Document:

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                                                                     EXHIBIT 4.3

                     CTS CORPORATION RETIREMENT SAVINGS PLAN

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                     CTS CORPORATION RETIREMENT SAVINGS PLAN

                             Article I. Introduction

         1.1 Establishment of Plan. CTS Corporation (the "Company") previously
established effective as of December 1, 1952 and now maintains a qualified
defined contribution savings plan now known as the "CTS Corporation Retirement
Savings Plan" (the "Plan").

         1.2 Purpose of the Plan. The purpose of the Plan is to share a portion
of the profits of the Employer's business with eligible employees, to encourage
and provide the opportunity for employees to make regular and systematic savings
through tax-deferred salary reduction contributions to the Plan, to encourage
employees to make and continue careers with the Employer, to provide employees
with retirement income, to reward them for their efforts to make the Employer's
business successful, to provide employees with disability benefits, and to
provide death benefits to employees' families.

         1.3 Mergers and Transfer of Accounts of Certain Prior Plans. Effective
as of May 1, 1992, the Prior Plans maintained by the Company are merged and
integrated into, and are restated and continued under, the Plan, without an
interruption or termination of such Prior Plans. Account balances of
participants in the Prior Plans shall be transferred to the Plan effective as of
May 1, 1992, to be held, administered, and distributed thereafter in accordance
and subject to the provisions of the Plan.

Effective as of April 1, 1998, the DCA Prior Plan is merged and integrated into
and is restated and continued under the Plan without an interruption or
termination of the DCA Prior Plan. Account balances of participants in the DCA
Prior Plan shall be transferred to the Plan effective as of April 1, 1998, to be
held, administered and distributed thereafter in accordance with and subject to
the provisions of the Plan.

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Effective February 26, 1999, account balances of Transferred Participants shall
be transferred to the Plan to be held, administered and distributed thereafter
in accordance with and subject to the provisions of the Plan.

         1.4 Restatement of the Plan. The Plan was previously amended and
restated effective as of January 1, 1989 to meet the requirements of the Tax
Reform Act of 1986, and as of December 18, 1992, primarily to reflect to the
merger of the Prior Plans, to make certain plan design, administrative and
technical changes and other applicable legal developments. The Plan was amended
in various respects effective as of October 25, 1996. The Plan was amended and
completely restated effective as of April 1, 1998 primarily to reflect the
merger of the DCA Prior Plan. The Plan has been amended herein effective as of
January 1, 1998 to reflect administrative and legal changes. The Plan has been
amended herein effective as of February 26, 1999 primarily to reflect the
transfer of the accounts of Transferred Participants from the Motorola Plan. The
Plan has been amended and restated effective as of January 1, 1995 to reflect
amendments required by GUST (the Uruguay Round Agreements Act, Pub. L. 103-465;
the Uniformed Services Employment and Reemployment Rights Act of 1994, Pub. L.
103-353; the Small Business Job Protection Act of 1996, Pub. L. 104-188; the
Taxpayer Relief Act of 1997, Pub. L. 105-34; the Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206; and the Community Renewal
Tax Relief Act of 2000, Pub. L. 106-554), EGTRRA (the Economic Growth and Tax
Relief Reconciliation Act of 2001) and other changes deemed necessary by the
Company.

         1.5 Applicability of the Plan. The provisions set forth herein are
applicable only to Members (or Beneficiaries of Members) who are Covered
Employees on or after January 1, 1995. Any Member who retired or terminated
employment under a Prior Plan or the DCA Prior Plan (or any Beneficiary thereof)
shall

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have his rights determined under the provisions of the Prior Plan or DCA Prior
Plan as in effect at the time his employment relationship terminated, except as
provided elsewhere in this Plan and as required by statute or regulation.

                             Article II. Definitions

         2.1 Definitions. Whenever used in the Plan, the words and phrases
defined in this Article II shall have the following meaning unless a different
meaning is clearly required by the context of the Plan. When the defined meaning
is intended the term is capitalized.

         (a)      "Act" means the Employee Retirement Income Security Act of
                  1974, as now in effect or hereafter amended.

         (b)      "Affiliate" means--

                  (1)      the Company and any corporation, i.e., either a
                           subsidiary corporation or an affiliated or associated
                           corporation of the Company, which together with the
                           Company is a Member of a "controlled group" of
                           corporations (as defined in Code section 414(b));

                  (2)      any organization (whether or not incorporated) which
                           together with the Company is under "common control"
                           (as defined in Code section 414(c));

                  (3)      any organization (whether or not incorporated) which
                           together with the Company is an "affiliated service
                           group" (as defined in Code section 414(m)); or

                  (4)      any other entity required to be aggregated with the
                           Company pursuant to regulations under Code section
                           414(o).

         (c)      "Anniversary Date" means the Valuation Date which is the last
                  day of the Plan Year.

         (d)      "Beneficiary" means any person entitled to receive benefits
                  which may be payable upon or after a Member's

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                  death, as herein described and provided in Article VIII.

         (e)      "Board of Directors" means the Board of Directors of CTS
                  Corporation.

         (f)      "Break in Service" is defined in section 3.6.

         (g)      "Code" means the Internal Revenue Code of 1986, as amended, or
                  as it may be amended from time to time, or the corresponding
                  provisions of any subsequent law.

         (h)      "Committee" means the CTS Corporation Employee Benefits
                  Committee, as described in Article X.

         (i)      "Company" means CTS Corporation and its corporate successors.

         (j)      "Company Stock" means the common stock of CTS Corporation.

         (k)      "Compensation" means the total amount paid to, or accrued by
                  the Employer for, a Participant during a Plan Year for
                  services rendered to the Employer including salaries,
                  commissions, wages, and bonuses, and including pre-tax and
                  after-tax payroll deductions, plus amounts deferred under any
                  other plan described under Code sections 125, 401(k), or
                  132(f)(4) and all payments deferred during a Plan Year by the
                  Participant as Pre-Tax Contributions, but excluding
                  compensation payable in forms other than cash, expense
                  allowances, moving reimbursements, and tuition reimbursements.
                  Compensation shall not include amounts paid to or for an
                  Employee for services rendered while he is not a Participant
                  as herein defined. Compensation shall not include the
                  following:

                  (1)      Employer contributions to a plan of deferred
                           compensation which are not includible in the
                           Participant's gross income for the taxable year in
                           which contributed, or any distributions from a plan
                           of deferred compensation;

                  (2)      amounts realized from the exercise of a nonqualified
                           stock option or when restricted stock or

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                           property held by the Participant either becomes
                           freely transferable or is no longer subject to
                           substantial risk of forfeiture, and any amounts paid
                           by the Employer to reimburse the Participant for
                           income taxes incurred when restrictions lapse under a
                           restricted stock plan; and

                  (3)      amounts realized from the sale, exchange, or other
                           disposition of stock acquired under a qualified stock
                           option.

                  The Committee shall adopt uniform rules and interpretations
                  pertaining to the treatment of other amounts not specifically
                  referred to above.

                  Effective for Plan Years beginning on and after January 1,
                  1989 and before January 1, 1994, Compensation shall not
                  include any Participant's annual compensation which exceeds
                  $200,000, as indexed under Code section 415(d).

                  For any Plan Year beginning after December 31, 1993, a
                  Participant's Compensation in excess of $150,000 shall be
                  excluded for purposes of the Plan. The $200,000 limitation and
                  $150,000 limitation shall be adjusted at the same time and in
                  the same manner as is provided in Section 401(a)(17) of the
                  Code. Solely for purposes of Plan Years beginning prior to
                  January 1, 1997, in determining the Compensation of a
                  Participant for purposes of this limitation, the rules of
                  Section 414(q)(6) of the Code shall apply, except in applying
                  such rules, the term "family" shall include only the spouse of
                  the Participant and any lineal descendants of the Participant
                  who have not attained age 19 before the close of the Plan
                  Year. If, as a result of the application of such rules, the
                  adjusted $200,000 or $150,000 limitation is exceeded, then the
                  limitation shall be prorated among the affected individuals in

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                  proportion to each such individual's Compensation as
                  determined under this section 2.1(k) prior to the application
                  of the limitation. Notwithstanding the foregoing, the annual
                  Compensation of each Participant taken into account in
                  determining allocations for any Plan Year beginning after
                  December 31, 2001, shall not exceed $200,000, as adjusted for
                  cost-of-living increases in accordance with section
                  401(a)(17)(B) of the Code. The cost-of-living adjustment in
                  effect for a calendar year applies to Compensation for the
                  Plan Year that begins with or within such calendar year.

         (l)      "Contributions" means any and all of the following
                  contributions made under the Plan:

                  (1)      "After-Tax Contributions" means a Member's own
                           after-tax contributions to the Plan, if any, made for
                           intervals prior to January 1, 1989.

                  (2)      "Pre-Tax Contributions" or "Elective Contributions"
                           means the tax-deferred contributions made by the
                           Employer on behalf of the Participant pursuant to his
                           election to reduce his Compensation as described in
                           section 4.1.

                  (3)      "Matching Contributions" means the matching
                           contributions made by the Employer to the Plan on
                           behalf of a Participant pursuant to section 4.2 of
                           the Plan.

                  (4)      "Incentive Contributions" means any discretionary
                           additional Matching Contributions made by the
                           Employer to the Plan on behalf of a Participant
                           pursuant to section 4.2 of the Plan.

                  (5)      "Supplemental Contributions" means an Employer's
                           contributions under section 4.6 of the Plan.

                  (6)      "Rollover Contributions" means a Covered Employee's
                           contributions described in section 4.8.

         (m)      "Coverage Date" means the Effective Date as to the Company,
                  and also means the date, after the Effective

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                  Date, as of which the Plan is made effective as to any other
                  Employer.

         (n)      "Covered Employee" means each person classified as a United
                  States exempt or nonexempt salaried Employee and each United
                  States hourly paid Employee of the Employer, except that it
                  shall not include (1) an Employee who is included in a unit of
                  Employees covered by a collective bargaining agreement on or
                  after May 1, 1992 unless such agreement specifically provides
                  for his coverage under the Plan or (2) any person employed by
                  and on the payroll of any separate division, unit, or
                  operation of the Employer which is established after May 1,
                  1992, incident to the creation or acquisition (including, but
                  not limited to, acquisition by purchase of assets or by
                  liquidation, merger, or reorganization) of a separate business
                  enterprise by the Employer, except as may otherwise
                  specifically be provided in any resolution of the Board of
                  Directors adopted at the time of, or any time after, such
                  acquisition and affecting in a nondiscriminatory manner, such
                  person and all other persons similarly situated. Further, a
                  Covered Employee shall include Employees meeting the above
                  stated definition and who; (i) on or after April 1, 1998, are
                  employed by Dynamics Corporation of America or International
                  Electronic Research Corporation, or; (ii) on or after February
                  26, 1999, are employed by CTS Wireless Components, Inc.

         (o)      "Disability" means a physical or mental condition of a
                  Participant resulting from a bodily injury or disease or
                  mental disorder which renders him incapable of continuing
                  active employment with the Employer. Disability of any
                  Participant shall be determined by the Committee in accordance
                  with uniform principles consistently applied, upon the basis
                  of such medical and other evidence which the Committee deems
                  necessary and desirable.

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         (p)      "Effective Date."  The effective date of the Plan is December
                  1, 1952.

         (q)      "Eligible Retirement Plan" means a defined contribution plan
                  which provides for acceptance of rollover contributions or an
                  individual retirement account or annuity ("IRA"). For
                  distributions made after December 31, 2001, Eligible
                  Retirement Plan shall also mean an annuity contract described
                  in Section 403(b) of the Code and an eligible plan under
                  Section 457(b) of the Code which is maintained by a state,
                  political subdivision of a state, or any agency or
                  instrumentality of a state or political subdivision of a state
                  and which agrees to separately account for amounts transferred
                  into such plan from this Plan. For distributions made after
                  December 31, 2001, the definition of Eligible Retirement Plan
                  shall also apply in the case of a distribution to a surviving
                  spouse, or to a spouse or former spouse who is the alternate
                  payee under a qualified domestic relation order, as defined in
                  section 414(p) of the Code.

       (r)        "Eligible Rollover Distribution" means any distribution of all
                  or any part of the benefits payable under a qualified plan,
                  other than:

                  (1)      One of a series of substantially equal payments over
                           one of the following periods: (a) the life or life
                           expectancy of the Employee; (b) the joint lives or
                           joint life expectancy of the employee and designated
                           beneficiary; or (c) 10 years or more.

                  (2)      The non-taxable portion of a distribution.

                  (3)      A required minimum distribution under the Internal
                           Revenue Code.

                  (4)      The return of excess contributions or excess
                           deferrals under a Section 401(k) plan.

                  (5)      A deemed distribution of P.S. 58 costs for life
                           insurance coverage or upon the default of an Employee
                           loan.

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                  (6)      A dividend on ESOP stock that is passed through to
                           employees.

                  (7)      For distributions made after December 31, 1998,
                           hardship withdrawals pursuant to Section 6.3.

         For distributions made after December 31, 2001, a portion of a
         distribution shall not fail to be an Eligible Rollover Distribution
         merely because the portion consists of After-Tax Contributions which
         are not includible in gross income. However, such portion may be
         transferred only to an individual retirement account or annuity
         described in section 408(a) or (b) of the Code, or to a qualified
         defined contribution plan described in section 401(a) or 403(a) of the
         Code that agrees to separately account for amounts so transferred,
         including separately accounting for the portion of such distribution
         which is includible in gross income and the portion of such
         distribution which is not so includible.

         (s)      "Employee" means any person employed by the Company or an
                  Affiliate, but shall not include any person who is a "leased
                  employee" as described in Section 3.8 herein.

                  However, "Employee" shall exclude any individual who is
                  retained by the Company or an Affiliate to perform services
                  for such employer (for either a definite or indefinite
                  duration) and who is characterized by the Company or an
                  Affiliate as a fee-for-service worker or independent
                  contractor or in a similar capacity (rather than in the
                  capacity of an employee), regardless of such individual's
                  status under common law. This exclusion shall apply, without
                  limitation, to any individual who is or who has been
                  determined by a third party, including, without limitation, a
                  government agency or board or court or arbitrator, to be an
                  employee of the Company or an Affiliate for any purpose,
                  including, without limitation, for purposes of any employee
                  benefit plan of the Company or an

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                  Affiliate (including this Plan) or for purposes of federal,
                  state or local tax withholding, employment tax or employment
                  law.

         (t)      "Employer" means the Company and any Affiliate which elects to
                  become a party to the Plan with the approval of the Company by
                  adopting the Plan for the benefit of its eligible Employees in
                  the manner prescribed in section 13.1, or any one or more or
                  all of such adopting Affiliates, as the context indicates. The
                  Company may act as agent for an Affiliate that becomes an
                  Employer hereunder for all purposes of the Plan.

         (u)      "Enrollment Date" means (1) the first day of a new Employee's
                  initial Pay Period and (2) thereafter, each January 1, April
                  1, July 1, and October 1.

         (v)      "Excess Deferral" means the amount of a Participant's Pre-Tax
                  Contributions for a calendar year that exceed the annual
                  dollar limit described under Code section 402(g).

         (w)      "Former Participant" means a Member who has participated in
                  the Plan and who has a Member's Account under the Plan, but
                  who is no longer employed by the Company or an Affiliate.

         (x)      "Highly Compensated Employee" means an individual determined
                  in accordance with Code Section 414(q) (and with such rules
                  and regulations as shall be promulgated by the Internal
                  Revenue Service pursuant to such Code Section), and shall mean
                  an Employee who,

                           (a)      was a 5% owner (as defined in Code Section
                                    416(i)(1)) with respect to the Company or an
                                    Affiliate during the Plan Year being tested
                                    or the preceding Plan Year; or

                           (b)      for Plan Years beginning on or before
                                    December 31, 1996, received compensation
                                    from the Company or an Affiliate, during the
                                    Plan Year or the preceding Plan Year, in
                                    excess of

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                                    (i)      $75,000 (as adjusted pursuant to
                                             Code Section 415(d)); or

                                    (ii)     $50,000 (as adjusted pursuant to
                                             Code Section 415(d)) and was in the
                                             top-paid group of employees for
                                             such year; or

                                    (iii)    50 percent of the amount in effect
                                             under Code Section 415(b)(1)(A) for
                                             such year and was at any time an
                                             officer; or

                           (c)      for Plan Years beginning after December 31,
                                    1996, earned more than $80,000 of Code
                                    Section 414(q) compensation (as defined in
                                    Code Section 414(q)(4)) in the preceding
                                    Plan Year and was in the top-paid group of
                                    employees for such year. For purposes of
                                    this provision, the $80,000 amount is
                                    subject to adjustment as provided under Code
                                    Section 415(d), except that the base period
                                    shall be the calendar quarter ending
                                    September 30, 1996.

                  For purposes of this subsection 2.1(x), a former employee
                  shall be treated as a Highly Compensated Employee if (i) such
                  former employee was a Highly Compensated Employee when such
                  former employee separated from service, or (ii) such former
                  employee was a Highly Compensated Employee at any time after
                  attaining age 55.

                  Unless the Company makes the "calendar year calculation
                  election" under Treasury regulations, Highly Compensated
                  Employee also means, as to a Plan Year, any Employee who is,
                  at any time during such Plan Year, a person described in
                  paragraph (b) and is among the top-paid 100 Employees and any
                  Employee during such Plan Year who is a Five-Percent Owner.

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                  For Plan Years beginning prior to January 1, 1997 and for
                  purposes of determining whether an individual is a Highly
                  Compensated Employee, "compensation" means an Employee's
                  "compensation" as defined in Code section 414(q)(7) and the
                  applicable Treasury regulations, increased by amounts excluded
                  from wages by reason of an Employee's election to reduce wages
                  under a cafeteria plan under Code section 125 or a cash or
                  deferred arrangement under Code section 401(k), or, for Plan
                  Years beginning after December 31, 2000, by reason of Code
                  section 132(f).

                  For Plan Years beginning prior to January 1, 1997 and for
                  purposes of this section 2.1(x), if any individual is a family
                  member of a Five Percent Owner or of a Highly Compensated
                  Employee in the group consisting of the ten Highly Compensated
                  Employees paid the greatest Compensation during the year, then
                  (a) such individual shall not be considered a separate
                  Participant, and (b) any Compensation paid to such individual
                  (and any applicable Contribution or benefit on behalf of such
                  individual) shall be treated as if it were paid to (or on
                  behalf of) the Highly Compensated Employee. The term "family
                  member" means a Participant's spouse, lineal ascendants or
                  descendants and the spouses of such lineal ascendants or
                  descendants.

         (y)      "Hours of Service" means the hours of employment by the
                  Affiliates for which an Employee receives credit for purposes
                  of eligibility to participate in the Plan, as follows:

                  (1)      Hours Worked. One hour for each hour for which the
                           Employee is directly or indirectly paid or entitled
                           to payment for the performance of duties during the
                           applicable computation period for which Hours of
                           Service are being determined under the Plan. (These
                           hours shall be credited to the

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                           Employee for the computation period or periods in
                           which the duties were performed.)

                  (2)      Hours Paid but not Worked. One hour for each hour, in
                           addition to the hours in paragraph (1) above, for
                           which the Employee is directly or indirectly paid or
                           entitled to payment for reasons other than for the
                           performance of duties during the applicable
                           computation periods, such as direct or indirect pay
                           for: vacation, holidays, salary continuation for
                           periods of absence due to illness or injury, periods
                           while absent from employment due to disability, and
                           similar paid periods of nonworking time; provided,
                           however, that not more than 501 Hours of Service
                           shall be credited under this paragraph for any single
                           continuous period during which the Employee performs
                           no duties. (These hours shall be counted in the
                           computation period or periods in which the hours for
                           which payment is made occur.)

                  (3)      Military Service. The number of normally scheduled
                           hours for each week the Employee is absent from
                           employment due to service in the armed forces of the
                           United States, provided the Employee returns
                           therefrom to work as an Employee within the time
                           prescribed by law relating to veterans' reemployment
                           rights.

                  (4)      Back Pay.  One hour for each hour for which the
                           Employee is credited with compensation, irrespective
                           of mitigation of damages, due to back pay which is
                           either awarded or agreed to by the employer.

                  When time records are not available or convenient for
                  determining Hours of Service required to be credited under
                  subsections (a), (b), and (c) above, the Employee shall be
                  credited with 10 hours for each day, 45 Hours of Service for
                  each week, or 190 hours for each month

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                  for which the Employee would be required to be credited with
                  at least one Hour of Service under subsections (a), (b), and
                  (c) above. Hours of Service shall be determined in accordance
                  with reasonable standards and policies adopted by the
                  Committee in conformance with section 2530.200b-2(b) and (c)
                  of the Department of Labor regulations, which are incorporated
                  herein by reference.

         (z)      "Inactive Participant" means, effective as of April 3, 1995, a
                  Member who did participate but who is not currently eligible
                  to participate in the Plan (but whose Member's Account remains
                  with the Plan) for any reason, including, without limitation,
                  transfer to employment:

                  (1)      as an Employee of an Employer where he does not meet
                           the requirements to be a Participant, or

                  (2)      as an Employee of a nonparticipating Affiliate, and

                  Participants whose Pre-Tax Contributions are suspended
                  following a hardship withdrawal as described in Section 6.3
                  shall be Inactive Participants during such period of
                  suspension.

         (aa)     "Investment Fund" means any of the funds that may be
                  designated as Investment Funds by the Committee from time to
                  time. Participants in the DCA Prior Plan who are invested in
                  the Fixed Income Fund may remain therein until such time as
                  the contracts reach maturity. No further investments may be
                  made into this fund. Upon maturity, amounts remaining in the
                  Fixed Income Fund will be transferred to the JP Morgan Prime
                  Money Market Fund unless otherwise directed by the
                  Participant.

         (bb)     "Member" means (1) any Covered Employee who is qualified under
                  and who has become a Participant in the Plan and (2) any
                  Inactive Participant or Former Participant who still has a
                  Member's Account in the Plan.

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         (cc)     "Member's Account" means the total amount credited to the
                  separate account maintained in the Plan in accordance with the
                  provisions of the Plan for each Member which represents his
                  total proportionate interest in the Trust Fund as of any
                  Valuation Date, and which consists of the sum of the following
                  accounts:

                  (1)      "After-Tax Account" means the separate fully vested
                           account of each Member under that name to which are
                           credited the Member's After-Tax Contributions to the
                           Plan, if any, and the net worth of the Trust Fund
                           attributable thereto.

                  (2)      "Deferred Compensation Account" means the separate
                           account of each Member under that name to which is
                           credited the Member's account balance, if any,
                           transferred from the CTS Corporation Deferred
                           Compensation Plan and the net worth of the Trust Fund
                           attributable thereto.

                  (3)      "Money Purchase Account" means the separate account
                           of each Member under that name to which is credited
                           the Member's account balance, if any, transferred
                           from a Retirement Plan described in subsection (gg)
                           below and the net worth of the Trust Fund
                           attributable thereto.

                  (4)      "Pre-Tax Contributions Account" means the separate
                           fully vested account of each Member under that name
                           to which are credited his Pre-Tax Contributions under
                           the Plan and the net worth of the Trust Fund
                           attributable thereto.

                  (5)      "After-Tax Matching Contributions Account" means the
                           separate account of each Member under that name to
                           which is credited his share of the Employer's
                           Matching Contributions and Incentive Contributions
                           relating to After-Tax Contributions and the net worth
                           of the Trust Fund attributable thereto.

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                  (6)      "Pre-Tax Matching Contributions Account" means the
                           separate account of each Member under that name to
                           which is credited his share of the Employer's
                           Matching Contributions and Incentive Contributions
                           relating to Pre-Tax Contributions and the net worth
                           of the Trust Fund attributable thereto.

                  (7)      "Supplemental Contributions Account" means the
                           separate account of each Considered Participant as
                           described in section 4.6(d) under that name to which
                           is credited his share of the Employer's Supplemental
                           Contributions and the net worth of the Trust Fund
                           attributable thereto.

                  (8)      "Rollover Account" means the separate fully vested
                           account of each Member under that name to which is
                           credited a Member's Rollover Contribution, if any,
                           under section 4.8 and the net worth of the Trust Fund
                           attributable thereto.

         (dd)     "Normal Retirement Age" means age 60. A Member's right to his
                  entire Member's Account will be nonforfeitable when he attains
                  his Normal Retirement Age.

         (ee)     "Participant" means any Covered Employee of the Employer who
                  has met the eligibility requirements of the Plan set forth in
                  section 3.1 to be and become a Participant.

         (ff)     "Pay Period" means the period of time beginning with the first
                  day of the Participant's regularly scheduled work period for
                  which the Participant is customarily paid by a single check
                  and ending on the last day of such regularly scheduled work
                  period.

         (gg)     "Plan" means the "CTS Corporation Retirement Savings Plan" set
                  forth in and by this document and all subsequent amendments
                  thereto (IRS Plan No. 009; EIN of the Company 35-0225010).

         (hh)     "Plan Year" means the calendar year.

         (ii)     "Prior Plan" means the CTS Corporation Deferred Compensation
                  Plan, the CTS Retirement Plan, and that portion

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                  of the CTS of Elkhart Division Retirement Plan covering
                  nonbargaining hourly Employees, as each of such plans was in
                  effect on April 30, 1992, which plans have been merged into
                  the Plan effective as of May 1, 1992.

         (jj)     "Termination of Employment" means severance of employment (as
                  defined in Code section 401(k)(2)(B)(i)(I) for distribution
                  after December 31, 2001) from the Company and Affiliates
                  regardless of when the severance of employment occurred.

         (kk)     "Trust" as herein used means the legal entity resulting from
                  the agreement between the Company and the Trustee by which
                  Contributions made under the Plan shall be received, held,
                  invested, and disbursed to or for the benefit of Members and
                  Beneficiaries.

         (ll)     "Trust Agreement" means any agreement in the nature of a trust
                  established to form a part of the Plan to receive, hold,
                  invest, and dispose of the Trust Fund for the benefit of
                  Members and Beneficiaries.

         (mm)     "Trustee" means the corporate trustee acting under the Trust
                  Agreement and its corporate successors.

         (nn)     "Trust Fund" means all funds received by the Trustee and held
                  under the Plan, together with all income, profits, or
                  increments thereon, and which shall consist of the Investment
                  Funds.

         (oo)     "Valuation Date" means the last day of each calendar month.
                  Effective April 3, 1995, Valuation Date shall mean each
                  regular business day of the calendar year.

         (pp)     "DCA Prior Plan" means the Dynamics Corporation of America
                  Employee Savings and Investment Plan as in effect on March 31,
                  1998, which plan has been merged into the Plan effective as of
                  April 1, 1998.

         (qq)     "Motorola Plan" means the Motorola Profit Sharing and
                  Investment Plan as in effect on February 26, 1999.

         (rr)     "Transferred Participant" means a participant in the Motorola
                  Plan who is employed by CTS Wireless Components, Inc. as of
                  February 26, 1999.

                                      -17-

<PAGE>

         2.2 Gender and Number. Except when otherwise indicated by the context,
any masculine terminology herein shall also include the feminine and neuter, and
the definition of any term herein in the singular may also include the plural.

                     Article III. Eligibility, Participation
                            and Crediting of Service

         3.1      Eligibility.

         (a)      Each person who on May 1, 1992 was a Participant, Inactive
                  Participant, former Participant, or Beneficiary under the Plan
                  or a Prior Plan as in effect on April 30, 1992 shall on and
                  after May 1, 1992 continue to participate in the Plan as a
                  Member hereunder. Further, each person who on April 1, 1998
                  participated in or was a beneficiary under the DCA Prior Plan
                  as in effect on March 31, 1998 shall on and after April 1,
                  1998 participate in the Plan as a Member hereunder. Further,
                  each person who on February 26, 1999 was a Transferred
                  Participant shall on and after February 26, 1999 participate
                  in the Plan as a Member hereunder.

         (b)      On and after May 1, 1992 each other person who is or who
                  becomes a Covered Employee shall be eligible to participate in
                  the Plan as of the Enrollment Date coincident with or next
                  following the latest to occur of (1), (2), or (3) below:

                  (1)      the Coverage Date applicable to such person's group
                           of Covered Employees;

                  (2)      the date such person becomes a Covered Employee;
                           or

                  (3)      the date determined under (A) or (B) below:

                           (A)      his date of hire, if his customary
                                    employment is for at least 1,000 Hours of
                                    Service in a year, or

                                      -18-

<PAGE>

                           (B)      if his customary employment is not for at
                                    least 1,000 Hours of Service in a year, the
                                    date as of which he actually completes at
                                    least 1,000 Hours of Service by the end of
                                    (i) his initial 12-month period of
                                    employment or (ii) any Plan Year ending
                                    after such 12-month period, whichever occurs
                                    first, if such person is a Covered Employee
                                    on such Enrollment Date, except that if a
                                    separated Covered Employee otherwise
                                    eligible to participate returns to
                                    employment as a Covered Employee after such
                                    Enrollment Date, such person shall again
                                    become eligible to participate as of the
                                    following Enrollment Date.

         3.2 Participation. A Covered Employee's participation in the Plan and
election to make Pre-Tax Contributions shall be voluntary. A Covered Employee
who is eligible to participate under section 3.1 may become a Participant and
make Pre-Tax Contributions as provided in section 4.1 as of the first day of his
initial Pay Period or as of any subsequent Enrollment Date by completing an
application form prescribed by the Committee and filing such application with
the Committee at such time and in such manner as the Committee shall determine.
In making such application the Covered Employee shall signify acceptance of the
terms and conditions of the Plan and shall be bound thereby. Each application
will authorize the Employer to deduct Pre-Tax Contributions from his
Compensation at the rate specified in the form and will also specify the
Investment Fund(s) in which his Pre-Tax Contributions are to be invested.

         3.3 Duration of Participation. A Covered Employee who becomes a
Participant shall continue to be a Participant or Inactive Participant until he
has a Termination of Employment and also shall continue to be a Member
thereafter for as long as he

                                      -19-

<PAGE>

is entitled to receive any benefits hereunder. After receiving all benefits to
which he is entitled hereunder, he shall cease to be a Member. If a Member
incurs a Termination of Employment and thereafter returns to employment as a
Covered Employee, such person shall immediately again be eligible to become a
Participant in the Plan as of the date of reemployment.

         3.4      Transferred Employees.

         (a)      An Employee who shall be transferred into employment that
                  renders him eligible to become a Participant hereunder shall
                  be credited with Vesting Service for all employment with the
                  Employer and Affiliates, before and after such transfer.

         (b)      Any Participant who is transferred to employment where he
                  becomes an Inactive Participant shall not be eligible to make
                  Pre-Tax Contributions for the period in which he is an
                  Inactive Participant. The Member's Account of such an Inactive
                  Participant shall continue to be held and administered under
                  the Plan, shall be adjusted as provided in section 5.7, shall
                  be subject to all other Plan provisions pertaining to Inactive
                  Participants, and shall be distributed only upon Termination
                  of Employment with the Employers and Affiliates as provided in
                  Article VII.

         3.5 Vesting Service. The term "Vesting Service" is used to determine
whether an Employee's service prior to a Break in Service shall be reinstated if
he is reemployed and to determine his vesting percentage under section 7.4. An
Employee shall receive credit for Vesting Service for his period of employment
by the Employer and nonparticipating Affiliates determined in accordance with
uniform and nondiscriminatory standards and policies adopted by the Committee,
which standards and policies shall be consistently observed and applied;
provided, however, that--

                                      -20-

<PAGE>

         (a)      Vesting Service shall be determined in completed full years
                  and fractions of years in excess of completed full years.

