Document:

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                                                                  EXHIBIT 4.1

         INDENTURE dated as of March 15, 2000 between IBASIS, INC., a
Delaware corporation (hereinafter sometimes called the "Company", as more fully
set forth in Section 1.1), and The Bank of New York, a New York banking
corporation, as trustee (hereinafter sometimes called the "Trustee", as more
fully set forth in Section 1.1).

                              W I T N E S S E T H:

         WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 5 3/4% Convertible Subordinated Notes due 2005
(hereinafter sometimes called the "Notes"), in an aggregate principal amount not
to exceed $150,000,000 ($172,500,000 if the over-allotment option is exercised
in full) and to provide the terms and conditions upon which the Notes are to be
authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture; and

         WHEREAS, the Notes, the certificate of authentication to be borne by
the Notes, a form of assignment, a form of option to elect repayment upon a
Repurchase Event, a form of conversion notice and a certificate of transfer to
be borne by the Notes are to be substantially in the forms hereinafter provided
for; and

         WHEREAS, all acts and things necessary to make the Notes, when executed
by the Company and authenticated and delivered by the Trustee or a duly
authorized authenticating agent, as in this Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute these presents a
valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.

         NOW, THEREFORE, THIS INDENTURE WITNESSETH:

         That in order to declare the terms and conditions upon which the Notes
are, and are to be, authenticated, issued and delivered, and in consideration of
the premises and of the purchase and acceptance of the Notes by the holders
thereof, the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:

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                                   ARTICLE 1.

                                   DEFINITIONS

         Section 1.1. DEFINITIONS. The terms defined in this Section 1.1 (except
as herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1. All other
terms used in this Indenture, which are defined in the Trust Indenture Act or
which are by reference therein defined in the Securities Act (except as herein
otherwise expressly provided or unless the context otherwise requires) shall
have the meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of the execution of this Indenture. The
words "herein," "hereof," "hereunder," and words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
Subdivision. The terms defined in this Article include the plural as well as the
singular.

         AFFILIATE: The term "Affiliate" of any specified person shall mean any
other person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified person. For the purposes of this
definition, "control," when used with respect to any specified person means the
power to direct or cause the direction of 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.

         BOARD OF DIRECTORS: The term "Board of Directors" shall mean the Board
of Directors of the Company or a committee of such Board duly authorized to act
for it hereunder.

         BOARD RESOLUTION: The term "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, or duly authorized
committee thereof (to the extent permitted by applicable law), and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.

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

         CHANGE IN CONTROL: The term "Change in Control" shall have the meaning
specified in Section 16.4.

         CLOSE OF BUSINESS: The term "close of business" means 5 p.m. (New York
City time).

         COMMISSION: The term "Commission" shall mean the Securities and
Exchange Commission.

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         COMMON STOCK: The term "Common Stock" shall mean 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.
Subject to the provisions of Section 15.6, however, shares issuable on
conversion of Notes shall include only shares of the class designated as common
stock of the Company at the date of this Indenture or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which are not subject to redemption by the Company; PROVIDED
that if at any time there shall be more than one such resulting class, the
shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.

         COMPANY: The term "Company" shall mean iBasis, Inc., a Delaware
corporation, and subject to the provisions of Article 12, shall include its
successors and assigns.

         CONVERSION PRICE: The term "Conversion Price" shall have the meaning
specified in Section 15.4.

         CORPORATE TRUST OFFICE: The term "Corporate Trust Office," or other
similar term, shall mean the office of the Trustee at which at any particular
time its corporate trust business shall be principally administered, which
office is, at the date as of which this Indenture is dated, located at [101
Barclay Street, 21W, New York, New York 10286], Attention: Corporate Trust
Administration (iBasis 5 3/4% Convertible Subordinated Notes due 2005).

         CUSTODIAN: The term "Custodian" means the custodian with respect to
respect to the Notes in global form (as appointed by DTC), or any successor
person thereto and shall initially be the Trustee.

         DEFAULT: The term "default" shall mean any event that is, or after
notice or passage of time, or both, would be, an Event of Default.

         DEPOSITARY: The term "Depositary" means, with respect to the Notes
issuable or issued in whole or in part in global form, the person specified in
Section 2.5(d) as the Depositary with respect to such Notes, until a successor
shall have been appointed and become such pursuant to the applicable provisions
of this Indenture, and thereafter, "Depositary" shall mean or include such
successor.

         DESIGNATED SENIOR INDEBTEDNESS: The term "Designated Senior
Indebtedness" means the Company's obligations under any particular Senior
Indebtedness in which the instrument creating or evidencing the same or the
assumption or guarantee thereof (or related agreements or documents to which the
Company is a party) expressly provides that such Senior Indebtedness

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shall be "Designated Senior Indebtedness" for purposes of this Indenture
(provided that such instrument, agreement or other document may place
limitations and conditions on the right of such Senior Indebtedness to exercise
the rights of Designated Senior Indebtedness).

         EVENT OF DEFAULT: The term "Event of Default" shall mean any event
specified in Section 7.1, continued for the period of time, if any, and after
the giving of notice, if any, therein designated.

         EXCHANGE ACT: The term "Exchange Act" means the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.

         EXPIRATION TIME: The term "Expiration Time" shall have the meaning
specified in Section 15.5(f).

         GLOBAL NOTE: The term "Global Note" shall have the meaning specified in
Section 2.5(b).

         INDEBTEDNESS: The term "Indebtedness" shall mean any obligations of, or
guaranteed or assumed by, the Company or any Significant Subsidiary for borrowed
money.

         INDENTURE: The term "Indenture" shall mean this instrument as
originally executed or, if amended or supplemented as herein provided, as so
amended or supplemented.

         NOTE OR NOTES: The terms "Note" or "Notes" shall mean any Note or
Notes, as the case may be, authenticated and delivered under this Indenture.

         NOTEHOLDER, HOLDER OR HOLDER: The terms "Noteholder", "Holder" or
"holder" as applied to any Note, or other similar terms (but excluding the term
"beneficial holder"), shall mean any person in whose name at the time a
particular Note is registered on the Note register.

         NOTE REGISTER: The term "Note register" shall have the meaning
specified in Section 2.5.

         OFFICERS' CERTIFICATE: The term "Officers' Certificate", when used with
respect to the Company, shall mean a certificate signed by (a) one of the
President, the Chief Executive Officer, Executive Vice President or any Vice
President (whether or not designated by a word or words added after the title
"Vice President") and (b) by one of the Treasurer or any Assistant Treasurer,
Secretary or any Assistant Secretary or Controller of the Company, which is
delivered to the Trustee. Each such certificate shall include the statements
provided for in Section 17.5 if and to the extent required by the provisions of
such Section.

         OPINION OF COUNSEL: The term "Opinion of Counsel" shall mean an opinion
in writing signed by legal counsel, who may be an employee of or counsel to the
Company, or other counsel acceptable to the Trustee, which is delivered to the
Trustee. Each such opinion shall

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include the statements provided for in Section 17.5 if and to the extent
required by the provisions of such Section.

         OUTSTANDING: The term "outstanding," when used with reference to Notes,
shall, subject to the provisions of Section 9.4, mean, as of any particular
time, all Notes authenticated and delivered by the Trustee under this Indenture,
except:

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

         (b) Notes, or portions thereof, for the payment, or redemption of which
monies in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or shall have been set
aside and segregated in trust by the Company (if the Company shall act as its
own paying agent); PROVIDED that if such Notes are to be redeemed, as the case
may be, prior to the maturity thereof, notice of such redemption shall have been
given as provided in Section 3.2, or provision satisfactory to the Trustee shall
have been made for giving such notice;

         (c) Notes in lieu of which, or in substitution for which, other Notes
shall have been authenticated and delivered pursuant to the terms of Section 2.6
unless proof satisfactory to the Trustee is presented that any such Notes are
held by bona fide holders in due course; and

         (d) Notes converted into Common Stock pursuant to Article 15 and Notes
deemed not outstanding pursuant to Section 3.2.

         PERSON OR PERSON: The term "person" or "Person" shall mean an
individual, a corporation, a limited liability company, an association, a
partnership, an individual, a joint venture, a joint stock company, a trust, an
unincorporated organization or a government or an agency or a political
subdivision thereof.

         PREDECESSOR NOTE: The term "Predecessor Note" of any particular Note
shall mean every previous Note evidencing all or a portion of the same debt as
that evidenced by such particular Note; and, for the purposes of this
definition, any Note authenticated and delivered under Section 2.6 in lieu of a
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
lost, destroyed or stolen Note that it replaces.

         REPURCHASE EVENT: The term "Repurchase Event" shall have the meaning
specified in Section 16.4.

         REPURCHASE PRICE: The term "Repurchase Price" has the meaning specified
in Section 16.1.

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         RESPONSIBLE OFFICER: The term "Responsible Officer", when used with
respect to the Trustee, shall mean an officer of the Trustee in the Corporate
Trust Office assigned and duly authorized by the Trustee to administer its
obligations under this Indenture.

         SECURITIES ACT: The term "Securities Act" means the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.

         SENIOR INDEBTEDNESS: The term "Senior Indebtedness" means the principal
of, premium, if any, interest on (including any interest accruing after the
filing of a petition by or against the Company under any bankruptcy law, whether
or not allowed as a claim after such filing in any proceeding under such
bankruptcy law) and any other payment due pursuant to, any of the following,
whether outstanding on the date of this Indenture or thereafter incurred or
created:

                  (a) All indebtedness of the Company for money borrowed that is
         evidenced by notes, debentures, bonds or other securities (including,
         but not limited to, those which are convertible or exchangeable for
         securities of the Company);

                  (b) All indebtedness of the Company due and owing with respect
         to letters of credit (including, but not limited to, reimbursement
         obligations with respect thereto), bankers' guarantees or bankers'
         acceptances;

                  (c) All indebtedness or other obligations of the Company due
         and owing with respect to interest rate and currency swap agreements,
         cap, floor and collar agreements, currency spot and forward contracts
         and other similar agreements and arrangements;

                  (d) All indebtedness consisting of commitment or standby fees
         due and payable to lending institutions with respect to credit
         facilities or letters of credit available to the Company;

                  (e) All obligations of the Company under leases required or
         permitted to be capitalized under generally accepted accounting
         principles;

                  (f) All indebtedness or obligations of others of the kinds
         described in any of the preceding clauses (a), (b), (c), (d) or (e)
         assumed by or guaranteed in any manner by the Company or in effect
         guaranteed (directly or indirectly) by the Company through an agreement
         to purchase, contingent or otherwise, and all obligations of the
         Company under any such guarantee or other arrangements; and

                  (g) All renewals, extensions, refundings, deferrals,
         amendments or modifications of indebtedness or obligations of the kinds
         described in any of the preceding clauses (a), (b), (c), (d), (e) or
         (f);

unless in the case of any particular indebtedness, obligation, renewal,
extension, refunding, amendment, modification or supplement, the instrument or
other document creating or

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evidencing the same or the assumption or guarantee of the same expressly
provides that such indebtedness, obligation, renewal, extension, refunding,
amendment, modification or supplement is subordinate to, or is not superior to,
or is PARI PASSU with, the Notes; PROVIDED that Senior Indebtedness shall not
include (i) any indebtedness of any kind of the Company to any subsidiary of the
Company, a majority of the voting stock of which is owned, directly or
indirectly, by the Company, (ii) indebtedness for trade payables or constituting
the deferred purchase price of assets or services incurred in the ordinary
course of business, or (iii) the Notes.

         SIGNIFICANT SUBSIDIARY: The term "Significant Subsidiary" means, with
respect to any person, a Subsidiary of such person that would constitute a
"significant subsidiary" as such term is defined under Rule 1-02 of Regulation
S-X of the Securities and Exchange Commission.

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

         TRADING DAY: The term "Trading Day" has the meaning specified in
Section 15.5(h)(5).

         TRUST INDENTURE ACT: The term "Trust Indenture Act" shall mean the
Trust Indenture Act of 1939, as amended, as it was in force at the date of
execution of this Indenture, except as provided in Sections 11.3 and 15.6;
PROVIDED, HOWEVER, that in the event the Trust Indenture Act of 1939 is amended
after the date hereof, the term "Trust Indenture Act" shall mean, to the extent
required by such amendment, the Trust Indenture Act of 1939 as so amended.

         TRUSTEE: The term "Trustee" shall mean [The Bank of New York], and its
successors and any corporation resulting from or surviving any consolidation or
merger to which it or its successors may be a party and any successor trustee at
the time serving as successor trustee hereunder.

         The definitions of certain other terms are contained herein, including
those specified in Article 15 and Article 16.

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                                   ARTICLE 2.

        ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES

         Section 2.1. DESIGNATION, AMOUNT AND ISSUE OF NOTES. The Notes shall
be designated as "5 3/4% Convertible Subordinated Notes due 2005." Notes not to
exceed the aggregate principal amount of $150,000,000 (or $172,500,000 if the
over-allotment option set forth in Section 2(c) of the Underwriting Agreement
dated March 9, 2000, as amended from time to time by the parties
thereto), by and among the Company and the Underwriters is exercised in
full) upon the execution of this Indenture, or (except pursuant to Sections 2.5,
2.6, 3.3, 15.2 and 16.2) from time to time thereafter, may be executed by the
Company and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Notes upon the written order of the
Company, signed by the Company's (a) President, Executive Vice President or any
Vice President (whether or not designated by a word or words added after the
title "Vice President") and (b) Treasurer or Assistant Treasurer or its
Secretary or any Assistant Secretary, without any further action by the Company
hereunder other than the provision to the Trustee of an Officer's Certificate
and Opinion of Counsel.

         Section 2.2. FORM OF NOTES. The Notes and the Trustee's certificate of
authentication to be borne by such Notes shall be substantially in the form set
forth in Exhibit A, which is incorporated in and made a part of this Indenture.

         Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange or automated quotation system on which the Notes may be
listed or designated for issuance, or to conform to usage.

         The Global Note shall represent such of the outstanding Notes as shall
be specified therein and shall provide that it shall represent the aggregate
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate amount of outstanding Notes represented thereby may from time to time
be increased or reduced to reflect transfers or exchanges permitted hereby. Any
endorsement of the Global Note to reflect the amount of any increase or decrease
in the amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in such manner and
upon instructions given by the holder of such Notes in accordance with this
Indenture. Payment of principal of and interest and premium, if any (including
any redemption price), on the Global Note shall be made to the holder of such
Note.

         The terms and provisions contained in the form of Note attached as
Exhibit A hereto shall constitute, and is hereby expressly made, a part of this
Indenture and to the extent applicable, the

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Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.

         Section 2.3. DATE AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST. The
Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount and integral multiples thereof. Every Note shall be
dated the date of its authentication, and shall bear interest from the
applicable date and accrued interest shall be payable March 15 and
September 15, commencing September 15, 2000 as specified on the face of the form
of Note, attached as Exhibit A hereto.

         The person in whose name any Note (or its Predecessor Note) is
registered at the close of business on any record date with respect to any
interest payment date (including any Note that is converted after the record
date and on or before the interest payment date) shall be entitled to receive
the interest payable on such interest payment date notwithstanding the
cancellation of such Note upon any transfer, exchange or conversion subsequent
to the record date and on or prior to such interest payment date. Interest may,
at the option of the Company, be paid by check mailed to the address of such
person on the Note registry; PROVIDED that, with respect to any holder of Notes
with an aggregate principal amount equal to or in excess of $2,000,000, at the
request of such holder in writing to the Company, interest on such holder's
Notes shall be paid by wire transfer in immediately available funds in
accordance with the wire transfer instruction supplied by such holder from time
to time to the Trustee and paying agent (if different from Trustee) at least two
days prior to the applicable record date. The term "record date" with respect to
any interest payment date shall mean the March 1 or September 1 preceding
said March 15 or September 15, respectively.

         Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months compounded semi-annually.

         Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any said March 15 or September 15 (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Noteholder on
the relevant record date by virtue of his having been such Noteholder; and such
Defaulted Interest shall be paid by the Company, at its election in each case,
as provided in clause (1) or (2) below:

                  (1) The Company may elect to make payment of any Defaulted
         Interest to the persons in whose names the Notes (or their respective
         Predecessor Notes) are registered at the close of business on a special
         record date for the payment of such Defaulted Interest, which shall be
         fixed in the following manner. The Company shall notify the Trustee in
         writing of the amount of Defaulted Interest to be paid on each Note and
         the date of the payment (which shall be not less than twenty-five (25)
         days after the receipt by the Trustee of such notice, unless the
         Trustee shall consent to an earlier date), and at the same time the
         Company shall deposit with the Trustee an amount of money equal to the
         aggregate amount 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

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         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 fifteen
         (15) days and not less than ten (10) days prior to the date of the
         proposed payment and not less than ten (10) days after the receipt by
         the Trustee of the notice of the proposed payment. The Trustee shall
         promptly notify the Company of such special record date and, in the
         name and at the expense of the Company, shall cause notice of the
         proposed payment of such Defaulted Interest and the special record date
         therefor to be mailed, first-class postage prepaid, to each Noteholder
         as of such special record date at his address as it appears in the Note
         register, not less than ten (10) days prior to such special record
         date. Notice of the proposed payment of such Defaulted Interest and the
         special record date therefor having been so mailed, such Defaulted
         Interest shall be paid to the persons in whose names the Notes (or
         their respective Predecessor Notes) were registered at the close of
         business on such special record date and shall no longer be payable
         pursuant to the following clause (2).

