  arise out of or are based upon any  Violation,  in
each case to the extent (and only to the extent) that such  Violation  occurs in
reliance upon and in conformity with written information furnished by the Holder
expressly for use in connection with such registration statement; and the Holder
will reimburse any legal or other expenses  reasonably  incurred by such Company
Indemnified  Parties in  connection  with  investigating  or defending  any such
Violation;  provided,  however,  that the indemnity  agreement contained in this
subsection  shall not apply to amounts  paid in  settlement  of any such Loss if
such settlement is effected without the consent of the Holder; provided further,
that the Holder shall not be liable for the  reasonable  legal fees and expenses
of more than one  counsel  to the  Company  Indemnified  Parties;  and  provided
further,  that the total  amounts  payable in indemnity by the Holder under this
subsection  in  respect  of any  Violation  shall not  exceed  the net  proceeds
received by the Holder in the  registered  offering out of which such  Violation
arises.

                           (c) Notice.  Promptly after receipt by an indemnified
party under this Section of notice of the commencement of any action  (including
any  governmental   action),  such  indemnified  party  will,  if  a  claim  for
indemnification  in respect thereof is to be made against any indemnifying party
under this Section,  deliver to the  indemnifying  party a written notice of the
commencement of such an action and the  indemnifying  party shall have the right
to participate in, and, to the extent the indemnifying party so desires, jointly
with any other  indemnifying  party  similarly  noticed,  to assume the  defense
thereof  with  counsel  selected  by  the  indemnifying   party  and  reasonably
acceptable  to a majority  in  interest of the  indemnified  parties;  provided,
however,  that an  indemnified  party  shall  have the right to  retain  its own
counsel,  with the reasonable  fees and expenses to be paid by the  indemnifying
party,  if the  indemnified  party has been  advised in writing by counsel  that
representation  of  such  indemnified  party  by  the  counsel  retained  by the
indemnifying  party would be  inappropriate  due to actual conflict of interests
between such indemnified  party and any other party  represented by such counsel
in such  proceeding.  The failure to deliver written notice to the  indemnifying
party  within a  reasonable  time of the  commencement  of any such action shall
relieve such indemnifying party of liability to the indemnified party under this
Section to the extent such delay caused  material  prejudice to the  indemnified
party, but the omission so to deliver written notice to the  indemnifying  party
will not relieve it of any liability that it may have to any  indemnified  party
otherwise than under this Section.

                           (d)  Defect  Eliminated  in  Final  Prospectus.   The
foregoing indemnity  agreements of the Company and the Holder are subject to the
condition  that,  insofar as they relate to any Violation  made in a preliminary
prospectus but eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration  statement in question becomes effective
or in the amended  prospectus filed with the Commission  pursuant to Rule 424(b)
of the Commission (the "Final Prospectus"),  such indemnity agreements shall not
inure  to the  benefit  of any  person  if a copy of the  Final  Prospectus  was
furnished in a timely manner to the  indemnified  party and was not furnished to
the person  asserting  the loss,  liability,  claim or damage at or prior to the
time such action is required by the Act.