         (b)      For employment prior to May 1, 1992, an Employee shall be
                  credited as of May 1, 1992 with Vesting Service equal to the
                  "years of service" he had under the Plan or a Prior Plan as of
                  April 30, 1992, determined under the service and break in
                  service provisions of the Plan or Prior Plan as in effect on
                  April 30, 1992. An Employee who was a participant under the
                  DCA Prior Plan as in effect on March 31, 1998, shall be
                  credited as of April 1, 1998 with Vesting Service equal to the
                  "years of service" he had under the DCA Prior Plan, determined
                  under the service and break in service provisions of the DCA
                  Prior Plan as in effect on March 31, 1998. An employee who is
                  a Transferred Participant shall be credited as of February 26,
                  1999 with Vesting Service equal to the "years of service" he
                  had under the Motorola Plan, determined under the service and
                  break in service provisions of the Motorola Plan as in effect
                  on February 26, 1999.

         (c)      Beginning May 1, 1992, an Employee shall receive credit for
                  Vesting Service for the period of time elapsed from the later
                  to occur of his date of hire or May 1, 1992 to his Break in
                  Service, including but not limited to credit for the following
                  periods:

                  (1)      The period he is on any leave of absence from work
                           with the Employer or nonparticipating Affiliate for
                           military service, but not to exceed the period
                           required under the Federal law pertaining to
                           veterans' reemployment rights; provided, however,
                           that if he fails to report for work at the end of
                           such leave during which he has reemployment rights,
                           he shall receive credit for Vesting Service while on
                           such leave only until his Break in Service.

                                      -21-

<PAGE>

                  (2)      The period he is absent from employment due to an
                           authorized leave of absence or layoff, but not to
                           exceed the maximum period applicable to the Employee
                           under the Employer's leave and layoff policies;
                           provided, however, that if he fails to report for
                           work at the end of such authorized leave or layoff,
                           he shall receive credit for Vesting Service while on
                           such authorized leave or layoff only until his Break
                           in Service.

         (d)      Reemployment.  If an Employee who has had a Break in Service
                  after May 1, 1992 is subsequently reemployed as an Employee,
                  he shall be considered a new Employee for purposes of the Plan
                  except--

                  (1)      Reemployment Within Less Than a One-Year Period.  If
                           he is reemployed before at least 12 months have
                           elapsed after the earlier to occur of:

                           (A)      his quit, discharge, or retirement, or

                           (B)      his first day of absence from employment for
                                    any other reason which results in a Break in
                                    Service,

                           the Vesting Service he had at such break shall be
                           reinstated upon his reemployment and he shall receive
                           credit for Vesting Service for the period between his
                           Break in Service and his reemployment.

                  (2)      Reemployment With a Vested Benefit. If upon his
                           reemployment he is then eligible for a benefit under
                           Article VII derived from Employer Contributions, the
                           Vesting Service he had at such break shall be
                           reinstated as of his date of reemployment.

                  (3)      Reemployed and Meeting the Parity Rule. If neither
                           (a) nor (b) is applicable, then, if the continuous
                           period between his Break in Service and his
                           reemployment does not equal or exceed the greater of
                           five or the number of years of Vesting Service he had
                           prior to such break, the Vesting

                                      -22-

<PAGE>

                           Service he had at such break shall be reinstated upon
                           his reemployment.

         3.6      Break in Service.  Break in Service means the earlier to occur
of (a) or (b) below:

         (a)      The date the Employee quits, is discharged, or retires.

         (b)      The first anniversary of the first day of his authorized
                  absence from employment with the Employer or Affiliate (with
                  or without pay) for any reason other than in (a) above, such
                  as sickness, military service, authorized leave of absence, or
                  layoff. An Employee who fails to return to work at the
                  expiration of an authorized absence shall be deemed to have
                  had a Break in Service on the earlier to occur of (1)
                  expiration of an authorized absence or a recall from layoff or
                  (2) the first anniversary of the first day of such absence.

(The fact that an Employee who is a Participant becomes an Inactive Participant
shall not constitute a Break in Service, but the rules set forth in sections 3.5
and 3.6 shall continue to apply to such an Employee during the period in which
he is an Inactive Participant.)

         3.7 Maternity/Paternity Absence, Family and Medical Leave. In the case
of an Employee (a) whose absence from work for maternity or paternity reasons
begins on or after January 1, 1985, to the extent not otherwise counted as an
authorized leave of absence and to the extent such absence continues beyond a
12-month period or (b) whose absence from employment, up to twelve weeks, on or
after August 5, 1993 qualifies for leave under the Family and Medical Leave Act
of 1993, such Employee's Break in Service shall occur on the second anniversary
of this section 3.7, absence from work for maternity or paternity reasons means
an absence (a) by reason of pregnancy of the individual, (b) by reason of the
birth of a child of the individual, (c) by reason of the placement of a child
with the individual in connection

                                      -23-

<PAGE>

with the adoption of such child by such individual, or (d) for purposes of
caring for such child for a period beginning immediately following such birth or
placement. This section 3.7 shall apply only for the purpose of determining
whether an Employee's Vesting Service must be reinstated upon reemployment
pursuant to section 3.5(d) and not for purposes of determining the number of
years of his Vesting Service. There shall be no duplication of credit between a
period credited under this section 3.7 and a period for which credit is granted
for Vesting Service under section 3.5.

         3.8 Leased Employees. A person who is not an Employee of an Employer or
nonparticipating Affiliate and who performs services for an Employer or a
nonparticipating Affiliate pursuant to an agreement between the Employer or
nonparticipating Affiliate and a leasing organization shall be considered a
"leased employee" if he performed the services on a substantially full-time
basis for a year and such services were performed under the primary direction or
control of an Employer or nonparticipating Affiliate. A person who is considered
a "leased employee" of an Employer or nonparticipating Affiliate shall not be
considered a Covered Employee for purposes of participating in this Plan or
receiving any contribution or benefit under this Plan. A leased employee shall
be excluded from this Plan regardless of whether he participates in any plan
maintained by the leasing organization. However, if a leased employee
participates in the Plan as a result of subsequent employment with an Employer,
he shall receive credit for Vesting Service for such employment as a leased
employee. Notwithstanding the preceding provisions of this section, a leased
employee shall be treated as an Employee for purposes of applying the
requirements described in Code section 414(n)(3) and for purposes of determining
the number and identity of Highly Compensated Employees.

         3.9 USERRA. Notwithstanding any provision of the Plan to the contrary,
contributions, benefits, loan repayments, and

                                      -24-

<PAGE>

service credit with respect to qualified military service (within the meaning of
Code Section 414(u)(5)) will be provided in accordance with Section 414(u) of
the Code, effective for reemployment on or after December 12, 1994.

                                      -25-
<PAGE>

                            Article IV. Contributions

         4.1      Participant Pre-Tax Contributions.

         (a)      Initial Contributions. Each Participant, so long as he remains
                  a Participant, may elect (on a form furnished by the Committee
                  and in accordance with the Committee's rules) to reduce his
                  Compensation by payroll reduction equal to between one percent
                  (1%) and thirty-five percent (35%) (eighteen percent (18%)
                  prior to May 1, 2002), in whole percentages of his
                  Compensation paid for each Pay Period. Payroll reductions may
                  begin as of any Enrollment Date provided that payroll
                  reduction and related forms are received by a specified time
                  prior to such Enrollment Date. The amount by which the
                  Participant's Compensation is reduced shall be contributed by
                  the Employer on the Participant's behalf to the Plan as the
                  Participant's Pre-Tax Contributions. The Committee shall have
                  the authority to limit the Pre-Tax Contributions of
                  Participants to the extent necessary to assure compliance with
                  the deferral percentage limitation in section 4.4, the
                  multiple use of alternatives test in section 4.5(d) and the
                  limitation on annual account additions in section 4.7 for any
                  Plan Year, notwithstanding that such limitation may result in
                  the Pre-Tax Contribution of any Participant being less than a
                  whole percentage of such Participant's Compensation.

         (b)      Adjustments. A Participant may change the percentage of his
                  Pre-Tax Contributions at any time (or, prior to May 1, 2002,
                  once each calendar quarter as of any Enrollment Date) by
                  filing a notice of such change in such manner and in
                  accordance with such rules as are established by the
                  Committee. Pre-Tax Contributions by Section 16 Reporting
                  Persons shall be limited as provided in section 5.5.

                                      -26-
<PAGE>

         (c)      Suspension. A Participant may elect to become an Inactive
                  Participant, and have his Pre-Tax Contributions suspended, as
                  of any payroll date by filing with the Employer a written
                  notice of such suspension (on a form furnished by the
                  Committee and in accordance with the Committee's rules), and
                  his Pre-Tax Contributions shall cease as of the first day of
                  the next Pay Period following the date on which the
                  Participant submits the notice.

         (d)      Inactive Participants. A Participant who ceases to qualify as
                  a Covered Employee but who remains in the employment of the
                  Employer or Affiliate, and a Participant whose Pre-Tax
                  Contributions have been suspended under section 6.3(e) due to
                  a hardship withdrawal, shall become an Inactive Participant
                  and shall have his Pre-Tax Contributions completely
                  discontinued, effective as of the date of such change of
                  employment status or withdrawal.

         (e)      Resumption. Any Participant whose Pre-Tax Contributions have
                  been suspended may elect again to become a Participant and
                  have such contributions resumed if at that time he qualifies
                  to elect to be a Participant, by filing a written notice (on a
                  form furnished by the Committee and in accordance with the
                  Committee's rules) therefor by a specified time prior to the
                  date as of which such person desires again to become a
                  Participant and have his Pre-Tax Contributions resumed. Such
                  resumption shall be effective as of (1) any subsequent
                  Enrollment Date, in the case of a voluntary suspension of
                  Pre-Tax Contributions under section 4.1(c) or (2) the first
                  day of any month following the 6-month suspension period, in
                  the case of involuntary suspension of Pre-Tax Contributions
                  under section 6.3(e) or 6.4.

         (f)      Former Participants. A Participant, or an Inactive
                  Participant, whose employment with the Employer and

                                      -27-
<PAGE>

                  Affiliates terminates for any reason shall become a Former
                  Participant, and any Pre-Tax Contributions he is making as a
                  Participant shall be discontinued, effective as of his final
                  Pay Period.

         (g)      Deposit and Allocations. Pre-Tax Contributions shall be paid
                  over by the Employer to the Trustee for deposit into the
                  Trust, and shall be allocated and credited to the
                  Participant's Pre-Tax Contributions Account in the Plan as
                  soon as practicable after the date they would have been
                  otherwise received as Compensation. The final payroll
                  reduction contributions for the Plan Year shall not be made
                  later than the time when the Company is required to file its
                  Federal income tax return for the Plan Year. All amounts
                  elected by the Participant to be contributed to the Plan
                  pursuant to this section shall at all times be fully vested.

         4.2      Employer Matching and Incentive Contributions.

         (a)      Matching Contribution. Each month for the interval from May 1,
                  1992 through December 31, 1992 and each month for each Plan
                  Year until April 3, 1995, the Employer shall contribute to the
                  Trust on behalf of Participants who make Pre-Tax Contributions
                  for the month. Effective April 3, 1995, the above Employer
                  Contributions shall be contributed to the Trust on behalf of
                  Participants as soon as practical after the payroll settlement
                  date for which the Employer Contribution is made. For the
                  above Employer Contributions that are contributed to the Trust
                  on wages earned prior to July 4, 1999, the Employer shall
                  contribute an amount which, when increased by the total amount
                  of any forfeitures credited under Section 7.4 shall be equal
                  to 50 percent of the

                                      -28-
<PAGE>

                  Participant's Pre-Tax Contributions up to 3 percent of
                  Compensation plus 25 percent of the Participant's Pre-tax
                  contributions between 4 and 6 percent of Compensation made
                  during that month pursuant to Section 4.1. For the above
                  Employer Contributions that are contributed to the Trust on
                  wages earned on or after July 4, 1999, the Employer shall
                  contribute an amount which, when increased by the total amount
                  of any forfeitures credited under Section 7.4, shall be equal
                  to 50 percent of the Participant's Pre-Tax Contributions up to
                  6 percent of Compensation made during that month pursuant to
                  Section 4.1.

                  Incentive Contribution. The Employer may, but is not required
                  to, make an additional, discretionary Matching Contribution to
                  the Plan for each Plan Year, which shall be called an
                  Incentive Contribution. Any such discretionary Incentive
                  Contribution shall be made as of the end of the Employer's
                  taxable year.

         (b)      Maximum Deductible Contributions. In no event shall the sum of
                  the aggregate Pre-Tax Contributions, Matching Contributions,
                  Incentive Contributions, and Supplemental Contributions under
                  section 4.6 made by the Employer for a Plan Year exceed the
                  maximum amount deductible by the Employer for a contribution
                  to the Plan for the Plan Year.

         (c)      Deposit of Contributions. Each Participant's Matching
                  Contribution shall be paid over by the Employer to the Trustee
                  and credited to the Trust as soon as possible after the end of
                  the month for which made, and Incentive Contributions shall be
                  credited as of the end of the Plan Year for which made, but in
                  any event no later than the date the Employer's Federal income
                  tax return is due for the Plan Year, including extensions.

                                      -29-
<PAGE>

         (d)      Allocation. The Employer's Matching Contribution for each
                  month shall be allocated and credited as of the last day of
                  each month to the Pre-Tax Matching Contributions Accounts of
                  all persons who made Pre-Tax Contributions under section 4.1
                  during such month and who are Covered Employees at any time
                  during such month. Such allocation and credit shall be in the
                  proportion that the Pre-Tax Contribution of each such
                  Participant (1) up to 3 percent of Compensation and (2) from
                  4-6 percent of Compensation for the Plan Year bears to such
                  aggregate Pre-Tax Contributions (A) up to 3 percent of
                  Compensation and (B) from 4-6 percent of Compensation,
                  respectively, of all such Participants for such month.
                  Employer Incentive Contributions shall be allocated in a
                  similar manner as of the end of each Plan Year.

         4.3      Dollar Limitation on Pre-Tax Contributions.
                  (a) Dollar Limit. Except as otherwise provided by Section 4.9
                  of the Plan or Section 414(v) of the Code, in no event shall a
                  Member's aggregate Pre-Tax Contributions under the Plan for
                  any calendar year beginning with 1987, when combined with any
                  other elective pre-tax deferrals under Code section 402(g)
                  made on behalf of the Member by the Employer and Affiliates
                  for such calendar year, exceed $11,000 (for calendar year
                  2002), or such higher annual amount as may be determined by
                  the Secretary of the Treasury to reflect increases in the cost
                  of living.

                  (b) Distribution of Excess Deferrals. In the event that in a
                  calendar year a Member's Pre-Tax Contributions reach the level
                  of an Excess Deferral, payroll deductions therefore shall
                  automatically cease and the Member shall be entitled to a
                  refund of any Excess Deferral. A distribution of Excess
                  Deferrals, adjusted for earnings and losses, shall be made no

                                      -30-
<PAGE>
                  later than the April 15 of the calendar year following the
                  calendar year in which such Excess Deferrals were made.

         4.4      Deferral Percentage Limitation on Pre-Tax Contributions.
                  Notwithstanding section 4.1, in no event shall the Employer
                  permit Pre-Tax Contributions for any Plan Year which would
                  cause the actual deferral percentage of the group of Members
                  who are Highly Compensated Employees to exceed the actual
                  deferral percentage of the group of all other Members by more
                  than the greater of --

         (a)      one and one-quarter times the actual deferral percentage of
                  the group of all other Members; or

         (b)      the lesser of (1) two times the actual deferral percentage of
                  the group of all other Members, or (2) two percentage points
                  above the actual deferral percentage of the group of all other
                  Members.

                  The actual deferral percentage of each group of eligible
                  Employees for any Plan Year shall be the average of the ratios
                  (calculated separately for each eligible Employee in each
                  group) of (A) the Pre-Tax Contributions made on behalf of each
                  eligible Employee for such Plan Year (or the Plan Year
                  immediately preceding such Plan Year, for Members who are not
                  Highly Compensated Employees and for Plan Years beginning on
                  or after January 1, 1997) to (B) such eligible Employee's
                  compensation for such Plan Year (or the Plan Year immediately
                  preceding such Plan Year, for Members who are not Highly
                  Compensated Employees and for Plan Years beginning on or after
                  January 1, 1997).

                  For purposes of this section 4.4 and section 4.5, the
                  Committee shall have the authority each year to choose a
                  definition of compensation as defined in Code Section

                                      -31-
<PAGE>

                  415(c)(3) and the regulations thereunder, including such
                  modifications to such definitions as set forth in the
                  regulations under Code Section 414(s).

                  If the Committee determines that a refund of the amount of
                  Pre-Tax Contributions is necessary in order to assure
                  compliance with the above limitation, the Committee shall
                  refund the amount of the excess Pre-Tax Contributions of
                  affected Members. A refund of the contributions to comply with
                  the above limitation shall be made only with respect to those
                  Members who are Highly Compensated Employees according to the
                  following procedures:

                  (a)      For Plan Years beginning before January 1, 1997, such
                           refunds shall be made in such manner that the Pre-Tax
                           Contributions of those Highly Compensated Employees
                           with the largest Pre-Tax Contributions as a
                           percentage of compensation shall be reduced first.

                  (b)      For Plan Years beginning on or after January 1, 1997,
                           excess contributions shall be allocated to the Highly
                           Compensated Employees with the largest amount of
                           Pre-Tax Contributions taken into account in
                           calculating the actual deferral percentage test for
                           the year in which the excess arose, beginning with
                           the Highly Compensated Employee with the largest
                           dollar amount of Pre-Tax Contributions and continuing
                           in descending order until all of the excess
                           contributions have been allocated. For purposes of
                           the preceding sentence, the "largest amount" is
                           determined after distribution of any excess
                           contributions.

                  Such excess contributions (reduced by any Excess Deferrals
                  returned under section 4.3(b)), adjusted for earnings and
                  losses, shall be refunded to the Highly

                                      -32-
<PAGE>

                  Compensated Employees as soon as practicable. In no event,
                  however, shall such excess contributions be left undistributed
                  any later than the last day of the Plan Year following the
                  Plan Year in which such excess contributions were made. The
                  Committee may also reduce Pre-Tax Contributions so that the
                  deductible limits of Code Section 404(a) are not exceeded.

         4.5      Contribution Percentage Limitation on Matching and Incentive
                  Contributions.

         (a)      Limitation. Notwithstanding section 4.2, in no event shall the
                  Plan permit Matching and Incentive Contributions to be made
                  for Members for any Plan Year that would cause the
                  contribution percentage of the group of Members who are Highly
                  Compensated Employees to exceed the contribution percentage of
                  the group of all other Members by more than the greater of --

                  (1)      one and one-quarter times the contribution percentage
                           of the group of all other Members; or

                  (2)      the lesser of (A) two times the contribution
                           percentage of the group of all other active Members
                           or (B) two percentage points above the contribution
                           percentage of the group of all other Members.

         (b)      Contribution Percentage. The contribution percentage of each
                  group of Members for any Plan Year shall be the average of the
                  ratios (calculated individually for each Member in each group)
                  of (1) the Matching and Incentive Contributions made for each
                  Member for such Plan Year (or the Plan Year immediately
                  preceding such Plan Year, for members who are not Highly
                  Compensated Employees and for Plan Years beginning on or after
                  January 1, 1997) to (2) such Member's compensation for such
                  Plan Year (or the Plan Year immediately preceding such Plan
                  Year, for members who are not Highly Compensated Employees and
                  for Plan Years beginning on or after January 1, 1997). The
                  Committee, in its discretion

                                      -33-
<PAGE>

                  (and pursuant to regulations issued by the Secretary of the
                  Treasury) may also consider the Member's Pre-Tax Contributions
                  when computing the contribution percentage for each group
                  under this section, provided that (1) all the Pre-Tax
                  Contributions, including such contributions being considered,
                  comply with the limits under section 4.4 and (2) the Matching
                  and Incentive Contributions (excluding such contributions
                  being considered under this section), comply with the limits
                  under section 4.4.

          (c)     Reduction to Meet Contribution Percentage Limit. To the extent
                  necessary to conform the contribution percentages for any Plan
                  Year to the limitations of subsection (a), the Committee shall
                  refund the Matching and/or Incentive Contributions made for
                  the group of active Members who are Highly Compensated
                  Employees (called the "Excess Aggregate Contribution")
                  according to the following procedures:

                  (1)      For Plan Years beginning before January 1, 1997, such
                           refunds shall be made in such manner that the
                           Matching and/or Contributions of those Highly
                           Compensated Employees with the largest Matching
                           and/or Incentive Contributions as a percentage of
                           compensation shall be reduced first.

                  (2)      For Plan Years beginning on or after January 1, 1997,
                           Excess Aggregate Contributions shall be allocated to
                           the Highly Compensated Employees with the largest
                           amount of Matching and/or Incentive Contributions
                           taken into account in calculating the actual
                           contribution percentage test for the year in which
                           the excess arose, beginning with the Highly
                           Compensated Employee with the largest dollar amount
                           of Matching and/or Incentive Contributions and
                           continuing in descending order

                                      -34-
<PAGE>

                           until all of the Excess Aggregate Contributions have
                           been allocated. For purposes of the preceding
                           sentence, the "largest amount" is determined after
                           distribution of any Excess Aggregate Contributions.

          (d)     Multiple Use of Alternative Tests. Solely for Plan Years
                  beginning prior to January 1, 2002,this subsection shall apply
                  only in Plan Years for which the Pre-Tax Contributions for the
                  Plan Year comply with the limits set forth in section 4.4
                  solely by meeting the alternative actual deferral percentage
                  test set forth in section 4.4(b) and the Matching
                  Contributions for the Plan Year comply with the limits set
                  forth in section 4.5(a) solely by meeting the alternative
                  contribution percentage test set forth in section 4.5(a)(2).

                  For Plan Years described in the preceding paragraph, the Plan
                  shall not be treated as complying with the limits of section
                  4.5(a) if the sum of the actual deferral percentage and
                  contribution percentage of the group of Members who are Highly
                  Compensated Employees exceeds the following limit (known as
                  the "Aggregate Limit") which is the sum of:

                  (1)      one and one-quarter times the greater of the actual
                           deferral percentage or contribution percentage of the
                           group of all other Members, and

                  (2)      the lesser of --

                           (A)      two times the lesser of the actual deferral
                                    percentage or contribution percentage of the
                                    group of all other Members, or

                           (B)      the sum of two percentage points and the
                                    lesser of the actual deferral percentage or
                                    contribution percentage of the group of all
                                    other Members.

                                      -35-
<PAGE>

         (e)      Reductions to Meet Aggregate Limit. To the extent necessary to
                  conform the contribution percentages for any Plan Year to the
                  limitation of paragraph (d) above, the Company shall refund
                  the Matching and/or Incentive Contributions of Highly
                  Compensated Employees in the same manner as provided under
                  section 4.5(c).

         4.6      Supplemental Contributions.

         (a)      Annual Contributions. For the period from May 1, 1992 through
                  December 31, 1992 and for each Plan Year thereafter, the
                  Company shall make a monthly contribution to the Plan on
                  behalf of Considered Participants, as described in (d) below,
                  of an amount equal to 3 percent of the Compensation of each
                  Considered Participant for such month. The Supplemental
                  Contribution shall become due and payable as of the last day
                  of each month, irrespective of the Company's earnings and
                  profits.

         (b)      Allocation of Supplemental Contribution. The Supplemental
                  Contribution shall be allocated and credited as of the last
                  day of each month for which made to the Supplemental
                  Contributions Accounts of all Considered Participants who had
                  any Compensation for such month. Such allocation shall be in
                  the ratio that each Considered Participant's Compensation for
                  the month bears to the total Compensation during such month of
                  all Considered Participants entitled to share in such
                  contribution.

         (c)      Payment to Trustee. Such Supplemental Contribution shall be
                  paid to the Trustee on a monthly basis, but not later than the
                  due date, including extensions, for the Employer to obtain a
                  Federal income tax deduction for such contribution for the
                  Plan Year.

         (d)      Considered Participants. "Considered Participants" means
                  nonexempt salaried and hourly paid Employees employed at the
                  following facilities of the Company: Bentonville, Arkansas;
                  Brownsville, Texas; Elkhart,

                                      -36-
<PAGE>

                  Indiana nonbargaining unit Employees hired on or after July 1,
                  1986; Corporate Office Employees hired on or after July 1,
                  1986; Sandwich, Illinois; and West Lafayette, Indiana; and
                  such other groups of Employees as may be designated in writing
                  by the Committee after May 1, 1992 as Considered Participants.

         4.7 Limitations on Annual Account Additions. The provisions of this
section 4.7 shall apply to Plan Years beginning on and after January 1, 1987.

         (a)      Annual Account Addition. The term "Annual Account Addition"
                  means, for any Member for any Plan Year the sum of --

                  (1)      the Affiliate contributions made for him under "any
                           defined contribution plan" for the year (including
                           Employer Contributions made under sections 4.1, 4.2,
                           and 4.6 of the Plan;

                  (2)      the Member's after-tax contributions, if any, for the
                           year to "any defined contribution plan";

                  (3)      forfeitures allocated to him for the year under "any
                           defined contribution plan"; and

                  (4)      any contributions allocated on his benefit to any
                           individual medical account under Code sections
                           401(h)(6) and 419A(d).

                  "Any defined contribution plan" means the Plan and all other
                  defined contribution plans of the Affiliates considered as one
                  plan. A Member's Annual Account Addition shall not include any
                  amounts transferred to the Plan from another qualified plan of
                  the Affiliates.

         (b)      Limitation. Except as otherwise provided by Section 4.9 of the
                  Plan or Section 414(v) of the Code, notwithstanding any other
                  provisions of the Plan, the Annual Account Addition of a
                  Member for any Plan Year, which shall be the "limitation
                  year," shall not exceed the lesser of --

                                      -37-
<PAGE>

                  (1)      for Plan Years beginning on or after January 1, 1995,
                           the limitation set forth in Code Section 415
                           (c)(i)(A) in effect for the Plan Year, and for Plan
                           Years beginning prior to January 1, 1995, the greater
                           of $30,000 or one-fourth of the defined benefit
                           dollar limitation set forth in Code section 415(b) in
                           effect for such Plan Year, or

                  (2)      100 percent (25 percent for Plan Years beginning
                           prior to January 1, 2002) of the Member's
                           compensation for such Plan Year. For purposes of this
                           section 4.7, "compensation" means the Member's
                           taxable compensation for the Plan Year as defined in
                           Code section 415(c)(3), (i) for purposes of Plan
                           Years beginning prior to January 1, 1998, not
                           including any pay deferrals under Code sections 125
                           and 401(k), (ii) for purposes of Plan Years beginning
                           on or after January 1, 1998, including any pay
                           deferrals under Code sections 125, 401(k), or 132
                           (f)(4), and (iii) without regard to the Code section
                           401(a)(17) compensation limitation. The compensation
                           limitation referred to in section 4.7(b)(2) shall not
                           apply to any contribution for medical benefits after
                           separation from service (within the meaning of Code
                           section 401(h) or section 419A(f)(2)) which is
                           otherwise treated as an annual addition.

         (c)      Reduction in Annual Account Additions. If in any Plan Year a
                  Member's Annual Account Additions exceed the applicable
                  limitation determined under subsection (b) above, such excess
                  (referred to herein as the "Annual Account Excess") shall not
                  be allocated to his accounts in any defined contribution plan,
                  but shall be treated in the following manner:

                  (1)      First, his Pre-Tax Contributions shall be reduced up
                           to the amount of the Annual Account Excess, and any
                           such contributions so reduced

                                      -38-
<PAGE>

                           shall be refunded to him as soon as administratively
                           convenient after the end of the Plan Year.

                  (2)      If there is any remaining Annual Account Excess after
                           the application of paragraph (1) above, his
                           allocation of Matching and Incentive Contributions
                           for the year shall be reduced, up to the remaining
                           amount of the Annual Account Excess.

                  (3)      If there is any remaining Annual Account Excess after
                           the application of paragraphs (1) and (2) above, his
                           share of Supplemental Contributions for that year
                           shall be reduced, up to the remaining amount of the
                           Annual Account Excess.

                  (4)      Any reduction in such a Member's allocation under (2)
                           and (3) above attributable to Employer contributions
                           shall be deemed to be a forfeiture under the Plan for
                           such Plan Year and be reallocated as provided for in
                           section 7.4.

         (d)      Dual Plan Limitation. For Plan Years beginning prior to
                  January 1, 2000, if a Member is also a participant in any
                  defined benefit plan maintained by the Affiliates, the
                  Member's projected benefit under such defined benefit plan
                  shall be limited to the extent necessary to comply with the
                  dual plan limitation set forth in Code section 415(e).

         4.8 Rollover Contributions. A Covered Employee (whether or not he has
become a Participant) may, in accordance with procedures approved by the
Committee, contribute to his Rollover Account an amount that constitutes a
"rollover amount" or a "rollover contribution" within the meaning of Code
sections 402(c), 403(a)(4), and 408(d)(3), including but not limited to the
following amounts:

         (a)      all or part of a distribution qualifying as a "qualified total
                  distribution" (including a single sum plan

                                      -39-
<PAGE>

                  termination distribution and a distribution of deductible
                  voluntary employee contributions) either from a trust
                  described in Code section 401(a) and exempt from tax under
                  Code section 501(a) or from a Code section 403(a) annuity
                  plan, less any amounts considered to be employee
                  contributions, or

         (b)      a distribution from an individual retirement account or
                  annuity, as described in Code section 408, the entire amount
                  of which distribution or redemption is from a source described
                  in (a) above.

Such a contribution must be paid over to the Trustee on or before the sixtieth
day after the Covered Employee receives or is deemed to have received the
distribution. The contribution shall be allocated and credited to the Covered
Employee's Rollover Account as of the Valuation Date coincident with or next
following the date the contribution is paid to the Trust Fund. The Rollover
Account of each Covered Employee shall be fully vested at all times.

Except as otherwise specifically provided in the Plan, a Rollover Account
established to hold any Rollover Contributions shall be subject to the same
investment provisions as a Member's After-Tax Account in the Plan, shall be
withdrawable in service as provided in section 6.2, and shall be distributable
to the Member as provided in sections 7.1 - 7.4. Notwithstanding the foregoing,
a Member may take a loan, in accordance with section 6.5, against any amounts in
his Rollover Account.

         4.9  Catch-up Contributions.

                  Notwithstanding any provisions of this Article IV to the
                  contrary, effective September 30, 2002, all Participants who
                  are eligible to make elective deferrals under this Plan and
                  who have attained age 50 before the close of the Plan Year
                  shall be eligible to make catch-up contributions in accordance
                  with, and subject to the

                                      -40-
<PAGE>

                  limitations of, section 414(v) of the Code. Such catch-up
                  contributions shall not be taken into account for purposes of
                  the provisions of the Plan implementing the required
                  limitations of sections 402(g) and 415 of the Code. The Plan
                  shall not be treated as failing to satisfy the provisions of
                  the Plan implementing the requirements of section 401(k)(3),
                  401(k)(11), 401(k)(12), 410(b), or 416 of the Code as
                  applicable, by reason of the making of such catch-up
                  contributions.