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

         Section 2.4. EXECUTION OF NOTES. The Notes shall be signed in the name
and on behalf of the Company by either the facsimile or manual signature of its
President, its Chief Executive Officer, any of its Executive or Senior Vice
Presidents, or any of its Vice Presidents (whether or not designated by a number
or numbers or word or words added before or after the title "Vice President")
and attested by either the manual or facsimile signature of its Secretary or any
of its Assistant Secretaries (which may be printed, engraved or otherwise
reproduced thereon, by facsimile or otherwise). Only such Notes as shall bear
thereon a certificate of authentication substantially in the form set forth on
the form of Note attached as Exhibit A hereto, manually executed by the Trustee
(or an authenticating agent appointed by the Trustee as provided by Section
17.11), shall be entitled to the benefits of this Indenture or be valid or
obligatory for any purpose. Such certificate by the Trustee (or such an
authenticating agent) upon any Note executed by the Company shall be conclusive
evidence that the Note so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the benefits of this
Indenture.

         In case any officer of the Company who shall have signed any of the
Notes shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons

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as, at the actual date of the execution of such Note, shall be the proper
officers of the Company, although at the date of the execution of this Indenture
any such person was not such an officer.

         Section 2.5. EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES;
         DEPOSITARY.

         (a) (1) The Company shall cause to be kept at the Corporate Trust
Office a register (the register maintained in such office and in any other
office or agency of the Company designated pursuant to Section 5.2 being herein
sometimes collectively referred to as the "Note register") in which, subject to
such reasonable regulations as it may prescribe, the Company shall provide for
the registration of Notes and of transfers of Notes. Such register shall be in
written form or in any form capable of being converted into written form within
a reasonable period of time. The Trustee is hereby appointed "Note registrar"
for the purpose of registering Notes and transfers of Notes as herein provided.
The Company may appoint one or more co-registrars in accordance with Section
5.2.

               (2) Upon surrender for registration of transfer of any Note to
         the Note registrar or any co-registrar, and satisfaction of the
         requirements for such transfer set forth in this Section 2.5, the
         Company shall execute, and the Trustee shall authenticate and deliver,
         in the name of the designated transferee or transferees, one or more
         new Notes of any authorized denominations and of a like aggregate
         principal amount and bearing such restrictive legends as may be
         required by this Indenture.

               (3) Notes may be exchanged for other Notes of any authorized
         denominations and of a like aggregate principal amount, upon surrender
         of the Notes to be exchanged at any such office or agency. Whenever any
         Notes are so surrendered for exchange, the Company shall execute, and
         the Trustee shall authenticate and deliver, the Notes which the
         Noteholder making the exchange is entitled to receive, bearing
         registration numbers not contemporaneously outstanding.

               (4) All Notes presented or surrendered for registration of
         transfer or for exchange shall (if so required by the Company, the
         Trustee, the Note registrar or any co-registrar) be duly endorsed, or
         be accompanied by a written instrument or instruments of transfer in
         form satisfactory to the Company and duly executed, by the Noteholder
         thereof or his attorney-in-fact duly authorized in writing.

               (5) No service charge shall be charged to the Noteholder for any
         exchange or registration of transfer of Notes, but the Company may
         require payment of a sum sufficient to cover any tax, assessments or
         other governmental charges that may be imposed in connection therewith
         other than stamp or other duties imposed with respect to the issuance
         of the Notes, which shall be paid by the Company.

               (6) None of the Company, the Trustee, the Note registrar or any
         co-registrar shall be required to exchange or register a transfer of
         (a) any Notes for a period of fifteen (15) days next preceding any
         selection of Notes to be redeemed or (b) any Notes called

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         for redemption or, if a portion of any Note is selected or called for
         redemption, such portion thereof selected or called for redemption or
         (c) any Notes surrendered for conversion or, if a portion of any Note
         is surrendered for conversion, such portion thereof surrendered for
         conversion or (d) any Notes, or a portion of any Note, surrendered for
         repurchase (and not withdrawn) in connection with a Repurchase Event.

               (7) All Notes issued upon any transfer or exchange of Notes in
         accordance with this Indenture shall be the valid obligations of the
         Company, evidencing the same debt, and entitled to the same benefits
         under this Indenture as the Notes surrendered upon such registration of
         transfer or exchange.

         (b) So long as the Notes are eligible for book-entry settlement with
the Depositary, unless otherwise required by law, all Notes shall be represented
by a Note in global form (the "Global Note") registered in the name of the
Depositary or the nominee of the Depositary. The transfer and exchange of
beneficial interests in the Global Note shall be effected through the Depositary
(but not the Trustee or the Custodian) in accordance with this Indenture
(including the restrictions on transfer set forth herein) and the procedures of
the Depositary therefor.

         (c) Reserved.

         (d) (1) Notwithstanding any other provisions of this Indenture (other
than the provisions set forth in this Section 2.5(d)), the Global Note may not
be transferred as a whole or in part except by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.

               (2) The Depositary shall be a clearing agency registered under
         the Exchange Act. The Company initially appoints The Depository Trust
         Company to act as Depositary with respect to the Global Note.
         Initially, the Global Note shall be issued to the Depositary,
         registered in the name of Cede & Co., as the nominee of the Depositary,
         and deposited with the Trustee as custodian for Cede & Co.

               (3) If (i) the Depositary notifies the Company that it is
         unwilling or unable to continue as, or ceases to be, a clearing agency
         registered under Section 17A of the Exchange Act and a successor to the
         Depositary registered as a clearing agency under Section 17A of the
         Exchange Act is not able to be appointed by the Company within 90
         calendar days, or (ii) the Depositary is at any time unwilling or
         unable to continue as Depositary and a successor to the Depositary is
         not able to be appointed by the Company within 90 calendar days, or
         (iii) the Company, at its option, notifies the Trustee in writing that
         it elects to cause the issuance of Notes in the form of definitive
         Notes, the Company shall issue notes in denominations of $1,000 or an
         integral multiple thereof to all beneficial owners of the Global Note
         in exchange for their beneficial interests therein. If an Event of
         Default occurs and is continuing, the Company shall, at the request of
         the Noteholder thereof, exchange all or part of the Global Note for one
         or more definitive

                                       12
<PAGE>

         Notes; PROVIDED that the principal amount of each of such definitive
         Note and such Global Note, after such exchange, shall be $1,000.00 or
         an integral multiple thereof. Whenever a Global Note is exchanged as a
         whole for one or more definitive Notes it shall be surrendered by the
         holder thereof to the Trustee for cancellation.

               (4) If a Note in definitive form is issued in exchange for any
         portion of a Global Note after the close of business on any record date
         at the office or agency where such exchange occurs and before the
         opening of business at such office or agency on the next succeeding
         interest payment date, interest will not be payable on such interest
         payment date in respect of such definitive Note, but will be payable on
         such interest payment date only with respect to the exchanged portion
         of the Global Note in accordance with the provisions of this Indenture.

               (5) Definitive Notes issued in exchange for all or a part of the
         Global Note pursuant to this Section 2.5(d) shall be registered in such
         names and in such authorized denominations as the Depositary, pursuant
         to instructions from its direct or indirect participants or otherwise,
         shall instruct the Trustee. Upon execution and authentication, the
         Trustee shall deliver such definitive Notes to the persons in whose
         names such definitive Notes are so registered.

               (6) At such time as all interests in the Global Note have been
         redeemed, converted, canceled, repurchased or transferred, the Global
         Note shall be, upon receipt thereof, canceled by the Trustee in
         accordance with standing procedures and instructions existing between
         the Depositary and the Custodian. At any time prior to such
         cancellation, if any interest in the Global Note is exchanged for
         definitive Notes, redeemed, converted, canceled, repurchased or
         transferred to a transferee who receives definitive Notes therefor or
         any definitive Note is exchanged or transferred for part of the Global
         Note, the principal amount of the Global Note shall, in accordance with
         the standing procedures and instructions existing between the
         Depositary and the Custodian, be appropriately reduced or increased, as
         the case may be, and an endorsement shall be made on the Global Note,
         by the Trustee or the Custodian, at the direction of the Trustee, to
         reflect such reduction or increase.

         Section 2.6. MUTILATED, DESTROYED, LOST OR STOLEN NOTES.

         (a) In case any Note shall become mutilated or be destroyed, lost or
stolen, the Company in its discretion may execute, and upon its request the
Trustee or an authenticating agent appointed by the Trustee shall authenticate
and deliver, a new Note, bearing a number not contemporaneously outstanding, in
exchange and substitution for the mutilated Note, or in lieu of and in
substitution for the Note so destroyed, lost or stolen. In every case the
applicant for a substituted Note shall furnish to the Company, to the Trustee
and, if applicable, to such authenticating agent such security or indemnity as
may be required by them to save each of them harmless for any loss, liability,
cost or expense caused by or connected with such substitution, and, in every
case of destruction, loss or theft, the applicant shall also furnish to the
Company, to

                                       13
<PAGE>

the Trustee and, if applicable, to such authenticating agent evidence to their
satisfaction of the destruction, loss or theft of such Note and of the ownership
thereof.

         (b) The Trustee or such authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Note, 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 connected
therewith. In case any Note which has matured or is about to mature or has been
called for redemption or is about to be converted into Common Stock shall become
mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Note, pay or authorize the payment of or convert or authorize the
conversion of the same (without surrender thereof except in the case of a
mutilated Note), as the case may be, if the applicant for such payment or
conversion shall furnish to the Company, to the Trustee and, if applicable, to
such authenticating agent such security or indemnity as may be required by them
to save each of them harmless for any loss, liability, cost or expense caused by
or connected with such substitution, and, in case of destruction, loss or theft,
evidence satisfactory to the Company, the Trustee and, if applicable, any paying
agent or conversion agent of the destruction, loss or theft of such Note and of
the ownership thereof.

         (c) Every substitute Note issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any Note is destroyed, lost or stolen
shall constitute an additional contractual obligation of the Company, whether or
not the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion of mutilated,
destroyed, lost or stolen Notes and shall preclude any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment or conversion of negotiable
instruments or other securities without their surrender.

         Section 2.7. TEMPORARY NOTES. Pending the preparation of definitive
Notes, the Company may execute and the Trustee or an authenticating agent
appointed by the Trustee shall, upon written request of the Company,
authenticate and deliver temporary Notes (printed or lithographed). Temporary
Notes shall be issuable in any authorized denomination, and substantially in the
form of the definitive Notes but with such omissions, insertions and variations
as may be appropriate for temporary Notes, all as may be determined by the
Company. Every such temporary Note shall be executed by the Company and
authenticated by the Trustee or such authenticating agent upon the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Notes. Without unreasonable delay the Company will execute and
deliver to the Trustee or such authenticating agent definitive Notes (other than
in the case of Notes in global form) and thereupon any or all temporary Notes
(other than any the Global Note) may be surrendered in exchange therefor, at
each office or agency maintained by

                                       14
<PAGE>

the Company pursuant to Section 5.2 and the Trustee or such authenticating agent
shall authenticate and deliver in exchange for such temporary Notes an equal
aggregate principal amount of definitive Notes. Such exchange shall be made by
the Company at its own expense and without any charge therefor. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits and subject to the same limitations under this Indenture as definitive
Notes authenticated and delivered hereunder.

         Section 2.8. CANCELLATION OF NOTES PAID, ETC. All Notes surrendered for
the purpose of payment, redemption, repurchase, conversion, exchange or
registration of transfer, shall, if surrendered to the Company or any paying
agent or any Note registrar or any conversion agent, be surrendered to the
Trustee and promptly canceled by it, or, if surrendered to the Trustee, shall be
promptly canceled by it, and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. Upon written
instructions of the Company, the Trustee shall destroy canceled Notes and, after
such destruction, shall deliver a certificate of such destruction to the
Company. If the Company shall acquire any of the Notes, such acquisition shall
not operate as a redemption or satisfaction of the indebtedness represented by
such Notes unless and until the same are delivered to the Trustee for
cancellation.

                                  ARTICLE 3.

                              REDEMPTION OF NOTES

         Section 3.1. REDEMPTION PRICES.

         (a) OPTIONAL REDEMPTION. The Company may, at its option, redeem all or
from time to time any part of the Notes on any date prior to maturity, upon
notice as set forth in Section 3.2, and at the optional redemption prices set
forth in the form of Note attached as Exhibit A hereto, together with accrued
interest, if any, to, but excluding, the date fixed for redemption, PROVIDED,
HOWEVER, that, other than as provided in Section 3.1(b), no such redemption
shall be effected before March 20, 2003.

         (b) PROVISIONAL REDEMPTION. The Notes may be redeemed by the Company (a
"Provisional Redemption"), in whole or in part, at any time prior to March 20,
2003, upon notice as set forth in Section 3.2, at a redemption price equal to
$1,000 per $1,000 principal amount of Notes to be redeemed plus accrued and
unpaid interest, if any, to the date of redemption (the "Provisional Redemption
Date") if (i) the closing price of the Common Stock shall have exceeded 150% of
the Conversion Price then in effect for at least 20 Trading Days in any
consecutive 30-Trading Day period ending on the Trading Day prior to the date of
mailing of the notice of redemption pursuant to Section 3.2 (the "Notice Date").
Upon any such Provisional Redemption, the Company shall make an additional
payment in cash (the "Make-Whole Payment") with respect to the Notes called for
redemption to holders on the Notice Date in an amount equal to $152.54 per
$1,000 Note, less the aggregate amount of any interest actually paid on such
Note at any time prior to the Notice Date. The Company shall make the
Make-Whole Payment on all Notes called for Provisional Redemption, including
any Notes converted into

                                       15
<PAGE>

Common Stock pursuant to the terms hereof after the Notice Date and prior to the
Provisional Redemption Date. For purposes of this Article, the term "Conversion
Price" shall have the meaning given such term in Section 15.4 hereof.

         Section 3.2. NOTICE OF REDEMPTION; SELECTION OF NOTES.

         (a) In case the Company shall desire to exercise the right to redeem
all or, as the case may be, any part of the Notes pursuant to Section 3.1, it
shall fix a date for redemption, and it, or at its request (which must be
received by the Trustee at least ten (10) Business Days prior to the date the
Trustee is requested to give notice as described below unless a shorter period
is agreed to by the Trustee), the Trustee in the name of and at the expense of
the Company, shall mail or cause to be mailed a notice of such redemption at
least twenty (20) and not more than sixty (60) days prior to the date fixed for
redemption to the holders of Notes so to be redeemed as a whole or in part at
their last addresses as the same appear on the Note register (PROVIDED that if
the Company shall give such notice, it shall also give such notice, and notice
of the Notes to be redeemed, to the Trustee). Such mailing shall be by first
class mail. The notice if mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the holder
receives such notice. In any case, failure to give such notice by mail or any
defect in the notice to the holder of any Note designated for redemption as a
whole or in part shall not affect the validity of the proceedings for the
redemption of any other Note.

         (b) Each such notice of redemption shall identify the Notes
(including CUSIP number(s)) to be redeemed, shall specify the aggregate
principal amount of Notes to be redeemed, the date fixed for redemption, the
redemption price at which Notes are to be redeemed, the place or places of
payment, that payment will be made upon presentation and surrender of such
Notes, that interest accrued to, but excluding, the date fixed for redemption
will be paid as specified in said notice, and that on and after said date
interest thereon or on the portion thereof to be redeemed will cease to
accrue. Such notice shall also state the current Conversion Price and the
date on which the right to convert such Notes or portions thereof into Common
Stock will expire. If fewer than all the Notes are to be redeemed, the notice
of redemption shall identify the Notes to be redeemed. In case any Note is to
be redeemed in part only, the notice of redemption shall state the portion of
the principal amount thereof to be redeemed and shall state that on and after
the date fixed for redemption, upon surrender of such Note, a new Note or
Notes in principal amount equal to the unredeemed portion thereof will be
issued.