                                      -15-

<PAGE>

                           (e)  If the  indemnification  provided  for  in  this
Section 7.5 is  unavailable to or  insufficient  to hold harmless an indemnified
party  under  subsection  (a) or (b) above in  respect  of any  losses,  claims,
damages,  liabilities or expenses (or actions or proceedings in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such  indemnified  party as a result of such losses,  claims,
damages,  liabilities  or  expenses  (or  actions  in respect  thereof)  in such
proportion as is appropriate to reflect the relative fault of the Company on the
one hand and the  Holder  on the  other in  connection  with the  statements  or
omissions  or other  matters  which  resulted in such losses,  claims,  damages,
liabilities  or expenses (or actions in respect  thereof),  as well as any other
relevant  equitable  considerations.  The relative  fault shall be determined by
reference to, among other things,  in the case of an untrue  statement,  whether
the untrue statement  relates to information  supplied by the Company on the one
hand or a Holder on the  other  and the  parties'  relative  intent,  knowledge,
access to  information  and  opportunity  to  correct  or  prevent  such  untrue
statement.  The  Company and the  Investors  agree that it would not be just and
equitable if contribution pursuant to this subsection (e) were determined by pro
rata  allocation  (even if all  Holders  were  treated  as one  entity  for such
purpose) or by any other method of  allocation  which does not take into account
the  equitable  considerations  referred to above in this  subsection  (e).  The
amount  paid or  payable  by an  indemnified  party as a result  of the  losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this  subsection  (e) shall be deemed to include any legal or other  expenses
reasonably  incurred by such indemnified party in connection with  investigating
or defending any such action or claim.  Notwithstanding  the  provisions of this
subsection  (e), no Holder shall be required to contribute  any amount in excess
of the net amount received by the Holder from the sale of the Shares.  No person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the Securities  Act) shall be entitled to  contribution  from any person who was
not guilty of such fraudulent misrepresentation. Contribution (together with any
indemnification  or  other  obligations  under  this  Agreement)  by any  Holder
(including any Indemnified  Person associated with such Holder) shall be limited
in amount to the net amount of proceeds received by such Holder from the sale of
the Registrable Securities

                           (f) Survival.  The obligations of the Company and the
Holder  under this  Section  shall  survive the  completion  of any  offering of
Registrable Securities in a registration statement, and otherwise.

                  7.6 Rule 144  Reporting.  With a view to making  available the
benefits of certain rules and  regulations of the  Commission,  which may at any
time  permit  the  sale of the  Registrable  Securities  to the  public  without
registration,  for a period of two years following the Closing Date, the Company
agrees to:

                           (a)   Make   and  keep   adequate,   current   public
information  available,  as those terms are  understood  and defined in Rule 144
under the Act, at all times;

                           (b) File with the  Commission  in a timely manner all
reports and other documents required of the Company under the Exchange Act; and

                                      -16-

<PAGE>

                           (c)  So  long  as the  Holder  owns  any  Registrable
Securities,  to furnish to the Holder forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements of said Rule
144, a copy of the most recent  annual or quarterly  report of the Company,  and
such other  reports and  documents  of the Company as the Holder may  reasonably
request in availing itself of any rule or regulation of the Commission  allowing
a Holder to sell any such securities without registration.

                  7.7  Termination of Cellegy's  Obligations.  The Company shall
have no obligation to register, or maintain, a registration  statement governing
Registrable  Securities and the restrictive legend described in Section 4.8 will
be removed from any certificate  representing the Purchased  Shares,  (i) if all
Registrable  Securities have been registered and sold pursuant to  registrations
effected  pursuant to this  Agreement,  or (ii) with  respect to any  particular
Holder,  at such time as all  Registrable  Securities held by such Holder may be
sold without any volume restrictions within a three month period under Rule 144,
as it may be amended from time to time,  including but not limited to amendments
that  reduce  that  period  of time that  securities  must be held  before  such
securities may be sold pursuant to such rule.

                  7.8  Piggyback  Registrations.  (a) The Company  shall use its
best efforts to notify all Holders of Registrable Securities in writing at least
twenty  (20) days before  filing any  registration  statement  under the Act for
purposes  of  effecting  an  underwritten  public  offering  by the  Company  of
securities of the Company  (excluding  registration  statements  relating to any
employee benefit plan or a corporate merger,  acquisition or reorganization,  or
any  Form  S-3  or  similar  shelf  registration   statements  relating  to  the
non-underwritten  offer and sale of  securities  for the  account  of persons or
entities other than the Company) and will afford each such Holder an opportunity
to include in such  registration  statement  all or any part of the  Registrable
Securities then held by such Holder. Each Holder desiring to include in any such
registration  statement all or any part of the  Registrable  Securities  held by
such Holder  shall,  within ten (10) days after  receipt of the  above-described
notice from the  Company,  so notify the Company in writing,  and in such notice
shall  inform the Company of the number of  Registrable  Securities  such Holder
wishes to include in such  registration  statement.  If a Holder  decides not to
include all of its  Registrable  Securities in any such  registration  statement
filed by the Company,  such Holder shall nevertheless continue to have the right
to include any Registrable  Securities in any subsequent  registration statement
or  registration  statements  as may be filed by the  Company  with  respect  to
offerings of its securities, all upon the terms and conditions set forth herein.
The Holders' rights to include any Registrable  Securities in any offering under
this  Section  are  subject  in all  events  to  the  ability  of  the  managing
underwriter  for  such  offering  to  exclude  some  or all  of the  Registrable
Securities requested to be registered on the basis of a good faith determination
that  inclusion of such  securities  might  adversely  affect the success of the
offering or otherwise adversely affect the Company.  Any such exclusion shall be
pro rata among all Holders who have requested to sell Registrable  Securities in
such registration.