                                      -41-

<PAGE>

                  Article V. Accounts and Records of the Plan,
                              Investment Elections

         5.1 Accounts. The Committee shall cause to be established and
maintained such records and accounts as it deems necessary or advisable in
connection with the management and operation of the Plan. The Committee shall
also establish and maintain a separate account in each of the Investment Funds
comprising the Trust for each Member to which shall be credited, or against
which shall be debited, from time to time as herein provided, the Member's
Pre-Tax Contributions, Matching Contributions, Incentive Contributions,
Supplemental Contributions, and any Rollover Contributions, the Member's share
of that Fund's income, the Member's share of any gain or loss in respect of that
Fund, earnings, if any, credited to the Member's Account, and distributions, if
any, from the Member's Account. It is stipulated, however, that the
establishment and maintenance of such separate accounts shall not require any
segregation of the assets of the Trust.

A Member's Pre-Tax Contributions together with the net income of the Trust
attributable thereto shall be separately identified in the Member's Account, but
for purposes of investment, Members' Pre-Tax Contributions shall be commingled
and invested with Members' Matching Contributions, Incentive Contributions,
Supplemental Contributions, and any Rollover Contributions. The Trust shall
consist of the Investment Funds, in each of which Investment Funds each Member
who has any interest therein shall have an undivided proportionate interest.
Each Member's undivided proportionate interest in each Investment Fund shall be
measured by the proportion that the Member's net balance in that Investment Fund
bears to the total net balance of that Investment Fund as of the date that such
interest is being determined.

         5.2 Records. The books of account, forms, and accounting methods used
in the administration of the Plan shall be prescribed by and under the
supervision and control of the Com-

                                      -42-
<PAGE>

mittee. Except as otherwise provided by law, a Member or Beneficiary shall not
have the right to inspect any of the records of the Plan except the individual
accounts maintained and established for said Member. The Committee may appoint
an agent to maintain all or any part of the records showing the interest of each
Member under the Plan, in such form and manner as the Committee may direct.

         5.3 Statements to Members. The Committee shall, at least annually, mail
or deliver to each Member a statement, in such form as the Committee shall
determine, of the Member's Account of such Member. Such statement shall be
deemed to have been accepted by the Member as correct unless written notice to
the contrary is received by the Employer within 30 days after the mailing or
delivery of such statement to said Member.

         5.4 Investment of Contributions. Each Participant upon becoming a
Participant shall elect on a form furnished for that purpose by the Committee
that such Participant's (a) Pre-Tax Contributions, (b) Matching and Incentive
Contributions, (c) Supplemental Contributions, and (d) any Rollover
Contributions credited to the Participant's account, taken collectively, be
invested in multiples of 1%, in any combination of Investment Funds, provided
that such combination totals 100 percent. If a Participant fails to make an
election upon becoming a Participant or does not provide for investment of 100
percent of such Contributions, any uninvested Contributions shall be invested in
the JP Morgan Prime Money Market Fund, or such other fund as the Committee may
designate. Such election or investment in lieu of an election shall continue in
effect thereafter until the Participant makes a new investment election as to
such Contributions as provided below.

A Participant may change such election as to future Contributions by filing an
election form in accordance with rules established by the Committee.

                                      -43-
<PAGE>

         5.5 Transfers Among Investment Funds. Each Member may elect, in
accordance with rules established by the Committee, to transfer and reallocate
among the Investment Funds the Member's aggregate balances in his Member's
Account as of any Valuation Date. The Member may elect, that, following such
transfer and reallocation, his Member's Account be invested 100 percent in any
Investment Fund or that any multiple of 1 percent of his Member's Account be
invested in any combination of Investment Funds totaling 100 percent. Such
election, when made, shall be applicable to the Member's aggregate account
balances as described above, but shall not affect how the Member's future
Contributions are invested under section 5.4.

Notwithstanding the foregoing, any person who is a "Section 16 Reporting Person"
(that is, a person who is required to report his transactions in Company Stock
to the Securities and Exchange Commission pursuant to Section 16(a) of the
Securities Exchange Act of 1934) may alter his selection with respect to the
investment of his current Member's Account balance by filing such change with
the Committee, on a form to be provided by the Committee; provided, however,
that no such election by a Section 16 Reporting Person into the CTS Common Stock
Fund may be made unless and until at least six months have elapsed since such
Section 16 Reporting Person's most recent election out of the CTS Common Stock
Fund, and no election by a Section 16 Reporting Person out of the CTS Common
Stock Fund may be made unless and until at least six months have elapsed since
such Section 16 Reporting Person's most recent election into the CTS Common
Stock Fund.

         5.6 Valuations. As of each Valuation Date, and as of such other dates,
if any, as the Committee may direct, the Trustee shall determine the value, at
current market values, of all assets then comprising each of the Investment
Funds of the Trust.

                                      -44-
<PAGE>

         5.7 Account Balances. As of each Valuation Date, the Committee shall
adjust each account in each Investment Fund to reflect net appreciation or
depreciation in the aggregate fair market value of said Fund's assets, said
Fund's income and expenses, and gains or losses from the sale or other
disposition of said Fund's assets since the last preceding adjustment under this
section 5.7.

                  Article VI. In-Service Withdrawals and Loans

         6.1 Withdrawals from After-Tax Accounts. Each Participant or Inactive
Participant may, upon a form approved for this purpose by the Committee and in
accordance with its rules, request a withdrawal from his After-Tax Account under
(a) or (b) below:

         (a)      Total Withdrawal. He may request a cash withdrawal of the
                  entire amount of his After-Tax Account and his After-Tax
                  Matching Contributions Account, including earnings thereon,
                  without penalty.

         (b)      Partial Withdrawal. He may request a partial cash withdrawal
                  of his After-Tax Contributions to the Plan, not including
                  earnings thereon, without penalty.

         6.2 Withdrawals from Rollover Accounts. Each Participant or Inactive
Participant may, upon a form approved for this purpose by the Committee and in
accordance with its rules, request a total or partial cash withdrawal from his
Rollover Account, including earnings thereon, without penalty, provided that
such withdrawal does not cause any outstanding Plan loan plus unpaid interest to
date to exceed 50 percent of the value of the Member's Account.

         6.3 Hardship Withdrawals. A Participant or Inactive Participant who has
not attained age 59 1/2 and who has withdrawn the maximum amount allowed under
sections 6.1 and 6.2 may, upon a form approved for this purpose by the Committee
and in accordance

                                      -45-
<PAGE>

with its rules, request a partial or total cash withdrawal from his Pre-Tax
Contributions Account, his Pre-Tax Matching Contributions Account, and his
Supplemental Contributions Account, excluding post-1988 earnings or gains on his
Pre-Tax Contributions, but only for hardship (as defined below) and in
accordance with uniform and nondiscriminatory standards and policies adopted by
the Committee, which standards and policies shall be consistently observed and
applied. The following rules shall apply to hardship withdrawals hereunder:

         (a)      Withdrawable Amounts. The amount of a hardship distribution
                  shall be limited to the lesser of (1) the amount which the
                  Committee determines is required to meet the immediate
                  financial need caused by the hardship or (2) the maximum
                  withdrawable amount specified below as of the Valuation Date
                  immediately preceding the date of withdrawal. No withdrawals
                  of earnings or gains on post-1988 Pre-Tax Contributions shall
                  be permitted. The Committee is authorized to limit the amount
                  of a withdrawal until the valuation process is completed.

         (b)      Financial Hardship. For purposes of this section 6.3,
                  financial hardship shall mean a circumstance resulting from an
                  immediate and heavy financial need, which shall be limited to
                  the following situations:

                  (1)      payment of medical expenses (described in Code
                           section 213(d)) previously incurred by the Member,
                           the Member's spouse, or dependents (as defined in
                           Code section 152) and expenses necessary for such
                           persons to obtain such medical care;

                  (2)      purchase, excluding mortgage payments, of a principal
                           residence for the Member;

                  (3)      payment of tuition and related educational fees as
                           determined by the Committee for the next 12 months of
                           post-secondary education for the Member or the
                           Member's spouse, children, or dependents;

                                      -46-
<PAGE>

                  (4)      payment to prevent the eviction of the Member from a
                           principal residence or the foreclosure on the
                           mortgage of the Member's principal residence;

                  (5)      payment of expenses, such as funeral expenses, due to
                           a death in the Member's immediate family; or

                  (6)      such other deemed financial needs as published from
                           time to time by the Commissioner of Internal Revenue.

         (c)      Maximum Withdrawal. An application for such a hardship
                  withdrawal shall be filed in such form and at such time as the
                  Committee may from time to time prescribe. Any withdrawal
                  pursuant to the provisions of this section 6.3 shall be
                  subject to the approval of the Committee. Such approval shall
                  be determined in accordance with uniform and nondiscriminatory
                  standards and policies adopted by the Committee, which shall
                  be consistently observed and applied. The Committee shall
                  permit no withdrawal to exceed the amount of the immediate and
                  heavy financial need of the Member. Furthermore, the maximum
                  amount of a withdrawal shall not exceed the total value of a
                  Member's Account less the amount of any outstanding principal
                  and interest on any loans under section 6.5.

         (d)      Other Resources. No withdrawal described above may be made by
                  a Participant or Inactive Participant unless the Member has
                  obtained all other distributions, withdrawals, and the maximum
                  available loan for which the Member is eligible under this
                  Plan or any other plan maintained by the Company or its
                  Affiliates (other than hardship withdrawals).

         (e)      Nonparticipation Penalty and Other Restriction. Upon receiving
                  such a withdrawal, (1) the Member shall not be permitted to
                  make Pre-Tax Contributions under any plan maintained by the
                  Company or its Affiliates and (2) the Employer shall not make
                  any Supplemental Contributions under the Plan for such Member
                  for the 6-

                                      -47-
<PAGE>

                  month period (12-month period for distributions prior to
                  January 1, 2002) beginning on the date of the withdrawal
                  distribution. In addition, the maximum dollar amount of
                  Pre-Tax Contributions under Code section 402(g) that such
                  Participant may make in the Plan Year (under section 4.3 of
                  the Plan) in which the 6-month period (12-month period for
                  distributions prior to January 1, 2002) ends shall be reduced
                  by the amount of Pre-Tax Contributions that the Participant
                  made in the Plan Year of the hardship withdrawal.

         6.4 Age 59 1/2 Withdrawals. Effective as of June 28, 1991, each Member
who attained age 59-1/2 may, upon a form approved for this purpose by the
Committee and in accordance with the Committee's rules, elect to make a total or
partial withdrawal, in cash or in Company Stock, of the entire vested portion of
his entire Member's Account, including earnings on all accounts, but the maximum
withdrawal may not exceed the value of the vested portion of the Member's
Account less the amount of any outstanding principal and interest on loans under
Section 6.5.

         6.5 Loans. Each Participant or Inactive Participant may request a loan
from the Trust, and the Committee shall authorize the Trustee to make a cash
loan to such Participant or Inactive Participant, secured by 50 percent of the
amount in the Participant's or Inactive Participant's Account. The terms of such
loan shall be determined by the Committee, subject to the following conditions:

         (a)      Term. The term of such loan shall not exceed five years,
                  except that the Committee may extend the loan term beyond five
                  years for any loan used for the purpose of purchasing the
                  Participant's or Inactive Participant's principal residence.
                  To the extent that such loan is unpaid at the time a
                  distribution of such Participant's or Inactive Participant's
                  Account becomes payable under Article III, such unpaid amount
                  shall be

                                      -48-
<PAGE>

                  deducted from the amount otherwise payable from the
                  Participant's or Inactive Participant's Account.

         (b)      Amount and Number Outstanding. The minimum loan amount
                  hereunder shall be $1,000. With respect to loans granted
                  before April 3, 1995, to any Participant or Inactive
                  Participant and loans granted at any time prior to February
                  26, 1999 to Transferred Participants, a Participant or
                  Inactive Participant may have a maximum of five loans
                  outstanding at one time. Effective for all loans granted on or
                  after April 3, 1995, a Participant or Inactive Participant
                  other than a Transferred Participant, and effective for all
                  loans granted on or after February 26, 1999 to a Transferred
                  Participant may have a maximum of two loans outstanding at one
                  time. The amount of such loan shall not exceed the smaller
                  of --

                  (1)      50 percent of the vested portion of the Member's
                           Account at the time of such loan, reduced by the
                           highest outstanding principal and interest balance of
                           all loans from the Plan during the 12-month period
                           ending on the day the loan is made, or

                  (2)      $50,000, reduced by the highest outstanding principal
                           and interest balance of all loans from the Plan
                           during the 12-month period ending on the day the loan
                           is made.

         (c)      Note. Such loan shall be evidenced by a promissory note.
                  Appropriate disclosure shall be made pursuant to the Truth in
                  Lending Act.

         (d)      Interest and Fees. Such loan shall bear a reasonable rate of
                  interest, as determined by the Committee as of the time the
                  loan is made in a uniform and nondiscriminatory manner, which
                  rate shall be commensurate with interest rates charged by
                  commercial lenders under similar circumstances. Until April 3,
                  1995, the interest rate shall be equal to 2 percent above the
                  prime rate of interest, as published by the Harris Trust and

                                      -49-
<PAGE>

                  Savings Bank, Chicago, Illinois, or such other bank as the
                  Committee may designate, as of the date of the loan. Effective
                  as of April 3, 1995, the interest rate shall be equal to 2
                  percent above the prime rate of interest, as published by the
                  Wall Street Journal, as of the first day of the month in which
                  the loan is granted. The interest rate shall remain unchanged
                  for the term of the loan. Effective April 3, 1995, a $50.00
                  processing fee shall be assessed upon the approval of each
                  loan. In addition, effective April 3, 1995, a $3.00 fee shall
                  be assessed against each loan for every quarter during which
                  that loan is outstanding. These fees shall be assessed to and
                  paid directly out of the Participant's or Inactive
                  Participant's Account.

         (e)      Payments. Payments of principal and interest shall be made by
                  approximately equal payments on a basis that would permit such
                  loan to be amortized over its term. Prepayment of the entire
                  amount of the Participant's or Inactive Participant's
                  outstanding loan amount may be made without penalty. Except
                  for such prepayments, loan payments shall be made by payroll
                  deductions.

         (f)      Default. If such Participant or Inactive Participant defaults
                  in the making of any payments on such loan when due and such
                  default continues for 90 days (six months, prior to February
                  1, 2002) thereafter, or in the event of such Participant's or
                  Inactive Participant's bankruptcy, impending bankruptcy,
                  insolvency, or impending insolvency, such loan shall be deemed
                  to be in default, the entire unpaid balance with accrued
                  interest shall become due and payable. The Trustee may pursue
                  collection of the debt by any means generally available to a
                  creditor where a promissory note is in default or, if the
                  Participant's or Inactive Participant's Account is then
                  distributable under Article VII, the Committee may direct the
                  Trustee to

                                      -50-
<PAGE>

                  apply the balance in the Participant's or Inactive
                  Participant's Account in satisfaction of the unpaid principal
                  and accrued interest.

         (g)      Loan Disbursement and Repayment. Loans shall be implemented by
                  means of a transfer of funds from the accounts comprising the
                  Participant's or Inactive Participant's Account to a loan fund
                  and by disbursement of the loan from such loan fund, except
                  that no amount may be transferred to the loan fund from a
                  Participant's or Inactive Participant's After-Tax Account or
                  his After-Tax Matching Contributions Account. Repayments of
                  principal and interest shall be credited to such loan fund and
                  shall be thereupon transferred to such account and to the
                  Investment Funds consistent with the Participant's or Inactive
                  Participant's current investment elections.

         (h)      Termination of Employment. A Former Participant shall have
                  ninety (90) days from the date on which he terminated
                  employment with the Employer in which to make arrangements to
                  continue payments on any outstanding loans, in accordance with
                  rules established by the Committee. If at any time following
                  termination, the Former Participant fails to make any required
                  payment on a loan for a period of 90 days, the loan shall be
                  deemed in default and the entire unpaid balance with accrued
                  interest shall become due and payable; provided, however,
                  that, with respect to Former Participants whose employment
                  with the Employer has been terminated by the Employer as a
                  result of a plant closing or other event which, in the sole
                  judgment of the Plan Administrator, is an unusual event, the
                  Plan Administrator may, in its discretion, elect not to
                  declare loans made to such Former Participants to be in
                  default after ninety (90) days, if no risk of loss of
                  principal or income would result to the Plan. The Plan
                  Administrator may grant such Former Participants a

                                      -51-
<PAGE>

                  reasonable period of time in which to cure any default, or
                  elect to defer collection proceedings against such Former
                  Participants, or take any other actions with respect to loans
                  made to such Former Participants which are reasonable and
                  prudent under the circumstances. This section 6.5(h) shall
                  affect only those loans granted on or after April 3, 1995.

         (i)      DCA Prior Plan Loans. Except as set forth in this section
                  6.5(i), loans made under the DCA Prior Plan shall be
                  administered in accordance with the DCA Prior Plan. Loans
                  under the DCA Prior Plan shall count towards the maximum
                  amount available for loan and number of loans allowed as set
                  forth in section 6.5(b).

         (j)      Motorola Plan Loans. Except as set forth in this section
                  6.5(j), loans made under the Motorola Plan shall be
                  administered in accordance with the Motorola Plan. Loans under
                  the Motorola Plan shall count towards the maximum amount
                  available for loan and number of loans allowed as set forth in
                  section 6.5(b).

         6.6 Spousal Consent to Withdrawals and Loans. No withdrawal may be made
by a married Member and no loan shall be granted to a married Member unless the
Member's spouse consents thereto in writing.

                            Article VII. Distribution

         7.1               Distribution at Normal Retirement Age. Upon
                           retirement of a Member after attaining Normal
                           Retirement Age (age 60), he shall be entitled to a
                           distribution of the full adjusted amount of his
                           Member's Account as of the Valuation Date coincident
                           with or next following the date of his retirement,
                           including any amounts allocated to his accounts after
                           such retirement. The amount payable under this
                           section 7.1 shall be

                                      -52-
<PAGE>

                           distributed by any of the methods specified below
                           elected by the distributee in accordance with
                           Committee rules:

                  (a)      Lump Sum. By immediate or deferred payment in one
                           lump sum.

                  (b)      Installments. If the value of the Member's Account is
                           more than $5,000, by substantially equal annual
                           installments over a period certain not exceeding the
                           joint and last survivor life expectancy of the Member
                           and a designated Beneficiary. The Member's Account
                           shall continue to share in the income of the
                           investment funds in which the Member has investments
                           until all amounts of the Member's Account are paid
                           out. The amount of the first installment on an annual
                           basis shall be a fraction of the Member's Account as
                           of the Valuation Date as of which the installment is
                           payable of which the numerator is one and the total
                           number of installments is the denominator. The amount
                           of each subsequent installment on an annual basis
                           shall be a fraction of the Member's Account as of the
                           date as of which the installment is payable of which
                           the numerator is one and the remaining number of
                           installments is the denominator.

                  (c)      Annuity Contract. If the value of the Member's
                           Account is more than $5,000, by purchase from a legal
                           reserve insurance company to be selected and approved
                           by the Committee of a nontransferable annuity
                           contract. The Member may choose any of the following
                           forms of annuities: a single life annuity for the
                           life of the Member, a Qualified Joint and Survivor
                           Annuity (as herein defined), a joint and 50%, 75% or
                           100% survivor annuity or a life-ten years certain
                           annuity. Notwithstanding the foregoing, if a married
                           Member elects an

                                      -53-
<PAGE>

                           annuity other than a Qualified Joint and Survivor
                           Annuity hereunder, the amount distributed will be
                           distributed by the purchase of a qualified Joint and
                           Survivor Annuity unless the Member elects to waive
                           the Qualified Joint and Survivor Annuity form of
                           benefit. The election to waive such form of benefit
                           shall not take effect unless (i) it is in writing,
                           (ii) the spouse of the Member consents in writing to
                           such election, (iii) such election indicates that the
                           Member alone is to receive the benefit or designates
                           a specific joint annuitant or Beneficiary and the
                           form of benefit payment, and (iv) the spouse's
                           consent acknowledges the effect of such election and
                           is witnessed by a Plan representative or notary
                           public. The recipient or Beneficiary designation and
                           form of benefit election may not be changed without
                           spousal consent, unless the change reinstates the
                           Qualified Joint and Survivor Annuity or the spouse's
                           consent expressly permits designations by the Member
                           without any requirements of further consent by the
                           spouse. Consent, if given, shall be irrevocable. If,
                           prior to the purchase of the annuity, the spouse dies
                           or the Member and the spouse become divorced, the
                           Member may change the joint annuitant, the
                           Beneficiary(ies) or form of benefit or both.
                           Notwithstanding this consent requirement, if the
                           Member establishes to the satisfaction of the
                           Committee that such written consent cannot be
                           obtained because there is no spouse or the spouse
                           cannot be located, the election to waive the
                           Qualified Joint and Survivor Annuity form of benefit
                           will take effect. Any consent necessary under this
                           provision (or establishment that the consent of a
                           spouse cannot be obtained) will be effective only
                           with respect

                                      -54-
<PAGE>
                           to the spouse who signs the consent, or in the event
                           the spouse cannot be located, the waiver will be
                           effective only with respect to such spouse.

                           A "Qualified Joint and Survivor Annuity" means a
                           reduced annuity for the life of the Member with a
                           survivor annuity for the life of his spouse which is
                           50%, 75% or 100%, as selected by the Member, and if
                           no selection is made, it will be 50%, of the amount
                           of the annuity payable during the joint lives of the
                           Member and his spouse, which is the actuarial
                           equivalent of a single annuity for the life of the
                           Member and which is amount of benefit which can be
                           purchased with Member's vested account balances. The
                           Committee shall no less than 30 days and no more than
                           90 days prior to the annuity starting date provide
                           each married Member who elects an annuity form of
                           benefit a written explanation of (1) the terms and
                           conditions of a Qualified Joint and Survivor Annuity,
                           (2) the Member's right to make and the effect of an
                           election to waive the Qualified Joint and Survivor
                           Annuity form of annuity, (3) the rights of the
                           Member's spouse, and (4) the right to make, and the
                           effect of, a revocation of a previous election to
                           waive the Qualified Joint and Survivor Annuity. The
                           annuity starting date for a distribution in a form
                           other than a Qualified Joint and Survivor Annuity may
                           be less than 30 days after receipt of the written
                           explanation described in the preceding sentence
                           provided (a) the Member has been provided with
                           information that clearly indicates that the Member
                           has at least 30 days to consider whether to waive the
                           Qualified Joint and Survivor Annuity and elect (with
                           spousal consent) a form of distribution other than a
                           Qualified Joint and

                                      -55-
<PAGE>
                           Survivor Annuity, (b) the Member is permitted to
                           revoke any affirmative distribution election at least
                           until the annuity starting date or, if later, at any
                           time prior to the expiration of the 7-day period that
                           begins the day after the explanation of the Qualified
                           Joint and Survivor Annuity is provided to the Member,
                           and (c) the annuity starting date is a date after the
                           date that the written explanation was provided to the
                           Member.

                  (d)      Combination. A combination of the methods in (b) and
                           (c).

                  If any Member entitled to receive or receiving distribution
                  under this Section 7.1 should die prior to receiving the full
                  distribution from the Trust fund to which he is entitled, any
                  unpaid balance thereof at the time of death shall be
                  distributed to the Member's Beneficiary by any of the methods
                  specified above as shall be determined and directed by the
                  Beneficiary.

                  Once payment of benefits has commenced, the decision of the
                  Member as to the mode of payment shall be final and the
                  Committee shall not be liable to the recipient (or to any
                  heir, Beneficiary, or representative of the Member, or of the
                  recipient, if other than the Member) for such decision,
                  notwithstanding the fact that another mode of payment would
                  have resulted in a greater benefit, because of variations in
                  the income and/or estate tax consequences applicable to the
                  alternative modes of payment, or for any other reason.

         7.2 Distribution Upon Disability. Upon incurring a Disability, a Member
shall be entitled to a distribution of the full adjusted amount of his Member's
Account as of the Valuation Date coincident with or next following such
termination of

                                      -56-
<PAGE>

employment, including any amounts allocated to his accounts after such Member's
termination due to Disability. Said distribution shall be made to the Member by
any of the methods specified in section 7.1.

If any Member entitled to receive or receiving distribution under the provisions
of this section 7.2 should die prior to receiving the full distribution from the
Trust Fund to which he is entitled, any unpaid balance thereof at the time of
death shall be distributed to the Member's Beneficiary by any of the methods
specified in section 7.1 as shall be determined and directed by the Beneficiary.

         7.3 Distribution Upon Termination of Employment Because of Death. Upon
the termination of a Member's employment because of death, his Beneficiary shall
be entitled to a distribution of the full adjusted amount of his Member's
Account as of the Valuation Date coincident with or next following his date of
death, including any amounts allocated to his accounts after the Member's death.
Said distribution shall be made to the Member's Beneficiary by any of the
methods specified in section 7.1 as shall be determined and directed by the
Beneficiary.

         7.4 Termination Benefit. Upon a Member's Termination of Employment for
any reason prior to his retirement, Disability, or death, as aforesaid, he shall
be entitled to a distribution of a termination benefit of an amount equal to the
sum of (a), (b), and (c) below, all determined as of the Valuation Date
coincident with or next following his Termination of Employment:

         (a)      The full adjusted amount of his After-Tax Account, his Pre-Tax
                  Contributions Account, and his Rollover Account, including any
                  amounts allocated to his accounts after the Member's
                  Termination of Employment.

         (b)      The full amount of the earnings and gains on his Deferred
                  Compensation Account, his Money Purchase Account, his
                  After-Tax and Pre-Tax Matching Contributions Accounts, and his
                  Supplemental Contributions

                                      -57-
<PAGE>

                  Accounts (collectively called the "Employer Accounts"),
                  including any earnings and gains allocated after the Member's
                  Termination of Employment.

         (c)      The full adjusted amount of his Employer contributions to his
                  Employer Accounts, including any amounts allocated to his
                  accounts after the Member's Termination of Employment,
                  multiplied by the vested percentage under the Vesting Table
                  below:

                                  Vesting Table
                        (Effective as of January 1, 1989)

<TABLE>
<CAPTION>
                                                    Vested and Nonforfeitable
                  Years of Vesting Service            Percentage of Account
                  ------------------------            ----------------------
<S>                                                 <C>
                  Less than 1 year                              0%
                  1 year but fewer than 2 years                20%
                  2 years but fewer than 3 years               40%
                  3 years but fewer than 4 years               60%
                  4 years but fewer than 5 years               80%
                  5 years or more                             100%
</TABLE>

A Transferred Participant who has an account balance under the Motorola Plan, as
of February 26, 1999, shall remain 100 percent vested in said account balance.
Amounts contributed to the Plan on or after February 26, 1999 shall become
vested in accordance with the Vesting Table set forth above.

A Participant, Inactive Participant or Beneficiary who has an account balance
under the DCA Prior Plan, as of March 31, 1998, shall remain 100% vested in said
account balance. Amounts contributed to the Plan on or after April 1, 1998 shall
become vested in accordance with the Vesting Table set forth above provided
however, that a Former DCA Employee, as defined herein, shall be 100% vested in
amounts credited to his Member's Account upon the date of his Termination of
Employment. A Former DCA Employee shall mean; (i) an employee of the corporate
office of Dynamics Corporation of America (DCA) whose employment was terminated
by the Employer because of the closing of the DCA corporate office; or (ii) an
employee of any DCA division or

                                      -58-
<PAGE>

subsidiary whose employment was terminated by the employer because of the sale
of substantially all of the assets of that DCA division or subsidiary.

Effective as of August 8, 1997, if a Member was an employee of one of the North
American Interconnect facilities of the Employer and was terminated from
employment by the Employer because of the sale of substantially all of the
assets of the North American Interconnect business, then the Member shall be
100% vested in the Member's Account upon his Termination of Employment.

Distribution of a termination benefit shall be made to the Member by any of the
methods specified in Section 7.1, except that if the value of his vested
Member's Account balance is $5,000 or less, distribution shall be made as an
immediate lump sum distribution as soon as administratively convenient after the
Member's Termination of Employment.

If a Former Participant dies after such Termination of Employment but prior to
receiving the full distribution from the Trust Fund to which he is entitled
under this section 7.4 as specified above, any unpaid balance thereof at the
time of death shall be distributed to his Beneficiary by any of the methods
specified in section 7.1 as shall be determined and directed by the Beneficiary.

The portions of the amounts credited to the Deferred Compensation Account, Money
Purchase Account, After-Tax and Pre-Tax Matching Contributions Accounts, and
Supplemental Contributions Account of such Former Participant that are not
distributable under this section 7.4 because he is not entitled to 100 percent
thereof as above provided shall be forfeited by him and shall be a forfeiture as
of the date of his Termination of Employment. Such forfeitures shall be valued
at the end of the month in which the Termination of Employment occurred and
shall be applied to reduce Employer Matching and Supplemental Contributions for
the next

                                      -59-
<PAGE>
succeeding month. If a terminated Participant is reemployed as an Employee
within 60 months after his employment terminates and repays to the Plan, within
such 60-month period, the full amount distributed under this section 7.4 except
for any After-Tax Account and Rollover Account amount, such forfeiture shall be
reinstated in his accounts. Any such forfeiture to be reinstated shall be
restored as soon as possible from other forfeitures next occurring during the
Plan Year in which he repays such amount, but to the extent such other
forfeitures are insufficient to make such restoration, the Employer shall make
an additional contribution to the Trust Fund.

         7.5 Commencement and Duration of Distributions. Generally,
distributions under sections 7.1 through 7.4 above shall be made or shall begin
as soon after the termination of a Member's employment as administratively
feasible, but commencement and duration of such distributions shall be subject
to the following provisions, which are consistent with the applicable provisions
of Treasury regulations 1.401(a)(9)-1 including the minimum distribution
incidental death benefit rule in 1.401(a)(9)-2:

         (a)      Effective as of January 1, 1997, unless a Member elects to
                  delay commencing a distribution of his Member's Account to a
                  subsequent Valuation Date, but not later than the April 1 of
                  the year following the later of the calendar year in which he
                  attains age 70-1/2 or, in the case of a Member who is not a 5%
                  Owner as defined in Code Section 416, retires from employment
                  with the Employer, his Member's Account shall commence to be
                  distributed not later than 60 days after the last day of the
                  Plan Year in which the later of the following events occurs:
                  (1) his sixty-fifth birthday or (2) his Termination of
                  Employment. Once a Member elects a delayed lump sum
                  distribution commencement date, he may not extend that date.
                  Any distribution which cannot be reasonably ascertained and
                  made by such required date

                                      -60-
<PAGE>

                  shall be made as soon as administratively possible thereafter,
                  retroactive to such required date.

         (b)      If a Member whose distributable benefit is more than $5,000
                  fails to elect an immediate distribution, his Member's Account
                  balance shall continue to be adjusted as provided in section
                  5.7 and shall not be distributed until the earlier of (1) the
                  date the Member applies for a distribution under section 7.7
                  or (2) his sixty-fifth birthday.

         (c)      When any installment distribution under this Article VII
                  commences to the Member as provided in subsection (a) above,
                  it shall be distributed over a period not extending beyond the
                  Member's then life expectancy, or over the then joint life
                  expectancies of the Member and his designated Beneficiary.