         (c) On or prior to the redemption date specified in the notice of
redemption given as provided in this Section, the Company will deposit with the
Trustee or with one or more paying agents (or, if the Company is acting as its
own paying agent, set aside, segregate and hold in trust as provided in Section
5.4) an amount of money sufficient to redeem on the redemption date all the
Notes (or portions thereof) so called for redemption (other than those
theretofore surrendered for conversion into Common Stock) at the appropriate
redemption price, together with accrued interest to, but excluding, the date
fixed for redemption; PROVIDED that if such payment is made on the redemption
date it must be received by the Trustee or paying agent, as the case may be, by
10:00 a.m. New York City time, on such date. If any Note called for redemption
is converted

                                       16
<PAGE>

pursuant hereto, any money deposited with the Trustee or any paying agent or so
segregated and held in trust for the redemption of such Note shall be paid to
the Company upon its request, or, if then held by the Company shall be
discharged from such trust.

         (d) If fewer than all the Notes are to be redeemed, the Company will
give the Trustee written notice in the form of an Officers' Certificate not
fewer than twenty-five (25) days (or such shorter period of time as may be
acceptable to the Trustee) prior to the redemption date as to the aggregate
principal amount of Notes to be redeemed. If fewer than all the Notes are to be
redeemed, the Trustee shall select the Notes or portions thereof to be redeemed
(in principal amounts of $1,000 or integral multiples thereof), by lot, or by a
method the Trustee considers fair and appropriate (as long as such method is not
prohibited by the rules of any United States national securities exchange or of
an established automated over-the-counter trading market in the United States on
which the Notes are then listed). If any Note selected for partial redemption is
converted in part after such selection, the converted portion of such Note shall
be deemed (so far as is possible) to be the portion to be selected for
redemption. The Notes (or portions thereof) so selected shall be deemed duly
selected for redemption for all purposes hereof, notwithstanding that any such
Note is converted as a whole or in part before the mailing of the notice of
redemption.

         (e) Upon any redemption of less than all Notes, the Company and the
Trustee may (but need not) treat as outstanding any Notes surrendered for
conversion during the period of fifteen (15) days next preceding the mailing of
a notice of redemption and may (but need not) treat as not outstanding any Note
authenticated and delivered during such period in exchange for the unconverted
portion of any Note converted in part during such period.

         Section 3.3.      PAYMENT OF NOTES CALLED FOR REDEMPTION.

         (a) If notice of redemption has been given as above provided, the Notes
or portion of Notes with respect to which such notice has been given shall,
unless converted into Common Stock pursuant to the terms hereof, become due and
payable on the date and at the place or places stated in such notice at the
applicable redemption price, together with interest accrued to, but excluding,
the date fixed for redemption, and on and after said date (unless the Company
shall default in the payment of such Notes at the redemption price, together
with interest accrued to, but excluding, said date) interest on the Notes or
portion of Notes so called for redemption shall cease to accrue and such Notes
shall cease after the close of business on the Business Day next preceding the
date fixed for redemption to be convertible into Common Stock and, except as
provided in Sections 8.5 and 13.4, to be entitled to any benefit or security
under this Indenture, and the holders thereof shall have no right in respect of
such Notes except the right to receive the redemption price thereof and unpaid
interest to, but excluding, the date fixed for redemption. On presentation and
surrender of such Notes at a place of payment in said notice specified, the said
Notes or the specified portions thereof to be redeemed shall be paid and
redeemed by the Company at the applicable redemption price, together with
interest accrued thereon to, but excluding, the date fixed for redemption;
PROVIDED that, if the applicable redemption date is an interest payment date,
the semi-annual payment of interest becoming due on such date shall be

                                       17
<PAGE>

payable to the holders of such Notes registered as such on the relevant record
date subject to the terms and provisions of Section 2.3 hereof.

         (b) Upon presentation of any Note redeemed in part only, the Company
shall execute and the Trustee shall authenticate and deliver to the holder
thereof, at the expense of the Company, a new Note or Notes, of authorized
denominations, in principal amount equal to the unredeemed portion of the Notes
so presented.

         (c) Notwithstanding the foregoing, the Trustee shall not redeem any
Notes or mail any notice of optional redemption during the continuance of a
default in payment of interest or premium on the Notes or of any Event of
Default of which, in the case of any Event of Default other than under Section
7.1(a), (b), (c) or (e), a Responsible Officer of the Trustee has knowledge. If
any Note called for redemption shall not be so paid upon surrender thereof for
redemption, the principal and premium, if any, shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate borne
by the Note and such Note shall remain convertible into Common Stock until the
principal and premium, if any, shall have been paid or duly provided for.

         Section 3.4. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In
connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes not converted prior to the expiration of
such conversion right by an agreement with one or more investment bankers or
other purchasers to purchase such Notes by paying to the Trustee in trust for
the Noteholders, on or before the date fixed for redemption, an amount not less
than the applicable redemption price, together with interest accrued to the date
fixed for redemption, of such Notes. Notwithstanding anything to the contrary
contained in this Article 3, the obligation of the Company to pay the redemption
price of such Notes, together with interest accrued to, but excluding, the date
fixed for redemption, shall be deemed to be satisfied and discharged to the
extent such amount is so paid by such purchasers. If such an agreement is
entered into, a copy of which, certified as true and correct by the Secretary or
Assistant Secretary of the Company will be filed with the Trustee prior to the
date fixed for redemption, any Notes not duly surrendered for conversion by the
holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, acquired by such purchasers from such holders and
(notwithstanding anything to the contrary contained in Article 15) surrendered
by such purchasers for conversion, all as of immediately prior to the close of
business on the date fixed for redemption (and the right to convert any such
Notes shall be deemed to have been extended through such time), subject to
payment of the above amount as aforesaid. At the direction of the Company, the
Trustee shall hold and dispose of any such amount paid to it in the same manner
as it would monies deposited with it by the Company for the redemption of Notes.
Without the Trustee's prior written consent, no arrangement between the Company
and such purchasers for the purchase and conversion of any Notes shall increase
or otherwise affect any of the powers, duties, responsibilities or obligations
of the Trustee as set forth in this Indenture, and the Company agrees to
indemnify the Trustee from, and hold it harmless against, any loss, liability or
expense arising out of or in connection with any such arrangement for the
purchase and conversion of any Notes between the Company and such purchasers,
including the costs and

                                       18
<PAGE>

expenses incurred by the Trustee in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.

                                  ARTICLE 4.

                              SUBORDINATION OF NOTES

         Section 4.1. AGREEMENT OF SUBORDINATION. The Company covenants and
agrees, and each holder of Notes issued hereunder by his acceptance thereof
likewise covenants and agrees, that all Notes shall be issued subject to the
provisions of this Article 4; and each person holding any Note, whether upon
original issue or upon transfer, assignment or exchange thereof, accepts and
agrees to be bound by such provisions.

         The payment of the principal of, premium, if any, and interest on all
Notes (including, but not limited to, the redemption price or repurchase price
with respect to the Notes to be redeemed or repurchased, as provided in this
Indenture) issued hereunder shall, to the extent and in the manner hereinafter
set forth, be subordinated to the prior payment in full, in cash or in such
other form of payment as may be acceptable to the holders of Senior
Indebtedness, of all Senior Indebtedness, whether outstanding at the date of
this Indenture or thereafter incurred or created.

         No provision of this Article 4 shall prevent the occurrence of any
default or Event of Default hereunder.

         Section 4.2. PAYMENTS TO NOTEHOLDERS. No payment (including pursuant
to any redemption or repurchase of Notes) shall be made with respect to the
principal of, or premium, if any, or interest on the Notes, except payments and
distributions made by the Trustee as permitted by Section 4.6, if:

                  (a) a default in the payment of principal, premium, if any, or
         interest or other payment due on Designated Senior Indebtedness occurs
         and is continuing beyond any applicable period of grace; or

                  (b) any other default occurs and is continuing with respect to
         Designated Senior Indebtedness that then permits holders of the
         Designated Senior Indebtedness as to which such default related to
         accelerate its maturity and the Trustee and the Company receive a
         notice of such default (a "Payment Blockage Notice") from a
         representative of Designated Senior Indebtedness or a holder of
         Designated Senior Indebtedness or the Company.

         The Company may and shall resume payments on the Notes (1) in the case
of a payment default, on the date upon which such default is cured or waived or
ceases to exist, and (2) in the case of a nonpayment default with respect to
Designated Senior Indebtedness, on the earlier of

                                       19
<PAGE>

the date on which the nonpayment default is cured or waived or ceases to exist
or 179 days pass after the date on which the applicable Payment Blockage Notice
is received.

         No new period of payment blockage may be commenced pursuant to a
Payment Blockage Notice unless (A) at least 365 days shall have elapsed since
the first day of effectiveness of the immediately prior Payment Blockage Notice
and (B) all scheduled payments of principal, premium, if any, and interest on
the Notes that have come due have been paid in full in cash, or in such other
form of payment as may be acceptable to the holders of the Notes. No default
(whether or not such event of default is on the same issue of Designated Senior
Indebtedness) that existed or was continuing on the date of delivery of any
Payment Blockage Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice.

         In addition, in the event of any acceleration of the Notes because of
an Event of Default, no payment or distribution (including with respect to any
redemption or repurchase of the Notes) shall be made to the Trustee or any
holder of Notes with respect to the principal of, premium, if any, or interest
on the Notes, except payments and distributions made by the Trustee as permitted
by Section 4.6, until all Senior Indebtedness has been paid in full in cash or
other payment satisfactory to the holders of Senior Indebtedness or such
acceleration is rescinded in accordance with the terms of this Indenture. If
payment of the Notes is accelerated because of an Event of Default, the Company
shall promptly notify holders of Senior Indebtedness of the acceleration.

         Notwithstanding the foregoing, in the event that the Trustee or any
holder of Notes receives any payment or distribution of assets of the Company of
any kind in contravention of any term of this Indenture, whether in cash,
property or securities, including, without limitation, by way of setoff or
otherwise, before all Senior Indebtedness is paid in full, in cash or such other
form of payment as may be acceptable to the holders of Senior Indebtedness, then
such payment or distribution shall be held by the recipient or recipients in
trust for the benefit of, and shall immediately be paid over or delivered to,
the holders of Senior Indebtedness or their respective representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to make payment in full, in cash or such other form of payment
as may be acceptable to the holders of Senior Indebtedness, of all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution, or provision therefor, to or for the holders of such Senior
Indebtedness.

         Nothing in this Section 4.2 shall apply to claims of, or payments to,
the Trustee pursuant to Section 8.6. This Section 4.2 shall be subject to the
further provisions of Section 4.6.

         Section 4.3. BANKRUPTCY AND DISSOLUTION, ETC. Upon any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any dissolution,
winding-up, liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
amounts due or to become due upon all Senior Indebtedness shall first be paid in

                                       20
<PAGE>

full, in cash or in such other form of payment as may be acceptable to the
holders of Senior Indebtedness, before any payment is made on account of the
principal or premium, if any, and interest on the Notes (except payments made
pursuant to Article 13 from monies deposited with the Trustee pursuant thereto
prior to the happening of such dissolution, winding-up, liquidation or
reorganization or bankruptcy, insolvency, receivership or other such
proceedings); and upon any such dissolution, winding-up, liquidation or
reorganization or bankruptcy, insolvency, receivership or other such
proceedings, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the holders of the Notes or the Trustee under this Indenture would be
entitled, except for the provision of this Article 4, shall (except as
aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
or by the holders of the Notes or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior Indebtedness (pro rata
to such holders on the basis of the respective amounts of Senior Indebtedness
held by such holders, or as otherwise required by law or a court order) or their
respective representative or representatives, or to the trustee or trustees
under any indenture pursuant to which any instruments evidencing any Senior
Indebtedness may have been issued, as their respective interests may appear, to
the extent necessary to pay all Senior Indebtedness in full in cash or in such
other form of payment as may be acceptable to the holders of Senior Indebtedness
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness, before any payment or distribution is made to
the holders of the Notes or to the Trustee under this Indenture.

         Notwithstanding the foregoing, in the event that the Trustee or any
holder of Notes receives any payment or distribution of assets of the Company of
any kind in contravention of any term of this Indenture, whether in cash,
property or securities, including, without limitation, by way of setoff or
otherwise, before all Senior Indebtedness is paid in full, in cash or such other
form of payment as may be acceptable to the holders of Senior Indebtedness, then
such payment or distribution shall be held by the recipient or recipients in
trust for the benefit of, and shall immediately be paid over or delivered to,
the holders of Senior Indebtedness or their respective representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to make payment in full, in cash or such other form of payment
as may be acceptable to the holders of Senior Indebtedness, of all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution, or provision therefor, to or for the holders of such Senior
Indebtedness.

         For purposes of Section 4.2 hereof and this Section 4.3, the words
"cash, property or securities" shall not be deemed to include shares of stock of
the Company as reorganized or readjusted, or securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated (at least to the extent provided in this
Article 4 with respect to the Notes) to the payment of all Senior Indebtedness
which may at the time be outstanding; PROVIDED that (i) the Senior Indebtedness
is assumed by the new corporation, if any, resulting from such reorganization or
adjustment, and (ii) the rights

                                       21
<PAGE>

of the holders of Senior Indebtedness (other than leases which are not assumed
by the Company or by the new corporation, as the case may be) are not, without
the consent of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company into, another
corporation or the liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided for in
Article 12 shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 4.3 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article 12.

         Nothing in this Section 4.3 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 8.6. This Section 4.3 shall be subject
to the further provisions of Section 4.6.

         Section 4.4. SUBROGATION OF NOTES. Subject to the payment in full in
cash or in such other form of payment as may be acceptable to the holders of
Senior Indebtedness of all Senior Indebtedness, the rights of the holders of the
Notes shall be subrogated to the extent of the payments or distributions made to
the holders of such Senior Indebtedness pursuant to the provisions of this
Article 4 (equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to other indebtedness of the
Company to substantially the same extent as the Notes are subordinated and is
entitled to like rights of subrogation) to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal of, and premium, if any, and interest on the Notes shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to
the holders of the Senior Indebtedness of any cash, property or securities to
which the holders of the Notes or the Trustee would be entitled except for the
provisions of this Article 4, and no payment over pursuant to the provisions of
this Article 4, to or for the benefit of the holders of Senior Indebtedness by
holders of the Notes or the Trustee, shall, as between the Company, its
creditors other than holders of Senior Indebtedness, and the holders of the
Notes, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness; and no payments or distributions of cash, property or securities
to or for the benefit of the holders of the Notes pursuant to the subrogation
provisions of this Article 4, which would otherwise have been paid to the
holders of Senior Indebtedness shall be deemed to be a payment by the Company to
or for the account of the Notes. It is understood that the provisions of this
Article 4 are and are intended solely for the purposes of defining the relative
rights of the holders of the Notes, on the one hand, and the holders of the
Senior Indebtedness, on the other hand.

         Nothing contained in this Article 4 or elsewhere in this Indenture or
in the Notes is intended to or shall impair, as among the Company, its creditors
other than the holders of Senior Indebtedness, and the holders of the Notes, the
obligation of the Company, which is absolute and unconditional, to pay to the
holders of the Notes the principal of, and premium, if any, and interest on the
Notes as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the holders of
the Notes and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything

                                       22
<PAGE>

herein or therein prevent the Trustee or the holder of any Note from exercising
all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article 4 of the holders of
Senior Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.

         Upon any payment or distribution of assets of the Company referred to
in this Article 4, the Trustee, subject to the provisions of Section 8.1, and
the holders of the Notes shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction in which such bankruptcy, dissolution,
winding-up, liquidation or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution, delivered to the Trustee or
to the holders of the Notes, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 4.

         Section 4.5. AUTHORIZATION BY NOTEHOLDERS. Each holder of a Note by
his acceptance thereof authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
provided in this Article 4 and appoints the Trustee his attorney-in-fact for any
and all such purposes.

         Section 4.6. NOTICE TO TRUSTEE. The Company shall give written notice
to the Trustee of the issuance of any Designated Senior Indebtedness. In
addition, the Company shall give prompt written notice in the form of an
Officers' Certificate to a Responsible Officer of the Trustee and to any paying
agent of any fact known to the Company which would prohibit the making of any
payment of monies to or by the Trustee or any paying agent in respect of the
Notes pursuant to the provisions of this Article 4. Notwithstanding the
provisions of this Article 4 or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any Senior
Indebtedness or of any default or event of default with respect to any Senior
Indebtedness or of any other facts which would prohibit the making of any
payment of monies to or by the Trustee in respect of the Notes pursuant to the
provisions of this Article 4, unless and until a Responsible Officer of the
Trustee shall have received written notice thereof at the Corporate Trust Office
from the Company (in the form of an Officers' Certificate) or a holder or
holders of Senior Indebtedness or from any trustee thereof who shall have been
certified by the Company or otherwise established to the reasonable satisfaction
of the Trustee to be such holder or trustee; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 8.1, shall be
entitled in all respects to assume that no such facts exist; PROVIDED that if on
a date at least two (2) Business Days prior to the date upon which by the terms
hereof any such monies may become payable for any purpose (including, without
limitation, the payment of the principal of, or premium, if any, or interest on
any Note), the Trustee shall not have received with respect to such monies the
notice provided for in this Section 4.6, then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such monies and to apply the same to the purpose for

                                       23
<PAGE>

which they were received, and shall not be affected by any notice to the
contrary which may be received by it on or after such prior date.