                           (b) Underwriting.  If a registration  statement under
which the  Company  gives  notice  under  this  Section  is for an  underwritten
offering,   then  the  Company  shall  so  advise  the  Holders  of  Registrable
Securities. In such event, the right of any such Holder's Registrable Securities
to be included in a  registration  pursuant to this Section shall be conditioned
upon such Holder's  participation in such underwriting and the inclusion of such

                                      -17-

<PAGE>

Holder's  Registrable  Securities  in the  underwriting  to the extent  provided
herein. All Holders proposing to distribute their Registrable Securities through
such underwriting  shall enter into an underwriting  agreement in customary form
with the managing underwriter or underwriters selected for such underwriting and
shall  furnish  such  information  and  documents as the Company or the managing
underwriter or underwriters may reasonably  request.  Notwithstanding  any other
provision of this Agreement,  if the managing  underwriter  determine(s) in good
faith that marketing  factors require a limitation of the number of shares to be
underwritten,   then  the  managing   underwriter(s)  may  exclude   Registrable
Securities  from the  registration  and the  underwriting,  pro rata  among  all
Holders who have requested to sell Registrable  Securities in such registration.
If any Holder disapproves of the terms of any such underwriting, such Holder may
elect  to  withdraw   therefrom  by  written  notice  to  the  Company  and  the
underwriter,  delivered at least ten (10)  business  days prior to the effective
date of the  registration  statement.  Any  Registrable  Securities  excluded or
withdrawn  from such  underwriting  shall be  excluded  and  withdrawn  from the
registration.

                           (c) Expenses.  The Holders shall be  responsible  for
their  pro  rata  share of  registration  fees and  underwriters'  and  brokers'
discounts and  commissions  relating to any Registrable  Securities  included in
such  registration.  Other  registration  expenses (such as legal and accounting
fees of counsel to the Company, printing fees, road show expenses, and the like)
shall be shall be borne by the Company.

                           (d) Number of Piggyback Registrations.  The piggyback
registration rights granted to the Holders under this Section shall apply to the
first three registrations filed by the Company after the Closing.

         8.  ASSIGNMENT.  Notwithstanding  anything herein to the contrary,  the
registration rights of the Holder under Section 7 hereof may be assigned only to
a party who  acquires  from the Holder at least  100,000  shares of  Registrable
Securities (as such number may be adjusted to reflect subdivisions, combinations
and stock dividends of the Company's  Common Stock),  (such party is referred to
as a "Assignee");  provided,  however,  that (w) no party may be assigned any of
the foregoing  rights until the Company is given written notice by the assigning
party at the  time of such  assignment  stating  the  name  and  address  of the
Assignee and identifying the securities of the Company as to which the rights in
question  are being  assigned;  (x) that any such  Assignee  shall  receive such
assigned rights subject to all the terms and conditions of this  Agreement;  and
(y) no such  assignment or  assignments  shall  increase the  obligations of the
Company hereunder.