         (d)      When any installment distribution under this Article VII
                  commences on account of a Member's death to a Member's
                  designated Beneficiary, it shall be distributed over a period
                  not extending beyond the then life expectancy of such
                  designated Beneficiary.

         (e)      If a Member shall die before his Member's Account shall be
                  distributed to him, and if his Beneficiary dies before the
                  Member's Account is fully distributed to such Member and his
                  Beneficiary, the entire Member's Account, or remaining portion
                  thereof, shall be distributed within five years after the
                  later of the death of the Member or the death of his
                  Beneficiary.

         7.6 Interest on Plan Payments. The Committee shall establish a
procedure for crediting a Member's payments with interest, determined consistent
with short-term, money market interest rates, from the Valuation Date applicable
to his payment to the actual payment date.

         7.7 Deferred Payments. In the event that any portion of a Member's
Account is deferred for future distribution as provided

                                      -61-
<PAGE>

herein, the deferred portion shall continue to be adjusted on each Valuation
Date to reflect the current value of the Trust Fund until the final Valuation
Date applicable to his distribution.

         7.8 Acceleration of Installment Payments. If the amount credited to the
account of a Former Participant is being paid to him or his Beneficiary in
installments, upon request of the Former Participant or Beneficiary, the amount
then credited to the account of the Former Participant shall be distributed in a
single lump sum payment in accordance with Committee rules.

         7.9 Application for Distribution. Each person eligible to receive a
distribution under the Plan shall furnish the Committee with such documents,
evidence, data, or information in support of his eligibility as the Committee
considers necessary or desirable. If the distributable benefit is more than
$5,000, then no such distribution shall begin unless and until the distributee
has made a claim to the Committee for his benefit, has requested the desired
method of distribution, and has furnished such documents, including but not
limited to written spousal consent, receipts, and other information as the
Committee may deem necessary or desirable in order to assure that proper
distribution is made.

         7.10 Option for Company Stock Distribution. Upon any lump sum
distribution under this Article VII following a Member's Termination of
Employment or attainment of age 59 1/2, any Member may elect that his account
balances invested in the CTS Corporation Common Stock Fund be distributed either
in cash or in shares of Company Stock (with cash in lieu of any fractional
share).

         7.11 Direct Rollover Option. If the distributee of any Eligible
Rollover Distribution from the Plan elects to have such distribution paid
directly to an Eligible Retirement Plan, and

                                      -62-
<PAGE>

specifies the Eligible Retirement Plan to which such distribution is to be paid,
in such form and at such time as the Plan Administrator shall prescribe, then
such distribution shall be made in the form of a direct-trustee-to-trustee
transfer to the Eligible Retirement Plan so specified.

         7.12 Effect of Reemployment. In the event a Former Participant is
reemployed by the Employer before a lump sum distribution has been made to such
person or after an installment distribution has been commenced to such person
under section 7.1, further distribution of the Member's Account shall be
suspended, and the undistributed balance of the Member's Account shall continue
to be held in the Trust until the Member's employment again terminates.

                    Article VIII. Designation of Beneficiary

         8.1 Designation of Beneficiary. Upon commencement of participation in
the Plan, each Member shall complete, sign, and file a designation of
Beneficiary on a form to be provided by the Employer, a true copy of which shall
be filed with the Committee. On said form, the Member shall designate a
Beneficiary or Beneficiaries, which may be an individual, the Member's estate,
or a trust to whom shall be paid any sum which may be payable on account of the
Member's death (reserving, however, to the Member the power to change the
designation of Beneficiary from time to time). In no event shall the Employer be
named as a Beneficiary.

No Beneficiary designation shall be effective under the Plan unless the
Participant's spouse consents in writing to such designation, the spouse's
consent acknowledges the effect of such designation, and the spouse's signature
is witnessed by a plan representative or a notary public. Consequently, any
Beneficiary designation previously made by a Member shall be automatically
revoked upon the marriage or remarriage of a Member. A spouse's consent shall be
valid under this Plan only with respect to the

                                      -63-
<PAGE>

specified Beneficiary or Beneficiaries designated by the Member. If the
Beneficiary or Beneficiaries are subsequently changed by the Member, a new
consent by the spouse will be required. A Beneficiary designation may not be
changed without spousal consent unless the consent of the spouse expressly
permits designation by the Member without any requirement of further consent.
The spouse's consent to any Beneficiary designation made by a Member pursuant to
this Plan, once given, may not be revoked by the Spouse. Notwithstanding the
foregoing, spousal consent to a Member's Beneficiary designation shall not be
required if--

         (a)      the spouse is designated as the sole primary Beneficiary by
                  the Member, or

         (b)      it is established to the satisfaction of the Committee that
                  spousal consent cannot be obtained because there is no spouse,
                  because the spouse cannot be located, or because of such other
                  circumstances as may be prescribed in regulations issued by
                  the Secretary of the Treasury.

Any consent by a spouse or any determination that the consent is not required
pursuant to subsections (a) and (b) above shall be effective only with respect
to such spouse.

         8.2 Beneficiaries if no Participant Designation. If a Member shall fail
to designate validly a Beneficiary, or if no designated Beneficiary survives the
Member, the following designated persons shall be the Beneficiaries in the order
named: (a) the Member's spouse, if living; (b) the Member's issue, if any, per
stirpes; (c) the Member's parents, if both are living, in equal shares or, if
but one is living, to such survivor; (d) the Member's heirs at law in the
proportion determined by the laws of intestate succession for personal property
in effect in the State of Indiana at the time of the Member's death; or (e)
otherwise, to the estate of the Member. In no event shall the Employer become a
Beneficiary.

                                      -64-
<PAGE>

         8.3 Designation Under a Prior Plan or DCA Prior Plan. If a Member who
formerly participated in a Prior Plan, DCA Prior Plan or Motorola Plan is
participating in Pre-Tax Contributions and Matching Contributions under the
Plan, effective as of May 1, 1992 April 1, 1998, and February 26, 1999,
respectively, any Beneficiary designation made under the Plan shall supersede
and replace any beneficiary designation previously made under the Prior Plan,
DCA Prior Plan or Motorola Plan as to distribution of accounts from the Prior
Plan, DCA Prior Plan or Motorola Plan.

                              Article IX. Financing

         9.1 Trust Agreement. The Company has entered into a Trust Agreement
with the Trustee to establish the Trust, and any and all rights and benefits
which may accrue to any Member or Beneficiary under the Plan shall be subject to
all of the terms and provisions of the Trust Agreement. Any Trust Agreement is
designated as, and shall constitute, a part of this Plan, and all rights that
may accrue to any person under this Plan shall be subject to all the terms and
provisions of the Trust Agreement. The Employers shall make payments of
Contributions to such Trust and payments under the Plan shall be made therefrom.
The Company may modify any Trust Agreement or remove any Trustee at any time.

         9.2 Exclusive Benefit of Members. It is hereby declared to be the
Company's intention that this Plan shall be maintained for the exclusive benefit
of Members and their Beneficiaries and is intended to be a qualified plan under
the provisions of the Code and the Act. In no event shall the Employer have any
right, claim, or beneficial or reversionary interest in any Trust asset, and the
Trustee shall make no payment or other distribution to the Employer, except as
provided in section 9.3. Nothing contained in the Plan or Trust shall be
construed to impair the Company's right to see to the proper administration of
the Trust in accordance with Plan provisions.

                                      -65-
<PAGE>

         9.3 Nonreversion. No Employer shall have any right, title, or interest
in the contributions made by it under the Plan and no part of the Trust Fund
shall revert to it or for its benefit, except that--

         (a)      Employer contributions hereunder are expressly conditioned
                  upon initial qualification of the Plan as to the Employer. In
                  the event that the Internal Revenue Service initially
                  determines that the Plan does not constitute a qualified plan
                  meeting the requirements of Code section 401(a) with respect
                  to any Employer's initial adoption of the Plan, then the Plan
                  shall be null and void from the date the Plan is first
                  effective with respect to such Employer, and any funds in the
                  Trust Fund at the time of such unfavorable determination which
                  have been contributed on behalf of Members of that Employer
                  shall be returned to that Employer within one year after the
                  date of such denial of qualification unless the Plan is
                  amended and a favorable determination obtained;

         (b)      Employer contributions hereunder are expressly conditioned
                  upon deductibility of contributions under Code section 404,
                  and if any part or all of a contribution is disallowed as a
                  deduction under Code section 404 with respect to any Employer,
                  then to the extent a contribution is disallowed as a
                  deduction, it may be returned to that Employer within one year
                  after the disallowance; and

         (c)      If a contribution is made to the Trust on behalf of any Member
                  or Members of any Employer by a mistake of fact, then such
                  contribution shall be returned to that Employer within one
                  year after the payment of the contribution.

Any contributions returned hereunder shall not include any investment earnings
thereon, but shall be net of any investment

                                      -66-
<PAGE>

losses thereon. Any Pre-Tax Contributions returned to an Employer pursuant to
this section 9.3 shall be paid over to the Member or Members on whose behalf
such contributions were made as soon as practicable after receipt thereof by the
Employer.

         9.4 Payment of Expenses. The Company may pay the administrative
expenses of the Plan, including legal, accounting, and actuarial fees and fees
and expenses of the Trustee, but if such fees and expenses are not paid by the
Company, they shall be paid out of the Trust. Such expenses shall include any
expenses incident to the functioning of the Plan, including, but not limited to,
fees of the actuary, accountants, counsel, and other specialists and other costs
of administering the Plan.

         9.5 Absence of Guaranty. Each Member (and Beneficiary) assumes all risk
connected with any decrease in the market value of any assets held under the
Plan. Neither the Committee nor the Employer in any way guarantees the Trust
from loss or depreciation or the payment of any amount that may be or become due
to any person from the Trust. The Trust shall be the sole source of
distributions to be made under this Plan, and any persons having any claim under
the Plan and Trust shall look solely to the assets of the Trust for
satisfaction.

                            Article X. Administration

    10.1 Appointment. The CTS Corporation Employee Benefits Committee shall
serve as the Administrative Committee and shall perform the duties given to the
Committee under the Plan. The Committee is designated as the administrator of
the Plan and its members are "named fiduciaries" under section 402(a) of the
Act.

The Committee shall be appointed by the Chief Executive Officer of the Company.
The Committee shall be composed of as many members as the Chief Executive
Officer may appoint from time to time, but not fewer than three members, and
shall hold office at

                                      -67-
<PAGE>

the pleasure of the Chief Executive Officer. Any member of the Committee may
resign by delivering to the Secretary of the Company a written resignation
addressed to the Chief Executive Officer. Vacancies in the Committee arising by
resignation, death, removal, or otherwise, shall be filled by the Chief
Executive Officer.

    10.2 Agents. The Committee may authorize one or more of its members or any
agent to execute or deliver any instrument on behalf of the Committee, including
directions to the Trustee as to the disbursement of the Trust Fund.

    10.3 Records. The Committee shall keep all records appropriate for the
performance of its powers and duties under the Plan and may keep appropriate
written records of its meetings.

    10.4 Powers. The Committee shall have full power and authority to do each
and every act and thing which it is specifically required or permitted to do
under the provisions of the Plan and in addition thereto shall have the
exclusive right and discretionary authority to exercise the following powers and
duties in connection with the administration of the Plan:

         (a)      to adopt from time to time such bylaws, procedures, and forms
                  as the Committee considers appropriate in the operation and
                  administration of the Plan;

         (b)      in its discretion, to establish rules and procedures needed
                  for its administration of the Plan and the transaction of Plan
                  business;

         (c)      to have the exclusive right, in its discretion, to make any
                  finding of fact necessary or appropriate for any purpose under
                  the Plan, including but not limited to the determination of
                  the eligibility for and the amount of any benefit payable
                  under the Plan;

         (d)      in its discretion, to interpret the terms and provisions of
                  the Plan and to determine any and all

                                      -68-
<PAGE>

                  questions arising under the Plan or in connection with the
                  administration thereof, including, without limitation, the
                  right to remedy or resolve possible ambiguities,
                  inconsistencies, or omissions, by general rule or particular
                  decision;

         (e)      to direct the Trustee as to the distribution of benefits and
                  as to the payment of other amounts payable from the Trust in
                  accordance with the provisions of the Plan;

         (f)      to receive information and review copies of all records of
                  Participant Contributions and Employer Contributions and Trust
                  accountings;

         (g)      to pay all reasonable and necessary expenses of the Plan from
                  the assets of the Trust under section 9.4 to the extent that
                  they are not paid by the Employer;

         (h)      to exercise general administration of the Plan except to the
                  extent responsibilities are expressly conferred on others;

         (i)      to be the designated agent of the Plan for the service of
                  legal process, or to designate the Employer or some other
                  individual to be the designated agent for the service of legal
                  process;

         (j)      to establish a funding policy and communicate this policy to
                  the Trustee;

         (k)      to approve or deny claims for Plan benefits made by Members
                  and Beneficiaries in accordance with section 10.11;

         (l)      to review appeals made by Members or Beneficiaries
                  ("claimants") who have had their claims for benefits under the
                  Plan denied in whole or in part in accordance with sections
                  10.12-10.14;

         (m)      in determining whether claimants are entitled to benefits
                  under this Plan or in accordance with subsections (k) and (l)
                  above, the Committee shall rely first, on official Employer
                  records; second, on questionnaires completed by Members if
                  such questionnaires

                                      -69-
<PAGE>

                  are provided to Members by the Committee; and third, on such
                  other proof as appears appropriate to the Committee in a given
                  case. However, in resolving disputes which arise as to facts
                  which must be established in reaching said decisions, the
                  Committee shall rely on the source or sources which it
                  considers to provide the best evidence of the facts in
                  question;

         (n)      to employ a qualified investment manager or managers to manage
                  all or part of the Plan assets if that is deemed by the
                  Committee to be in the interests of the Plan's Members and
                  Beneficiaries; and

         (o)      to allocate fiduciary duties and responsibilities (other than
                  Trustee responsibilities) among members of the Committee or
                  other named fiduciaries appointed by the Committee to act in
                  such capacity and to designate persons other than named
                  fiduciaries to carry out fiduciary responsibilities (other
                  than Trustee responsibilities) under the Plan to the extent
                  that it is deemed advisable by the Committee. For purposes of
                  this subsection, Trustee responsibility shall mean any
                  responsibility provided in the Trust to manage or control the
                  assets of the Plan, other than power of the Committee to
                  appoint an investment manager in accordance with section
                  402(c)(3) of the Act. Before the Committee delegates any
                  duties or responsibilities as provided herein, it must first
                  obtain approval for such delegation from the Board of
                  Directors. The Committee shall periodically review the
                  performance of any person to whom it has delegated such
                  responsibilities. It is intended under this Plan that each
                  fiduciary shall be responsible for the proper exercise of its
                  own powers, duties, responsibilities, and obligations under
                  the Plan and shall not be responsible for any act or failure
                  to act of another fiduciary.

                                      -70-
<PAGE>

All findings of fact, determinations, interpretations, and decisions of the
Committee shall be conclusive and binding upon all persons having or claiming to
have any interest or right under the Plan and shall be given the maximum
possible deference allowed by law.

         10.5 Compensation. No member of the Committee shall receive any
compensation from the Plan or Trust for his services as such.

         10.6 Indemnification. The Company shall indemnify each member of the
Committee and each other Employee acting at the direction of the Committee in
the administration of the Plan against any and all claims, loss, damages,
expenses (including counsel fees approved by the Committee), and liability
(including any amounts paid in settlement with the Committee's approval) arising
from any loss or damage or depreciation which may result in connection with the
execution of his duties or the exercise of his discretion or from any other
action or failure to act hereunder, except when the same is judicially
determined to be due to the gross negligence or willful misconduct of such
person.

         10.7 Settlement of Claims. The Committee shall have the power to
accept, compromise, arbitrate, or otherwise settle any obligations, liability,
or claim, but it shall not be obligated to do so unless, in its sole judgment,
it is in the interest of the Plan or Trust to do so.

         10.8 Discretionary Powers. Whenever in the Plan or Trust discretionary
powers are given to the Committee, it shall have absolute discretion and its
decision shall be binding upon all persons affected thereby. The Committee shall
exercise its discretion in a nondiscriminatory manner.

         10.9 Employment of Professionals and Assistants. The Committee shall
have the power --

                                      -71-
<PAGE>

         (a)      to secure such legal, medical, and actuarial advice or
                  assistance as it deems necessary or desirable in carrying out
                  the provisions of the Plan; and

         (b)      to appoint or employ such other advisors or assistants as it
                  deems necessary or desirable to carry out its duties.

The Committee shall have full discretion to employ any person or firm that it
deems qualified to supply any of the required services set forth above;
provided, however, that the person or firm so employed shall be independent of
the control of the Employer, and where required, shall have all necessary
licenses to practice their profession.

         10.10 Bond. The Committee shall obtain a bond in accordance with
section 412 of the Act that shall cover every fiduciary of the Plan and every
person who handles funds or other property of the Plan ("plan official"). Said
bond will insure the Plan against loss by reason of acts of fraud or dishonesty
on the part of every fiduciary and plan official, directly or through connivance
with others.

         10.11 Claim for Benefits. A Member or Beneficiary may make a claim for
Plan benefits, if such process has not been initiated by the Committee, by
filing a written request with the Committee on a form to be furnished to him for
such purpose. The Member or Beneficiary shall also furnish such additional
information as may be reasonably necessary to establish a right to a benefit
under the Plan.

         10.12 Denial of Benefits. If a claim for benefits is wholly or
partially denied, the Committee shall furnish to the claimant a notice of the
decision, meeting the requirements of section 10.13, within 90 days after
receipt of the claim by the Plan. If special circumstances require more than 90
days to process the claim, this period may be extended for up to an additional
90

                                      -72-
<PAGE>

days by giving written notice to the claimant before the end of the initial
90-day period, stating the special circumstances requiring the extension and the
date by which a decision is expected. Failure to provide a notice of decision in
the time specified shall constitute a denial of the claim, and the claimant
shall be entitled to require a review of the denial under the review procedures
specified in section 10.13.

         10.13 Notice and Claimant Review. The notice to be provided to every
claimant who is denied a claim for benefits under section 10.12 shall be in
writing and shall set forth in a manner calculated to be understood by the
claimant, the following:

         (a)      the specific reason or reasons for the denial;

         (b)      specific reference to pertinent Plan provisions on which the
                  denial is based;

         (c)      a description of any additional material or information
                  necessary for the claimant to perfect the claim and an
                  explanation of why such material or information is necessary;
                  and

         (d)      an explanation of the Plan's claim review procedure describing
                  the steps to be taken by a claimant who wishes to submit a
                  claim for review.

The purpose of the review procedure set forth in this section 10.13 and in
section 10.14 is to provide a procedure by which a claimant may have a
reasonable opportunity to appeal a denial of a claim to the Committee for a full
and fair review. To accomplish that purpose, the claimant or his duly authorized
representative may request a review upon written application to the Committee,
may review pertinent plan documents, and may submit issues and comments in
writing. A claimant (or his duly authorized representative) shall request a
review by filing a written application for review with the Committee at any time
within 60 days after receipt by the claimant of written notice of the denial of
his claim.

                                      -73-
<PAGE>

         10.14 Decision on Review. The decision on review of a denied claim
shall be made in the following manner:

         (a)      The decision on review shall be made by the Committee, which
                  may hold a hearing on the denied claim. The Committee shall
                  make its decision promptly, which shall ordinarily be not
                  later than 60 days after the Plan's receipt of the request for
                  review, unless special circumstances (such as the need to hold
                  a hearing) require an extension of time for processing. In
                  that case, a decision shall be rendered as soon as possible,
                  but no later than 120 days after receipt of the request for
                  review. If an extension of time is required due to special
                  circumstances, written notice of the extension shall be
                  furnished to the claimant prior to the time the extension
                  commences.

         (b)      The decision or review shall be in writing and shall include
                  specific reasons for the decision, written in a manner
                  calculated to be understood by the claimant, and specific
                  references to the pertinent Plan provisions on which the
                  decision is based.

         (c)      In the event the decision on review is not furnished to the
                  claimant with the time required, the claim shall be deemed
                  denied on review.

                                      -74-
<PAGE>

         10.15 Supplemental Claims Procedures for Disability Benefits.

         (a)      Effective for all claims filed on or after January 1, 2002, in
                  the case of a claim for disability benefits, the Committee
                  shall notify the claimant of the approval or the denial of the
                  claim within forty-five (45) days after the receipt of such
                  claim unless, due to circumstances beyond the control of the
                  Committee, an extension of time for processing the claim is
                  required. If the Committee needs such an extension, the
                  Committee shall furnish a written notice to the claimant that
                  the review period will be extended by thirty (30) days before
                  the end of the initial forty-five (45) day period. If, prior
                  to the end of the first extension period, the Committee
                  determines that circumstances beyond the control of the Plan
                  prevent a decision from being rendered within that extension
                  period, the period for making the determination may be
                  extended for an additional thirty (30) days, provided that the
                  Committee notifies the claimant prior to the end of the first
                  extension period.

                  In the case of either extension under this section 10.15(a),
                  the written notice shall specify the special circumstances
                  requiring an extension and the date by which the Committee
                  expects to reach a final decision. The date by which a
                  decision is expected to be rendered shall not be later than
                  (1) seventy-five (75) days after the date on which the claim
                  was filed in the case of the first extension, or (2) one
                  hundred and five (105) days after the date on which the claim
                  was filed in the case of the second extension. The notice of
                  extension shall specifically explain (1) the standards on
                  which entitlement to a benefit is based, (2) the unresolved
                  issues that prevent a final decision from being rendered on
                  the claim, (3) the additional information needed to resolve
                  those issues, and (4) that the claimant shall be afforded
                  forty-five (45)

                                      -75-
<PAGE>

                  days within which to provide the specified information. If the
                  claimant must provide additional information to allow the
                  Committee to make a decision on the claim, the review period
                  shall be tolled until such information is provided

In addition to the requirements for a notice of denial of benefits specified in
section 10.13, a notice of denial of disability benefits shall contain the
following:

               (1)   If an internal rule, guideline, protocol, or other similar
                     criterion was relied upon in making the adverse
                     determination, either the specific rule, guideline,
                     protocol, or other similar criterion; or a statement that
                     such a rule, guideline, protocol, or other similar
                     criterion was relied upon in making the adverse
                     determination and that a copy of such rule, guideline,
                     protocol or other criterion will be provided free of charge
                     to the claimant upon request; or

               (2)   If the adverse determination is based on a medical
                     necessity or experimental treatment or similar exclusion or
                     limit, either an explanation of the scientific or clinical
                     judgment for the determination, applying the terms of the
                     Plan to the claimant's medical circumstances, or a
                     statement that such explanation will be provided free of
                     charge upon request.

         (b)      Effective for all claims filed on or after January 1, 2002, if
                  a claim for disability benefits is denied, in whole or in
                  part, the claimant shall have the right to request that the
                  Committee review the denial, provided that he files a written
                  request for review with the Committee within one hundred
                  eighty (180) days after

                                      -76-
<PAGE>

                  the date on which he received written notification of the
                  denial.

                  In addition to the requirements for a review of a denial of a
                  claim specified in section 10.13, a review of a denial of a
                  claim for disability benefits shall not afford deference to
                  the initial adverse benefit determination and shall be
                  conducted by an appropriate named fiduciary of the Plan who is
                  neither the individual who made the adverse benefit
                  determination that is the subject of the review, nor a
                  subordinate of such individual.

                  In reviewing an adverse determination of a claim for
                  disability benefits, that is based in whole or in part on a
                  medical judgment, the Committee shall consult with a health
                  care professional who has appropriate experience in the field
                  of medicine involved in the medical judgment. The health care
                  professional engaged for purposes of this consultation shall
                  be an individual who is neither an individual who was
                  consulted in connection with the initial adverse benefit
                  determination that is the subject of the review, nor a
                  subordinate of any such individual. In addition, the Committee
                  shall provide the identification of medical or vocational
                  experts whose advice was obtained on behalf of the Plan in
                  connection with the claimant's adverse benefit determination,
                  without regard to whether the advice was relied upon in making
                  the benefit determination.

                  Within forty-five (45) days after a request for review is
                  received, the review shall be made and the Plan Administrator
                  shall advise the claimant in writing of the decision on
                  review, unless special circumstances require an extension of
                  time for processing the review.

                                      -77-
<PAGE>
                  If the Committee needs such an extension, the Committee shall
                  furnish a written notice to the claimant before the
                  termination of the initial forty-five (45) day period. The
                  written notice shall specify the reasons for the extension and
                  when the review shall be completed (provided that such review
                  shall be completed within ninety (90) days after the date on
                  which the request for review was filed). The decision on
                  review shall be forwarded to the claimant in writing and shall
                  include specific reasons for the decision and references to
                  Plan provisions upon which the decision is based. A decision
                  on review shall be final and binding on all persons for all
                  purposes. If a claimant shall fail to file a request for
                  review according to the procedures herein outlined, such
                  claimant shall have no rights to review and shall have no
                  right to bring action in any court, and the denial of the
                  claim shall become final and binding on all persons for all
                  purposes.

                      Article XI. Miscellaneous Provisions

         11.1 Incompetence. Every person receiving or claiming benefits under
the Plan shall be conclusively presumed to be mentally competent until the date
on which the Committee receives a written notice, in a form and manner
acceptable to the Committee, that such person is incompetent and that a
guardian, conservator, or other person legally vested with the care of such
person's person or estate has been appointed; provided, however, that if the
Committee shall find that any person to whom a benefit is payable under the Plan
is unable to care for his affairs because of incompetency, any payment due
(unless a prior claim therefor shall have been made by a duly appointed legal
representative) may be paid to the spouse, a child, a parent, a brother or
sister, or to any person or institution deemed by the Committee to have incurred
expense for such person otherwise entitled to

                                      -78-
<PAGE>

payment. Any such payment so made shall be a complete discharge of liability
therefor under the Plan.

In the event a guardian or conservator of the estate of any person receiving or
claiming benefits under the Plan shall be appointed by a court of competent
jurisdiction, distributions hereunder may be made to such guardian or
conservator provided that proper proof of appointment and continuing
qualification is furnished in a form and manner acceptable to the Committee. Any
such payment so made shall be a complete discharge of any liability therefor
under the Plan, to the extent permitted by law.

         11.2 Nonalienation. No benefit payable at any time under the Plan shall
be subject in any manner to alienation, sale, transfer, assignment, pledge,
attachment, garnishment, or encumbrance of any kind, and shall not be subject to
or reached by any legal or equitable process (including execution, garnishment,
attachment, pledge, or bankruptcy) in satisfaction of any debt, liability or
obligation, prior to receipt. Any attempt to alienate, sell, transfer, assign,
pledge, or otherwise encumber any such benefit, whether presently or thereafter
payable, shall be void. The Trust Fund shall not in any manner be liable for or
subject to the debts or liabilities of any Employee, Participant, or Inactive
Participant or other person entitled to receive benefits hereunder.

Notwithstanding the foregoing provisions, the Committee shall direct the Trustee
or insurer to make all payments required (a) by a Federal tax levy made pursuant
to section 6331 of the Code, (b) as an offset of a Participant's benefits
against an amount that the Participant is ordered or required to pay to the Plan
to the extent permitted under Section 401(a)(13)(C) of the Code (relating to
certain fiduciary breaches or criminal convictions of the Participant with
respect to the Plan), or (c) by a qualified domestic relations order ("QDRO")
within the meaning of Code section 414(p). The Committee shall establish
reasonable

                                      -79-
<PAGE>

procedures to determine the qualified status of domestic relations orders and to
administer distributions under such orders. In no event shall a domestic
relations order be treated as a QDRO if it requires the Plan to make payments
prior to the date that a Member attains the "Earliest Retirement Age" under the
Plan. Nevertheless, the Plan may make a distribution to an alternate payee prior
to the date the Member attains the Earliest Retirement Age if (a) the
distribution is made as if the Participant had retired on the date on which the
distribution is to be made under such order (but taking into consideration only
the value of the Member's Account at the time of the distribution) or (b) the
QDRO provides that the Plan and the alternate payee may agree in writing to an
earlier distribution, and the distribution is made pursuant to such a written
agreement. "Earliest retirement age" means the earliest date on which the Member
could begin receiving benefits under the Plan upon Termination of Employment.

         11.3 Right to Terminate Employment. The adoption and maintenance of the
Plan and Trust shall not be deemed to be a contract between the Employer and any
of its Employees. Nothing herein contained shall be deemed to give to any
Employee the right to be retained in the employ of the Employer or to interfere
with the right of the Employer to discharge any Employee at any time, nor shall
it be deemed to give the Employer the right to require any Employee to remain in
its employ, nor shall it interfere with the Employee's right to terminate his
employment at any time.

         11.4 Notice of Address. Each person entitled to benefits from the Trust
must file with the Employer, in writing, such person's post office address and
each change of post office address. Any communication, statement, or notice
addressed to such a person at the latest reported post office address will be
binding upon such person for all purposes of the Plan and neither

                                      -80-
<PAGE>

the Committee nor the Company nor the Trustee shall be obliged to search for or
ascertain such person's whereabouts.

         11.5 Unclaimed Payments. If a Member or Beneficiary fails to apprise
the Committee of changes in his address, and the Committee is unable to
communicate with the Member or Beneficiary at the address last recorded by the
Committee within two years after any benefit becomes due and payable from the
Plan to any Member or Beneficiary, the Committee may mail a notice by certified
mail, return receipt requested to his last known address outlining the following
action to be taken unless he makes written reply to the Committee within 60 days
from the mailing of such notice: The Committee may direct that the Member's
adjusted account balance at the end of such two-year period shall be forfeited
and all liability for the payment thereof shall terminate; provided, however,
that in the event of the subsequent reappearance of the Member or Beneficiary
prior to termination of the Plan, the amount forfeited shall be reinstated
without past adjustments. Any amounts forfeited under this section 11.5 shall be
applied to reduce future Employer Contributions.

         11.6 Notices. Any notice required or permitted to be given hereunder to
a Member or Beneficiary will be properly given if delivered or mailed, postage
prepaid, to the Member or Beneficiary at the last post office address as shown
on the Employer's records. Any notice to the Committee or the Company shall be
properly given or filed if delivered or mailed, postage prepaid, to the
Committee or the Company, as the case may be, at such address as may be
specified from time to time by the Committee. Any notice required hereunder may
be waived by the person entitled thereto.

         11.7 Action by Company. Any action required or permitted to be taken
hereunder by the Company or the Board of Directors shall be taken by the Board
of Directors, or by any committee of the

                                      -81-
<PAGE>

Board of Directors, or by any officer of the Company, or by any person or
persons authorized by them.

         11.8 Effect of Mistake. In the event of any mistake or misstatement
with respect to the eligibility, Compensation, Contributions, service, or
participation of a Member or Beneficiary, or the amount of any distribution made
or to be made to a Member or Beneficiary, the Committee shall, to the extent
they deem it appropriate, cause to be allocated from future Contributions, or
cause to be withheld or accelerated, or otherwise adjust, such amounts as will
in its judgment accord to such Member or Beneficiary the credits to the Member's
Account or the distributions to which he is entitled under the Plan.

         11.9 Severability. In the event any provision of the Plan shall be held
invalid or illegal for any reason, any illegality or invalidity shall not affect
the remaining parts of the Plan, but the Plan shall be construed and enforced as
if said illegal or invalid provision had never been inserted, and the Company
shall have the privilege and opportunity to correct and remedy such questions of
illegality or invalidity by amendment as provided in the Plan.