         Notwithstanding anything to the contrary hereinbefore set forth,
nothing shall prevent (a) any payment by the Company or the Trustee to the
Noteholders of amounts in connection with a redemption of Notes if (i) notice of
such redemption has been given to the Noteholders pursuant to Article 3 prior to
the receipt by the Trustee of written notice as aforesaid, and (ii) such notice
of redemption is given not earlier than sixty (60) days before the redemption
date, (b) any payment by the Company or the Trustee to the Noteholders of
amounts in connection with a repurchase of Notes if (i) notice of such
repurchase has been given pursuant to Article 16 prior to the receipt by the
Trustee of written notice as aforesaid, and (ii) such notice of repurchase is
given not earlier than forty (40) days before the repurchase date, or (c) any
payment by the Trustee to the Noteholders of monies deposited with it pursuant
to Section 13.1.

         The Trustee, subject to the provisions of Section 8.1, shall be
entitled to rely on the delivery to it of a written notice by a person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a holder
of Senior Indebtedness or a trustee on behalf of any such holder or holders. In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article 4, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such person under this Article 4, and if such evidence is not furnished the
Trustee may defer any payment to such person pending judicial determination as
to the right of such person to receive such payment.

         Section 4.7. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS. The Trustee
and any agent of the Company or the Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article 4 in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in Section 8.13 or elsewhere in this Indenture
shall deprive the Trustee or any such agent of any of its rights as such holder.
Nothing in this Article 4 shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 8.6.

         With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article 4, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 4.2 and Section 8.1, the Trustee shall not be liable to
any holder of Senior Indebtedness if it shall pay over or deliver to holders of
Notes, the Company or any other person money or assets to which any holder of
Senior Indebtedness shall be entitled by virtue of this Article 4 or otherwise.

                                       24
<PAGE>

         Section 4.8. NO IMPAIRMENT OF SUBORDINATION. No right of any present
or future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with.

         Section 4.9. CERTAIN CONVERSIONS DEEMED PAYMENT. For the purposes of
this Article 4 only, (1) the issuance and delivery of junior securities upon
conversion of Notes in accordance with Article 15 shall not be deemed to
constitute a payment or distribution on account of the principal of (or premium,
if any) or interest on Notes or on account of the purchase or other acquisition
of Notes, and (2) the payment, issuance or delivery of cash, property or
securities (other than junior securities) upon conversion of a Note shall be
deemed to constitute payment on account of the principal of such Note. For the
purposes of this Section, the term "junior securities" means (a) shares of any
stock of any class of the Company and (b) securities of the Company which are
subordinated in right of payment to all Senior Indebtedness which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Notes are so
subordinated as provided in this Article. Nothing contained in this Article or
elsewhere in this Indenture or in the Notes is intended to or shall impair, as
among the Company, its creditors other than holders of Senior Indebtedness and
the holders of the Notes, the right, which is absolute and unconditional, of the
holder of any Note to convert such Note in accordance with Article 15.

         Section 4.10. ARTICLE APPLICABLE TO PAYING AGENTS. If at any time any
paying agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term Trustee as used in this Article 4 shall
(unless the context shall otherwise require) be construed as extending to and
including such paying agent within its meaning as fully for all intents and
purposes as if such paying agent were named in this Article in addition to or in
place of the Trustee; provided, however, that the first sentence of Section 4.5
shall not apply to the Company or any Affiliate of the Company if it or such
Affiliate acts as paying agent.

                                 ARTICLE 5.

                      PARTICULAR COVENANTS OF THE COMPANY

         Section 5.1. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any, and interest on each of the Notes at the
places, at the respective times and in the manner provided herein and in the
Notes. Each installment of interest on the Notes due on any semi-annual interest
payment date may be paid by mailing checks for the interest payable to or upon
the written order of the holders of Notes entitled thereto as they shall appear
on the registry books of the Company, provided that, with respect to any holder
of Notes with an aggregate principal amount equal to or in excess of $2,000,000,
at the request of such holder in writing to

                                       25
<PAGE>

the Company, interest on such holder's Notes shall be paid by wire transfer in
immediately available funds in accordance with the wire transfer instructions
supplied by such holder from time to time to the Trustee and paying agent (if
different from Trustee) at least two days prior to the applicable record date;
PROVIDED, FURTHER that any payment to the Depositary or its nominee shall be
made by wire transfer of immediately available funds to the account of the
Depositary or its +nominee.

         Section 5.2. MAINTENANCE OF OFFICE OR AGENCY. The Company will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where the Notes may be surrendered for registration of transfer or exchange or
for presentation for payment or for conversion, redemption or repurchase and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency not designated or appointed by the Trustee. 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 or the
office or agency of the Trustee in the Borough of Manhattan, The City of New
York.

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

         The Company hereby initially designates the Trustee as paying agent,
Note registrar, Custodian and conversion agent and the Corporate Trust Office
and the office or agency of the Trustee in the Borough of Manhattan, The City of
New York (which initially shall be the office of the Trustee located at [101
Barclay Street, 21W, New York, New York 10286]) as one such office or agency of
the Company for each of the aforesaid purposes.

         So long as the Trustee is the Note registrar, the Trustee agrees to
mail, or cause to be mailed, the notices set forth in Section 8.10(a) and the
third paragraph of Section 8.11.

         Section 5.3. APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.

                                       26
<PAGE>

         Section 5.4.      PROVISIONS AS TO PAYING AGENT.

         (a) If the Company shall appoint a paying agent other than the Trustee
or if the Trustee shall appoint such a paying agent, it will cause such paying
agent to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 5.4:

                                    (1) that it will hold all sums held by it as
                  such agent for the payment of the principal of and premium, if
                  any, or interest on the Notes (whether such sums have been
                  paid to it by the Company or by any other obligor on the
                  Notes) in trust for the benefit of the holders of the Notes;

                                    (2) that it will give the Trustee notice of
                  any failure by the Company (or by any other obligor on the
                  Notes) to make any payment of the principal of and premium, if
                  any, or interest on the Notes when the same shall be due and
                  payable; and

                                    (3) that at any time during the continuance
                  of an Event of Default, upon request of the Trustee, it will
                  forthwith pay to the Trustee all sums so held in trust.

                  The Company shall, on or before each due date of the principal
         of, premium, if any, or interest on the Notes, deposit with the paying
         agent a sum sufficient to pay such principal, premium, if any, or
         interest, and (unless such paying agent is the Trustee) the Company
         will promptly notify the Trustee of any failure to take such action,
         provided that if such deposit is made on the due date, such deposit
         must be received by the paying agent by 10:00 a.m., New York City time,
         on such date.

         (b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of, premium, if any, or interest on the
Notes, set aside, segregate and hold in trust for the benefit of the holders of
the Notes a sum sufficient to pay such principal, premium, if any, or interest
so becoming due and will notify the Trustee of any failure to take such action
and of any failure by the Company (or any other obligor under the Notes) to make
any payment of the principal of, premium, if any, or interest on the Notes when
the same shall become due and payable.

         (c) Anything in this Section 5.4 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Company or any paying agent hereunder
as required by this Section 5.4, such sums to be held by the Trustee upon the
trusts herein contained and upon such payment by the Company or any paying agent
to the Trustee, the Company or such paying agent shall be released from all
further liability with respect to such sums.

                                       27
<PAGE>

         (d) Anything in this Section 5.4 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 5.4 is subject to
Sections 13.3 and 13.4.

         Section 5.5. EXISTENCE. Subject to Article 12, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence.

         Section 5.6. RESERVED.

         Section 5.7. STAY, EXTENSION AND USURY LAWS. The Company covenants (to
the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal of or
interest on the Notes as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Indenture; and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not, by resort to any such law, 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 has been enacted.

         Section 5.8. COMPLIANCE CERTIFICATE. The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on December 31, 2000) an Officers'
Certificate stating whether or not to the best of their knowledge the signers
know of any default or Event of Default that occurred during such period. If
they do, such Officers' Certificate shall describe the default or Event of
Default and its status.

         Section 5.9. FURTHER INSTRUMENTS AND ACTS. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.

         Section 5.10. 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 material taxes, assessments and governmental charges levied
or imposed upon it or any subsidiary or upon the income, profits or property of
the Company or any subsidiary, (2) all material lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company or any subsidiary; and (3) all stamps and similar
duties, if any, which may be imposed by the United States, the United Kingdom or
any political subdivision thereof or therein in connection with the issuance,
transfer, exchange or conversion of any Notes or with respect to this Indenture;
provided, however, that, in the case of clauses (1) and (2) 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 whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.

                                       28
<PAGE>

                                   ARTICLE 6.

         NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE

         Section 6.1. NOTEHOLDERS' LISTS. The Company covenants and agrees that
it will furnish or cause to be furnished to the Trustee, semi-annually, not more
than fifteen (15) days after each March 30 and September 30 in each year
beginning with September 30, 2000, and at such other times as the Trustee may
request in writing, within thirty (30) days after receipt by the Company of any
such request (or such lesser time as the Trustee may reasonably request in order
to enable it to timely provide any notice to be provided by it hereunder), a
list in such form as the Trustee may reasonably require of the names and
addresses of the holders of Notes as of a date not more than fifteen (15) days
(or such other date as the Trustee may reasonably request in order to so provide
any such notices) prior to the time such information is furnished, except that
no such list need be furnished so long as the Trustee is acting as Note
registrar.

         Section 6.2. PRESERVATION AND DISCLOSURE OF LISTS.

                  (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Notes contained in the most recent list furnished to it as provided
in Section 6.1 or maintained by the Trustee in its capacity as Note registrar,
if so acting. The Trustee may destroy any list furnished to it as provided in
Section 6.1 upon receipt of a new list so furnished.

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

                  (c) Every Noteholder, 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 of Notes made
pursuant to the Trust Indenture Act.

         Section 6.3. REPORTS BY TRUSTEE.

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

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

                                       29
<PAGE>

         Section 6.4. REPORTS BY COMPANY.

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

                  (b) The Company will deliver to the Trustee (i) as soon as
available and in any event within ninety (90) days after the end of each fiscal
year of the Company (x) a consolidated balance sheet of the Company and its
subsidiaries as of the end of such fiscal year and the related consolidated
statements of operations, stockholders' equity and cash flows for such fiscal
year, all reported on by an independent public accountant of nationally
recognized standing and (y) a report containing a management's discussion and
analysis of the financial condition and results of operations and a description
of the business and properties of the Company and (ii) as soon as available and
in any event within forty-five (45) days after the end of each of the first
three quarters of each fiscal year of the Company an unaudited consolidated
management's discussion and analysis of the financial condition and results of
operations of the Company for such quarter; provided that the foregoing
statements and reports shall not be required for any fiscal year or quarter, as
the case may be, with respect to which the Company files or expects to file with
the Trustee an annual report or quarterly report, as the case may be, pursuant
to the preceding paragraph of this Section 6.4. The Trustee shall have no
liability as regards the substance of the information provided by the Company or
its agents pursuant to this Section 6.4.

                                   ARTICLE 7.

                             DEFAULTS AND REMEDIES

         Section 7.1. EVENTS OF DEFAULT. In case one or more of the following
Events of Default (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) shall have occurred and be
continuing:

         (a) default in the payment of the principal of and premium, if any, on
any of the Notes as and when the same shall become due and payable either at
maturity or in connection with any redemption, by declaration or otherwise,
whether or not such payment is prohibited by the provisions of Article 4; or

                                       30
<PAGE>

         (b) default for thirty (30) days in the payment of any installment of
interest upon any of the Notes as and when the same shall become due and
payable, whether or not such payment is prohibited by the provisions of Article
4; or

         (c) failure on the part of the Company, within 5 days of the
satisfaction of the requirements for conversion set forth in Section 15.2 with
respect to any Note, to deliver shares of its common stock, including cash for
fractional shares, to the holder of such Note; or

         (d) failure on the part of the Company duly to observe or perform any
other of the covenants on the part of the Company in the Notes or in this
Indenture (other than a covenant a default in whose performance or whose breach
is elsewhere in this Section specifically dealt with) and the continuance of
such failure for a period of forty-five (45) days after the date on which
written notice of such failure, requiring the Company to remedy the same, shall
have been given to the Company by the Trustee, or to the Company and a
Responsible Officer of the Trustee by the holders of at least 25% in aggregate
principal amount of the outstanding Notes at the time outstanding determined in
accordance with Section 9.4; or

         (e) a default in the payment of the Repurchase Price in respect of any
Note on the repurchase date therefor in accordance with the provisions of
Article 16, whether or not such payment in cash of the Repurchase Price is
prohibited by the provisions of Article 4; or

         (f) failure on the part of the Company to provide a written notice of a
Repurchase Event in accordance with Section 16.2; or

         (g) failure on the part of the Company or any Significant Subsidiary to
make any payment at maturity, including any applicable grace period, in respect
of Indebtedness of, or guaranteed or assumed by, the Company or any Significant
Subsidiary, in a principal amount then outstanding in excess of U.S. $5,000,000,
and the continuance of such failure for a period of thirty (30) days after there
shall have been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the holders of not less than 25% in
aggregate principal amount of the Notes then outstanding, a written notice
specifying such default and requiring the Company to cause such default to be
cured or waived and stating that such notice is a "Notice of Default" hereunder;
or

         (h) default on the part of the Company or any Significant Subsidiary
with respect to any Indebtedness of, or guaranteed or assumed by, the Company or
any Significant Subsidiary, which default results in the acceleration of
Indebtedness in a principal amount then outstanding in excess of U.S.
$5,000,000, and such Indebtedness shall not have been discharged or such
acceleration shall not have been rescinded or annulled for a period of thirty
(30) days after there shall have been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the holders of
not less than 25% in aggregate principal amount of the Notes then outstanding, a
written notice specifying such default and requiring the Company to cause such
Indebtedness to be discharged or cause such default to be cured or waived or
such

                                       31
<PAGE>

acceleration to be rescinded or annulled and stating that such notice is a
"Notice of Default" hereunder; or

         (i) the Company or any Significant Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due; or

         (j) an involuntary case or other proceeding shall be commenced against
the Company or any Significant Subsidiary seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of ninety (90) consecutive
days;

then, and in each and every such case (other than an Event of Default specified
in Section 7.1(i) or (j) with respect to the Company), unless the principal of
all of the Notes shall have already become due and payable, either the Trustee
or the holders of not less than 25% in aggregate principal amount of the Notes
then outstanding hereunder determined in accordance with Section 9.4, by notice
in writing to the Company (and to the Trustee if given by Noteholders), may
declare the principal of and premium, if any, on all the Notes and the interest
accrued thereon to be due and payable immediately, and upon any such declaration
the same shall become and shall be immediately due and payable, anything in this
Indenture or in the Notes contained to the contrary notwithstanding. If an Event
of Default specified in Section 7.1(i) or (j) occurs and is continuing with
respect to the Company, the principal of all the Notes and the interest accrued
thereon shall be immediately due and payable. This provision, however, is
subject to the conditions that if, at any time after the principal of the Notes
shall have been so declared due and payable, and before any judgment or decree
for the payment of the monies due shall have been obtained or entered as
hereinafter provided, the Company shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all Notes and
the principal of and premium, if any, on any and all Notes which shall have
become due otherwise than by acceleration (with interest on overdue installments
of interest (to the extent that payment of such interest is enforceable under
applicable law) and on such principal and premium, if any, at the rate borne by
the Notes, to the date of such payment or deposit) and amounts due to the
Trustee pursuant to Section 8.6, and if any and all defaults under this
Indenture, other than the nonpayment of principal of and premium, if any, and
accrued interest on Notes which shall have become due by acceleration, shall
have been cured or waived pursuant to Section 7.7, then and in every such case
the holders of a majority in aggregate principal amount of the Notes then
outstanding, by written notice to the Company and to the Trustee, may waive all
defaults or Events of Default and rescind and annul such declaration and its

                                       32
<PAGE>

consequences; but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or Event of Default, or shall impair any
right consequent thereon. The Company shall notify the Responsible Officer of
the Trustee, promptly upon becoming aware thereof, of any default or Event of
Default and shall deliver to the Trustee a statement specifying such default or
Event of Default and the action the Company has taken, is taking or proposes to
take with respect thereto.