                                      -18-

<PAGE>

         9. MISCELLANEOUS.

                  9.1 Survival of Warranties.  The  representations,  warranties
and covenants of the Company and the Investors  contained in or made pursuant to
this  Agreement  shall survive the execution and delivery of this  Agreement and
the Closing and shall in no way be affected by any  investigation of the subject
matter  thereof  made by or on behalf of the  Investors,  their  counsel  or the
Company, as the case may be.

                  9.2 Successors  and Assigns.  The terms and conditions of this
Agreement  shall  inure to the  benefit  of and be binding  upon the  respective
successors and assigns of the parties.

                  9.3 Governing  Law;  Consent to  Jurisdiction.  This Agreement
shall be  governed  by and  construed  under the  internal  laws of the State of
California as applied to agreements among California  residents entered into and
to be performed entirely within  California,  without reference to principles of
conflict of laws or choice of laws.

                  9.4  Counterparts.  This  Agreement  may be executed in two or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument.

                  9.5 Headings. The headings and captions used in this Agreement
are used for  convenience  only and are not to be  considered  in  construing or
interpreting  this  Agreement.  All  references  in this  Agreement to sections,
paragraphs,  exhibits, and schedules shall, unless otherwise provided,  refer to
sections and paragraphs hereof and exhibits and schedules  attached hereto,  all
of which exhibits and schedules are incorporated herein by this reference.

                  9.6 Notices. Unless otherwise provided, any notice required or
permitted  under this  Agreement  shall be given in writing  and shall be deemed
effectively  given  upon  personal  delivery  to the  party to be  notified,  by
telecopier or upon deposit with the United States Post Office,  by registered or
certified mail, postage prepaid and addressed to the party to be notified in the
case of the Company,  at 349 Oyster Point  Boulevard,  South San  Francisco,  CA
94080, Attention:  President, with a copy to C. Kevin Kelso, Fenwick & West LLP,
Two Palo Alto Square,  Palo Alto,  California 94306, or in the case of Investor,
at the  record  address  for such  Investor  as  reflected  on the  books of the
Company,  or at such other address as any party may designate by giving ten (10)
days  advance  written  notice  to the  other  party.  Notices  shall be  deemed
delivered  upon  delivery  if  personally  delivered,  one  business  day  after
transmission with  confirmation of receipt if sent by telecopier,  or three days
after deposit in the mails if mailed.

                  9.7 No Finder's Fees. Each party represents that it neither is
nor  will be  obligated  for any  finder's  or  broker's  fee or  commission  in
connection with this transaction.  Each Investor agrees to indemnify and to hold
harmless the Company from any liability for any  commission or  compensation  in
the nature of a finder's or broker's fee (and any asserted  liability) for which
the Investor or any of its officers, partners,  employees, or representatives is
responsible.  The Company agrees to indemnify and to hold harmless each Investor
from any  liability  for any  commission  or  compensation  in the  nature  of a
finder's or broker's fee (and any

                                      -19-

<PAGE>

asserted  liability) for which the Company or any of its officers,  employees or
representatives is responsible.

                  9.8 Costs, Expenses. Each party's costs in connection with the
preparation,  execution  delivery and  performance of this Agreement  (including
without limitation legal fees) shall be borne by that party.

                  9.9 Amendments and Waivers.  Any term of this Agreement may be
amended and the  observance of any term of this  Agreement may be waived (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  only with the  written  consent of the  Company  and  Investors
holding a  majority  of the  Purchased  Shares  purchased  hereunder;  provided,
however,  that no amendment or waiver of the Company's obligations under Section
7 of this Agreement  that  significantly  and adversely  affects the rights of a
holder of Purchased  Shares shall be binding upon that holder unless that holder
has consented in writing to such amendment or waiver. Subject to the limitations
set  forth in the  preceding  sentence,  any  amendment  or waiver  effected  in
accordance  with this Section shall be binding upon each holder of any Purchased
Shares at the time  outstanding  (even if such  Investor or other holder did not
vote with respect to, or voted against,  such amendment or waiver),  each future
holder of such securities,  and the Company.  The Investors  acknowledge that by
virtue of this provision, holders of a majority of the Purchased Shares may bind
other  holders to amendment or waivers that such other holders may have voted to
oppose.