         11.10 Counterparts. This Plan has been established by the Company and
may be executed in any number of counterparts, each of which shall be considered
as the original, and no requirements to produce another counterpart shall exist.

         11.11 Plan Binding on Successors. This Plan shall be binding upon all
persons entitled to benefits hereunder, their respective heirs, next-of-kin and
legal representatives, and upon the Company, its successors and assigns.

         11.12 Applicable Law. The Plan and all rights hereunder shall be
governed, construed, and administered in accordance with the laws of the State
of Indiana and of the United States of

                                      -82-
<PAGE>

America, and all provisions hereof shall be administered according to the laws
of said state to the extent such law is not superseded pursuant to the
provisions of section 514 of the Act. The Trust and all rights thereunder shall
be governed, construed, and administered in accordance with the laws of the
state where the Trustee thereunder is located.

                     Article XII. Amendment and Termination

         12.1 Amendments. The Company expects the Plan to be permanent, but
since conditions affecting it cannot be anticipated or foreseen, the Company
must necessarily and hereby does reserve the right to modify, amend, or
terminate the Plan at any time. The Company may make any modifications or
amendments, additions, or deletions in this Plan, as to benefits or otherwise,
retroactively if necessary or appropriate, which it deems appropriate in order
to qualify this Plan and to keep it qualified under the Act and Code section
401(a) and to have the Trust declared exempt and keep it exempt from taxation
under Code section 501(a). Except to the extent necessary to comply with
applicable laws and regulations, no such amendment shall operate either directly
or indirectly to deprive any Member or Beneficiary of a nonforfeitable
beneficial interest as it is constituted at the time of amendment.

         12.2 Provision Against Diversion. No part of the assets of the Trust
shall, by reason of any modification or amendment or otherwise, be used for, or
diverted to, purposes other than for the exclusive benefit of Members or their
Beneficiaries under the Plan and administrative expenses to the Plan prior to
the satisfaction of all liabilities to such Members and their Beneficiaries for
distributions hereunder and such expenses, except as provided in section 9.3.

         12.3 Termination. The Company reserves the right to terminate the Plan
and Trust as to its Employees by giving writ-

                                      -83-
<PAGE>

ten notice to that effect to the Committee and the Trustee on or before the
close of any Plan Year, in which event its Participants' Pre-Tax Contributions
shall be discontinued as of such date. In the event that an Employer shall be
judicially declared bankrupt or insolvent or shall be dissolved, merged,
consolidated, or reorganized, or sell substantially all of its assets, the Plan
and Trust shall terminate with respect to the Employees of such Employer unless,
in the case of any such merger, consolidation, reorganization, or sale,
provision is made for the appropriate assets of the Trust to be transferred to
the credit of such Employees in a trust established by said Employer's
successor. Upon the termination of the Plan and Trust, in whole or in part, or
upon complete discontinuance of Employer contributions hereunder, each affected
Participant shall become an Inactive Participant, and each person's Member's
Account, as adjusted as of the termination date as if it were a Valuation Date,
shall be 100 percent vested and nonforfeitable. In such event, the Committee may
hold, administer, and distribute the Plan assets held under the Trust on the
same terms and conditions and with the same powers, authorities, and immunities
set forth in the Plan and Trust, as if there had been no termination.
Alternatively, the Committee may direct the Trustee to distribute the Member's
Accounts of each Member affected by the termination, after payment of all
expenses and proportional adjustment of Member's Accounts to reflect expenses,
Trust earnings or losses, and allocations of any previously unallocated funds to
the date of termination, but any such distribution shall be subject to the
restrictions on in-service distributions of Pre-Tax Contributions under Code
section 401(k)(10) and regulations thereunder. Any amounts unallocable to
Members affected by the termination shall be returned to the Company.

When all Trust assets have been distributed, the Trustee and the Committee shall
be discharged. The Trust shall nevertheless continue as a legal entity during
the period and for the purpose of distributing all property to the persons
entitled hereunder.

                                      -84-
<PAGE>

If the Trust should terminate only with respect to the Employees of one
Employer, the provisions hereof governing the determination and distribution of
terminated Plan and Trust accounts shall apply only to the Members who are
Employees of such Employer.

The Committee shall take all action appropriate or necessary under applicable
law to effect a termination or partial termination under this section.

         12.4 Successor Employer. In the event of the dissolution, merger,
consolidation, or reorganization of the Employer, provision may be made by which
the Plan and Trust will be continued by the successor; and, in that event, such
successor shall be substituted for the Employer under the Plan. The substitution
of the successor shall constitute an assumption of Plan liabilities by the
successor and the successor shall have all of the powers, duties, and
responsibilities of the Employer under the Plan.

         12.5 Transfers, Mergers, and Consolidations. The Plan may not merge or
consolidate with, or transfer its assets or liabilities to, any other plan
unless each Member in the Plan would (if the other plan then terminated) receive
a benefit immediately after the merger, consolidation, or transfer which is
equal to or greater than the benefit the Member would have been entitled to
receive immediately before the merger, consolidation, or transfer (if the Plan
had then terminated).

                    Article XIII. Participation by Affiliates

    13.1 Participation in the Plan. Any Affiliate which desires to become an
Employer may elect to become a party to the Plan and Trust by adopting the Plan
for the benefit of one or more groups of its Covered Employees, effective as of
the Coverage Date specified in such adoption--

         (a)      by filing with the Committee a certified copy of a resolution
                  of its board of directors to that effect,

                                      -85-
<PAGE>

                  together with such other instruments as the Committee may
                  require; and

         (b)      by the Committee's filing with the then Trustee a copy of such
                  resolution, together with a certified copy of resolutions of
                  the Company's Board of Directors approving such adoption.

                        Article XIV. Top-Heavy Provisions

         14.1 Application of Top-Heavy Provisions.

         (a)      Single Plan Determination. Except as provided in subsection
                  (b)(2), if as of a Determination Date the sum of the amount of
                  the Section 416 Accounts of Key Employees and the
                  Beneficiaries of deceased Key Employees exceeds 60 percent of
                  the amount of the Section 416 Accounts of all Members and
                  Beneficiaries other than former Key Employees, the Plan is
                  top-heavy and the provisions of this Article shall become
                  applicable.

         (b)      Aggregation Group Determination.

                  (1)      If as of a Determination Date this Plan is part of an
                           Aggregation Group which is top-heavy, the provisions
                           of this Article shall become applicable.
                           Top-heaviness for the purpose of this subsection
                           shall be determined with respect to the Aggregation
                           Group in the same manner as described in subsection
                           (a) except that if the Aggregation Group includes a
                           defined benefit plan, the Section 416 Account shall
                           include the present value of the accrued benefit of a
                           participant or a beneficiary under such plan.

                  (2)      If this Plan is top-heavy under subsection (a), but
                           the Aggregation Group is not top-heavy, this Article
                           shall not be applicable.

         (c)      Calculations. The Committee shall have responsibility to make
                  all calculations to determine whether this Plan is top-heavy.

                                      -86-
<PAGE>

         14.2 Special Terms. For purposes of this Article, the following terms
shall have the following meanings:

         (a)      "Aggregation Group" means collectively this Plan and all other
                  plans maintained by the Company and its Affiliates which cover
                  a Key Employee and any other plan which enables a plan
                  covering a Key Employee to meet the requirements of Code
                  sections 401(a)(4) or 410. In addition, at the election of the
                  Committee, the Aggregation Group may be expanded to include
                  any other qualified plan maintained by the Company or an
                  Affiliate if such expanded Aggregation Group meets the
                  requirements of Code sections 401(a)(4) and 410.

         (b)      "Compensation" shall have the same meaning as in section
                  4.7(b)(2).

         (c)      "Determination Date" means the last day of the Plan Year
                  immediately preceding the Plan Year for which top-heaviness is
                  to be determined, or in the case of the first plan year of a
                  new plan, the last day of such plan year.

         (d)      "Key Employee" means an employee who for the Plan Year
                  containing the Determination Date or any of the four preceding
                  Plan Years is --

                  (1)      an officer of the Company or an Affiliate whose
                           annual Compensation is greater than 150 percent of
                           the dollar limitation of Code section 415(c)(1)(A)
                           for such Plan Year; provided, however, that no more
                           than the lesser of--

                           (A)      50 employees, or

                           (B)      the greater of (i) three employees or (ii)
                                    10 percent of all employees, shall be
                                    treated as officers, and such officers shall
                                    be those with the highest annual
                                    Compensation in the five-year period;

                  (2)      one of the ten employees having annual Compensation
                           from the Company and Affiliates for such

                                      -87-
<PAGE>

                           Plan Year greater than the dollar limit specified in
                           Code section 415(c)(1)(A), and owning (or considered
                           as owning pursuant to Code section 318) both more
                           than a one-half of 1 percent interest and one of the
                           ten largest interests in the Company or Affiliate;

                  (3)      a 5 percent owner of the Company; or (4) a 1 percent
                           owner of the Company having an annual Compensation of
                           more than $150,000.

                  Key Employee shall also include a Beneficiary of a deceased
                  Key Employee. Ownership shall be determined in accordance with
                  Code section 416(i)(1)(B) and (C). For purposes of subsection
                  (d)(2), if two employees have the same ownership interest in
                  the Company or Affiliate, the employee having the greater
                  annual Compensation from the Company or Affiliate shall be
                  treated as having a larger interest.

         (e)      "Section 416 Account" means--

                  (1)      the amount credited to a Member's Account as of a
                           Determination Date, decreased by

                  (2)      the amount credited to a rollover account as of a
                           Determination Date attributable to rollover
                           contributions initiated by the Member and derived
                           from plans not maintained by the Company or an
                           Affiliate, and increased by

                  (3)      the amount of distributions to the Member or
                           Beneficiary during the five-year period ending on a
                           Determination Date other than a distribution which is
                           a tax-free rollover contribution that is not
                           initiated by the Member or that is contributed to a
                           plan which is maintained by an Company or an
                           Affiliate.

                  The Member's Account of a Member who was a Key Employee and
                  who subsequently meets none of the conditions of section
                  14.2(d) for the Plan Year containing the Determination Date
                  and the preceding four Plan Years is not

                                      -88-
<PAGE>

                  a Section 416 Account and shall be excluded from all
                  computations under this Article. Furthermore, the Member's
                  Account of a Member who did not perform service for the
                  Company or Affiliate during the five-year period ending on the
                  Determination Date shall be similarly excluded from all
                  computations under this Article.

         14.3 Vesting Requirements. If the Plan is determined to be top-heavy
with respect to a Plan Year under the provisions of section 14.1, the vested
interest in the Member's Deferred Compensation Account, Retirement Account, and
Matching Contributions Account on such Determination Date shall continue to be
determined in accordance with the Vesting Table under section 7.4 (which
provides vesting faster than top-heavy vesting).

                                      -89-
<PAGE>

         14.4 Minimum Contribution.

         (a)      General. If this Plan is determined to be top-heavy under the
                  provisions of section 14.1 with respect to a Plan Year, the
                  sum of Employer contributions, other than contributions under
                  a salary reduction agreement, and forfeitures under all
                  qualified defined contribution plans allocated to the accounts
                  of each Member in the Aggregation Group who is not a Key
                  Employee shall not be less than 3 percent of such Member's
                  Compensation. This section shall not be applicable with
                  respect to a Member who is also covered under a top-heavy
                  defined benefit plan maintained by the Company or an Affiliate
                  which provides the benefit specified by Code section
                  416(c)(1).

         (b)      Exception. The contribution rate specified in subsection (a)
                  shall not exceed the percentage at which Employer
                  contributions and forfeitures are allocated under the plans of
                  the Aggregation Group to the account of the Key Employee for
                  whom such percentage is the highest for the Plan Year. For the
                  purpose of this subsection, the percentage for each Key
                  Employee shall be determined by dividing the Employer
                  contributions and forfeitures for the Key Employee by the
                  amount of the total Compensation for the year not in excess of
                  $200,000 (as adjusted by the Secretary of the Treasury under
                  Code section 416(d)).

         14.5 Limit on Annual Additions: Combined Plan Limit.

         (a)      General. For the Plan Years beginning prior to January 1,
                  2000, if this Plan is determined to be top-heavy under section
                  14.1, the combined plan limit in Code section 415(e) shall be
                  applied by substituting "1.0" for "1.25" in each place it
                  appears. The transitional rule of Code section 415(e)(6)(B)(i)
                  shall be applied by substituting "$41,500" for "$51,875."

         (b)      Exception.  Subsection (a) shall not be applicable if --

                                      -90-
<PAGE>

                  (1)      section 14.4(a) is applied by substituting "4
                           percent" for "3 percent," and

                  (2)      this Plan would not be top-heavy if "90 percent" is
                           substituted for "60 percent" in section 14.1(a).

         (c)      Transitional Rule. If, but for this subsection (c), subsection
                  (a) would begin to apply with respect to the Plan, the
                  application of subsection (a) shall be suspended with respect
                  to a Member so long as there are--

                  (1)      no Employer contributions, forfeitures, or voluntary
                           nondeductible contributions allocated to such Member,
                           and

                  (2)      no accruals under a qualified defined benefit plan
                           for such Member.

         14.6 Additional Rules Effective January 1, 2002.

                  This Section shall apply for purposes of determining whether
                  the Plan is a top-heavy Plan under Section 416(g) of the Code
                  for Plan Years beginning on or after January 1, 2002, and
                  whether the Plan satisfies the minimum benefits requirements
                  of Section 416(c) of the Code for such years. This Section
                  replaces applicable language in Article XIV of the Plan.

         (a)      Determination of top-heavy status.

                 (1)       Key Employee. "Key Employee" means any Employee or
                           former Employee (including any deceased Employee) who
                           at any time during the Plan Year that includes the
                           determination date was an officer of the Company or
                           an Affiliate having annual compensation greater than
                           $130,000 (as adjusted under Section 416(i)(1) of the
                           Code for Plan Years beginning after December 31,
                           2002), a 5-percent owner of the Company or an
                           Affiliate, or a 1-percent owner of the Company or an
                           Affiliate having annual compensation of more than
                           $150,000. For this purpose, annual compensation means
                           compensation

                                      -91-
<PAGE>

                           within the meaning of Section 415(c)(3) of the Code.
                           The determination of who is a Key Employee will be
                           made in accordance with Section 416(i)(1) of the Code
                           and the applicable regulations and other guidance of
                           general applicability issued thereunder.

                  (2)      Determination of present values and amounts. This
                           section 14.6(b)(2) shall apply for purposes of
                           determining the present values of accrued benefits
                           and the amounts of account balances of Employees as
                           of the determination date.

                        (i)   Distributions during year ending on the
                              determination date. The present values of accrued
                              benefits and the amounts of account balances of an
                              Employee as of the determination date shall be
                              increased by the distributions made with respect
                              to the Employee under the Plan and any plan
                              aggregated with the Plan under Section 416(g)(2)
                              of the Code during the 1-year period ending on the
                              determination date. The preceding sentence shall
                              also apply to distributions under a terminated
                              plan which, had it not been terminated, would have
                              been aggregated with the Plan under Section
                              416(g)(2)(A)(i) of the Code. In the case of a
                              distribution made for a reason other than
                              separation from service, death, or disability,
                              this provision shall be applied by substituting
                              "5-year period" for "1-year period." Employees not
                              performing services during year ending on the
                              determination date. The accrued benefits and
                              accounts of any individual who has not performed
                              services for the Company during the 1-year period
                              ending on the determination date shall not be
                              taken into account.

                                      -92-
<PAGE>

         (b)      Matching contributions. Employer matching contributions shall
                  be taken into account for purposes of satisfying the minimum
                  contribution requirements of section 416(c)(2) of the Code and
                  the Plan. The preceding sentence shall apply with respect to
                  matching contributions under the Plan or, if the Plan provides
                  that the minimum contribution requirement shall met in another
                  plan, such other plan. Employer matching contributions that
                  are used to satisfy the minimum contribution requirements
                  shall be treated as matching contributions for purposes of the
                  actual contribution percentage test and other requirements of
                  section 401(m) of the Code.

         IN WITNESS WHEREOF, CTS Corporation has caused this amended and
restated CTS Corporation Retirement Savings Plan to be executed by its proper
officer duly authorized by its Board of Directors on this 20th day of February,
2002.

                                        CTS CORPORATION

                                         By /s/James L. Cummins
                                            -------------------
                                               James L. Cummins
                                               Senior Vice President
                                               Administration

                                      -93-<PAGE>
                                                                     EXHIBIT 4.1

                          NORTHFIELD LABORATORIES INC.

                                       TO

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

                                   AS TRUSTEE

                                    INDENTURE

                          DATED AS OF ___________, 200_

                             SENIOR DEBT SECURITIES

<PAGE>

<TABLE>
<S>                                                                                                           <C>
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION..........................................    1
         SECTION 1.1 DEFINITIONS...........................................................................    1
         SECTION 1.2 COMPLIANCE CERTIFICATES AND OPINIONS..................................................    8
         SECTION 1.3 FORM OF DOCUMENTS DELIVERED TO TRUSTEE................................................    8
         SECTION 1.4 ACTS OF HOLDERS; RECORD DATES.........................................................    9
         SECTION 1.5 NOTICES, ETC., TO TRUSTEE AND COMPANY.................................................   10
         SECTION 1.6 NOTICE TO HOLDERS; WAIVER.............................................................   11
         SECTION 1.7 CONFLICT WITH TRUST INDENTURE ACT.....................................................   11
         SECTION 1.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS..............................................   11
         SECTION 1.9 SUCCESSORS AND ASSIGNS................................................................   11
         SECTION 1.10 SEPARABILITY CLAUSE..................................................................   12
         SECTION 1.11 BENEFITS OF INDENTURE................................................................   12
         SECTION 1.12 GOVERNING LAW........................................................................   12
         SECTION 1.13 LEGAL HOLIDAYS.......................................................................   12
         SECTION 1.14 INDENTURE AND SECURITIES SOLELY CORPORATE OBLIGATIONS................................   12
         SECTION 1.15 INDENTURE MAY BE EXECUTED IN COUNTERPARTS............................................   12
ARTICLE 2 SECURITY FORMS...................................................................................   13
         SECTION 2.1 FORMS GENERALLY.......................................................................   13
         SECTION 2.2 FORM OF FACE OF SECURITY..............................................................   13
         SECTION 2.3 FORM OF REVERSE OF SECURITY...........................................................   15
         SECTION 2.4 FORM OF LEGEND FOR GLOBAL SECURITIES..................................................   19
         SECTION 2.5 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.......................................   20
         SECTION 2.6 FORM OF CONVERSION NOTICE.............................................................   20
ARTICLE 3 THE SECURITIES...................................................................................   21
         SECTION 3.1 AMOUNT UNLIMITED; ISSUABLE IN SERIES..................................................   21
         SECTION 3.2 DENOMINATIONS.........................................................................   24
         SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING........................................   24
         SECTION 3.4 TEMPORARY SECURITIES..................................................................   26
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                           <C>
         SECTION 3.5 REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE...................................   26
         SECTION 3.6 MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES......................................   28
         SECTION 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED........................................   28
         SECTION 3.8 PERSONS DEEMED OWNERS.................................................................   30
         SECTION 3.9 CANCELLATION..........................................................................   30
         SECTION 3.10 COMPUTATION OF INTEREST..............................................................   30
ARTICLE 4 SATISFACTION AND DISCHARGE.......................................................................   30
         SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE...............................................   30
         SECTION 4.2 APPLICATION OF TRUST MONEY............................................................   31
ARTICLE 5 REMEDIES.........................................................................................   31
         SECTION 5.1 EVENTS OF DEFAULT.....................................................................   31
         SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT....................................   33
         SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.......................   34
         SECTION 5.4  TRUSTEE MAY FILE PROOFS OF CLAIM.....................................................   34
         SECTION 5.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES...........................   35
         SECTION 5.6 APPLICATION OF MONEY COLLECTED........................................................   35
         SECTION 5.7  LIMITATION ON SUITS..................................................................   35
         SECTION 5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST AND TO
                       CONVERT.............................................................................   36
         SECTION 5.9 RESTORATION OF RIGHTS AND REMEDIES....................................................   36
         SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE.......................................................   36
         SECTION 5.11 DELAY OR OMISSION NOT WAIVER.........................................................   36
         SECTION 5.12 CONTROL BY HOLDERS...................................................................   37
         SECTION 5.13 WAIVER OF PAST DEFAULTS..............................................................   37
         SECTION 5.14 UNDERTAKING FOR COSTS................................................................   37
         SECTION 5.15 WAIVER OF USURY, STAY OR EXTENSION LAWS..............................................   38
ARTICLE 6 THE TRUSTEE......................................................................................   38
         SECTION 6.1 CERTAIN DUTIES AND RESPONSIBILITIES...................................................   38
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                           <C>
         SECTION 6.2 NOTICE OF DEFAULTS....................................................................   38
         SECTION 6.3  CERTAIN RIGHTS OF TRUSTEE............................................................   39
         SECTION 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES................................   40
         SECTION 6.5 MAY HOLD SECURITIES AND ACT AS TRUSTEE UNDER OTHER INDENTURES.........................   40
         SECTION 6.6 MONEY HELD IN TRUST...................................................................   40
         SECTION 6.7 COMPENSATION AND REIMBURSEMENT........................................................   40
         SECTION 6.8 CONFLICTING INTERESTS.................................................................   41
         SECTION 6.9 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY...............................................   41
         SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR....................................   41
         SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR...............................................   42
         SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS..........................   43
         SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY....................................   44
         SECTION 6.14 APPOINTMENT OF AUTHENTICATING AGENT..................................................   44
ARTICLE 7 HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY................................................   45
         SECTION 7.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.............................   45
         SECTION 7.2 PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS................................   46
         SECTION 7.3 REPORTS BY TRUSTEE....................................................................   46
         SECTION 7.4 REPORTS BY COMPANY....................................................................   46
ARTICLE 8 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.............................................   47
         SECTION 8.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS..................................   47
         SECTION 8.2 SUCCESSOR SUBSTITUTED.................................................................   47
ARTICLE 9 SUPPLEMENTAL INDENTURES..........................................................................   48
         SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS....................................   48
         SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.......................................   49
</TABLE>

                                      iii
<PAGE>

<TABLE>
<S>                                                                                                           <C>
         SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES..................................................   50
         SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURES.....................................................   50
         SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT...................................................   50
         SECTION 9.6 REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES....................................   50
ARTICLE 10 COVENANTS.......................................................................................   51
         SECTION 10.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST...........................................   51
         SECTION 10.2 MAINTENANCE OF OFFICE OR AGENCY......................................................   51
         SECTION 10.3 MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST....................................   51
         SECTION 10.4 STATEMENT BY OFFICERS AS TO DEFAULT..................................................   52
         SECTION 10.5 EXISTENCE............................................................................   52
         SECTION 10.6 MAINTENANCE OF PROPERTIES............................................................   53
         SECTION 10.7 PAYMENT OF TAXES AND OTHER CLAIMS....................................................   53
         SECTION 10.8 WAIVER OF CERTAIN COVENANTS..........................................................   53
ARTICLE 11 REDEMPTION OF SECURITIES........................................................................   54
         SECTION 11.1 APPLICABILITY OF ARTICLE.............................................................   54
         SECTION 11.2 ELECTION TO REDEEM; NOTICE TO TRUSTEE................................................   54
         SECTION 11.3 SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED....................................   54
         SECTION 11.4 NOTICE OF REDEMPTION.................................................................   55
         SECTION 11.5 DEPOSIT OF REDEMPTION PRICE..........................................................   56
         SECTION 11.6 SECURITIES PAYABLE ON REDEMPTION DATE................................................   56
         SECTION 11.7 SECURITIES REDEEMED IN PART..........................................................   56
ARTICLE 12 SINKING FUNDS...................................................................................   57
         SECTION 12.1 APPLICABILITY OF ARTICLE.............................................................   57
         SECTION 12.2 SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES................................   57
         SECTION 12.3 REDEMPTION OF SECURITIES FOR SINKING FUND............................................   57
ARTICLE 13 DEFEASANCE AND COVENANT DEFEASANCE..............................................................   58
         SECTION 13.2 DEFEASANCE AND DISCHARGE.............................................................   58
         SECTION 13.3 COVENANT DEFEASANCE..................................................................   58
</TABLE>

                                       iv
<PAGE>

<TABLE>
<S>                                                                                                           <C>
         SECTION 13.4 CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE......................................   59
         SECTION 13.5 DEPOSITED MONEY, U.S. GOVERNMENT OBLIGATIONS AND FOREIGN GOVERNMENT OBLIGATIONS TO BE
                        HELD IN TRUST; MISCELLANEOUS PROVISIONS............................................   61
ARTICLE 14 CONVERSION OF SECURITIES........................................................................   62
         SECTION 14.1 APPLICABILITY OF ARTICLE.............................................................   62
         SECTION 14.2 EXERCISE OF CONVERSION PRIVILEGE.....................................................   62
         SECTION 14.3 NO FRACTIONAL SHARES.................................................................   63
         SECTION 14.4 ADJUSTMENT OF CONVERSION PRICE.......................................................   63
         SECTION 14.5 NOTICE OF CERTAIN CORPORATE ACTIONS..................................................   64
         SECTION 14.6 RESERVATION OF SHARES OF COMMON STOCK................................................   64
         SECTION 14.7 PAYMENT OF CERTAIN TAXES UPON CONVERSION.............................................   64
         SECTION 14.8 NONASSESSABILITY.....................................................................   65
         SECTION 14.9 PROVISION IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS.........................   65
         SECTION 14.10 DUTIES OF TRUSTEE REGARDING CONVERSION..............................................   66
         SECTION 14.11 REPAYMENT OF CERTAIN FUNDS UPON CONVERSION..........................................   66
</TABLE>

                                       v
<PAGE>

                                    INDENTURE

         INDENTURE, dated as of ____________, 200_, between Northfield
Laboratories Inc., a corporation duly organized and existing under the laws of
the State of Delaware (herein called the "Company"), having its principal
executive office at 1560 Sherman Avenue, Suite 1000, Evanston, Illinois
60201-4800, and ______________________________, as Trustee (herein called the
"Trustee").

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

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

                   NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

                                    ARTICLE I

             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 1.1       DEFINITIONS.

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

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

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

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

                  (4)      all references to "$" refer to the lawful currency of
         the United States of America;

                                       1
<PAGE>

                  (5)      unless the context otherwise requires, any reference
         to an "Article" or a "Section" refers to an Article or a Section, as
         the case may be, of this Indenture; and

                  (6)      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.

         "Act," when used with respect to any Holder, has the meaning specified
in Section 1.4.

         "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.

         "Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities of one or more series.

         "Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board empowered to act for it with
respect to this Indenture.

         "Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.

         "Business Day," when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close.

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

         "Common Stock" includes any stock of any class of the Company which has
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which is not subject to redemption by the Company; provided, however,
subject to the provisions of Section 14.9, shares issuable upon conversion of
Securities shall include only shares of the class designated as Common Stock of
the Company at the date of this Indenture or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which are not subject to redemption by the Company; provided, further, that
if at any time there shall be more than one such resulting class, the shares of
each such class then so issuable shall be substantially in the proportion which
the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.

         "Company" means the corporation 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.

                                       2
<PAGE>

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

         "Control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.

         "Corporate Trust Office" means the corporate trust office of the
Trustee at _____________, Attention: Corporate Trust Department, or such other
office, designated by the Trustee by written notice to the Company, at which at
any particular time its corporate trust business shall be administered.

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

         "Covenant Defeasance" has the meaning specified in Section 13.3.

         "Defaulted Interest" has the meaning specified in Section 3.7.

         "Defeasance" has the meaning specified in Section 13.2.

         "Depositary" means, with respect to Securities of any series issuable
in whole or in part in the form of one or more Global Securities, a clearing
agency registered under the Exchange Act that is designated to act as Depositary
for such Securities as contemplated by Section 3.1.

         "Euro" or "Euros" means the currency adopted by those nations
participating in the third stage of the economic and monetary union provisions
of the Treaty on European Union, signed at Maastricht on February 2, 1992.

         "European Economic Area" means the member nations of the European
Economic Area pursuant to the Oporto Agreement on the European Economic Area
dated May 2, 1992, as amended.

         "European Union" means the member nations of the European Union
established by the Treaty of European Union, signed at Maastricht on February 2,
1992, which amended the Treaty of Rome establishing the European Community.

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

         "Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time.

         "Expiration Date" has the meaning specified in Section 1.4.

         "Foreign Government Obligation" means with respect to Securities of any
series which are not denominated in the currency of the United States of America
(x) any security which is (i) a direct obligation of the government which issued
or caused to be issued the currency in which such security is denominated and
for the payment of which obligations its full faith and credit is pledged or,
with respect

                                       3
<PAGE>

to Securities of any series which are denominated in euros, a direct obligation
of any member nation of the European Union for the payment of which obligation
the full faith and credit of the respective nation is pledged so long as such
nation has a credit rating at least equal to that of the highest rated member
nation of the European Economic Area, or (ii) an obligation of a Person
controlled or supervised by and acting as an agency or instrumentality of a
government specified in clause (i) above the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the such government, which,
in either case (i) or (ii), is not callable or redeemable at the option of the
issuer thereof, and (y) any depositary receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act) as custodian with respect to any Foreign
Government Obligation which is specified in clause (x) above and held by such
bank for the account of the holder of such depositary receipt, or with respect
to any specific payment of principal of or interest on any Foreign Government
Obligation which is so specified and held, 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 depositary receipt from any amount received by the
custodian in respect of the Foreign Government Obligation or the specific
payment of principal or interest evidenced by such depositary receipt.

         "Global Security" means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 2.4 (or such
legend as may be specified as contemplated by Section 3.1 for such Securities).

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

         "Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated by Section 3.1; provided,
however, that if at any time more than one Person is acting as Trustee under
this Indenture due to the appointment of one or more separate Trustees for any
one or more separate series of Securities, "Indenture" shall mean, with respect
to such series of Securities for which any such Person is Trustee, 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 shall include the terms of particular
series of 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 Securities for which such Person is not
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; provided,
further that in the event that this Indenture is supplemented or amended by one
or more indentures supplemental hereto which are only applicable to certain
series of Securities, the term "Indenture" for a particular series of Securities
shall only include the supplemental indentures applicable thereto.

         "Interest," when used with respect to an Original Issue Discount
Security, which by its terms bears interest only after Maturity, means interest
payable after Maturity.

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

                                       4
<PAGE>

         "Investment Company Act" means the Investment Company Act of 1940 and
any statute successor thereto, in each case as amended from time to time.

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

         "Notice of Default" means a written notice of the kind specified in
Section 5.1(4).

         "Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the Chief Executive Officer, the
President or a Vice President, and by the principal financial officer, the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of
the Company, and delivered to the Trustee. One of the officers signing an
Officers' Certificate given pursuant to Section 10.4 shall be the principal
executive, financial or accounting officer of the Company.

         "Opinion of Counsel" means a written opinion of counsel, who may be
counsel for, or an employee of, the Company, and who shall be reasonably
acceptable to the Trustee.

         "Original Issue Discount Security" means any Security that provides for
an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 5.2.