         In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such waiver or rescission and annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the holders of Notes, and the Trustee shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the holders of Notes, and the Trustee shall
continue as though no such proceeding had been instituted.

         Section 7.2. PAYMENTS OF NOTES ON DEFAULT; SUIT THEREFOR. The Company
covenants that (a) in case default shall be made in the payment by the Company
of any installment of interest upon any of the Notes as and when the same shall
become due and payable, and such default shall have continued for a period of
thirty (30) days, or (b) in case default shall be made in the payment of the
principal of or premium, if any, on any of the Notes as and when the same shall
have become due and payable, whether at maturity of the Notes or in connection
with any redemption or repurchase, by declaration under this Indenture or
otherwise, then, upon demand of the Trustee, the Company will pay to the
Trustee, for the benefit of the holders of the Notes, the whole amount that then
shall have become due and payable on all such Notes for principal and premium,
if any, or interest, or both, as the case may be, with interest upon the overdue
principal and premium, if any, and (to the extent that payment of such interest
is enforceable under applicable law) upon the overdue installments of interest
at the rate borne by the Notes; and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
any expenses or liabilities incurred by the Trustee hereunder other than through
its negligence or bad faith. Until such demand by the Trustee, the Company may
pay the principal of and premium, if any, and interest on the Notes to the
registered holders, whether or not the Notes are overdue.

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

         In the case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Notes under
Title 11 of the United

                                       33
<PAGE>

States Code, or any other applicable law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of the Company or
such other obligor, the property of the Company or such other obligor, or in the
case of any other judicial proceedings relative to the Company or such other
obligor upon the Notes, or to the creditors or property of the Company or such
other obligor, the Trustee, irrespective of whether the principal of the Notes
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 7.2, shall be entitled and empowered,
by intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal, premium, if any, and interest owing
and unpaid in respect of the Notes, and, in case of any judicial proceedings, to
file such proofs of claim and other papers or documents and to take such other
actions as it may deem necessary or advisable in order to have the claims of the
Trustee and of the Noteholders allowed in such judicial proceedings relative to
the Company or any other obligor on the Notes, its or their creditors, or its or
their property, and to collect and receive any monies or other property payable
or deliverable on any such claims, and to distribute the same after the
deduction of any amounts due the Trustee under Section 8.6; and any receiver,
assignee or trustee in bankruptcy or reorganization, liquidator, custodian or
similar official is hereby authorized by each of the Noteholders 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 Noteholders, to pay to the Trustee any
amount due it for reasonable compensation, expenses, advances and disbursements,
including agents and counsel fees incurred by it up to the date of such
distribution. To the extent that such payment of reasonable compensation,
expenses, advances and disbursements out of the estate in any such proceedings
shall be denied for any reason, payment of the same shall be secured by a lien
on, and shall be paid out of, any and all distributions, dividends, monies,
securities and other property which the holders of the Notes may be entitled to
receive in such proceedings, whether in liquidation or under any plan of
reorganization or arrangement or otherwise.

         All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes, or the production thereof on any trial or other proceeding
relative thereto, and any such suit or 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 Notes.

         In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Notes, and it shall not be necessary to make any holders of the Notes
parties to any such proceedings.

         Section 7.3. APPLICATION OF MONIES COLLECTED BY TRUSTEE. Any monies
collected by the Trustee pursuant to this Article 7 shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes,

                                       34
<PAGE>

and stamping thereon 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 8.6;

                  Second: Subject to the provisions of Article 4, in case the
         principal of the outstanding Notes shall not have become due and be
         unpaid, to the payment of interest on the Notes in default in the order
         of the maturity of the installments of such interest, with interest (to
         the extent that such interest has been collected by the Trustee) upon
         the overdue installments of interest at the rate borne by the Notes,
         such payments to be made ratably to the persons entitled thereto;

                  Third: Subject to the provisions of Article 4, in case the
         principal of the outstanding Notes shall have become due, by
         declaration or otherwise, and be unpaid, to the payment of the whole
         amount then owing and unpaid upon the Notes for principal and premium,
         if any, and interest, with interest on the overdue principal and
         premium, if any, and (to the extent that such interest has been
         collected by the Trustee) upon overdue installments of interest at the
         rate borne by the Notes; and in case such monies shall be insufficient
         to pay in full the whole amounts so due and unpaid upon the Notes, then
         to the payment of such principal and premium, if any, and interest
         without preference or priority of principal and premium, if any, over
         interest, or of interest over principal and premium, if any, or of any
         installment of interest over any other installment of interest, or of
         any Note over any other Note, ratably to the aggregate of such
         principal and premium, if any, and accrued and unpaid interest; and

                  Fourth:  Subject to the provisions of Article 4, to the
         payment of the remainder, if any, to the Company or any other person
         lawfully entitled thereto.

         Section 7.4. PROCEEDINGS BY NOTEHOLDER. No holder of any Note shall
have any right by virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than 25% in aggregate
principal amount of the Notes then outstanding shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such indemnity as may be
reasonably satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for sixty (60)
days after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or proceeding and
no direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 7.7; it being understood and intended, and being
expressly covenanted by the taker and holder of every Note with every other
taker and holder and the Trustee, that no one or more holders of Notes shall
have any right in any manner whatever by virtue of or by availing of

                                       35
<PAGE>

any provision of this Indenture to affect, disturb or prejudice the rights of
any other holder of Notes, or to obtain or seek to obtain priority over or
preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Notes (except as otherwise provided herein).
For the protection and enforcement of this Section 7.4, each and every
Noteholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.

         Notwithstanding any other provision of this Indenture and any provision
of any Note, the right of any holder of any Note to receive payment of the
principal of and premium, if any, and interest on such Note, on or after the
respective due dates expressed in such Note, or to institute suit for the
enforcement of any such payment on or after such respective dates against the
Company shall not be impaired or affected without the consent of such holder.

         Anything in this Indenture or the Notes to the contrary
notwithstanding, the holder of any Note, without the consent of either the
Trustee or the holder of any other Note, in his own behalf and for his own
benefit, may enforce, and may institute and maintain any proceeding suitable to
enforce, his rights of conversion as provided herein.

         Section 7.5. PROCEEDINGS BY TRUSTEE. In case of an Event of Default
the Trustee may in its discretion proceed to protect and enforce the rights
vested in it by this Indenture by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any of such rights,
either by suit in equity or by action at law or by proceeding in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement
contained in this Indenture or in aid of the exercise of any power granted in
this Indenture, or to enforce any other legal or equitable right vested in the
Trustee by this Indenture or by law.

         Section 7.6. REMEDIES CUMULATIVE AND CONTINUING. Except as provided in
the last paragraph of Section 2.6, all powers and remedies given by this Article
7 to the Trustee or to the Noteholders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any thereof or of any other powers and
remedies available to the Trustee or the holders of the Notes, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture, and no delay or omission
of the Trustee or of any holder of any of the Notes to exercise any right or
power accruing upon any default or Event of Default occurring and continuing as
aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or any acquiescence therein; and, subject to the
provisions of Section 7.4, every power and remedy given by this Article 7 or by
law to the Trustee or to the Noteholders may be exercised from time to time, and
as often as shall be deemed expedient, by the Trustee or by the Noteholders.

         Section 7.7. DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY
MAJORITY OF NOTEHOLDERS. The holders of a majority in aggregate principal amount
of the Notes at the time outstanding determined in accordance with Section 9.4
shall have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee; PROVIDED, HOWEVER, that (a) such direction

                                       36
<PAGE>

shall not be in conflict with any rule of law or with this Indenture, and (b)
the Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction. The holders of a majority in aggregate
principal amount of the Notes at the time outstanding determined in accordance
with Section 9.4 may on behalf of the holders of all of the Notes waive any past
default or Event of Default hereunder and its consequences except (i) a default
in the payment of interest or premium, if any, on, or the principal of, the
Notes when due, (ii) a failure by the Company to convert any Notes into Common
Stock or (iii) a default in respect of a covenant or provisions hereof which
under Article 11 cannot be modified or amended without the consent of the
holders of all Notes then outstanding. Upon any such waiver the Company, the
Trustee and the holders of the Notes shall be restored to their former positions
and rights hereunder; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon. Whenever any
default or Event of Default hereunder shall have been waived as permitted by
this Section 7.7, said default or Event of Default shall for all purposes of the
Notes and this Indenture be deemed to have been cured and to be not continuing;
but no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon.

         Section 7.8. NOTICE OF DEFAULTS. The Trustee shall, within ninety (90)
days after the occurrence of a default, mail to all Noteholders, as the names
and addresses of such holders appear upon the Note register, notice of all
defaults known to a Responsible Officer, unless such defaults shall have been
cured or waived before the giving of such notice; and provided that, except in
the case of default in the payment of the principal of, or premium, if any, or
interest on any of the Notes, including without limiting the generality of the
foregoing any default in the payment of any Repurchase Price or in the payment
of any amount due in connection with any redemption of Notes, then in any such
event 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 Noteholders.

         Section 7.9. UNDERTAKING TO PAY COSTS. All parties to this Indenture
agree, and each holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; PROVIDED that the provisions of this Section 7.9 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any Noteholder, or
group of Noteholders, holding in the aggregate more than 10% in principal amount
of the Notes at the time outstanding determined in accordance with Section 9.4,
or to any suit instituted by any Noteholder for the enforcement of the payment
of the principal of or premium, if any, or interest on any Note (including, but
not limited to, the redemption price or repurchase price with respect to the
Notes being redeemed or repurchased as provided in this Indenture) on or after
the due date expressed in such Note or to any suit for the enforcement of the
right to convert any Note in accordance with the provisions of Article 15.

                                       37
<PAGE>

         Section 7.10. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Trustee or of any holder of any Note to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or any acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to the
holders of Notes may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the holders of Notes, as the case may be.

                                   ARTICLE 8.

                             CONCERNING THE TRUSTEE

         Section 8.1. DUTIES AND RESPONSIBILITIES OF TRUSTEE. The Trustee, prior
to the occurrence of an Event of Default and after the curing or waiver of all
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture. In case an
Event of Default has occurred (which has not been cured or waived) the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.

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

                  (a) prior to the occurrence of an Event of Default and after
         the curing or waiving of all Events of Default which may have occurred:

                           (1) the duties and obligations of the Trustee shall
                  be determined solely by the express provisions of this
                  Indenture and, after it has been qualified thereunder, the
                  Trust Indenture Act, and the Trustee shall not be liable
                  except for the performance of such duties and obligations as
                  are specifically set forth in this Indenture and no implied
                  covenants or obligations shall be read into this Indenture and
                  the Trust Indenture Act against the Trustee; and

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

                                       38
<PAGE>

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

                  (c) the Trustee shall not be liable to any Noteholder with
         respect to any action taken or omitted to be taken by it in good faith
         in accordance with the direction of the holders of not less than a
         majority in principal amount of the Notes at the time outstanding
         determined as provided in Section 9.4 relating to the time, method and
         place of conducting any proceeding for any remedy available to the
         Trustee, or exercising any trust or power conferred upon the Trustee,
         under this Indenture; and

                  (d) whether or not therein 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.

                  None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.

         Section 8.2. RELIANCE ON DOCUMENTS, OPINIONS, ETC. Except as otherwise
provided in Section 8.1:

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

         (b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the Secretary or an Assistant Secretary of the Company;

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

         (d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Noteholders pursuant to the provisions of this
Indenture, unless such Noteholders shall have offered to the Trustee

                                       39
<PAGE>

reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;

         (e) 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 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; PROVIDED, HOWEVER, that if
the payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
indemnity reasonably satisfactory to the Trustee from the Noteholders against
such expenses or liability as a condition to so proceeding; the reasonable
expenses of every such examination shall be paid by the Company or, if paid by
the Trustee or any predecessor Trustee, shall be repaid by the Company upon
demand; and

         (f) 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 by it with due care
hereunder.

In no event shall the Trustee be liable for any consequential loss or damage of
any kind whatsoever (including but not limited to lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and regardless
of the form of action other than through the Trustee's willful misconduct or
gross negligence.

         Section 8.3. NO RESPONSIBILITY FOR RECITALS, ETC. The recitals
contained herein and in the Notes (except in the Trustee's certificate of
authentication) shall be taken as the statements of the Company, and the Trustee
assumes no responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.

         Section 8.4. TRUSTEE, PAYING AGENTS, CONVERSION AGENTS OR REGISTRAR MAY
OWN NOTES. The Trustee, any paying agent, any conversion agent or Note
registrar, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights it would have if it were not Trustee,
paying agent, conversion agent or Note registrar.

         Section 8.5. MONIES TO BE HELD IN TRUST. Subject to the provisions of
Section 13.4, all monies received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received.
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

                                       40
<PAGE>

under no liability for interest on any money received by it hereunder except as
may be agreed from time to time by the Company and the Trustee.

         Section 8.6. COMPENSATION AND EXPENSES OF TRUSTEE. The Company
covenants and agrees to pay to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for all services rendered by it
hereunder in any capacity (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust), and the Company
will pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence, willful misconduct or
bad faith. The Company also covenants to indemnify the Trustee in any capacity
under this Indenture and its agents and any authenticating agent for, and to
hold them harmless against, any loss, liability or expense incurred without
negligence, willful misconduct or bad faith on the part of the Trustee or such
agent or authenticating agent, as the case may be, and arising out of or in
connection with the acceptance or administration of this trust or in any other
capacity hereunder, including the costs and expenses of defending themselves
against any claim of liability in the premises. The obligations of the Company
under this Section 8.6 to compensate or indemnify the Trustee and to pay or
reimburse the Trustee for expenses, disbursements and advances shall be secured
by a lien prior to that of the Notes upon all property and funds held or
collected by the Trustee as such, except, subject to the effect of Sections 4.3
and 7.6, funds held in trust herewith for the benefit of the holders of
particular Notes prior to the date of the accrual of such unpaid compensation or
indemnifiable claim. The obligation of the Company under this Section shall
survive the satisfaction and discharge of this Indenture. The indemnification
provided in this Section 8.6 shall extend to the officers, directors, agents and
employees of the Trustee.

         When the Trustee and its agents and any authenticating agent incur
expenses or render services after an Event of Default specified in Section
7.1(i) or (j) occurs, the expenses and the compensation for the services are
intended to constitute expenses of administration under any bankruptcy,
insolvency or similar laws.

         Section 8.7. OFFICERS' CERTIFICATE AS EVIDENCE. Except as otherwise
provided in Section 8.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence, willful misconduct, recklessness
and bad faith on the part of the Trustee, be deemed to be conclusively proved
and established by an Officers' Certificate delivered to the Trustee, and such
Officers' Certificate, in the absence of negligence, willful misconduct,
recklessness and bad faith on the part of the Trustee, shall be full warrant to
the Trustee for any action taken or omitted by it under the provisions of this
Indenture upon the faith thereof.

                                       41
<PAGE>

         Section 8.8. CONFLICTING INTERESTS OF TRUSTEE. If the Trustee has or
shall acquire a conflicting interest within the meaning of the Trust Indenture
Act, the Trustee shall either eliminate such interest or resign, to the extent
and in the manner provided by, and subject to the provisions of, the Trust
Indenture Act and this Indenture.

         Section 8.9. ELIGIBILITY OF TRUSTEE. There shall at all times be a
Trustee hereunder which shall be a person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus (together
with its corporate parent) of at least $50,000,000. If such person publishes
reports of condition at least annually, pursuant to law or to the requirements
of any supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such person shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.

         Section 8.10. RESIGNATION OR REMOVAL OF TRUSTEE.

         (a) The Trustee may at any time resign by giving written notice of such
resignation to the Company and by mailing notice thereof to the holders of Notes
at their addresses as they shall appear on the Note register. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
trustee by written instrument, in duplicate, executed by order of the Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment sixty (60) days after the
mailing of such notice of resignation to the Noteholders, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor trustee, or any Noteholder who has been a bona fide holder of a Note
or Notes for at least six months may, subject to the provisions of Section 7.9,
on behalf of himself and all others similarly situated, petition any such court
for the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.

         (b) In case at any time any of the following shall occur:

                                    (1) the Trustee shall fail to comply with
                  Section 8.8 within a reasonable time after written request
                  therefor by the Company or by any Noteholder who has been a
                  bona fide holder of a Note or Notes for at least six months,
                  or

                                    (2) the Trustee shall cease to be eligible
                  in accordance with the provisions of Section 8.9 and shall
                  fail to resign after written request therefor by the Company
                  or by any such Noteholder, 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

                                       42
<PAGE>

                  or of its property or affairs for the purpose of
                  rehabilitation, conservation or liquidation,

         then, in any such case, the Company may by a Board resolution remove
         the Trustee and appoint a successor trustee by written instrument, in
         duplicate, executed by order of the Board of Directors, one copy of
         which instrument shall be delivered to the Trustee so removed and one
         copy to the successor trustee, or, subject to the provisions of Section
         7.9, any Noteholder who has been a bona fide holder of a Note or Notes
         for at least six months may, on behalf of himself and all others
         similarly situated, petition any court of competent jurisdiction for
         the removal of the Trustee and the appointment of a successor trustee.
         Such court may thereupon, after such notice, if any, as it may deem
         proper and prescribe, remove the Trustee and appoint a successor
         trustee.