                  9.10 Severability. If one or more provisions of this Agreement
are held to be invalid,  illegal or  unenforceable  under  applicable  law, such
provision(s)  shall be  excluded  from this  Agreement  and the  balance  of the
Agreement  shall be  interpreted  as if such  provision(s)  were so excluded and
shall be enforceable in accordance with its terms.

                  9.11  Entire  Agreement.  This  Agreement,  together  with any
exhibits or schedules hereto, constitutes the entire agreement and understanding
of the parties with respect to the subject  matter hereof and supersedes any and
all prior negotiations,  correspondence,  agreements,  understandings  duties or
obligations between the parties with respect to the subject matter hereof.

                  9.12  Further  Assurances.  From  and  after  the date of this
Agreement,  upon the request of an Investor or the Company,  the Company and the
Investors  shall  execute  and  deliver  such  instruments,  documents  or other
writings as may be  reasonably  necessary  or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.

                  9.13  Termination.

                           (a) By the Investor:  The Investor may terminate this
Agreement  immediately  if, at any time prior to the Closing,  the Company shall
cease  conducting  business in the normal  course;  become  insolvent  or become
unable to meet its obligations as they become due; make a general assignment for
the benefit of creditors;  petition, apply for, suffer or permit with or without
its consent the appointment of a custodian,  receiver,  trustee in bankruptcy or
similar officer for all or any substantial part of its business or assets; avail
itself or become

                                      -20-

<PAGE>

subject to any  proceeding  under the  Federal  Bankruptcy  Code or any  similar
state,   federal  or  foreign  statute   relating  to  bankruptcy,   insolvency,
reorganization,  receivership, arrangement, adjustment of debts, dissolutions or
liquidation.

                           (b) By the Company:  The Company may  terminate  this
Agreement at any time prior to the Closing if the  Investors  have not agreed to
purchase an aggregate of at least  2,000,000  shares  pursuant to the Agreements
prior to June 20,  2001 or such later date as the  Company  shall have agreed to
extend the offering.

                [Remainder of this page intentionally left blank]

                                      -21-

<PAGE>

         IN WITNESS WHEREOF,  the parties hereto have executed this Common Stock
Purchase Agreement as of the date first above written.

THE COMPANY:                                   INVESTORS:
-----------                                    ----------

Cellegy Pharmaceuticals, Inc.,
  a California corporation                     Caduceus Private Investments, LP
                                               ---------------------------------
                                               Name of Investor

                                               Orbimed Associates LLC
                                               ---------------------------------
By:   /s/ A. Richard Juelis                    Name of Investor
     ---------------------------------------
                                               PW Juniper Crossover Fund, L.L.C.
                                               ---------------------------------
Title:   VP, Finance & CFO                     Name of Investor
        ------------------------------------
                                               SAFECO COMMON STOCK TRUST
                                               ---------------------------------
                                               Name of Investor

                                               SAFE RESOURCE SERIES TRUST
                                               ---------------------------------
                                               Name of Investor

                                               First Health, L.P.
                                               ---------------------------------
                                               Name of Investor

                                               First Health Associates, L.P.
                                               ---------------------------------
                                               Name of Investor

                                               First Health Limited
                                               ---------------------------------
                                               Name of Investor

                                               Four Partners
                                               ---------------------------------
                                               Name of Investor

                                               JALAA Equities, LP
                                               ---------------------------------
                                               Name of Investor

                                               Knott Partners, LP
                                               ---------------------------------
                                               Name of Investor

                                               Dorset Management
                                               ---------------------------------
                                               Name of Investor

                                               GMT Capital Corp.
                                               ---------------------------------
                                               Name of Investor

                                               Thomas E. Claugus
                                               ---------------------------------
                                               Name of Investor

                           [COUNTERPART SIGNATURE PAGE
                        COMMON STOCK PURCHASE AGREEMENT]

                                      -22-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00027-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00027-of-00352.parquet"}]]