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

                  (1)      Securities theretofore canceled by the Trustee or
         delivered to the Trustee for cancellation;

                  (2)      Securities for whose payment or redemption 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 Securities; provided that, if
         such Securities are to be redeemed, notice of such redemption has been
         duly given pursuant to this Indenture or provision therefor
         satisfactory to the Trustee has been made;

                  (3)      Securities as to which Defeasance has been effected
         pursuant to Section 13.2; and

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

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be the amount of
the principal thereof

                                       5
<PAGE>

which would be due and payable as of such date upon acceleration of the Maturity
thereof to such date pursuant to Section 5.2, (B) if, as of such date, the
principal amount payable at the Stated Maturity of a Security is not
determinable, the principal amount of such Security which shall be deemed to be
Outstanding shall be the amount as specified or determined as contemplated by
Section 3.1, (C) the principal amount of a Security denominated in one or more
non-U.S. dollar currencies or currency units which shall be deemed to be
Outstanding shall be the U.S. dollar equivalent, determined as of such date in
the manner provided as contemplated by Section 3.1, of the principal amount of
such Security (or, in the case of a Security described in clause (A) or (B)
above, of the amount determined as provided in such clause), and (D) Securities
owned by the Company or any other obligor upon the Securities or any Affiliate
of the Company or of such other obligor shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent, waiver or other action, only Securities which the Trustee knows
to be so owned shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor.

         "Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.

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

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

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

         "Record Date" means any Regular Record Date or Special Record Date.

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

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

         "Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 3.1.

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

                                       6
<PAGE>

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

         "Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.

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

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

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

         "Subsidiary" means a Person of which at least a majority of the
outstanding voting stock having the power to elect a majority of the board of
directors of such Person (in the case of a corporation) is, or of which at least
a majority of the equity interests (in the case of a Person which is not a
corporation) are, at the time owned, directly or indirectly, by the Company or
by one or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.

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

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

         "U.S. Government Obligation" means (x) any security which is (i) a
direct obligation of the United States of America for the payment of which the
full faith and credit of the United States of America is pledged or (ii) an
obligation of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case (i) or (ii), is not callable or
redeemable at the option of the issuer thereof, and (y) any depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any U.S. Government Obligation which is specified in
clause (x) above and held by such bank for the account of the holder of such
depositary receipt, or with respect to any specific payment of principal of or
interest on any U.S. Government Obligation which is so specified and held,
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 depositary
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal or interest evidenced
by such depositary receipt.

                                       7
<PAGE>

         "Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a 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 such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.

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

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

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

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

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

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.

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

                                       8
<PAGE>

         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.

SECTION 1.4       ACTS OF HOLDERS; RECORD DATES.

         Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given, made or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. The
Trustee shall promptly deliver to the Company copies of all such instrument or
instruments delivered to the Trustee. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.

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

         The ownership of Securities shall be proved by the Security Register.

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

         The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, vote, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, provided that the
Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next paragraph. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities of such
series on such record date. Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any

                                       9
<PAGE>

Person be canceled and of no effect), and nothing in this paragraph shall be
construed to render ineffective any action taken by Holders of the requisite
principal amount of Outstanding Securities of the relevant series on the date
such action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Trustee in writing and to each Holder of Securities of the relevant
series in the manner set forth in Section 1.6.

         The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to join
in the giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 5.2, (iii) any request to institute
proceedings referred to in Section 5.7(2), or (iv) any direction referred to in
Section 5.12, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 1.6.

         With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 1.6, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.

         Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.

SECTION 1.5       NOTICES, ETC., TO TRUSTEE AND COMPANY.

         Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,

                  (1)      the Trustee by any Holder or by the Company shall be
         Sufficient for every purpose hereunder if made, given, furnished or
         filed in writing (or by facsimile

                                       10
<PAGE>

         transmissions, provided that oral confirmation of receipt shall have
         been received) to or with the Trustee at its Corporate Trust Office,
         Attention: Corporate Trust Department, or

                  (2)      the Company by the Trustee or by any Holder shall be
         sufficient for every purpose hereunder (unless otherwise herein
         expressly provided) if in writing and mailed, first-class postage
         prepaid, personally delivered or sent via overnight courier to the
         Company addressed to it at the address of its principal office
         specified in the first paragraph of this instrument or at any other
         address previously furnished in writing to the Trustee by the Company,
         Attention: Chief Financial Officer.

SECTION 1.6       NOTICE TO HOLDERS; WAIVER.

         Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, or delivered by hand or
overnight courier to each Holder affected by such event, at its address as it
appears in the Security Register, not later than the latest date (if any), and
not earlier than the earliest date (if any), prescribed for the giving of such
notice. Neither the failure to mail or deliver by hand or overnight courier any
notice, nor any defect in any notice so mailed or delivered by hand or overnight
courier, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.

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

SECTION 1.7       CONFLICT WITH TRUST INDENTURE ACT.

         If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required under the Trust Indenture Act to be
a part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act, which may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.

SECTION 1.8       EFFECT OF HEADINGS AND TABLE OF CONTENTS.

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

SECTION 1.9       SUCCESSORS AND ASSIGNS.

         All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.

                                       11
<PAGE>

SECTION 1.10      SEPARABILITY CLAUSE.

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

SECTION 1.11      BENEFITS OF INDENTURE.

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

SECTION 1.12      GOVERNING LAW.

THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED UNDER THE
LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

SECTION 1.13      LEGAL HOLIDAYS.

         In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security or the last date on which a Holder has the right to
convert a Security at a particular conversion price shall not be a Business Day
at any Place of Payment, then (notwithstanding any other provision of this
Indenture or of the Securities (other than a provision of any Security which
specifically states that such provision shall apply in lieu of this Section))
payment of interest or principal (and premium, if any) or, if applicable to a
particular series of Securities, conversion 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 or Redemption Date, at the Stated Maturity or on such last day for
conversion, as the case may be.

SECTION 1.14      INDENTURE AND SECURITIES SOLELY CORPORATE OBLIGATIONS.

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

SECTION 1.15      INDENTURE MAY BE EXECUTED IN COUNTERPARTS.

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

                                       12
<PAGE>

                                    ARTICLE 2

                                 SECURITY FORMS

SECTION 2.1       FORMS GENERALLY.

         The Securities of each series shall be in substantially the form set
forth in this Article, or in such other form as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental hereto,
in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. If the form of Securities of any series is established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action 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 Company
Order contemplated by Section 3.3 for the authentication and delivery of such
Securities. Any such Board Resolution or record of such action shall have
attached thereto a true and correct copy of the form of Security referred to
therein approved by or pursuant to such Board Resolution.

         The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.

SECTION 2.2       FORM OF FACE OF SECURITY.

[INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE AND THE REGULATIONS
THEREUNDER.]

                          NORTHFIELD LABORATORIES INC.

NO. __________                                             $__________

                                                  CUSIP:____________

         Northfield Laboratories Inc., a corporation duly organized and existing
under the laws of Delaware (herein called the "Company," which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ____________, or registered assigns, the
principal sum of _____________ dollars on _____________________________ [IF THE
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, COMMENCING _________, AT THE RATE OF ___% PER ANNUM,
UNTIL THE PRINCIPAL HEREOF IS PAID OR MADE AVAILABLE FOR PAYMENT [IF APPLICABLE,
INSERT -- , PROVIDED THAT ANY PRINCIPAL AND PREMIUM, AND ANY SUCH INSTALLMENT OF
INTEREST, WHICH IS OVERDUE SHALL BEAR INTEREST AT THE RATE OF ___% PER ANNUM (TO
THE EXTENT THAT THE PAYMENT OF SUCH INTEREST SHALL BE LEGALLY ENFORCEABLE), FROM
THE DATES SUCH AMOUNTS ARE DUE UNTIL THEY ARE PAID OR MADE AVAILABLE FOR
PAYMENT, AND SUCH INTEREST SHALL BE

                                       13
<PAGE>

PAYABLE ON DEMAND]. THE INTEREST SO PAYABLE, AND PUNCTUALLY PAID OR DULY
PROVIDED FOR, ON ANY INTEREST PAYMENT DATE WILL, AS PROVIDED IN SUCH INDENTURE,
BE PAID TO THE PERSON IN WHOSE NAME THIS 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 THE CASE MAY BE, NEXT PRECEDING SUCH INTEREST PAYMENT DATE.
ANY SUCH INTEREST NOT SO PUNCTUALLY PAID OR DULY PROVIDED FOR WILL FORTHWITH
CEASE TO BE PAYABLE TO THE HOLDER ON SUCH REGULAR RECORD DATE AND MAY EITHER BE
PAID TO THE PERSON IN WHOSE NAME THIS SECURITY (OR ONE OR MORE PREDECESSOR
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 SECURITIES OF THIS SERIES NOT LESS THAN 10
DAYS PRIOR TO SUCH SPECIAL RECORD DATE, OR BE PAID AT ANY TIME IN ANY OTHER
LAWFUL MANNER NOT INCONSISTENT WITH THE REQUIREMENTS OF ANY SECURITIES EXCHANGE
ON WHICH THE SECURITIES OF THIS SERIES MAY BE LISTED, AND UPON SUCH NOTICE AS
MAY BE REQUIRED BY SUCH EXCHANGE, ALL AS MORE FULLY PROVIDED IN SAID INDENTURE].

         [IF THE SECURITY IS NOT TO BEAR INTEREST PRIOR TO MATURITY, INSERT -
THE PRINCIPAL OF THIS SECURITY SHALL NOT BEAR INTEREST EXCEPT IN THE CASE OF A
DEFAULT IN PAYMENT OF PRINCIPAL UPON ACCELERATION, UPON REDEMPTION OR AT STATED
MATURITY AND IN SUCH CASE THE OVERDUE PRINCIPAL AND ANY OVERDUE PREMIUM SHALL
BEAR INTEREST AT THE RATE OF ___% PER ANNUM (TO THE EXTENT THAT THE PAYMENT OF
SUCH INTEREST SHALL BE LEGALLY ENFORCEABLE), FROM THE DATES SUCH AMOUNTS ARE DUE
UNTIL THEY ARE PAID OR MADE AVAILABLE FOR PAYMENT. INTEREST ON ANY OVERDUE
PRINCIPAL OR PREMIUM SHALL BE PAYABLE ON DEMAND. [ANY SUCH INTEREST ON OVERDUE
PRINCIPAL OR PREMIUM WHICH IS NOT PAID ON DEMAND SHALL BEAR INTEREST AT THE RATE
OF ___% PER ANNUM (TO THE EXTENT THAT THE PAYMENT OF SUCH INTEREST ON INTEREST
SHALL BE LEGALLY ENFORCEABLE), FROM THE DATE OF SUCH DEMAND UNTIL THE AMOUNT SO
DEMANDED IS PAID OR MADE AVAILABLE FOR PAYMENT. INTEREST ON ANY OVERDUE INTEREST
SHALL BE PAYABLE ON DEMAND.]]

         Payment of the principal of (and premium, if any) and [IF APPLICABLE,
INSERT -- ANY SUCH] interest on this Security will be made at the office or
agency of the Company maintained for that purpose in _______, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts

         [IF APPLICABLE, INSERT -- ; PROVIDED, HOWEVER, THAT AT THE OPTION OF
THE COMPANY PAYMENT OF INTEREST MAY BE MADE BY CHECK MAILED TO THE ADDRESS OF
THE PERSON ENTITLED THERETO AS SUCH ADDRESS SHALL APPEAR IN THE SECURITY
REGISTER].

         Reference is hereby made to the further provisions of this 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 referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

                                       14
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

Dated: ________________________________    NORTHFIELD LABORATORIES INC.

                                           By:__________________________________

                                           Title:_______________________________

ATTEST:

_______________________________________

SECTION 2.3       FORM OF REVERSE OF SECURITY.

         This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of ________, 200_ (herein called the
"Indenture," which term shall have the meaning assigned to it in such
instrument), between the Company and _____________________________, as Trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), and reference is hereby made to the Indenture and all indentures
supplemental thereto for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof [IF APPLICABLE, INSERT -- , limited in aggregate
principal amount to $________].

         [IF APPLICABLE, INSERT -- THE SECURITIES OF THIS SERIES ARE SUBJECT TO
REDEMPTION UPON NOT LESS THAN [IF APPLICABLE, INSERT -- 30] DAYS' NOTICE BY
MAIL, [IF APPLICABLE, INSERT-- (1) 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 (2)] AT ANY TIME [IF APPLICABLE, INSERT-- ON OR AFTER __________,
20__], 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 [IF APPLICABLE, INSERT-- ON OR BEFORE __________, ___%, AND IF
REDEEMED] DURING THE 12-MONTH PERIOD BEGINNING ____________ OF THE YEARS
INDICATED,

<TABLE>
<CAPTION>
--------------------------------------------------------------------------
                     REDEMPTION                                REDEMPTION
     YEAR              PRICE               YEAR                  PRICE
--------------------------------------------------------------------------
<S>                  <C>                   <C>                 <C>

--------------------------------------------------------------------------
</TABLE>

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, BUT INTEREST INSTALLMENTS WHOSE STATED MATURITY IS ON OR
PRIOR TO SUCH REDEMPTION DATE WILL BE PAYABLE TO THE HOLDERS OF SUCH SECURITIES,
OR ONE OR MORE PREDECESSOR 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.]

                                       15
<PAGE>

[IF APPLICABLE, INSERT-- THE SECURITIES OF THIS SERIES ARE SUBJECT TO REDEMPTION
UPON NOT LESS THAN [IF APPLICABLE, INSERT 30] DAYS' NOTICE BY MAIL, (1) 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 (2) AT
ANY TIME [IF APPLICABLE, INSERT-- 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,

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                           REDEMPTION PRICE FOR         REDEMPTION PRICE FOR
                            REDEMPTION THROUGH        REDEMPTION OTHERWISE THAN
                             OPERATION OF THE           THROUGH OPERATION OF
      YEAR                     SINKING FUND               THE SINKING FUND
-------------------------------------------------------------------------------
<S>                        <C>                        <C>

-------------------------------------------------------------------------------
</TABLE>

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, BUT
INTEREST INSTALLMENTS WHOSE STATED MATURITY IS ON OR PRIOR TO SUCH REDEMPTION
DATE WILL BE PAYABLE TO THE HOLDERS OF SUCH SECURITIES, OR ONE OR MORE
PREDECESSOR 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 SECURITIES OF THIS SERIES AS
CONTEMPLATED BY [IF APPLICABLE, INSERT-- CLAUSE (2) OF] THE PRECEDING PARAGRAPH
AS A PART OF, OR IN ANTICIPATION OF, ANY REFUNDING OPERATION BY THE APPLICATION,
DIRECTLY OR INDIRECTLY, OF MONEYS 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 THIS SERIES PROVIDES FOR
THE REDEMPTION ON __________ IN EACH YEAR BEGINNING WITH THE YEAR ______ AND
ENDING WITH THE YEAR ______ OF [IF APPLICABLE, INSERT-- NOT LESS THAN $_______
("MANDATORY SINKING FUND") AND NOT MORE THAN] $_______ AGGREGATE PRINCIPAL
AMOUNT OF SECURITIES OF THIS SERIES. SECURITIES OF THIS SERIES ACQUIRED OR
REDEEMED BY THE COMPANY OTHERWISE THAN THROUGH [IF APPLICABLE, INSERT--
MANDATORY] SINKING FUND PAYMENTS MAY BE CREDITED AGAINST SUBSEQUENT [IF
APPLICABLE, INSERT -- MANDATORY] SINKING FUND PAYMENTS OTHERWISE REQUIRED TO BE
MADE [IF APPLICABLE, INSERT--, IN THE INVERSE ORDER IN WHICH THEY BECOME DUE].]

         [IF THE SECURITY IS SUBJECT TO REDEMPTION OF ANY KIND, INSERT -- IN THE
EVENT OF REDEMPTION OF THIS SECURITY IN PART ONLY, A NEW SECURITY OR SECURITIES
OF THIS SERIES AND OF LIKE TENOR FOR THE UNREDEEMED PORTION HEREOF WILL BE
ISSUED IN THE NAME OF THE HOLDER HEREOF UPON THE CANCELLATION HEREOF.]

         [IF APPLICABLE, INSERT-- THE INDENTURE CONTAINS PROVISIONS FOR
DEFEASANCE AT ANY TIME OF [THE ENTIRE INDEBTEDNESS OF THIS SECURITY] [OR]
[CERTAIN RESTRICTIVE COVENANTS AND EVENTS OF DEFAULT

                                       16
<PAGE>

WITH RESPECT TO THIS SECURITY] [, IN EACH CASE] UPON COMPLIANCE WITH CERTAIN
CONDITIONS SET FORTH IN THE INDENTURE.]

         [IF THE SECURITY IS CONVERTIBLE INTO COMMON STOCK OF THE COMPANY,
INSERT-- SUBJECT TO THE PROVISIONS OF THE INDENTURE, THE HOLDER OF THIS SECURITY
IS ENTITLED, AT ITS OPTION, AT ANY TIME ON OR BEFORE [INSERT DATE] (EXCEPT THAT,
IN CASE THIS SECURITY OR ANY PORTION HEREOF SHALL BE CALLED FOR REDEMPTION, SUCH
RIGHT SHALL TERMINATE WITH RESPECT TO THIS SECURITY OR PORTION HEREOF, AS THE
CASE MAY BE, SO CALLED FOR REDEMPTION AT THE CLOSE OF BUSINESS ON THE FIRST
BUSINESS DAY NEXT PRECEDING THE DATE FIXED FOR REDEMPTION AS PROVIDED IN THE
INDENTURE UNLESS THE COMPANY DEFAULTS IN MAKING THE PAYMENT DUE UPON
REDEMPTION), TO CONVERT THE PRINCIPAL AMOUNT OF THIS SECURITY (OR ANY PORTION
HEREOF WHICH IS $1,000 OR AN INTEGRAL MULTIPLE THEREOF), INTO FULLY PAID AND
NON-ASSESSABLE SHARES (CALCULATED AS TO EACH CONVERSION TO THE NEAREST 1/100TH
OF A SHARE) OF THE COMMON STOCK OF THE COMPANY, AS SAID SHARES SHALL BE
CONSTITUTED AT THE DATE OF CONVERSION, AT THE CONVERSION PRICE OF $______
PRINCIPAL AMOUNT OF SECURITIES FOR EACH SHARE OF COMMON STOCK, OR AT THE
ADJUSTED CONVERSION PRICE IN EFFECT AT THE DATE OF CONVERSION DETERMINED AS
PROVIDED IN THE INDENTURE, UPON SURRENDER OF THIS SECURITY, TOGETHER WITH THE
CONVERSION NOTICE HEREON DULY EXECUTED, TO THE COMPANY AT THE DESIGNATED OFFICE
OR AGENCY OF THE COMPANY IN __________, ACCOMPANIED (IF SO REQUIRED BY THE
COMPANY) BY INSTRUMENTS OF TRANSFER, IN FORM SATISFACTORY TO THE COMPANY AND TO
THE TRUSTEE, DULY EXECUTED BY THE HOLDER OR BY ITS DULY AUTHORIZED ATTORNEY IN
WRITING. SUCH SURRENDER SHALL, IF MADE DURING ANY PERIOD BEGINNING AT THE CLOSE
OF BUSINESS ON A REGULAR RECORD DATE AND ENDING AT THE OPENING OF BUSINESS ON
THE INTEREST PAYMENT DATE NEXT FOLLOWING SUCH REGULAR RECORD DATE (UNLESS THIS
SECURITY OR THE PORTION BEING CONVERTED SHALL HAVE BEEN CALLED FOR REDEMPTION ON
A REDEMPTION DATE DURING THE PERIOD BEGINNING AT THE CLOSE OF BUSINESS ON A
REGULAR RECORD DATE AND ENDING AT THE OPENING OF BUSINESS ON THE FIRST BUSINESS
DAY AFTER THE NEXT SUCCEEDING INTEREST PAYMENT DATE, OR IF SUCH INTEREST PAYMENT
DATE IS NOT A BUSINESS DAY, THE SECOND SUCH BUSINESS DAY), ALSO BE ACCOMPANIED
BY PAYMENT IN FUNDS ACCEPTABLE TO THE COMPANY OF AN AMOUNT EQUAL TO THE INTEREST
PAYABLE ON SUCH INTEREST PAYMENT DATE ON THE PRINCIPAL AMOUNT OF THIS SECURITY
THEN BEING CONVERTED. SUBJECT TO THE AFORESAID REQUIREMENT FOR PAYMENT AND, IN
THE CASE OF A CONVERSION AFTER THE REGULAR RECORD DATE NEXT PRECEDING ANY
INTEREST PAYMENT DATE AND ON OR BEFORE SUCH INTEREST PAYMENT DATE, TO THE RIGHT
OF THE HOLDER OF THIS SECURITY (OR ANY PREDECESSOR SECURITY) OF RECORD AT SUCH
REGULAR RECORD DATE TO RECEIVE AN INSTALLMENT OF INTEREST (WITH CERTAIN
EXCEPTIONS PROVIDED IN THE INDENTURE), NO ADJUSTMENT IS TO BE MADE ON CONVERSION
FOR INTEREST ACCRUED HEREON OR FOR DIVIDENDS ON SHARES OF COMMON STOCK ISSUED ON
CONVERSION. THE COMPANY IS NOT REQUIRED TO ISSUE FRACTIONAL SHARES UPON ANY SUCH
CONVERSION, BUT SHALL MAKE ADJUSTMENT THEREFOR IN CASH ON THE BASIS OF THE
CURRENT MARKET VALUE OF SUCH FRACTIONAL INTEREST AS PROVIDED IN THE INDENTURE.
THE CONVERSION PRICE IS SUBJECT TO ADJUSTMENT AS PROVIDED IN THE INDENTURE. IN
ADDITION, THE INDENTURE PROVIDES THAT IN CASE OF CERTAIN CONSOLIDATIONS OR
MERGERS TO WHICH THE COMPANY IS A PARTY OR THE SALE OF SUBSTANTIALLY ALL OF THE
ASSETS OF THE COMPANY, THE INDENTURE SHALL BE AMENDED, WITHOUT THE CONSENT OF
ANY HOLDERS OF SECURITIES, SO THAT THIS SECURITY, IF THEN OUTSTANDING, WILL BE
CONVERTIBLE THEREAFTER, DURING THE PERIOD THIS SECURITY SHALL BE CONVERTIBLE AS
SPECIFIED ABOVE, ONLY INTO THE KIND AND AMOUNT OF SECURITIES, CASH AND OTHER
PROPERTY RECEIVABLE UPON THE CONSOLIDATION, MERGER OR SALE BY A HOLDER OF THE
NUMBER OF SHARES OF COMMON STOCK INTO WHICH THIS SECURITY MIGHT HAVE BEEN
CONVERTED IMMEDIATELY PRIOR TO SUCH CONSOLIDATION, MERGER OR SALE (ASSUMING SUCH
HOLDER OF COMMON STOCK FAILED TO EXERCISE ANY RIGHTS OF ELECTION AND RECEIVED
PER SHARE THE KIND AND AMOUNT RECEIVED PER SHARE BY A PLURALITY OF NON-ELECTING
SHARES). IN THE EVENT OF CONVERSION OF THIS SECURITY IN PART ONLY, A NEW
SECURITY OR SECURITIES FOR THE UNCONVERTED PORTION HEREOF SHALL BE ISSUED IN THE
NAME OF THE HOLDER HEREOF UPON THE CANCELLATION HEREOF.]

                                       17
<PAGE>

         [IF THE SECURITY IS CONVERTIBLE INTO OTHER SECURITIES OF THE COMPANY,
SPECIFY THE CONVERSION FEATURES.]

         [IF THE SECURITY IS NOT AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT --
IF AN EVENT OF DEFAULT WITH RESPECT TO SECURITIES OF THIS SERIES SHALL OCCUR AND
BE CONTINUING, THE PRINCIPAL OF THE SECURITIES OF THIS SERIES MAY BE DECLARED
DUE AND PAYABLE IN THE MANNER AND WITH THE EFFECT PROVIDED IN THE INDENTURE.]

         [IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT - IF AN
EVENT OF DEFAULT WITH RESPECT TO SECURITIES OF THIS SERIES SHALL OCCUR AND BE
CONTINUING, AN AMOUNT OF PRINCIPAL OF THE SECURITIES OF THIS SERIES MAY BE
DECLARED DUE AND PAYABLE IN THE MANNER AND WITH THE EFFECT PROVIDED IN THE
INDENTURE. SUCH AMOUNT SHALL BE EQUAL TO -- INSERT FORMULA FOR DETERMINING THE
AMOUNT. UPON PAYMENT (I) OF THE AMOUNT OF PRINCIPAL SO DECLARED DUE AND PAYABLE
AND (II) OF INTEREST ON ANY OVERDUE PRINCIPAL, PREMIUM AND INTEREST (IN EACH
CASE TO THE EXTENT THAT THE PAYMENT OF SUCH INTEREST SHALL BE LEGALLY
ENFORCEABLE), ALL OF THE COMPANY'S OBLIGATIONS IN RESPECT OF THE PAYMENT OF THE
PRINCIPAL OF AND PREMIUM AND INTEREST, IF ANY, ON THE SECURITIES OF THIS SERIES
SHALL TERMINATE.]

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of more than 50% in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.

         As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than a majority in principal
amount of the Securities of this series at the time Outstanding shall have made
written request to the Trustee to institute proceedings in respect of such Event
of Default as Trustee and offered the Trustee reasonable indemnity, and the
Trustee shall not have received from the Holders of a majority in principal
amount of Securities of this series at the time Outstanding a direction
inconsistent with such request, and shall have failed to institute any such
proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Security for the enforcement of any payment of principal hereof or any
premium or interest hereon on or after the respective due dates expressed
herein.

         No reference herein to the Indenture and no provision of this 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 any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.

                                       18
<PAGE>

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, 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 any
premium and interest on this 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 its
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

         The Securities of this series are issuable only in registered form
without coupons in denominations of $______ and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.

         No service charge shall be made for any such registration of transfer
or exchange, 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 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 Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

         All terms used in this Security that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

SECTION 2.4       FORM OF LEGEND FOR GLOBAL SECURITIES.

         Unless otherwise specified as contemplated by Section 3.1 for the
Securities evidenced thereby, every Global Security authenticated and delivered
hereunder shall bear a legend in substantially the following form:

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

                                       19
<PAGE>

SECTION 2.5       FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

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

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

                           _____________________________________________________
                              as Trustee

                           By: _________________________________________________
                                            Authorized Officer

SECTION 2.6       FORM OF CONVERSION NOTICE.

         Conversion notices shall be in substantially the following form:

To Northfield Laboratories Inc.:

         The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of the
Company in accordance with the terms of the Indenture referred to in this
Security, and directs that the shares issuable and deliverable upon the
conversion, together with any check in payment for fractional shares and any
Securities representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If this Notice is being delivered on a date after the close of
business on a Regular Record Date and prior to the opening of business on the
related Interest Payment Date (unless this Security or the portion thereof being
converted has been called for redemption on a Redemption Date during the period
beginning at the close of business on a Regular Record Date and ending at the
opening of business on the first Business Day after the next succeeding Interest
Payment Date, or if such Interest Payment Date is not a Business Day, the second
such Business Day), this Notice is accompanied by payment, in funds acceptable
to the Company, of an amount equal to the interest payable on such Interest
Payment Date of the principal of this Security to be converted. If shares are to
be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect hereto. Any amount required to
be paid by the undersigned on account of interest accompanies this Security.

                                       20

<PAGE>

Principal Amount to be Converted (in an integral multiple of $1,000, if less
than all)

U.S. $

Dated:

                                        Signature(s) must be guaranteed by an
                                        eligible guarantor institution (banks,
                                        stockbrokers, savings and loan
                                        associations and credit unions with
                                        membership in an approved signature
                                        guarantee medallion program) pursuant to
                                        Securities and Exchange Commission Rule
                                        17Ad-15.

                                        ________________________________________
                                        Signature Guaranty

         Fill in for registration of shares of Common Stock and Security if to
be issued otherwise than to the registered Holder.

____________________________________    ________________________________________
Name                                    Social Security or Other Taxpayer
                                        Identification Number

____________________________________

____________________________________

Please print Name and Address
(including zip code)

[The above conversion notice is to be modified, as appropriate, for conversion
into other securities or property of the Company.]

                                    ARTICLE 3

                                 THE SECURITIES

SECTION 3.1       AMOUNT UNLIMITED; ISSUABLE IN SERIES.

         The aggregate principal amount of Securities that may be authenticated
and delivered under this Indenture is unlimited.

         The 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, or determined in the manner provided, in an

                                       21
<PAGE>

Officers' Certificate, or established in one or more indentures supplemental
hereto, prior to the issuance of Securities of any series,

                  (1)      the title of the Securities of the series (which
         shall distinguish the Securities of the series from Securities of any
         other series);

                  (2)      any limit upon the aggregate principal amount of the
         Securities of the series which may be authenticated and delivered under
         this Indenture (except for Securities authenticated and delivered upon
         registration of transfer of, or in exchange for, or in lieu of, other
         Securities of the series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.7
         and except for any Securities which, pursuant to Section 3.3, are
         deemed never to have been authenticated and delivered hereunder);

                  (3)      the Person to whom any interest on a Security of the
         series shall be payable, if other than the Person in whose name that
         Security (or one or more Predecessor Securities) is registered at the
         close of business on the Regular Record Date for such interest;

                  (4)      the date or dates on which the principal of any
         Securities of the series is payable;

                  (5)      the rate or rates (which may be fixed or variable) at
         which any Securities of the series shall bear interest, if any, the
         date or dates from which any such interest shall accrue, the Interest
         Payment Dates on which any such interest shall be payable and the
         Regular Record Date for any such interest payable on any Interest
         Payment Date (or the method for determining the dates and rates);

                  (6)      the place or places where the principal of and any
         premium and interest on any Securities of the series shall be payable;

                  (7)      the period or periods within which, the price or
         prices at which and the terms and conditions upon which any Securities
         of the series may be redeemed, in whole or in part, at the option of
         the Company and, if other than by a Board Resolution, the manner in
         which any election by the Company to redeem the Securities shall be
         evidenced;

                  (8)      the obligation, if any, of the Company to redeem or
         purchase any Securities of the series pursuant to any sinking fund or
         analogous provisions or at the option of the Holder thereof and the
         period or periods within which, the price or prices at which and the
         terms and conditions upon which any Securities of the series shall be
         redeemed or purchased, in whole or in part, pursuant to such
         obligation;

                  (9)      if other than denominations of $1,000 and any
         integral multiple thereof, the denominations in which any Securities of
         the series shall be issuable;

                  (10)     if the amount of principal of or any premium or
         interest on any Securities of the series may be determined with
         reference to an index or pursuant to a formula, the manner in which
         such amounts shall be determined;

                                       22
<PAGE>

                  (11)     if other than the currency of the United States of
         America, the currency, currencies or currency units in which the
         principal of or any premium or interest on any Securities of the series
         shall be payable and the manner of determining the equivalent thereof
         in the currency of the United States of America for any purpose,
         including for purposes of the definition of "Outstanding" in Section
         1.1;

                  (12)     if the principal of or any premium or interest on any
         Securities of the series is to be payable, at the election of the
         Company or the Holder thereof, in one or more currencies or currency
         units other than that or those in which such Securities are stated to
         be payable, the currency, currencies or currency units in which the
         principal of or any premium or interest on such Securities as to which
         such election is made shall be payable, the periods within which and
         the terms and conditions upon which such election is to be made and the
         amount so payable (or the manner in which such amount shall be
         determined);

                  (13)     if other than the entire principal amount thereof,
         the portion of the principal amount of any Securities of the series
         which shall be payable upon declaration of acceleration of the Maturity
         thereof pursuant to Section 5.2;

                  (14)     if the principal amount payable at the Stated
         Maturity of any Securities of the series will not be determinable as of
         any one or more dates prior to the Stated Maturity, the amount which
         shall be deemed to be the principal amount of such Securities as of any
         such date for any purpose thereunder or hereunder, including the
         principal amount thereof which shall be due and payable upon any
         Maturity other than the Stated Maturity or which shall be deemed to be
         Outstanding as of any date prior to the Stated Maturity (or, in any
         such case, the manner in which such amount deemed to be the principal
         amount shall be determined);

                  (15)     if applicable, that the Securities of the series, in
         whole or any specified part, shall be defeasible pursuant to Section
         13.2 or Section 13.3 or both such Sections, or any other defeasance
         provisions applicable to any Securities of the series, and, if other
         than by a Board Resolution, the manner in which any election by the
         Company to defease such Securities shall be evidenced;

                  (16)     if applicable, the terms of any right to convert or
         exchange Securities of the series into shares of Common Stock of the
         Company or other securities or property;

                  (17)     if applicable, that any Securities of the series
         shall be issuable in whole or in part in the form of one or more Global
         Securities and, in such case, the respective Depositaries for such
         Global Securities, the form of any legend or legends which shall be
         borne by any such Global Security in addition to or in lieu of that set
         forth in Section 2.4 and any circumstances in addition to or in lieu of
         those set forth in clause (2) of the last paragraph of Section 3.5 in
         which any such Global Security may be exchanged in whole or in part for
         Securities registered, and any transfer of such Global Security in
         whole or in part may be registered, in the name or names of Persons
         other than the Depositary for such Global Security or a nominee
         thereof;

                  (18)     any addition to or change in the Events of Default
         which applies to any Securities of the series and any change in the
         right of the Trustee or the requisite Holders

                                       23
<PAGE>

         of such Securities to declare the principal amount thereof due and
         payable pursuant to Section 5.2;

                  (19)     any addition to or change in the covenants set forth
         in Article 10 which applies to Securities of the series;

                  (20)     any Authenticating Agents, Paying Agents, Security
         Registrars or such other agents necessary in connection with the
         issuance of the Securities of such series, including, without
         limitation, exchange rate agents and calculation agents;

                  (21)     if applicable, the terms of any security that will be
         provided for a series of Securities, including any provisions regarding
         the circumstances under which collateral may be released or
         substituted;

                  (22)     if applicable, the terms of any guaranties for the
         Securities and any circumstances under which there may be additional
         obligors on the Securities; and

                  (23)     any other terms of the series (which terms shall not
         be inconsistent with the provisions of this Indenture, except as
         permitted by Section 9.1(5)).