         (c) The holders of a majority in aggregate principal amount of the
Notes at the time outstanding may at any time remove the Trustee and nominate a
successor trustee which shall be deemed appointed as successor trustee unless
within ten (10) days after notice to the Company of such nomination the Company
objects thereto, in which case the Trustee so removed or any Noteholder, upon
the terms and conditions and otherwise as in Section 8.10(a) provided, may
petition any court of competent jurisdiction for an appointment of a successor
trustee.

         (d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.11.

         Section 8.11. ACCEPTANCE BY SUCCESSOR TRUSTEE. Any successor trustee
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, the trustee ceasing to act shall,
upon payment of any amounts then due it pursuant to the provisions of Section
8.6, execute and deliver an instrument transferring to such successor trustee
all the rights and powers of the trustee so ceasing to act. Upon request of any
such successor trustee, the Company shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
trustee all such rights and powers. Any trustee ceasing to act shall,
nevertheless, retain a lien upon all property and funds held or collected by
such trustee as such, except for funds held in trust for the benefit of holders
of particular Notes, to secure any amounts then due it pursuant to the
provisions of Section 8.6.

         No successor trustee shall accept appointment as provided in this
Section 8.11 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.

                                       43
<PAGE>

         Upon acceptance of appointment by a successor trustee as provided in
this Section 8.11, each of the Company and the former trustee shall mail or
cause to be mailed notice of the succession of such trustee hereunder to the
holders of Notes at their addresses as they shall appear on the Note register.
If the Company fails to mail such notice within ten (10) days after acceptance
of appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Company.

         Section 8.12. SUCCESSION BY MERGER, ETC. Any corporation or other
entity 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 or other
entity succeeding to all or substantially all of the corporate trust business of
the Trustee, shall be the successor to the Trustee hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that in the case of any corporation succeeding to all
or substantially all of the corporate trust business of the Trustee such
corporation shall be qualified under the provisions of Section 8.8 and eligible
under the provisions of Section 8.9.

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

         Section 8.13. LIMITATION ON RIGHTS OF TRUSTEE AS CREDITOR. If and when
the Trustee shall be or become a creditor of the Company (or any other obligor
upon the Notes), the Trustee shall be subject to the provisions of the Trust
Indenture Act regarding the collection of the claims against the Company (or any
such other obligor).

                                       44
<PAGE>

                                   ARTICLE 9.

                           CONCERNING THE NOTEHOLDERS

         Section 9.1. ACTION BY NOTEHOLDERS. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, or (b) by the record of the
holders of Notes voting in favor thereof at any meeting of Noteholders duly
called and held in accordance with the provisions of Article X, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders. Whenever the Company or the Trustee solicits the taking
of any action by the holders of the Notes, the Company or the Trustee may fix in
advance of such solicitation, a date as the record date for determining holders
entitled to take such action. The record date shall be not more than fifteen
(15) days prior to the date of commencement of solicitation of such action.

         Section 9.2. PROOF OF EXECUTION BY NOTEHOLDERS. Subject to the
provisions of Sections 8.1, 8.2 and 10.5, proof of the execution of any
instrument by a Noteholder or his agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Notes shall be proved by the Note register or by a certificate of the
Note registrar. The record of any Noteholders' meeting shall be proved in the
manner provided in Section 10.6.

         Section 9.3. WHO ARE DEEMED ABSOLUTE OWNERS. The Company, the Trustee,
any authenticating agent, any paying agent, any conversion agent and any Note
registrar may deem the person in whose name such Note shall be registered upon
the Note register to be, and may treat him as, the absolute owner of such Note
(whether or not such Note shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of, premium, if any, and interest on such Note, for
conversion of such Note and for all other purposes; and neither the Company nor
the Trustee nor any paying agent nor any conversion agent nor any Note registrar
shall be affected by any notice to the contrary. All such payments so made to
any holder for the time being, or upon his order, shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for monies payable upon any such Note.

         Section 9.4. COMPANY-OWNED NOTES DISREGARDED. In determining whether
the holders of the requisite aggregate principal amount of Notes have concurred
in any direction, consent, waiver or other action under this Indenture, Notes
which are owned by the Company or any other obligor on the Notes or by any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any other obligor on the Notes shall
be disregarded and deemed not to be outstanding for the purpose of any such
determination;

                                       45
<PAGE>

PROVIDED that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, consent, waiver or other action only
Notes which a Responsible Officer knows are so owned shall be so disregarded.
Notes so owned which have been pledged in good faith may be regarded as
outstanding for the purposes of this Section 9.4 if the pledgee shall establish
to the satisfaction of the Trustee the pledgee's right to vote such Notes and
that the pledgee is not the Company, any other obligor on the Notes or a person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any such other obligor. In the case of a
dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee. Upon request of the Trustee,
the Company shall furnish to the Trustee promptly an Officers' Certificate
listing and identifying all Notes, if any, known by the Company to be owned or
held by or for the account of any of the above described persons; and, subject
to Section 8.1, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Notes not listed therein are outstanding for the purpose of any
such determination.

         Section 9.5. REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note which is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 9.2, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Note and of any Notes issued in exchange or substitution
therefor, irrespective of whether any notation in regard thereto is made upon
such Note or any Note issued in exchange or substitution therefor.

                                   ARTICLE 10.

                              NOTEHOLDERS' MEETINGS

         Section 10.1. PURPOSE OF MEETINGS. A meeting of Noteholders may be
called at any time and from time to time pursuant to the provisions of this
Article 10 for any of the following purposes:

                  (a) to give any notice to the Company or to the Trustee or to
         give any directions to the Trustee permitted under this Indenture, or
         to consent to the waiving of any default or Event of Default hereunder
         and its consequences, or to take any other action authorized to be
         taken by Noteholders pursuant to any of the provisions of Article 7;

                  (b) to remove the Trustee and nominate a successor trustee
         pursuant to the provisions of Article 8;

                                       46
<PAGE>

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

                  (d) to take any other action authorized to be taken by or on
         behalf of the holders of any specified aggregate principal amount of
         the Notes under any other provision of this Indenture or under
         applicable law; or

                  (e) to take any other action authorized by this Indenture or
         under applicable law.

         Section 10.2. CALL OF MEETINGS BY TRUSTEE. The Trustee may at any time
call a meeting of Noteholders to take any action specified in Section 10.1, to
be held at such time and at such place in the Borough of Manhattan, The City of
New York, as the Trustee shall determine. Notice of every meeting of the
Noteholders, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting and the establishment of
any record date pursuant to Section 9.1, shall be mailed to holders of Notes at
their addresses as they shall appear on the Note register. Such notice shall
also be mailed to the Company. Such notices shall be mailed not less than twenty
(20) nor more than ninety (90) days prior to the date fixed for the meeting.

         Any meeting of Noteholders shall be valid without notice if the holders
of all Notes then outstanding are present in person or by proxy or if notice is
waived before or after the meeting by the holders of all Notes outstanding, and
if the Company and the Trustee are either present by duly authorized
representatives or have, before or after the meeting, waived notice.

         Section 10.3. QUORUM. The persons entitled to vote a majority in
principal amount of the outstanding Notes shall constitute a quorum. In the
absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of Noteholders of Notes,
be dissolved. In any other case, the meeting may be adjourned for a period of
not less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any such adjourned
meeting, such adjourned meeting may be further adjourned for a period not less
than 10 days as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting (subject to repeated applications of this
sentence). Notice of the reconvening of any adjourned meeting shall be given as
provided in Section 10.2 except that such notice need be given only once not
less than five days prior to the date on which the meeting is scheduled to be
reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage of the principal amount of the outstanding Notes which
shall constitute a quorum.

                  Subject to the foregoing, at the reconvening of any meeting
adjourned for a lack of a quorum, the Persons entitled to vote 25% in principal
amount of the outstanding Notes at the time shall constitute a quorum for the
taking of any action set forth in the notice of the original meeting.

                                       47
<PAGE>

                  At a meeting or an adjourned meeting duly reconvened and at
which a quorum is present as aforesaid, any resolution and all matters (except
as limited by the proviso to Section 11.2 and except to the extent Section 7.7
requires a different vote) shall be effectively passed and decided if passed or
decided by the lesser of (i) the holders of not less than a majority in
principal amount of outstanding Notes and (ii) the persons entitled to vote not
less than 66-2/3% in principal amount of outstanding Notes represented and
entitled to vote at such meeting.

                  Any resolution passed or decisions taken at any meeting of
holders of Notes duly held in accordance with this Section shall be binding on
all the holders of Notes whether or not present or represented at the meeting.
The Trustee shall, in the name and at the expense of the Company, notify all the
holders of Notes of any such resolutions or decisions.

         Section 10.4. CALL OF MEETINGS BY COMPANY OR NOTEHOLDERS. In case at
any time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least 10% in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of Noteholders,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within twenty (20) days after receipt of such request, then the Company
or such Noteholders may determine the time and the place for such meeting and
may call such meeting to take any action authorized in Section 10.1, by mailing
notice thereof as provided in Section 10.2.

         Section 10.5. QUALIFICATIONS FOR VOTING. To be entitled to vote at any
meeting of Noteholders a person shall (a) be a holder of one or more Notes on
the record date pertaining to such meeting or (b) be a person appointed by an
instrument in writing as proxy by a holder of one or more Notes. The only
persons who shall be entitled to be present or to speak at any meeting of
Noteholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.

         Section 10.6. REGULATIONS. Notwithstanding any other provisions of
this Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.

         The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the Company
or the Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote at the
meeting.

                                       48
<PAGE>

         Subject to the provisions of Section 9.4, at any meeting each
Noteholder or proxyholder shall be entitled to one vote for each $1,000
principal amount of Notes held or represented by him; PROVIDED, HOWEVER, that no
vote shall be cast or counted at any meeting in respect of any Note challenged
as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Notes held by him or instruments in writing as aforesaid duly
designating him as the proxy to vote on behalf of other Noteholders. Any meeting
of Noteholders duly called pursuant to the provisions of Section 10.2 or 10.3
may be adjourned from time to time by the holders of a majority of the aggregate
principal amount of Notes represented at the meeting, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.

         Section 10.7. VOTING. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballot on which shall be subscribed
the signatures of the holders of Notes or of their representatives by proxy and
the principal amount of the Notes held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Noteholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 10.2. The record shall show the principal amount of the Notes voting in
favor of or against any resolution. The record shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one of
the duplicates shall be delivered to the Company and the other to the Trustee to
be preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting.

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

         Section 10.8. NO DELAY OF RIGHTS BY MEETING. Nothing in this Article
10 contained shall be deemed or construed to authorize or permit, by reason of
any call of a meeting of Noteholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise of
any right or rights conferred upon or reserved to the Trustee or to the
Noteholders under any of the provisions of this Indenture or of the Notes.

                                       49
<PAGE>

                                   ARTICLE 11.

                             SUPPLEMENTAL INDENTURES

         Section 11.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
The Company, when authorized by the resolutions of the Board of Directors, and
the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:

         (a)      to make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 15.6;

         (b) subject to Article 4, to convey, transfer, assign, mortgage or
pledge to the Trustee as security for the Notes, any property or assets;

         (c) to evidence the succession of another corporation to the Company,
or successive successions, and the assumption by the successor corporation of
the covenants, agreements and obligations of the Company pursuant to Article 12;

         (d) to add to the covenants of the Company such further covenants,
restrictions or conditions for the benefit of the holders of Notes, and to make
the occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; PROVIDED, HOWEVER, that in
respect of any such additional covenant, restriction or condition such
supplemental indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default;

         (e) to provide for the issuance under this Indenture of Notes in coupon
form (including Notes registrable as to principal only) and to provide for
exchangeability of such Notes with the Notes issued hereunder in fully
registered form and to make all appropriate changes for such purpose;

         (f) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture which shall not materially adversely affect the
interests of the holders of the Notes;

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

                                       50
<PAGE>

         (h) to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to effect the qualifications of this Indenture
under the Trust Indenture Act, or under any similar federal statute hereafter
enacted.

          The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to, but may in its discretion, enter into any
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.

         Any supplemental indenture authorized by the provisions of this Section
11.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 11.2.

         Section 11.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS.
With the consent (evidenced as provided in Article 9) of the holders of not less
than a majority in aggregate principal amount of the Notes at the time
outstanding (determined in accordance with Section 9.4), the Company, when
authorized by the resolutions of the Board of Directors, and the Trustee may
from time to time and at any time enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or any
supplemental indenture or of modifying in any manner the rights of the holders
of the Notes; PROVIDED, HOWEVER, that no such supplemental indenture shall,
without the consent of the holders of all Notes then outstanding:

         (a)      extend the fixed maturity of any Note, or

         (b)      reduce the rate or extend the time of payment of interest on
any Note, or

         (c)      reduce the principal amount thereof or premium, if any, on any
Note, or

         (d)      reduce any amount payable on redemption or repurchase of any
Note, or

         (e) impair, or change in any respect adverse to the holder of Notes,
the obligation of the Company to repurchase any Note at the option of the holder
upon the happening of a Repurchase Event, or

         (f) impair or adversely affect the right of any Noteholder to institute
suit for the payment of his Note, or

         (g)      change the place where, or currency in which, the Notes are
payable, or

         (h) impair or change in any respect adverse to the Noteholders the
right to convert the Notes into Common Stock subject to the terms set forth
herein, including Section 15.6, or

                                       51
<PAGE>

         (i) modify the provisions of this Indenture with respect to the
subordination of the Notes in a manner adverse to the Noteholders, without the
consent of the holder of each Note so affected,

         (j) reduce the requirements of Section 10.3 for quorum or voting or the
percentage in principal amount of the outstanding Notes of any series, the
consent of whose holders is required for any such supplemental indenture, or the
consent of whose holder is required for any waiver with respect to such series
(or compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture, or

         (k) modify any of the provisions of this Section or Section 7.7, except
to increase the required percentage to effect such action or to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the holder of each outstanding Note affected thereby.

         Upon the request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence of the consent of Noteholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in is discretion, but shall not be obligated to, enter into
such supplemental indenture.

         It shall not be necessary for the consent of the Noteholders under this
Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.

         Section 11.3. EFFECT OF SUPPLEMENTAL INDENTURES. Any supplemental
indenture executed pursuant to the provisions of this Article 11 shall comply
with the Trust Indenture Act, as then in effect. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article 11, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitation of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Notes shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.

         Section 11.4. NOTATION ON NOTES. Notes authenticated and delivered
after the execution of any supplemental indenture pursuant to the provisions of
this Article 11 may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may, at the Company's expense, be
prepared and

                                       52
<PAGE>

executed by the Company, authenticated by the Trustee (or an authenticating
agent duly appointed by the Trustee pursuant to Section 17.11) and delivered in
exchange for the Notes then outstanding, upon surrender of such Notes then
outstanding.

         Section 11.5. EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE
FURNISHED TRUSTEE. The Trustee, subject to the provisions of Sections 8.1 and
8.2, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article 11.

                                   ARTICLE 12.

                CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

         Section 12.1. COMPANY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. The
Company shall not, directly or indirectly, consolidate with or merge with or
into any other Person or sell, lease, convey or transfer all its properties and
assets substantially as an entirety, whether in a single transaction or a series
of related transactions, to any Person or group of affiliated Persons unless:

                  (a) either (i) in the case of a merger or consolidation that
does not involve a transfer of all or substantially all of the Company's
properties and assets, the Company is the surviving entity or (ii) in case the
Company shall consolidate with or merge into another Person or sell, lease,
convey or transfer all its properties and assets substantially as an entirety,
whether in a single transaction or a series of related transactions, to any
Person, the Person formed by such consolidation or into which the Company is
merged, or the Person which acquires by sale, 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, premium, if any, and interest on all of the Notes as
applicable, and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed and shall have
provided for the applicable conversion rights set forth in Section 15.6 and the
repurchase rights set forth in Article 15,

                  (b) immediately after giving effect to such transaction, no
Event of Default, and no event that after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing; and

                  (c) the Company has delivered to the Trustee an Officers
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, 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, together with any documents
required under Article 9.

                                       53
<PAGE>

         Section 12.2. SUCCESSOR CORPORATION TO BE SUBSTITUTED. In case of any
such consolidation, merger, sale, conveyance or lease in accordance with Section
12.1, and, where required in accordance with Section 12.1(a) upon the assumption
by the successor corporation, by supplemental indenture, executed and delivered
to the Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and premium, if any, and interest on all of the
Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party of the first part. Such
successor corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of the Company any or all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor corporation
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver,
or cause to be authenticated and delivered, any Notes which previously shall
have been signed and delivered by the officers of the Company to the Trustee for
authentication, and any Notes which such successor corporation thereafter shall
cause to be signed and delivered to the Trustee for that purpose. All the Notes
so issued shall in all respects have the same legal rank and benefit under this
Indenture as the Notes theretofore or thereafter issued in accordance with the
terms of this Indenture as though all of such Notes had been issued at the date
of the execution hereof. In the event of any such consolidation, merger, sale,
conveyance or lease, the person named as the "Company" in the first paragraph of
this Indenture or any successor which shall thereafter have become such in the
manner prescribed in this Article 12 may be dissolved, wound up and liquidated
at any time thereafter and such person shall be released from its liabilities as
obligor and maker of the Notes and from its obligations under this Indenture.

         In case of any such consolidation, merger, sale, conveyance or lease,
such changes in phraseology and form (but not in substance) may be made in the
Notes thereafter to be issued as may be appropriate.

         Section 12.3. OPINION OF COUNSEL TO BE GIVEN TRUSTEE. The Trustee,
subject to Sections 8.1 and 8.2, shall receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance or lease and any such assumption complies with the provisions
of this Article 12.

                                       54
<PAGE>

                                   ARTICLE 13.

                     SATISFACTION AND DISCHARGE OF INDENTURE

         Section 13.1. DISCHARGE OF INDENTURE. When (a) the Company shall
deliver to the Trustee for cancellation all Notes theretofore authenticated
(other than any Notes which have been destroyed, lost or stolen and in lieu of
or in substitution for which other Notes shall have been authenticated and
delivered) and not theretofore canceled, or (b) all the Notes not theretofore
canceled or delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption, and the Company shall
deposit with the Trustee, in trust, funds sufficient to pay at maturity or upon
redemption of all of the Notes (other than any Notes which shall have been
mutilated, destroyed, lost or stolen and in lieu of or in substitution for which
other Notes shall have been authenticated and delivered) not theretofore
canceled or delivered to the Trustee for cancellation, including principal and
premium, if any, and interest due or to become due to such date of maturity or
redemption date, as the case may be, and if in either case the Company shall
also pay or cause to be paid all other sums payable hereunder by the Company,
then this Indenture shall cease to be of further effect (except as to (i)
remaining rights of registration of transfer, substitution and exchange and
conversion of Notes, (ii) rights hereunder of Noteholders to receive payments of
principal of and premium, if any, and interest on, the Notes and the other
rights, duties and obligations of Noteholders, as beneficiaries hereof with
respect to the amounts, if any, so deposited with the Trustee and (iii) the
rights, obligations and immunities of the Trustee hereunder), and the Trustee,
on demand of the Company accompanied by an Officers' Certificate and an Opinion
of Counsel as required by Section 17.5 and at the cost and expense of the
Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture; the Company, however, hereby agreeing to reimburse
the Trustee for any costs or expenses thereafter reasonably and properly
incurred by the Trustee and to compensate the Trustee for any services
thereafter reasonably and properly rendered by the Trustee in connection with
this Indenture or the Notes.

         Section 13.2. DEPOSITED MONIES TO BE HELD IN TRUST BY TRUSTEE. Subject
to Section 13.4, all monies deposited with the Trustee pursuant to Section 13.1
shall be held in trust and applied by it to the payment, notwithstanding the
provisions of Article 4, either directly or through any paying agent (including
the Company if acting as its own paying agent), to the holders of the particular
Notes for the payment or redemption of which such monies have been deposited
with the Trustee, of all sums due and to become due thereon for principal and
interest and premium, if any.

         Section 13.3. PAYING AGENT TO REPAY MONIES HELD. Upon the satisfaction
and discharge of this Indenture, all monies then held by any paying agent of the
Notes (other than the Trustee) shall, upon demand of the Company, be repaid to
it or paid to the Trustee, and thereupon such paying agent shall be released
from all further liability with respect to such monies.

                                       55
<PAGE>

         Section 13.4. RETURN OF UNCLAIMED MONIES. Subject to the requirements
of applicable law, any monies deposited with or paid to the Trustee for payment
of the principal of, premium, if any, or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after the date upon
which the principal of, premium, if any, or interest on such Notes, as the case
may be, shall have become due and payable, shall be repaid to the Company by the
Trustee on demand and all liability of the Trustee shall thereupon cease with
respect to such monies; and the holder of any of the Notes shall thereafter look
only to the Company for any payment which such holder may be entitled to collect
unless an applicable abandoned property law designates another person.

         Section 13.5. REINSTATEMENT. If (i) the Trustee or the paying agent is
unable to apply any money in accordance with Section 13.2 by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application and (ii) the holders of at least a
majority in principal amount of the then outstanding Notes so request by written
notice to the Trustee, the Company's obligations under this Indenture and the
Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Section 13.1 until such time as the Trustee or the paying agent is permitted
to apply all such money in accordance with Section 13.2; PROVIDED, HOWEVER, that
if the Company makes any payment of interest on or principal of any Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the holders of such Notes to receive such payment from the
money held by the Trustee or paying agent.

                                   ARTICLE 14.

         IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

         Section 14.1. INDENTURE AND NOTES SOLELY CORPORATE OBLIGATIONS. No
recourse for the payment of the principal of or premium, if any, or interest on
any Note, 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 Note, 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 Notes.

                                       56
<PAGE>

                                   ARTICLE 15.

                               CONVERSION OF NOTES

         Section 15.1. RIGHT TO CONVERT. Subject to and upon compliance with
the provisions of this Indenture, the holder of any Note shall have the right,
at his option, at any time following the date of original issuance of the Notes
and prior to the close of business on March 15, 2005 (except that, with
respect to any Note or portion of a Note which shall be called for redemption,
such right shall terminate, except as provided in the fifth paragraph of Section
15.2 and Section 3.4, at the close of business on the Business Day next
preceding the date fixed for redemption or repurchase of such Note or portion of
a Note unless the Company shall default in payment due upon redemption or
repurchase, as applicable, thereof) to convert the principal amount of any such
Note, or any portion of such principal amount which is $1,000 or an integral
multiple thereof, into that number of fully paid and non-assessable shares of
Common Stock (as such shares shall then be constituted) obtained by dividing the
principal amount of the Note or portion thereof surrendered for conversion by
the Conversion Price in effect at such time, by surrender of the Note so to be
converted in whole or in part in the manner provided in Section 15.2. A holder
of Notes is not entitled to any rights of a holder of Common Stock until such
holder has converted his Notes to Common Stock, and only to the extent such
Notes are deemed to have been converted to Common Stock under this Article 15. A
Note with respect to which a holder has delivered a notice in accordance with
Section 16.2 regarding such holder's election to require the Company to
repurchase such holder's Notes following the occurrence of a Repurchase Event
may be converted in accordance with this Article 15 only if such holder
withdraws such notice by delivering a written notice of withdrawal to the
Company prior to the close of business on last Business Day prior to the day
fixed for repurchase.

         Section 15.2. EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON
STOCK ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS. In order to
exercise the conversion privilege with respect to any Note in definitive form,
the holder of any such Note to be converted in whole or in part shall surrender
such Note, duly endorsed, at an office or agency maintained by the Company
pursuant to Section 5.2, accompanied by the funds, if any, required by the
penultimate paragraph of this Section 15.2, and shall give written notice of
conversion in the form provided on the Notes (or such other notice which is
acceptable to the Company) to the office or agency that the holder elects to
convert such Note or such portion thereof specified in said notice. Such notice
shall also state 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, and shall be accompanied by transfer taxes, if
required pursuant to Section 15.7. Each such Note surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as the registration of such Note, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or his duly authorized attorney.

                                       57
<PAGE>

         In order to exercise the conversion privilege with respect to any
interest in the Global Note, the beneficial holder must complete the appropriate
instruction form for conversion pursuant to the Depositary's book-entry
conversion program, deliver by book-entry delivery an interest in the Global
Note, furnish appropriate endorsements and transfer documents if required by the
Company or the Trustee or conversion agent, and pay the funds, if any, required
by the penultimate paragraph of this Section 15.2 and any transfer taxes, if
required pursuant to Section 15.7.

         As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Noteholder (as if such transfer were a transfer of the Note or Notes
(or portion thereof) so converted), the Company shall issue and shall deliver to
such holder at the office or agency maintained by the Company for such purpose
pursuant to Section 5.2, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such Note or portion
thereof in accordance with the provisions of this Article and a check or cash in
respect of any fractional interest in respect of a share of Common Stock arising
upon such conversion, as provided in Section 15.3 (which payment, if any, shall
be paid no later than five Business Days after satisfaction of the requirements
for conversion set forth above). In case any Note of a denomination greater than
$1,000 shall be surrendered for partial conversion, and subject to Section 2.3,
the Company shall execute and the Trustee shall authenticate and deliver to the
holder of the Note so surrendered, without charge to him, a new Note or Notes in
authorized denominations in an aggregate principal amount equal to the
unconverted portion of the surrendered Note.

         Each conversion shall be deemed to have been effected as to any such
Note (or portion thereof) on the date on which the requirements set forth above
in this Section 15.2 have been satisfied as to such Note (or portion thereof),
and the person in whose name any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become on said date the holder of record of the shares represented thereby;
PROVIDED, HOWEVER, that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the person in whose name
the certificates are to be issued as the record holder thereof for all purposes
on the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such Note shall be surrendered.

         Any Note or portion thereof surrendered for conversion during the
period from the close of business on the record date for any interest payment
date through the opening of business on the Business Day next preceding such
interest payment date shall (unless such Note or portion thereof being converted
shall have been called for redemption pursuant to a redemption notice mailed to
the Noteholders in accordance with Section 3.2 or eligible for repurchase
pursuant to a Company Notice mailed to the Noteholders in accordance with
Section 16.2) be accompanied by payment, in New York Clearing House funds or
other funds acceptable to the Company, of an amount equal to the interest
otherwise payable on such interest payment date on the principal amount being
converted; PROVIDED, HOWEVER, that no such payment need be made if there shall

                                       58
<PAGE>

exist at the time of conversion a default in the payment of interest on the
Notes. Except as provided above in this Section 15.2, no adjustment shall be
made for interest accrued on any Note converted or for dividends on any shares
issued upon the conversion of such Note as provided in this Article.

         Upon the conversion of an interest in the Global Note, the Trustee, or
the Custodian at the direction of the Trustee, shall make a notation on the
Global Note as to the reduction in the principal amount represented thereby.

         Section 15.3. CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES. No
fractional shares of Common Stock or scrip representing fractional shares shall
be issued upon conversion of Notes. If more than one Note shall be surrendered
for conversion at one time by the same holder, the number of full shares which
shall be issuable upon conversion shall be computed on the basis of the
aggregate principal amount of the Notes (or specified portions thereof to the
extent permitted hereby) so surrendered for conversion. If any fractional share
of stock otherwise would be issuable upon the conversion of any Note or Notes,
the Company shall make an adjustment therefor in cash at the current market
value thereof to the holder of Notes. The current market value of a share of
Common Stock shall be the Closing Price on the first Trading Day immediately
preceding the day on which the Notes (or specified portions thereof) are deemed
to have been converted and such Closing Price shall be determined as provided in
Section 15.5(h).

         Section 15.4. CONVERSION PRICE. The conversion price shall be as
specified in the form of Note (herein called the "Conversion Price") attached as
Exhibit A hereto, subject to adjustment as provided in this Article 15.

         Section 15.5. ADJUSTMENT OF CONVERSION PRICE.  The Conversion Price
shall be adjusted from time to time by the Company as follows:

         (a) In case the Company shall hereafter pay a dividend or make a
distribution on any class of capital stock of the Company payable in shares of
Common Stock, the Conversion Price in effect at the opening of business on the
date following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the Record Date
(as defined in Section 15.5(h)) fixed for such determination and the denominator
shall be the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following the
Record Date. If any dividend or distribution of the type described in this
Section 15.5(a) is declared but not so paid or made, the Conversion Price shall
again be adjusted to the Conversion Price which would then be in effect if such
dividend or distribution had not been declared.

         (b) In case the Company shall issue rights, options or warrants to all
holders of its outstanding shares of Common Stock (other than any rights,
options or warrants that by their

                                       59
<PAGE>

terms will also be issued to any Noteholder upon conversion of a Note into
Common Stock without any action required by the Company or any other person)
entitling them to subscribe for or purchase shares of Common Stock at a price
per share less than the Current Market Price (as defined in Section 15.5(h)) on
the Record Date fixed for the determination of stockholders entitled to receive
such rights, options or warrants, the Conversion Price shall be adjusted so that
the same shall equal the price determined by multiplying the Conversion Price in
effect at the opening of business on the date after such Record Date by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the Record Date plus the number of
shares which the aggregate offering price of the total number of shares so
offered for subscription or purchase would purchase at such Current Market
Price, and of which the denominator shall be the number of shares of Common
Stock outstanding on the close of business on the Record Date plus the total
number of additional shares of Common Stock so offered for subscription or
purchase. Such adjustment shall become effective immediately after the opening
of business on the day following the Record Date fixed for determination of
stockholders entitled to receive such rights or warrants. To the extent that
shares of Common Stock are not delivered pursuant to such rights, options or
warrants, upon the expiration or termination of such rights or warrants the
Conversion Price shall be readjusted to the Conversion Price which would then be
in effect had the adjustments made upon the issuance of such rights or warrants
been made on the basis of delivery of only the number of shares of Common Stock
actually delivered. In the event that such rights or warrants are not so issued,
the Conversion Price shall again be adjusted to be the Conversion Price which
would then be in effect if such date fixed for the determination of stockholders
entitled to receive such rights or warrants had not been fixed. In determining
whether any rights or warrants entitle the holders to subscribe for or purchase
shares of Common Stock at less than such Current Market Price, and in
determining the aggregate offering price of such shares of Common Stock, there
shall be taken into account any consideration received for such rights or
warrants, the value of such consideration, if other than cash, to be determined
by the Board of Directors.

         Not in limitation of the foregoing, in the event that the Company
implements a stockholder rights plan, such rights plan shall provide that upon
conversion of the Notes the holders will receive, in addition to the Common
Stock issuable upon such conversion, the rights issued under such rights plan
(notwithstanding the occurrence of an event causing such rights to separate from
the Common Stock at or prior to the time of conversion). Any distribution of
rights, options or warrants pursuant to a stockholder rights plan complying with
the requirements set forth in the immediately preceding sentence of this
paragraph shall not constitute a distribution of rights, options or warrants for
the purposes of this Section 15.5(d).

         Rights, options or warrants distributed by the Company to all holders
of Common Stock entitling the holders thereof to subscribe for or purchase
shares of the Company's capital stock (either initially or under certain
circumstances), which rights, options or warrants, until the occurrence of a
specified event or events ("Trigger Event"): (i) are deemed to be transferred
with such shares of Common Stock; (ii) are not exercisable; and (iii) are also
issued in respect of future issuances of Common Stock, shall be deemed not to
have been distributed for purposes of this Section 15.5(b) (and no adjustment to
the Conversion Price under this Section 15.5(b) will

                                       60
<PAGE>

be required) until the occurrence of the earliest Trigger Event. If such right,
option or warrant is subject to subsequent events, upon the occurrence of which
such right or warrant shall become exercisable to purchase different securities,
evidences of indebtedness or other assets or entitle the holder to purchase a
different number or amount of the foregoing or to purchase any of the foregoing
at a different purchase price, then the occurrence of each such event shall be
deemed to be the date of issuance and record date with respect to a new right,
option or warrant (and a termination or expiration of the existing right, option
or warrant without exercise by the holder thereof). In addition, in the event of
any distribution (or deemed distribution) of rights, options or warrants, or any
Trigger Event or other event (of the type described in the preceding sentence)
with respect thereto, that resulted in an adjustment to the Conversion Price
under this Section 15.5(b), (1) in the case of any such rights, options or
warrants which shall all have been redeemed or repurchased without exercise by
any holders thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger Event,
as the case may be, as though it were a cash distribution, equal to the per
share redemption or repurchase price received by a holder of Common Stock with
respect to such rights or warrants (assuming such holder had retained such
rights, options or warrants), made to all holders of Common Stock as of the date
of such redemption or repurchase, and (2) in the case of such rights, options or
warrants all of which shall have expired or been terminated without exercise,
the Conversion Price shall be readjusted as if such rights and warrants had
never been issued.