         All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to the Board Resolution referred to above and (subject to Section 3.3) set
forth, or determined in the manner provided, in the Officers' Certificate
referred to above or in any such indenture supplemental hereto.

         If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
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.

         The Securities of each series shall be issuable only in registered form
without coupons and only in such denominations as shall be specified as
contemplated by Section 3.1. In the absence of any such specified denomination
with respect to the Securities of any series, the Securities of such series
shall be issuable in denominations of $1,000 and any integral multiple thereof.

SECTION 3.3       EXECUTION, AUTHENTICATION, DELIVERY AND DATING.

         The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its Chief Executive
Officer, its principal financial officer, its President or one of its Vice
Presidents, attested by its Treasurer, its Secretary or one of its Assistant
Treasurers or Assistant Secretaries. The signature of any of these officers on
the Securities may be manual or facsimile.

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

                                       24
<PAGE>

         At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver 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 Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities. If the
form or terms of the Securities of the series have been established by or
pursuant to one or more Board Resolutions as permitted by Sections 2.1 and 3.1,
in authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 6.1) shall be fully protected in
relying upon, a copy of such Board Resolution, the Officers' Certificate setting
forth the terms of the series and an Opinion of Counsel, with such Opinion of
Counsel stating,

                  (1)      if the form of such Securities has been established
         by or pursuant to Board Resolution as permitted by Section 2.1, that
         such form has been established in conformity with the provisions of
         this Indenture;

                  (2)      if the terms of such Securities have been established
         by or pursuant to Board Resolution as permitted by Section 3.1, that
         such terms have been established in conformity with the provisions of
         this Indenture; and

                  (3)      that such Securities, when authenticated and
         delivered by the Trustee and issued by the Company in the manner and
         subject to any conditions specified in such Opinion of Counsel, will
         constitute valid and legally binding obligations of the Company
         enforceable in accordance with their terms, subject to bankruptcy,
         insolvency, fraudulent transfer, reorganization, moratorium and similar
         laws of general applicability relating to or affecting creditors'
         rights and to general equity principles.

         If such form or terms have been so established, the Trustee shall not
be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.

         Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.1 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.

         Each Security shall be dated the date of its authentication.

         No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation as provided in Section 3.9, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.

                                       25
<PAGE>

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

SECTION 3.4       TEMPORARY SECURITIES.

         Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.

         If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities of any series, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor one or more
definitive Securities of the same series, of any authorized denominations and of
like tenor and aggregate principal amount. Until so exchanged, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series and tenor.

SECTION 3.5       REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.

         The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency 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 it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.

         Upon surrender for registration of transfer of any Security of a series
at the office or agency of the Company in a Place of Payment for that series,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Securities
of the same series, of any authorized denominations and of like tenor and
aggregate principal amount.

         At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series, of any authorized denominations and of
like tenor and aggregate principal amount, upon surrender of the Securities to
be exchanged at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities that the Holder making the exchange is
entitled to receive.

                                       26
<PAGE>

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

         Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company 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 its attorney duly authorized in writing.

         No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.4, 9.6 or 11.7 not involving any transfer.

         If the Securities of any series (or of any series and specified tenor)
are to be redeemed in part, the Company shall not be required (A) to issue,
register the transfer of or exchange any Securities of that series (or of that
series and specified tenor, as the case may be) during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of any such Securities selected for redemption under Section 11.3 and
ending at the close of business on the day of such mailing, or (B) to register
the transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.

         The provisions of clauses (1), (2), (3) and (4) below shall apply only
to Global Securities:

                  (1)      Each Global Security authenticated under this
         Indenture shall be registered in the name of the Depositary designated
         for such Global Security or a nominee thereof and delivered to such
         Depositary or a nominee thereof or custodian therefor, and each such
         Global Security shall constitute a single Security for all purposes of
         this Indenture.

                  (2)      Notwithstanding any other provision in this
         Indenture, no Global Security may be exchanged in whole or in part for
         Securities registered, and no transfer of a Global Security in whole or
         in part may be registered, in the name of any Person other than the
         Depositary for such Global Security or a nominee thereof unless (A)
         such Depositary (i) has notified the Company that it is unwilling or
         unable to continue as Depositary for such Global Security or (ii) has
         ceased to be a clearing agency registered under the Exchange Act, (B)
         there shall have occurred and be continuing an Event of Default with
         respect to such Global Security or (C) there shall exist such
         circumstances, if any, in addition to or in lieu of the foregoing as
         have been specified for this purpose as contemplated by Section 3.1.

                  (3)      Subject to clause (2) above, any exchange of a Global
         Security for other Securities may be made in whole or in part, and all
         Securities issued in exchange for a Global Security or any portion
         thereof shall be registered in such names as the Depositary for such
         Global Security shall direct.

                  (4)      Every Security authenticated and delivered upon
         registration of transfer of, or in exchange for or in lieu of, a Global
         Security or any portion thereof, whether pursuant to this Section,
         Section 3.4, 3.6, 9.6 or 11.7 or otherwise, shall be authenticated

                                       27
<PAGE>

         and delivered in the form of, and shall be, a Global Security, unless
         such Security is registered in the name of a Person other than the
         Depositary for such Global Security or a nominee thereof.

SECTION 3.6       MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.

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

         If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.

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

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

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

SECTION 3.7       PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.

         Except as otherwise provided as contemplated by Section 3.1 with
respect to any series of Securities, interest on any Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.

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

                                       28
<PAGE>

                  (1)      The Company may elect to make payment of any
         Defaulted Interest to the Persons in whose names the Securities of such
         series (or their respective Predecessor Securities) are registered at
         the close of business on a Special Record Date for the payment of such
         Defaulted Interest, which shall be fixed in the following manner. The
         Company shall notify the Trustee in writing of the amount of Defaulted
         Interest proposed to be paid on each Security of such series and the
         date of the proposed payment, and at the same time the Company shall
         deposit with the Trustee an amount of money equal to the aggregate
         amount proposed to be paid in respect of such Defaulted Interest or
         shall make arrangements satisfactory to the Trustee for such deposit
         prior to the date of the proposed payment, such money when deposited to
         be held in trust for the benefit of the Persons entitled to such
         Defaulted Interest as in this clause provided. Thereupon the Trustee
         shall fix a Special Record Date for the payment of such Defaulted
         Interest, which shall be not more than 15 days and not less than 10
         days prior to the date of the proposed payment and not less than 10
         days after the receipt by the Trustee of the notice of the proposed
         payment. The Trustee shall promptly notify the Company of such Special
         Record Date and, in the name and at the expense of the Company, shall
         cause notice of the proposed payment of such Defaulted Interest and the
         Special Record Date therefor to be given to each Holder of Securities
         of such series in the manner set forth in Section 1.6, not less than 10
         days prior to such Special Record Date. Notice of the proposed payment
         of such Defaulted Interest and the Special Record Date therefor having
         been so mailed, such Defaulted Interest shall be paid to the Persons in
         whose names the Securities of such series (or their respective
         Predecessor Securities) are registered at the close of business on such
         Special Record Date and shall no longer be payable pursuant to the
         following clause (2).

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

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

         Subject to the provisions of Section 14.2, in the case of any Security
(or any part thereof) which is converted after any Regular Record Date and on or
prior to the next succeeding Interest Payment Date (other than any Security the
principal of (or premium, if any, on) which shall become due and payable,
whether at Stated Maturity or by declaration of acceleration or otherwise prior
to such Interest Payment Date), interest whose Stated Maturity is on such
Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion and such interest (whether or not punctually
paid or duly provided for) shall be paid to the Person in whose name that
Security (or any one or more Predecessor Securities) is registered at the close
of business on such Regular Record Date. Except as otherwise expressly provided
in the immediately preceding sentence or in Section 14.2, in the case of any
Security (or any part thereof) which is converted, interest whose Stated
Maturity is after the date of conversion of such Security (or such part thereof)
shall not be payable.

                                       29
<PAGE>

SECTION 3.8       PERSONS DEEMED OWNERS.

         Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and any premium
and (subject to Section 3.7) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

SECTION 3.9       CANCELLATION.

         All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any 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 Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of in accordance with its customary procedures.

SECTION 3.10      COMPUTATION OF INTEREST.

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

                                    ARTICLE 4

                           SATISFACTION AND DISCHARGE

SECTION 4.1       SATISFACTION AND DISCHARGE OF INDENTURE.

         This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when

                  (1)      either

                           (A)      all Securities theretofore authenticated and
                           delivered (other than (i) Securities which have been
                           destroyed, lost or stolen and which have been
                           replaced or paid as provided in Section 3.6 and (ii)
                           Securities for whose payment money has theretofore
                           been deposited in trust or segregated and held in
                           trust by the Trustee or the Company and thereafter
                           repaid to the Company or discharged from such trust,
                           as provided in Section 10.3) have been delivered to
                           the Trustee for cancellation; or

                                       30
<PAGE>

                           (B)      all such Securities not theretofore
                           delivered to the Trustee for cancellation (i) have
                           become due and payable, or (ii) will become due and
                           payable at their Stated Maturity within one year, or
                           (iii) are to be called for redemption within one year
                           under arrangements satisfactory to the Trustee for
                           the giving of notice of redemption by the Trustee in
                           the name, and at the expense, of the Company, and the
                           Company, in the case of (i), (ii) or (iii) above, has
                           deposited or caused to be deposited with the Trustee
                           as trust funds in trust for the purpose money in an
                           amount sufficient to pay and discharge the entire
                           indebtedness on such Securities not theretofore
                           delivered to the Trustee for cancellation, for
                           principal and any premium and interest to the date of
                           such deposit (in the case of Securities which have
                           become due and payable) or to the Stated Maturity or
                           Redemption Date, as the case may be;

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

                  (3)      the Company has delivered to the Trustee an Officers'
         Certificate and an Opinion of Counsel, each stating that all conditions
         precedent herein provided for relating to the satisfaction and
         discharge of this Indenture have been complied with.

         Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Trustee to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.

SECTION 4.2       APPLICATION OF TRUST MONEY.

         Subject to the provisions of the last paragraph of Section 10.3, 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 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 any premium and
interest for whose payment such money has been deposited with the Trustee.

                                    ARTICLE 5

                                    REMEDIES

SECTION 5.1       EVENTS OF DEFAULT.

         "Event of Default," wherever used herein with respect to 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 or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body),
unless in the Board Resolution, supplemental indenture or Officers' Certificate
establishing such series, it is provided that such series shall not have the
benefit of said Event of Default:

                                       31
<PAGE>

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

                  (2)      default in the payment of the principal of or any
         premium on any Security of that series at its Maturity; or

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

                  (4)      default in the performance, or breach, of any
         covenant or warranty of the Company in this Indenture (other than a
         covenant or warranty a default in whose performance or whose breach is
         elsewhere in this Section specifically dealt with or which has
         expressly been included in this Indenture solely for the benefit of
         series of Securities other than that series), and continuance of such
         default or breach for a period of 90 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 Securities of that 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

                  (5)      the entry by a court having jurisdiction in the
         premises of (A) a decree or order for relief in respect of the Company
         in an involuntary case or proceeding under any applicable Federal or
         State bankruptcy, insolvency, reorganization or other similar law or
         (B) 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 custodian,
         receiver, liquidator, assignee, 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 for relief or any such other
         decree or order unstayed and in effect for a period of 90 consecutive
         days; or

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

                                       32
<PAGE>

                  (7)      any other Event of Default provided with respect to
         Securities of that series in the Board Resolution, supplemental
         indenture or Officers' Certificate establishing that series.

SECTION 5.2       ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

         Unless the Board Resolution, supplemental indenture or Officers'
Certificate establishing such series provides otherwise, if an Event of Default
(other than an Event of Default specified in Section 5.1(5) or 5.1(6)) with
respect to 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 Securities of that series may declare
the principal amount of all the Securities of that series (or, if any Securities
of that series are Original Issue Discount Securities, such portion of the
principal amount of such Securities as may be specified by the terms thereof),
and premium, if any, together with accrued and unpaid interest, if any, thereon,
to be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by the Holders), and upon any such declaration such
principal amount (or specified amount), and premium, if any, together with
accrued and unpaid interest, if any, thereon, shall become immediately due and
payable. If an Event of Default specified in Section 5.1(5) or 5.1(6) with
respect to Securities of any series at the time Outstanding occurs, the
principal amount of all the Securities of that series (or, if any Securities of
that series are Original Issue Discount Securities, such portion of the
principal amount of such Securities as may be specified by the terms thereof),
and premium, if any, together with accrued and unpaid interest, if any, thereon,
shall automatically, and without any declaration or other action on the part of
the Trustee or any Holder, become immediately due and payable.

         At any time after such a declaration of acceleration with respect to
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 a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if

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

                           (A)      all overdue interest on all Securities of
                           that series,

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

                           (C)      to the extent that payment of such interest
                           is lawful, interest upon overdue interest at the rate
                           or rates prescribed therefor in such Securities, and

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

                                       33
<PAGE>

                  (2)      all Events of Default with respect to Securities of
         that series, other than the non-payment of the principal of Securities
         of that series that have become due solely by such declaration of
         acceleration, have been cured or waived as provided in Section 5.13.

         No such rescission 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

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

                  (2)      default is made in the payment of the principal of
         (or premium, if any, on) any Security at the Maturity thereof, the
         Company will, upon demand of the Trustee, pay to it, for the benefit of
         the Holders of such Securities, the whole amount then due and payable
         on such Securities for principal and any premium and interest and, to
         the extent that payment of such interest shall be legally enforceable,
         interest on any overdue principal and premium and on any overdue
         interest, at the rate or rates prescribed therefor in such Securities,
         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 an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.

SECTION 5.4       TRUSTEE MAY FILE PROOFS OF CLAIM.

         In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it 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.

         No provision of this Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote

                                       34
<PAGE>

in respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.

SECTION 5.5       TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.

         All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the 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 or any premium
or interest, upon presentation of the Securities 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 and any premium, if any, and interest on the Securities in respect of which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Securities for principal and any premium, if any, and interest,
respectively; and

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

SECTION 5.7       LIMITATION ON SUITS.

         No Holder of any 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

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

                  (2)      the Holders of not less than 25% in principal amount
         of the Outstanding Securities of that 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;

                  (3)      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;

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

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<PAGE>

                  (5)      no direction inconsistent with such written request
         has been given to the Trustee during such 60-day period by the Holders
         of a majority in principal amount of the Outstanding Securities of that
         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 of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.

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

         Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and any premium and (subject to Section 3.7)
interest on such Security on the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date), to convert
such Securities in accordance with Article 14 to the extent that such right to
convert is applicable to such Security, and to institute suit for the
enforcement of any such payment, and such rights 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, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.

SECTION 5.10      RIGHTS AND REMEDIES CUMULATIVE.

         Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 3.6, 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 of any Securities
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee (subject to the limitations
contained in this Indenture) or by the Holders, as the case may be.

                                       36
<PAGE>

SECTION 5.12      CONTROL BY HOLDERS.

         The Holders of a majority in principal amount of the Outstanding
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 or power conferred on the Trustee, with respect to the
Securities of such series, provided that

                  (1)      such direction shall not be in conflict with any rule
         of law or with this Indenture and the Trustee shall not have determined
         that the action so directed would be unjustly prejudicial to Holders of
         Securities of that series, or any other series, not taking part in such
         direction; and

                  (2)      the Trustee may take any other action deemed proper
         by the Trustee that is not inconsistent with such direction or this
         Indenture.

SECTION 5.13      WAIVER OF PAST DEFAULTS.

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

                  (1)      a default in the payment of the principal of or any
         premium or interest on any Security of such series as and when the same
         shall become due and payable by the terms thereof, otherwise than by
         acceleration (unless such default has been cured and a sum sufficient
         to pay all matured installments of interest, principal and premium, if
         any, has been deposited with the Trustee), or

                  (2)      to the extent such right is applicable to such
         Security, a failure by the Company on request to convert any Security
         into Common Stock; or

                  (3)      in respect of a covenant or provision hereof which
         under Article 9 cannot be modified or amended without the consent of
         the Holder of each Outstanding 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 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.

         In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or in any suit for the
enforcement of the right to convert any Security in accordance with Article 14.

                                       37
<PAGE>

SECTION 5.15      WAIVER OF USURY, STAY OR EXTENSION LAWS.

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

                                    ARTICLE 6

                                   THE TRUSTEE

SECTION 6.1       CERTAIN DUTIES AND RESPONSIBILITIES.

         The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability 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. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.

SECTION 6.2       NOTICE OF DEFAULTS.

         If a default occurs hereunder with respect to Securities of any series,
the Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; provided,
however, that except in the case of a default in the payment of principal of (or
premium, if any) or interest on any Securities of such series or in the payment
of any sinking fund installment or any conversion right applicable to Securities
of such series, the Trustee shall be protected in withholding such notice if and
so long as a trust committee of directors and/or Responsible Officers of the
Trustee in good faith determine that the withholding of such notice is in the
interests of the holders of Securities of such series; provided, further,
however, that in the case of any default of the character specified in Section
5.1(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 60 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event that is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.

         Except with respect to Section 10.1, the Trustee shall have no duty to
inquire as to the performance of the Company with respect to the covenants
contained in Article 10. In addition, the Trustee shall not be deemed to have
knowledge of an Event of Default except (i) any Default or Event of Default
occurring pursuant to Sections 5.1(1), 5.1(2) and 5.1(3) (defaults in payments
on the Securities) or (ii) any Default or Event of Default of which the Trustee
shall have received written notification or obtained actual knowledge.

         Delivery of reports, information and documents to the Trustee under
Section 7.4 is for informational purposes only and the Trustee's receipt of the
foregoing shall not constitute constructive

                                       38
<PAGE>

notice of any information contained therein or determinable from information
contained therein, including the Company's compliance with any of their
covenants hereunder (as to which the Trustee is entitled to rely conclusively on
Officers' Certificates).

SECTION 6.3       CERTAIN RIGHTS OF TRUSTEE.

         Subject to the provisions of Section 6.1:

                  (1)      in the absence of bad faith on the part of the
         Trustee, 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;

                  (2)      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;

                  (3)      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) is
         entitled to and may, in the absence of bad faith on its part, rely upon
         an Officers' Certificate;

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

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

                  (6)      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

                  (7)      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.

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<PAGE>

SECTION 6.4       NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.

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

SECTION 6.5       MAY HOLD SECURITIES AND ACT AS TRUSTEE UNDER OTHER INDENTURES.

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

         Subject to the limitations imposed by the Trust Indenture Act, nothing
in this Indenture shall prohibit the Trustee from becoming and acting as trustee
under other indentures under which other securities, or certificates of interest
of participation in other securities, of the Company are outstanding in the same
manner as if it were not Trustee hereunder.

SECTION 6.6       MONEY HELD IN TRUST.

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

SECTION 6.7       COMPENSATION AND REIMBURSEMENT.

         The Company agrees:

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

                  (2)      except as otherwise expressly provided herein, to
         reimburse the Trustee 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 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

                  (3)      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 the trust or trusts hereunder,

                                       40
<PAGE>

         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.

         When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(5) or Section 5.1(6) hereof occurs, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of administration
under any applicable bankruptcy, insolvency, reorganization or similar law.

SECTION 6.8       CONFLICTING INTERESTS.

         If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act and there is an Event of Default under the
Securities of that series, the Trustee shall either eliminate such interest or
resign, to the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by the Trust Indenture Act, the Trustee shall not be deemed to have a
conflicting interest by virtue of being a trustee under this Indenture with
respect to Securities of more than one series.

SECTION 6.9       CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

         There shall at all times be one (and only one) Trustee hereunder with
respect to the Securities of each series, which may be Trustee hereunder for
Securities of one or more other series. Each Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has (or if the
Trustee is a member of a bank holding company system, its bank holding company
has) a combined capital and surplus of at least $50,000,000. If any such Person
or bank holding company publishes reports of condition at least annually,
pursuant to law or to the requirements of its supervising or examining
authority, then for the purposes of this Section and to the extent permitted by
the Trust Indenture Act, the combined capital and surplus of such Person or bank
holding company shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee with respect to the Securities of any series shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.

SECTION 6.10      RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.

         No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.11.

         The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 6.11 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.

         The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.

         If at any time:

                                       41
<PAGE>

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

                  (2)      the Trustee shall cease to be eligible under Section
         6.9 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,
         (A) the Company by a Board Resolution may remove the Trustee with
         respect to all Securities, or (B) subject to Section 5.14, any Holder
         who has been a bona fide Holder of a Security for at least six months
         may, on behalf of himself and all others similarly situated, petition
         any court of competent jurisdiction for the removal of the Trustee with
         respect to all Securities and the appointment of a successor Trustee or
         Trustees.

         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 Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 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 Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the successor Trustee
so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 6.11, become the
successor Trustee with respect to the Securities of such series and to that
extent supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of any series shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
required by Section 6.11, the retiring Trustee may petition, or any Holder who
has been a bona fide Holder of a Security of such series for at least six months
may petition, on behalf of himself and all others similarly situated, any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.

         The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series to all Holders
of Securities of such series in the manner provided in Section 1.6. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.

SECTION 6.11      ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

         In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or

                                       42
<PAGE>

conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on the 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.

         In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (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 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 Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(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 such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; 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
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.

         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 the
first or second preceding paragraph, as the case may be.

         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 the corporate trust business
of the Trustee (including the administration of the trust created by this
Indenture), shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor

                                       43
<PAGE>

Trustee had itself authenticated such Securities. In the event that any
Securities shall not have been authenticated by such predecessor Trustee, any
such successor Trustee may authenticate and deliver such Securities in either
its own name or that of such 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 other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).

SECTION 6.14      APPOINTMENT OF AUTHENTICATING AGENT.

         The Trustee may appoint an Authenticating Agent or Agents with respect
to one or more series of Securities which shall be authorized to act on behalf
of the Trustee to authenticate Securities of such series issued upon original
issue and upon exchange, registration of transfer or partial redemption thereof
or pursuant to Section 3.6, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having (or if the Authenticating Agent is a member of a bank holding
company system, its bank holding company has) a combined capital and surplus of
not less than $50,000,000 and subject to supervision or examination by Federal
or State authority. If such Authenticating Agent publishes reports of condition
at least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.

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

         An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its

                                       44
<PAGE>

appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.

         The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.7.

         If an appointment with respect to one or more series is made pursuant
to this Section 6.12, the Securities of such series may have endorsed thereon,
in lieu of the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:

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

                                    ___________________________________________,
                                      as Trustee

                                 By:___________________________________________
                                      as Authenticating Agent

                                 By:___________________________________________
                                      Authorized Officer

                                    ARTICLE 7

                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

                  (1)      semi-annually, not later than 15 days after the
         Regular Record Date for each respective series of Securities, a list,
         in such form as the Trustee may reasonably require, of the names and
         addresses of the Holders of Securities of each series as of such
         Regular Record Date, as the case may be, or if there is no Regular
         Record Date for such series of Securities, semi-annually, and

                  (2)      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;

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<PAGE>

provided that no such list need be furnished by the Company to the Trustee so
long as the Trustee is acting as Security Registrar.

SECTION 7.2       PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.

         The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.

         The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.

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

SECTION 7.3       REPORTS BY TRUSTEE.

         The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.

         Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted no later than July 15 in each calendar year,
commencing with the first July 15 after the first issuance of Securities
pursuant to this Indenture.

         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
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.

SECTION 7.4       REPORTS BY COMPANY.

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

                                       46
<PAGE>

                                    ARTICLE 8

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 8.1       COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.

         The Company shall not consolidate with or merge into any other Person
(in a transaction in which the Company is not the surviving corporation) or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, unless:

                  (1)      in case the Company shall consolidate with or merge
         into another Person (in a transaction in which the Company is not the
         surviving corporation) or convey, transfer or lease its properties and
         assets substantially as an entirety to any Person, the Person formed by
         such consolidation or into which the Company is merged or the Person
         which acquires by conveyance or transfer, or which leases, the
         properties and assets of the Company substantially as an entirety shall
         be a corporation, limited liability company, partnership or trust,
         shall be organized and validly existing under the laws of the United
         States of America, any State thereof or the District of Columbia and
         shall expressly assume, by an indenture supplemental hereto, executed
         and delivered to the Trustee, in form satisfactory to the Trustee, the
         due and punctual payment of the principal of and any premium and
         interest on all the Securities and the performance or observance of
         every covenant of this Indenture on the part of the Company to be
         performed or observed and the conversion rights shall be provided for
         in accordance with Article 14, if applicable, or as otherwise specified
         pursuant to Section 3.1, by supplemental indenture satisfactory in form
         to the Trustee, executed and delivered to the Trustee, by the Person
         (if other than the Company) formed by such consolidation or into which
         the Company shall have been merged or by the Person which shall have
         acquired the Company's assets;

                  (2)      immediately after giving effect to such transaction
         and treating any indebtedness which becomes an obligation of the
         Company or any Subsidiary as a result of such transaction as having
         been incurred by the Company or such Subsidiary at the time of such
         transaction, no Event of Default, and no event which, after notice or
         lapse of time or both, would become an Event of Default, shall have
         happened and be continuing; and

                  (3)      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, if a
         supplemental indenture is required in connection with such transaction,
         such supplemental indenture comply with this Article and that all
         conditions precedent herein provided for relating to such transaction
         have been complied with.

SECTION 8.2       SUCCESSOR SUBSTITUTED.

         Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 8.1, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in

                                       47
<PAGE>

the case of a lease, the predecessor Person shall be relieved of all obligations
and covenants under this Indenture and the Securities.

                                    ARTICLE 9

                             SUPPLEMENTAL INDENTURES

SECTION 9.1       SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.

         Without the consent of any Holders, the Company, 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 satisfactory to the
Trustee, for any of the following purposes:

                  (1)      to evidence the succession of another Person to the
         Company, or successive successions, and the assumption by any such
         successor of the covenants of the Company herein and in the Securities
         in compliance with Article 8; or

                  (2)      to add to the covenants of the Company for the
         benefit of the Holders of all or any series of Securities (and if such
         covenants are to be for the benefit of less than all series of
         Securities, 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

                  (3)      to add any additional Events of Default for the
         benefit of the Holders of all or any series of Securities (and if such
         additional Events of Default are to be for the benefit of less than all
         series of Securities, stating that such additional Events of Default
         are expressly being included solely for the benefit of such series); or

                  (4)      to add to or change any of the provisions of this
         Indenture to such extent as shall be necessary to permit or facilitate
         the issuance of Securities in bearer form, registrable or not
         registrable as to principal, and with or without interest coupons, or
         to permit or facilitate the issuance of Securities in uncertificated
         form; or

                  (5)      to add to, change or eliminate any of the provisions
         of this Indenture in respect of one or more series of Securities,
         provided that any such addition, change or elimination (A) shall
         neither (i) apply to any Security of any series created prior to the
         execution of such supplemental indenture and entitled to the benefit of
         such provision nor (ii) modify the rights of the Holder of any such
         Security with respect to such provision or (B) shall become effective
         only when there is no such Security Outstanding; or

                  (6)      to secure the Securities, including provisions
         regarding the circumstances under which collateral may be released or
         substituted; or

                  (7)      to add or provide for a guaranty of the Securities or
         additional obligors on the Securities; or

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

                                       48
<PAGE>

                  (9)      to evidence and provide for the acceptance of
         appointment hereunder by a successor Trustee with respect to the
         Securities of one or more series and to add to or change any of the
         provisions of this Indenture as shall be necessary to provide for or
         facilitate the administration of the trusts hereunder by more than one
         Trustee, pursuant to the requirements of Section 6.11; or

                  (10)     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, provided that such
         action pursuant to this clause (10) shall not adversely affect the
         interests of the Holders of Securities of any series in any material
         respect; or

                  (11)     to supplement any of the provisions of the Indenture
         to such extent as shall be necessary to permit or facilitate the
         defeasance and discharge of any series of Securities pursuant to
         Articles 4 and 13, provided that any such action shall not adversely
         affect the interests of the Holders of Securities of such series or any
         other series of Securities in any material respect.

SECTION 9.2       SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.

         With the consent of the Holders of a majority in principal amount of
the Outstanding Securities of each series affected by such supplemental
indenture, by Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities of such series under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,

                  (1)      change the Stated Maturity of the principal of, or
         any installment of principal of or interest on, any Security, or reduce
         the principal amount thereof or the rate of interest thereon or any
         premium payable upon the redemption thereof, or reduce the amount of
         the principal of an Original Issue Discount Security or any other
         Security which would be due and payable upon a declaration of
         acceleration of the Maturity thereof pursuant to Section 5.2, or change
         the coin or currency in which, any Security or any premium or interest
         thereon is payable, or impair the right to institute suit for the
         enforcement of any such payment on or after the Stated Maturity thereof
         (or, in the case of redemption, on or after the Redemption Date), or
         modify the provisions of this Indenture in the case of Securities of
         any series that are convertible into Securities or other securities of
         the Company, adversely affect the right of Holders to convert any of
         the Securities of such series other than as provided in or pursuant to
         this Indenture, or

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

                                       49
<PAGE>

                  (3)      modify any of the provisions of this Section, Section
         5.13 or Section 10.8, 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 Security affected thereby; provided, however, that this
         clause shall not be deemed to require the consent of any Holder with
         respect to changes in the references to "the Trustee" and concomitant
         changes in this Section and Section 10.8, or the deletion of this
         proviso, in accordance with the requirements of Sections 6.11 and
         9.1(8), or

                  (4)      if applicable, make any change that adversely affects
         the right to convert any security as provided in Article 14 or pursuant
         to Section 3.1 (except as permitted by Section 9.1(9)) or decrease the
         conversion rate or increase the conversion price of any such security.

         A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

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

SECTION 9.3       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 Sections 6.1 and 6.3) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

SECTION 9.4       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 Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

SECTION 9.5       CONFORMITY WITH TRUST INDENTURE ACT.

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

SECTION 9.6       REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.

         Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company

                                       50
<PAGE>

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

                                   ARTICLE 10

                                    COVENANTS

SECTION 10.1      PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.

         The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.

SECTION 10.2      MAINTENANCE OF OFFICE OR AGENCY.

         The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange, where Securities of that series may be
surrendered for conversion and where notices and demands to or upon the Company
in respect of the 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
such presentations, surrenders, notices and demands. Unless otherwise provided
in a supplemental indenture or pursuant to Section 3.1 hereof, the Place of
Payment for any series of Securities shall be the Corporate Trust Office of the
Trustee.

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

SECTION 10.3      MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.

         If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and any premium and 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 for any
series of Securities, it will, on or prior to each due date of the principal of
or any premium or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the

                                       51
<PAGE>

Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of its action or failure so to act.

         The Company will cause each Paying Agent for any series of 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 (1) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent for payment in
respect of the Securities of that series.

         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 or any premium or
interest on any Security of any series and remaining unclaimed for a period
ending on the earlier of the date that is ten Business Days prior to the date
such money would escheat to the State or two years after such principal, premium
or interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such 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 published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in each Place of Payment, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.

SECTION 10.4      STATEMENT BY OFFICERS AS TO DEFAULT.

         The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge. The fiscal year of the Company currently ends on
December 31; and the Company will give the Trustee prompt written notice of any
change of its fiscal year.

SECTION 10.5      EXISTENCE.

         Subject to Article 8, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence.

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<PAGE>

SECTION 10.6      MAINTENANCE OF PROPERTIES.

         The Company will cause all properties used or useful in the conduct of
its business to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as, and to the extent, in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section shall prevent the Company from discontinuing the operation or
maintenance of any of such properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business and not disadvantageous
in any material respect to the Holders.

SECTION 10.7      PAYMENT OF TAXES AND OTHER CLAIMS.

         The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or upon the income,
profits or property of the Company, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim (i) whose amount, applicability or validity is being
contested in good faith by appropriate proceedings or (ii) if the failure to pay
or discharge would not have a material adverse effect on the assets, business,
operations, properties or condition (financial or otherwise) of the Company and
its subsidiaries, taken as a whole.

SECTION 10.8      WAIVER OF CERTAIN COVENANTS.

         Except as otherwise specified as contemplated by Section 3.1 for
Securities of such series, the Company may, with respect to the Securities of
any series, omit in any particular instance to comply with any term, provision
or condition set forth in any covenant provided pursuant to Section 3.1(19),
9.1(2), 9.1(7), 10.6 or 10.7 for the benefit of the Holders of such series if
before the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding 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 so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such term,
provision or condition shall remain in full force and effect.

                                       53
<PAGE>

                                   ARTICLE 11

                            REDEMPTION OF SECURITIES

SECTION 11.1      APPLICABILITY OF ARTICLE.

         Securities of any series that are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 3.1 for such Securities) in
accordance with this Article.

SECTION 11.2      ELECTION TO REDEEM; NOTICE TO TRUSTEE.

         The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution or in another manner specified as contemplated by Section
3.1 for such Securities. In case of any redemption at the election of the
Company of less than all the Securities of any series (including any such
redemption affecting only a single Security), the Company shall, at least 45
days prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date, of the principal amount of Securities of such series to be redeemed and,
if applicable, of the tenor of the Securities to be redeemed. In the case of any
redemption of Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.

SECTION 11.3      SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.

         If less than all the Securities of any series are to be redeemed
(unless all the Securities of such series and of a specified tenor are to be
redeemed or unless such redemption affects only a single Security), the
particular Securities to be redeemed shall be selected not more than 45 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by lot, or in the Trustee's
discretion, on a pro-rata basis, provided that the unredeemed portion of the
principal amount of any Security shall be in an authorized denomination (which
shall not be less than the minimum authorized denomination) for such Security.
If less than all the Securities of such series and of a specified tenor are to
be redeemed (unless such redemption affects only a single Security), the
particular Securities to be redeemed shall be selected not more than 45 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series and specified tenor not previously called for redemption in
accordance with the preceding sentence.

         If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption. Securities that have
been converted during a selection of Securities to be redeemed shall be treated
by the Trustee as Outstanding for the purpose of such selection.

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

         The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case

                                       54
<PAGE>

of any such redemption in part, the unredeemed portion of the principal amount
of the Security shall be in an authorized denomination (which shall not be less
than the minimum authorized denomination) for such Security.

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

SECTION 11.4      NOTICE OF REDEMPTION.

         Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not fewer than 30 nor more than 60 days prior to the Redemption
Date, unless a shorter period is specified in the Securities to be redeemed, to
each Holder of Securities to be redeemed, at its address appearing in the
Security Register.

         All notices of redemption shall state:

                  (1)      the Redemption Date,

                  (2)      the Redemption Price (including accrued interest, if
         any),

                  (3)      if less than all the Outstanding Securities of any
         series consisting of more than a single Security are to be redeemed,
         the identification (and, in the case of partial redemption of any such
         Securities, the principal amounts) of the particular Securities to be
         redeemed and, if less than all the Outstanding Securities of any series
         consisting of a single Security are to be redeemed, the principal
         amount of the particular Security to be redeemed,

                  (4)      in case any Security is to be redeemed in part only,
         that on and after the Redemption Date, upon surrender of such Security,
         the Holder of such Security will receive, without charge, a new
         Security or Securities of authorized denominations for the principal
         amount thereof remaining unredeemed,

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

                  (6)      the place or places where each such Security is to be
         surrendered for payment of the Redemption Price,

                  (7)      if applicable, the conversion price, the date on
         which the right to convert the principal of the Securities or the
         portions thereof to be redeemed will terminate, and the place or places
         where such Securities may be surrendered for conversion,

                  (8)      that the redemption is for a sinking fund, if such is
         the case, and

                  (9)      the CUSIP number or numbers and/or common codes of
         the Security being redeemed.

                                       55
<PAGE>

         Notice of redemption of Securities to be redeemed at the election of
the Company 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 and shall be irrevocable.

SECTION 11.5      DEPOSIT OF REDEMPTION PRICE.

         On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 10.3) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.

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

SECTION 11.6      SECURITIES PAYABLE ON REDEMPTION DATE.

         Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 3.1, installments of interest whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 3.7.

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

SECTION 11.7      SECURITIES REDEEMED IN PART.

         Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or its attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, 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 Security so surrendered.

                                       56
<PAGE>

                                   ARTICLE 12

                                  SINKING FUNDS

SECTION 12.1      APPLICABILITY OF ARTICLE.

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

         The minimum amount of any sinking fund payment provided for by the
terms of any Securities 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 such Securities is herein referred to as an "optional sinking fund
payment." If provided for by the terms of any Securities, the cash amount of any
sinking fund payment may be subject to reduction as provided in Section 12.2.
Each sinking fund payment shall be applied to the redemption of Securities as
provided for by the terms of such Securities.

SECTION 12.2      SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.

         The Company (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to any Securities of such series required to be made
pursuant to the terms of such Securities as and to the extent provided for by
the terms of such Securities; provided that the Securities to be so credited
have not been previously so credited. The Securities to be so credited shall be
received and credited for such purpose by the Trustee at the Redemption Price,
as specified in the Securities so to be redeemed, for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.

SECTION 12.3      REDEMPTION OF SECURITIES FOR SINKING FUND.

         Not fewer than 60 days prior to each sinking fund payment date for any
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for such
Securities pursuant to the terms of such Securities, the portion thereof, if
any, which is to be satisfied by payment of cash and the portion thereof, if
any, which is to be satisfied by delivering and crediting Securities pursuant to
Section 12.2 and will also deliver to the Trustee any Securities to be so
delivered. Not fewer than 30 days prior to each such sinking fund payment date,
the Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 11.3 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 11.4. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 11.6 and 11.7.

                                       57
<PAGE>

                                   ARTICLE 13

                       DEFEASANCE AND COVENANT DEFEASANCE

SECTION 13.1      COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.

         The Company may elect, at its option at any time, to have Section 13.2
or Section 13.3 applied to any Securities or any series of Securities, as the
case may be, designated pursuant to Section 3.1 as being defeasible pursuant to
such Section 13.2 or 13.3, in accordance with any applicable requirements
provided pursuant to Section 3.1 and upon compliance with the conditions set
forth below in this Article. Any such election shall be evidenced by a Board
Resolution or in another manner specified as contemplated by Section 3.1 for
such Securities.

SECTION 13.2      DEFEASANCE AND DISCHARGE.

         Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, the
Company shall be deemed to have been discharged from its obligations with
respect to such Securities as provided in this Section on and after the date the
conditions set forth in Section 13.4 are satisfied (hereinafter called
"Defeasance"). For this purpose, such Defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by such
Securities and to have satisfied all its other obligations under such Securities
and this Indenture insofar as such Securities are concerned (and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging the
same), subject to the following which shall survive until otherwise terminated
or discharged hereunder:

                  (1)      the rights of Holders of such Securities to receive,
         solely from the trust fund described in Section 13.4 and as more fully
         set forth in such Section, payments in respect of the principal of and
         any premium and interest on such Securities when payments are due,

                  (2)      the Company's obligations with respect to such
         Securities under Sections 3.4, 3.5, 3.6, 10.2 and 10.3, and, if
         applicable, Article 14,

                  (3)      the rights, powers, trusts, duties and immunities of
         the Trustee hereunder, and

                  (4)      this Article.

         Subject to compliance with this Article, the Company may exercise its
option (if any) to have this Section applied to any Securities notwithstanding
the prior exercise of its option (if any) to have Section 13.3 applied to such
Securities.

SECTION 13.3      COVENANT DEFEASANCE.

         Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be,

                                       58
<PAGE>

                  (1)      the Company shall be released from its obligations
         under Sections 10.6 and 10.7 and any covenants provided pursuant to
         Sections 3.1(19), 9.1(2) or 9.1(7) for the benefit of the Holders of
         such Securities and

                  (2)      the occurrence of any event specified in Section
         5.1(4) (with respect to any of Sections 10.6 and 10.7 and any such
         covenants provided pursuant to Section 3.1(19), 9.1(2) or 9.1(7)) and
         the occurrence of any other Event of Default specified pursuant to
         Section 3.1 shall be deemed not to be or result in an Event of Default,
         in each case with respect to such Securities or any series of
         Securities as provided in this Section on and after the date the
         conditions set forth in Section 13.4 are satisfied (hereinafter called
         "Covenant Defeasance"). For this purpose, such Covenant Defeasance
         means that, with respect to such Securities, the Company may omit to
         comply with and shall have no liability in respect of any term,
         condition or limitation set forth in any such specified Section (to the
         extent so specified in the case of Section 5.1(4) and the occurrence of
         any Event of Default specified pursuant to Section 3.1), whether
         directly or indirectly by reason of any reference elsewhere herein to
         any such Section or by reason of any reference in any such Section to
         any other provision herein or in any other document, but the remainder
         of this Indenture and such Securities shall be unaffected thereby.

SECTION 13.4      CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.

         The following shall be the conditions to the application of Section
13.2 or Section 13.3 to any Securities or any series of Securities, as the case
may be:

                  (1)      The Company shall irrevocably have deposited or
         caused to be deposited with the Trustee (or another trustee which
         satisfies the requirements contemplated by Section 6.9 and agrees to
         comply with the provisions of this Article applicable to it) as trust
         funds in trust for the purpose of making the following payments,
         specifically pledged as security for, and dedicated solely to, the
         benefits of the Holders of such Securities,

                           (A) in the case of Securities of a series denominated
                           in currency of the United States of America, (i) cash
                           in currency of the United States of America in an
                           amount, or (ii) U.S. Government Obligations which
                           through the scheduled payment of principal and
                           interest in respect thereof in accordance with their
                           terms will provide, not later than one day before the
                           due date of any payment, an amount in cash, or (iii)
                           a combination thereof, or

                           (B) in the case of Securities of a series denominated
                           in currency other than that of the United States of
                           America, (i) cash in the currency in which such
                           series of Securities is denominated in an amount, or
                           (ii) Foreign Government Obligations which through the
                           scheduled payment of principal and interest in
                           respect thereof in accordance with their terms will
                           provide, not later than one day before the due date
                           of any payment, an amount in cash, or (iii) a
                           combination thereof, in each case sufficient, in the
                           opinion of a nationally recognized firm of
                           independent public accountants expressed in a written
                           certification thereof delivered to the Trustee, to
                           pay and discharge, and which shall be applied by the
                           Trustee

                                       59
<PAGE>

                           (or any such other qualifying trustee) to pay and
                           discharge, the principal of and any premium and
                           interest on such Securities on the respective Stated
                           Maturities, in accordance with the terms of this
                           Indenture and such Securities.

                  (2)      For Securities denominated in United States dollars,
         in the event of an election to have Section 13.2 apply to any
         Securities or any series of Securities, as the case may be, the Company
         shall have delivered to the Trustee an Opinion of Counsel stating that

                           (A) the Company has received from, or there has been
                           published by, the Internal Revenue Service a ruling
                           or

                           (B) since the date of this instrument, there has been
                           a change in the applicable Federal income tax law, in
                           either case (A) or (B) to the effect that, and based
                           thereon such opinion shall confirm that, the Holders
                           of such Securities will not recognize gain or loss
                           for Federal income tax purposes as a result of the
                           deposit, Defeasance and discharge to be effected with
                           respect to such Securities and will be subject to
                           Federal income tax on the same amount, in the same
                           manner and at the same times as would be the case if
                           such deposit, Defeasance and discharge were not to
                           occur.

                  (3)      For Securities denominated in United States dollars,
         in the event of an election to have Section 13.3 apply to any
         Securities or any series of Securities, as the case may be, the Company
         shall have delivered to the Trustee an Opinion of Counsel to the effect
         that the Holders of such Securities will not recognize gain or loss for
         Federal income tax purposes as a result of the deposit and Covenant
         Defeasance to be effected with respect to such Securities and will be
         subject to Federal income tax on the same amount, in the same manner
         and at the same times as would be the case if such deposit and Covenant
         Defeasance were not to occur.

                  (4)      The Company shall have delivered to the Trustee an
         Officers' Certificate to the effect that neither such Securities nor
         any other Securities of the same series, if then listed on any
         securities exchange, will be delisted as a result of such deposit.

                  (5)      No event which is, or after notice or lapse of time
         or both would become, an Event of Default with respect to such
         Securities or any other Securities shall have occurred and be
         continuing at the time of such deposit or, with regard to any such
         event specified in Sections 5.1(5) and (6), at any time on or prior to
         the 90th day after the date of such deposit (it being understood that
         this condition shall not be deemed satisfied until after such 90th
         day).

                  (6)      Such Defeasance or Covenant Defeasance shall not
         cause the Trustee to have a conflicting interest within the meaning of
         the Trust Indenture Act (assuming all Securities are in default within
         the meaning of such Act).

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<PAGE>

                  (7)      Such Defeasance or Covenant Defeasance shall 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.

                  (8)      Such Defeasance or Covenant Defeasance shall not
         result in the trust arising from such deposit constituting an
         investment company within the meaning of the Investment Company Act
         unless such trust shall be registered under such Act or exempt from
         registration thereunder.

                  (9)      The Company shall have delivered to the Trustee an
         Officers' Certificate and an Opinion of Counsel, each stating that all
         conditions precedent with respect to such Defeasance or Covenant
         Defeasance have been complied with.

SECTION 13.5      DEPOSITED MONEY, U.S. GOVERNMENT OBLIGATIONS AND FOREIGN
GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; MISCELLANEOUS PROVISIONS.

         Subject to the provisions of the last paragraph of Section 10.3, all
money, U.S. Government Obligations and Foreign Government Obligations (including
the proceeds thereof) deposited with the Trustee or other qualifying trustee
(solely for purposes of this Section and Section 13.6, the Trustee and any such
other trustee are referred to collectively as the "Trustee") pursuant to Section
13.4 in respect of any Securities shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any such Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal and any premium and interest, but money so held
in trust need not be segregated from other funds except to the extent required
by law. The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations or
Foreign Government Obligations deposited pursuant to Section 13.4 or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of Outstanding
Securities. Anything in this Article to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money, U.S. Government Obligations or Foreign Government Obligations
held by it as provided in Section 13.4 with respect to any Securities which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect the Defeasance or Covenant Defeasance, as the case may be, with respect
to such Securities.

SECTION 13.6      REINSTATEMENT.

         If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Securities from which the Company has been discharged or
released pursuant to Section 13.2 or 13.3 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to such
Securities, until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 13.5 with respect to such Securities
in accordance with this Article; provided, however, that if the Company makes
any payment of principal of or any premium or interest on any such Security
following such reinstatement of its obligations, the Company shall be subrogated
to the rights (if any) of the Holders of such Securities to receive such payment
from the money so held in trust.

                                       61
<PAGE>

                                   ARTICLE 14

                            CONVERSION OF SECURITIES

SECTION 14.1      APPLICABILITY OF ARTICLE.

         The provisions of this Article shall be applicable to the Securities of
any series which are convertible into shares of Common Stock of the Company, and
the issuance of such shares of Common Stock upon the conversion of such
Securities, except as otherwise specified as contemplated by Section 3.1 for the
Securities of such series.

SECTION 14.2      EXERCISE OF CONVERSION PRIVILEGE.

         In order to exercise a conversion privilege, the Holder of a Security
of a series with such a privilege shall surrender such Security to the Company
at the office or agency maintained for that purpose pursuant to Section 10.2,
accompanied by a duly executed conversion notice to the Company substantially in
the form set forth in Section 2.6 stating that the Holder elects to convert such
Security or a specified portion thereof. Such notice shall also state, if
different from the name and address of such Holder, the name or names (with
address) in which the certificate or certificates for shares of Common Stock,
which shall be issuable on such conversion, shall be issued. Securities
surrendered for conversion shall (if so required by the Company or the Trustee)
be duly endorsed by or accompanied by instruments of transfer in forms
satisfactory to the Company and the Trustee duly executed by the Holder or its
attorney duly authorized in writing; and Securities so surrendered for
conversion (in whole or in part) during the period from the close of business on
any Regular Record Date to the opening of business on the next succeeding
Interest Payment Date (excluding Securities or portions thereof called for
redemption during the period beginning at the close of business on a Regular
Record Date and ending at the opening of business on the first Business Day
after the next succeeding Interest Payment Date, or if such Interest Payment
Date is not a Business Day, the second such Business Day) shall also be
accompanied by payment in funds acceptable to the Company of an amount equal to
the interest payable on such Interest Payment Date on the principal amount of
such Security then being converted, and such interest shall be payable to such
Holder notwithstanding the conversion of such Security, subject to the
provisions of Section 3.7 relating to the payment of Defaulted Interest by the
Company. As promptly as practicable after the receipt of such notice and of any
payment required pursuant to a Board Resolution and, subject to Section 3.3, set
forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto setting forth the
terms of such series of Security, and the surrender of such Security in
accordance with such reasonable regulations as the Company may prescribe, the
Company shall issue and shall deliver, at the office or agency at which such
Security is surrendered, to such Holder or on its written order, a certificate
or certificates for the number of full shares of Common Stock issuable upon the
conversion of such Security (or specified portion thereof), in accordance with
the provisions of such Board Resolution, Officers' Certificate or supplemental
indenture, and cash as provided therein in respect of any fractional share of
such Common Stock otherwise issuable upon such conversion. Such conversion shall
be deemed to have been effected immediately prior to the close of business on
the date on which such notice and such payment, if required, shall have been
received in proper order for conversion by the Company and such Security shall
have been surrendered as aforesaid (unless such Holder shall have so surrendered
such Security and shall have instructed the Company to effect the conversion on
a particular date following such surrender and such Holder shall be entitled to
convert such Security on such date, in which case such conversion shall be
deemed to be effected immediately prior to the close of business on such date)
and at such time the rights of the Holder of such Security as such Security
Holder shall cease and the person or persons in whose name or names any
certificate or

                                       62
<PAGE>

certificates for shares of Common Stock of the Company shall be issuable upon
such conversion shall be deemed to have become the Holder or Holders of record
of the shares represented thereby. Except as set forth above and subject to the
final paragraph of Section 3.7, no payment or adjustment shall be made upon any
conversion on account of any interest accrued on the Securities (or any part
thereof) surrendered for conversion or on account of any dividends on the Common
Stock of the Company issued upon such conversion. In the case of any Security
which is converted in part only, upon such conversion the Company shall execute
and the Trustee shall authenticate and deliver to or on the order of the Holder
thereof, at the expense of the Company, a new Security or Securities of the same
series, of authorized denominations, in aggregate principal amount equal to the
unconverted portion of such Security.

SECTION 14.3      NO FRACTIONAL SHARES.

         No fractional share of Common Stock of the Company shall be issued upon
conversions of Securities of any series. If more than one Security shall be
surrendered for conversion at one time by the same Holder, the number of full
shares which shall be issuable upon conversion shall be computed on the basis of
the aggregate principal amount of the Securities (or specified portions thereof
to the extent permitted hereby) so surrendered. If, except for the provisions of
this Section 14.3, any Holder of a Security or Securities would be entitled to a
fractional share of Common Stock of the Company upon the conversion of such
Security or Securities, or specified portions thereof, the Company shall pay to
such Holder an amount in cash equal to the current market value of such
fractional share computed, (i) if such Common Stock is listed or admitted to
unlisted trading privileges on a national securities exchange or market, on the
basis of the last reported sale price regular way on such exchange or market on
the last trading day prior to the date of conversion upon which such a sale
shall have been effected, or (ii) if such Common Stock is not at the time so
listed or admitted to unlisted trading privileges on a national securities
exchange or market, on the basis of the average of the bid and asked prices of
such Common Stock in the over-the-counter market, on the last trading day prior
to the date of conversion, as reported by the National Quotation Bureau,
Incorporated or similar organization if the National Quotation Bureau,
Incorporated is no longer reporting such information, or if not so available,
the fair market price as determined by the Board of Directors. For purposes of
this Section, "trading day" shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday other than any day on which the Common Stock is not traded on the
Nasdaq National Market, or if the Common Stock is not traded on the Nasdaq
National Market, on the principal exchange or market on which the Common Stock
is traded or quoted.

SECTION 14.4      ADJUSTMENT OF CONVERSION PRICE.

         The conversion price of Securities of any series that is convertible
into Common Stock of the Company shall be adjusted for any stock dividends,
stock splits, reclassifications, combinations or similar transactions in
accordance with the terms of the supplemental indenture or Board Resolutions
setting forth the terms of the Securities of such series. Whenever the
conversion price is adjusted, the Company shall compute the adjusted conversion
price in accordance with terms of the applicable Board Resolution or
supplemental indenture and shall prepare an Officers' Certificate setting forth
the adjusted conversion price and showing in reasonable detail the facts upon
which such adjustment is based, and such certificate shall forthwith be filed at
each office or agency maintained for the purpose of conversion of Securities
pursuant to Section 10.2 and, if different, with the Trustee. The Company shall
forthwith cause a notice setting forth the adjusted conversion price to be
mailed, first class postage prepaid, to each Holder of Securities of such series
at its address appearing on the Security Register and to any conversion agent
other than the Trustee.

                                       63
<PAGE>

SECTION 14.5      NOTICE OF CERTAIN CORPORATE ACTIONS.

         In case:

                  (1)      the Company shall declare a dividend (or any other
         distribution) on its Common Stock payable otherwise than in cash out of
         its retained earnings (other than a dividend for which approval of any
         shareholders of the Company is required) that would require an
         adjustment pursuant to Section 14.4; or

                  (2)      the Company shall authorize the granting to all or
         substantially all of the holders of its Common Stock of rights, options
         or warrants to subscribe for or purchase any shares of capital stock of
         any class or of any other rights (other than any such grant for which
         approval of any shareholders of the Company is required); or

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

                  (4)      of the voluntary or involuntary dissolution,
         liquidation or winding up of the Company; then the Company shall cause
         to be filed with the Trustee, and shall cause to be mailed to all
         Holders at their last addresses as they shall appear in the Security
         Register, at least 20 days (or 10 days in any case specified in clause
         (1) or (2) above) prior to the applicable record date hereinafter
         specified, a notice stating (i) the date on which a record is to be
         taken for the purpose of such dividend, distribution, rights, options
         or warrants, or, if a record is not to be taken, the date as of which
         the holders of Common Stock of record to be entitled to such dividend,
         distribution, rights, options or warrants are to be determined, or (ii)
         the date on which such reclassification, consolidation, merger, share
         exchange, sale, dissolution, liquidation or winding up is expected to
         become effective, and the date as of which it is expected that holders
         of Common Stock of record shall be entitled to exchange their shares of
         Common Stock for securities, cash or other property deliverable upon
         such reclassification, consolidation, merger, share exchange, sale,
         dissolution, liquidation or winding up. If at any time the Trustee
         shall not be the conversion agent, a copy of such notice shall also
         forthwith be filed by the Company with the Trustee.

SECTION 14.6      RESERVATION OF SHARES OF COMMON STOCK.

         The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Securities, the full number of shares of
Common Stock of the Company then issuable upon the conversion of all outstanding
Securities of any series that has conversion rights.

SECTION 14.7      PAYMENT OF CERTAIN TAXES UPON CONVERSION.

         Except as provided in the next sentence, the Company will pay any and
all taxes that may be payable in respect of the issue or delivery of shares of
its Common Stock on conversion of Securities pursuant hereto. The Company shall
not, however, be required to pay any tax which may be payable in

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respect of any transfer involved in the issue and delivery of shares of its
Common Stock in a name other than that of the Holder of the Security or
Securities to be converted, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Company the amount of
any such tax, or has established, to the satisfaction of the Company, that such
tax has been paid.

SECTION 14.8      NONASSESSABILITY.

         The Company covenants that all shares of its Common Stock that may be
issued upon conversion of Securities will upon issue in accordance with the
terms hereof be duly and validly issued and fully paid and nonassessable.

SECTION 14.9      PROVISION IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS.

         In case of any consolidation or merger of the Company with or into any
other Person, any merger of another Person with or into the Company (other than
a merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company) or any
conveyance, sale, transfer or lease of all or substantially all of the assets of
the Company, the Person formed by such consolidation or resulting from such
merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security of a series then Outstanding that is convertible into Common Stock
of the Company shall have the right thereafter (which right shall be the
exclusive conversion right thereafter available to said Holder), during the
period such Security shall be convertible, to convert such Security only into
the kind and amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer or lease by a holder of the
number of shares of Common Stock of the Company into which such Security might
have been converted immediately prior to such consolidation, merger, conveyance,
sale, transfer or lease, assuming such holder of Common Stock of the Company (i)
is not a Person with which the Company consolidated or merged with or into or
which merged into or with the Company or to which such conveyance, sale,
transfer or lease was made, as the case may be (a "Constituent Person"), or an
Affiliate of a Constituent Person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, sale, transfer
or lease (provided that if the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, sale, transfer,
or lease is not the same for each share of Common Stock of the Company held
immediately prior to such consolidation, merger, conveyance, sale, transfer or
lease by others than a Constituent Person or an Affiliate thereof and in respect
of which such rights of election shall not have been exercised ("Non-electing
Share"), then for the purpose of this Section 14.9 the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, sale, transfer or lease by the holders of each Non-electing Share
shall be deemed to be the kind and amount so receivable per share by a plurality
of the Non-electing Shares). Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article or in accordance with the terms of
the supplemental indenture or Board Resolutions setting forth the terms of such
adjustments. The above provisions of this Section 14.9 shall similarly apply to
successive consolidations, mergers, conveyances, sales, transfers or leases.
Notice of the execution of such a supplemental indenture shall be given by the
Company to the Holder of each Security of a series that is convertible into
Common Stock of the Company as provided in Section 1.6 promptly upon such
execution. Neither the Trustee nor any conversion agent, if any, shall be under
any responsibility to determine the correctness of any provisions contained in
any such supplemental indenture relating either to the kind or amount of shares
of stock or

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other securities or property or cash receivable by Holders of Securities of a
series convertible into Common Stock of the Company upon the conversion of their
Securities after any such consolidation, merger, conveyance, transfer, sale or
lease or to any such adjustment, but may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, an
Opinion of Counsel with respect thereto, which the Company shall cause to be
furnished to the Trustee upon request.

SECTION 14.10     DUTIES OF TRUSTEE REGARDING CONVERSION.

         Neither the Trustee nor any conversion agent shall at any time be under
any duty or responsibility to any Holder of Securities of any series that is
convertible into Common Stock of the Company to determine whether any facts
exist which may require any adjustment of the conversion price, or with respect
to the nature or extent of any such adjustment when made, or with respect to the
method employed, whether herein or in any supplemental indenture, any
resolutions of the Board of Directors or written instrument executed by one or
more officers of the Company provided to be employed in making the same. Neither
the Trustee nor any conversion agent shall be accountable with respect to the
validity or value (or the kind or amount) of any shares of Common Stock of the
Company, or of any securities or property, which may at any time be issued or
delivered upon the conversion of any Securities and neither the Trustee nor any
conversion agent makes any representation with respect thereto. Subject to the
provisions of Section 6.1, neither the Trustee nor any conversion agent shall be
responsible for any failure of the Company to issue, transfer or deliver any
shares of its Common Stock or stock certificates or other securities or property
upon the surrender of any Security for the purpose of conversion or to comply
with any of the covenants of the Company contained in this Article 14 or in the
applicable supplemental indenture, resolutions of the Board of Directors or
written instrument executed by one or more duly authorized officers of the
Company.

SECTION 14.11     REPAYMENT OF CERTAIN FUNDS UPON CONVERSION.

         Any funds which at any time shall have been deposited by the Company or
on its behalf with the Trustee or any other paying agent for the purpose of
paying the principal of, and premium, if any, and interest, if any, on any of
the Securities (including, but not limited to, funds deposited for the sinking
fund referred to in Article 12 hereof and funds deposited pursuant to Article 13
hereof) and which shall not be required for such purposes because of the
conversion of such Securities as provided in this Article 14 shall after such
conversion be repaid to the Company by the Trustee upon the Company's written
request.

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

                                  NORTHFIELD LABORATORIES INC

                                  By:__________________________________________

                                  Title:_______________________________________

                                  _____________________________________________,
                                      as Trustee

                                  By:__________________________________________

                                  Title:_______________________________________

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