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

         (d) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock shares of any class of capital stock of the
Company (other than any dividends or distributions to which Section 15.5(a)
applies) or evidences of its indebtedness, cash or other assets (including
securities, but excluding (1) any rights, options or warrants referred to in
Section 15.5(b) and, (2) dividends and distributions exclusively in cash (the
foregoing hereinafter in this Section 15.5(d) called the "Securities")), unless
the Company elects to reserve such Securities for distribution to the
Noteholders upon conversion of the Notes so that any such holder converting
Notes will receive upon such conversion, without any additional action on the
part of the Company or the Noteholder and in addition to the shares of Common
Stock to which such holder is entitled, the amount and kind of such Securities
which such holder would have received if such holder had converted its Notes
into Common Stock immediately prior to the Record Date (as defined in Section
15.5(h) for such distribution of the Securities) then, in each such case, the
Conversion Price shall be reduced so that the same shall be equal to the price

                                       61
<PAGE>

determined by multiplying the Conversion Price in effect immediately prior to
the close of business on the Record Date (as defined in Section 15.5(h)) with
respect to such distribution by a fraction of which the numerator shall be the
Current Market Price (determined as provided in Section 15.5(h)) on such date
less the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) on such
date of the portion of the Securities so distributed applicable to one share of
Common Stock and the denominator shall be such Current Market Price, such
reduction to become effective immediately prior to the opening of business on
the day following the Record Date; PROVIDED, HOWEVER, that in the event the then
fair market value (as so determined) of the portion of the Securities so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price on the Record Date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Noteholder shall have
the right to receive upon conversion of a Note (or any portion thereof) the
amount of Securities such holder would have received had such holder converted
such Note (or portion thereof) immediately prior to such Record Date. In the
event that such dividend or distribution is not so paid or made, the Conversion
Price shall again be adjusted to be the Conversion Price which would then be in
effect if such dividend or distribution had not been declared. If the Board of
Directors determines the fair market value of any distribution for purposes of
this Section 15.5(d) by reference to the actual or when issued trading market
for any securities comprising all or part of such distribution, it must in doing
so consider the prices in such market over the same period (the "Reference
Period") used in computing the Current Market Price pursuant to Section 15.5(h)
to the extent possible, unless the Board of Directors in a board resolution
determines in good faith that determining the fair market value during the
Reference Period would not be in the best interest of the Noteholder.

         For purposes of this Section 15.5(d) and Sections 15.5(a) and (b), any
dividend or distribution to which this Section 15.5(d) is applicable that also
includes shares of Common Stock, or rights, options or warrants to subscribe for
or purchase shares of Common Stock to which Section 15.5(b) applies (or both),
shall be deemed instead to be (1) a dividend or distribution of the evidences of
indebtedness, assets, shares of capital stock, rights or warrants other than
such shares of Common Stock or rights or warrants to which Section 15.5(b)
applies (and any Conversion Price reduction required by this Section 15.5(d)
with respect to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such shares of Common Stock or
such rights or warrants (and any further Conversion Price reduction required by
Sections 15.5(a) and (b) with respect to such dividend or distribution shall
then be made, except (A) the Record Date of such dividend or distribution shall
be substituted as "the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution", "Record Date fixed for such
determination" and "Record Date" within the meaning of Section 15.5(a) and as
"the date fixed for the determination of stockholders entitled to receive such
rights or warrants", "the Record Date fixed for the determination of the
stockholders entitled to receive such rights or warrants" and "such Record Date"
within the meaning of Section 15.5(b) and (B) any shares of Common Stock
included in such dividend or distribution shall not be deemed "outstanding at
the close of business on the date fixed for such determination" within the
meaning of Section 15.5(a).

                                       62
<PAGE>

         (e) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding any cash that is distributed
upon a merger or consolidation to which Section 15.6 applies or as part of a
distribution referred to in Section 15.5(d)), in an aggregate amount that,
combined together with (1) the aggregate amount of any other such distributions
to all holders of its Common Stock made exclusively in cash within the twelve
(12) months preceding the date of payment of such distribution, and in respect
of which no adjustment pursuant to this Section 15.5(e) has been made, and (2)
the aggregate of any cash plus the fair market value (as determined by the Board
of Directors, whose determination shall be conclusive and described in a Board
Resolution) of consideration payable in respect of any tender offer by the
Company or any of its subsidiaries for all or any portion of the Common Stock
concluded within the twelve (12) months preceding the date of payment of such
distribution, and in respect of which no adjustment pursuant to Section 15.5(f)
has been made, exceeds 10% of the product of the Current Market Price
(determined as provided in Section 15.5(h)) on the Record Date with respect to
such distribution times the number of shares of Common Stock outstanding on such
date, then, and in each such case, immediately after the close of business on
such date, the Conversion Price shall be reduced so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the close of business on such Record Date by a fraction (i) the
numerator of which shall be equal to the Current Market Price on the Record Date
less an amount equal to the quotient of (x) the excess of such combined amount
over such 10% and (y) the number of shares of Common Stock outstanding on the
Record Date and (ii) the denominator of which shall be equal to the Current
Market Price on such date; PROVIDED, HOWEVER, that in the event the portion of
the cash so distributed applicable to one share of Common Stock is equal to or
greater than the Current Market Price of the Common Stock on the Record Date, in
lieu of the foregoing adjustment, adequate provision shall be made so that each
Noteholder shall have the right to receive upon conversion of a Note (or any
portion thereof) the amount of cash such holder would have received had such
holder converted such Note (or portion thereof) immediately prior to such Record
Date. In the event that such dividend or distribution is not so paid or made,
the Conversion Price shall again be adjusted to be the Conversion Price which
would then be in effect if such dividend or distribution had not been declared.
Any cash distribution to all holders of Common Stock as to which the Company
makes the election permitted by Section 15.5(n) and as to which the Company has
complied with the requirements of such Section shall be treated as not having
been made for all purposes of this Section 15.5(e)).

         (f) In case a tender offer made by the Company or any Subsidiary for
all or any portion of the Common Stock shall expire and such tender offer (as
amended upon the expiration thereof) shall require the payment to stockholders
(based on the acceptance (up to any maximum specified in the terms of the tender
offer) of Purchased Shares (as defined below)) of an aggregate consideration
having a fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) that
combined together with (1) the aggregate of the cash plus the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution), as of the expiration of such
tender offer, of consideration payable in respect of any other tender offers, by
the Company or any of its subsidiaries for all or any portion of the Common
Stock

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<PAGE>

expiring within the twelve (12) months preceding the expiration of such tender
offer and in respect of which no adjustment pursuant to this Section 15.5(f) has
been made and (2) the aggregate amount of any distributions to all holders of
the Company's Common Stock made exclusively in cash within twelve (12) months
preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to Section 15.5(e) has been made, exceeds 10% of the product
of the Current Market Price (determined as provided in Section 15.5(h)) as of
the last time (the "Expiration Time") tenders could have been made pursuant to
such tender offer (as it may be amended) times the number of shares of Common
Stock outstanding (including any tendered shares) on the Expiration Time, then,
and in each such case, immediately prior to the opening of business on the day
after the date of the Expiration Time, the Conversion Price shall be adjusted so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to close of business on the date of the
Expiration Time by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding (including any tendered shares) on the
Expiration Time multiplied by the Current Market Price of the Common Stock on
the Trading Day next succeeding the Expiration Time and the denominator shall be
the sum of (x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender offer) of all shares validly tendered and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) on the Expiration Time and the Current Market Price of the Common Stock
on the Trading Day next succeeding the Expiration Time, such reduction (if any)
to become effective immediately prior to the opening of business on the day
following the Expiration Time. In the event that the Company is obligated to
purchase shares pursuant to any such tender offer, but the Company is
permanently prevented by applicable law from effecting any such purchases or all
such purchases are rescinded, the Conversion Price shall again be adjusted to be
the Conversion Price which would then be in effect if such tender offer had not
been made. If the application of this Section 15.5(f) to any tender offer would
result in an increase in the Conversion Price, no adjustment shall be made for
such tender offer under this Section 15.5(f). Any cash distribution to all
holders of Common Stock as to which the Company has made the election permitted
by Section 15.5(n) and as to which the Company has complied with the
requirements of such Section shall be treated as not having been made for all
purposes of this Section 15.5(f).

         (g) In case of a tender or exchange offer made by a person other than
the Company or any Subsidiary for an amount which increases the offeror's
ownership of Common Stock to more than 25% of the Common Stock outstanding and
shall involve the payment by such person of consideration per share of Common
Stock having a fair market value (as determined by the Board of Directors),
whose determination shall be conclusive, and described in a resolution of the
Board of Directors at the last time (the "Expiration Time") tenders or exchanges
may be made pursuant to such tender or exchange offer (as it shall have been
amended) that exceeds the Current Market Price of the Common Stock on the
Trading Day next succeeding the Expiration Time, and in which, as of the
Expiration Time the Board of Directors is not recommending rejection of the
offer, the Conversion Price shall be reduced so that the same shall equal the
price

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<PAGE>

determined by multiplying the Conversion Price in effect immediately prior to
the Expiration Time by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding (including any tendered or exchanged shares)
on the Expiration Time multiplied by the current Market Price of the Common
Stock on the Trading Day next succeeding the Expiration Time and the denominator
shall be the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Expiration Time
(the shares deemed so accepted, up to any such maximum, being referred to as the
"Purchased Shares") and (y) the product of the number of shares of Common Stock
outstanding (less any Purchased Shares) on the Expiration Time and the Current
Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time, such reduction to become effective immediately prior to the
opening of business on the day following the Expiration Time. In the event that
such person is obligated to purchase shares pursuant to any such tender or
exchange offer, but such person is permanently prevented by applicable law from
effecting any such purchases or all such purchases are rescinded, the Conversion
Price shall again be adjusted to be the Conversion Price which would then be in
effect if such tender or exchange offer had not been made. Notwithstanding the
foregoing, the adjustment described in this Section 15.5(g) shall not be made
if, as of the Expiration Time, the offering documents with respect to such offer
disclose a plan or intention to cause the Company to engage in any transaction
described in Article 12.

         (h) For purposes of this Section 15.5, the following terms shall have
the meaning indicated:

                                    (1) "Closing Price" with respect to any
                  securities on any day shall mean the closing sale price
                  regular way on such day or, in case no such sale takes place
                  on such day, the average of the reported closing bid and asked
                  prices, regular way, in each case on the Nasdaq National
                  Market or New York Stock Exchange, as applicable, or, if such
                  security is not listed or admitted to trading on such National
                  Market or Exchange, on the principal national security
                  exchange or quotation system on which such security is quoted
                  or listed or admitted to trading, or, if not quoted or listed
                  or admitted to trading on any national securities exchange or
                  quotation system, the average of the closing bid and asked
                  prices of such security on the over-the-counter market on the
                  day in question as reported by the National Quotation Bureau
                  Incorporated, or a similar generally accepted reporting
                  service, or if not so available, in such manner as furnished
                  by any New York Stock Exchange member firm selected from time
                  to time by the Board of Directors for that purpose, or a price
                  determined in good faith by the Board of Directors, whose
                  determination shall be conclusive and described in a Board
                  Resolution.

                                    (2) "Current Market Price" shall mean the
                  average of the daily Closing Prices per share of Common Stock
                  for the ten (10) consecutive Trading Days immediately prior to
                  the date in question; PROVIDED, HOWEVER, that (1) if the

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<PAGE>

                  "ex" date (as hereinafter defined) for any event (other than
                  the issuance or distribution requiring such computation) that
                  requires an adjustment to the Conversion Price pursuant to
                  Section 15.5(a), (b), (c), (d), (e), (f) or (g) occurs during
                  such ten (10) consecutive Trading Days, the Closing Price for
                  each Trading Day prior to the "ex" date for such other event
                  shall be adjusted by multiplying such Closing Price by the
                  same fraction by which the Conversion Price is so required to
                  be adjusted as a result of such other event, (2) if the "ex"
                  date for any event (other than the issuance or distribution
                  requiring such computation) that requires an adjustment to the
                  Conversion Price pursuant to Section 15.5(a), (b), (c), (d),
                  (e), (f) or (g) occurs on or after the "ex" date for the
                  issuance or distribution requiring such computation and prior
                  to the day in question, the Closing Price for each Trading Day
                  on and after the "ex" date for such other event shall be
                  adjusted by multiplying such Closing Price by the reciprocal
                  of the fraction by which the Conversion Price is so required
                  to be adjusted as a result of such other event, and (3) if the
                  "ex" date for the issuance or distribution requiring such
                  computation is prior to the day in question, after taking into
                  account any adjustment required pursuant to clause (1) or (2)
                  of this proviso, the Closing Price for each Trading Day on or
                  after such "ex" date shall be adjusted by adding thereto the
                  amount of any cash and the fair market value (as determined by
                  the Board of Directors in a manner consistent with any
                  determination of such value for purposes of Section 15.5(d),
                  (f) or (g), whose determination shall be conclusive and
                  described in a Board Resolution) of the evidences of
                  indebtedness, shares of capital stock or assets being
                  distributed applicable to one share of Common Stock as of the
                  close of business on the day before such "ex" date. For
                  purposes of any computation under Sections 15.5(f) or (g), the
                  Current Market Price of the Common Stock on any date shall be
                  deemed to be the average of the daily Closing Prices per share
                  of Common Stock for such day and the next two succeeding
                  Trading Days; PROVIDED, HOWEVER, that if the "ex" date for any
                  event (other than the tender offer requiring such computation)
                  that requires an adjustment to the Conversion Price pursuant
                  to Section 15.5(a), (b), (c), (d), (e), (f) and (g) occurs on
                  or after the Expiration Time for the tender or exchange offer
                  requiring such computation and prior to the day in question,
                  the Closing Price for each Trading Day on and after the "ex"
                  date for such other event shall be adjusted by multiplying
                  such Closing Price by the reciprocal of the fraction by which
                  the Conversion Price is so required to be adjusted as a result
                  of such other event. For purposes of this paragraph, the term
                  "ex" date, (1) when used with respect to any issuance or
                  distribution, means the first date on which the Common Stock
                  trades regular way on the relevant exchange or in the relevant
                  market from which the Closing Price was obtained without the
                  right to receive such issuance or distribution, (2) when used
                  with respect to any subdivision or combination of shares of
                  Common Stock, means the first date on which the Common Stock
                  trades regular way on such exchange or in such market after
                  the time at which such subdivision or combination becomes
                  effective, and (3) when used with respect to any tender or
                  exchange offer means the first date on which

                                       66
<PAGE>

                  the Common Stock trades regular way on such exchange or in
                  such market after the Expiration Time of such offer.
                  Notwithstanding the foregoing, whenever successive adjustments
                  to the Conversion Price are called for pursuant to this
                  Section 15.5, such adjustments shall be made to the Current
                  Market Price as may be necessary or appropriate to effectuate
                  the intent of this Section 15.5 and to avoid unjust or
                  inequitable results as determined in good faith by the Board
                  of Directors.

                                    (3) "fair market value" shall mean the
                  amount which a willing buyer would pay a willing seller in an
                  arm's length transaction.

                                    (4) "Record Date" shall mean, with respect
                  to any dividend, distribution or other transaction or event in
                  which the holders of Common Stock have the right to receive
                  any cash, securities or other property or in which the Common
                  Stock (or other applicable security) is exchanged for or
                  converted into any combination of cash, securities or other
                  property, the date fixed for determination of stockholders
                  entitled to receive such cash, securities or other property
                  (whether such date is fixed by the Board of Directors or by
                  statute, contract or otherwise).

                                    (5) "Trading Day" shall mean (x) if the
                  applicable security is listed or admitted for trading on the
                  New York Stock Exchange or another national security exchange,
                  a day on which the New York Stock Exchange or another national
                  security exchange is open for business or (y) if the
                  applicable security is quoted on the Nasdaq National Market, a
                  day on which trades may be made thereon or (z) if the
                  applicable security is not so listed, admitted for trading or
                  quoted, any day other than a Saturday or Sunday or a day on
                  which banking institutions in the State of New York are
                  authorized or obligated by law or executive order to close.

          (i) The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 15.5(a), (b), (c), (d), (e), (f) and (g),
as the Board of Directors considers to be advisable to avoid or diminish any
income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.

         To the extent permitted by applicable law, the Company from time to
time may reduce the Conversion Price by any amount for any period of time if the
period is at least twenty (20) days, the reduction is irrevocable during the
period and the Board of Directors shall have made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive and described in a Board Resolution. Whenever the Conversion
Price is reduced pursuant to the preceding sentence, the Company shall mail to
the holder of each Note at his last address appearing on the Note register
provided for in Section 2.5 a notice of the reduction at least fifteen (15) days
prior to the date the reduced Conversion Price

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<PAGE>

takes effect, and such notice shall state the reduced Conversion Price and the
period during which it will be in effect.

         (j) No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
PROVIDED, HOWEVER, that any adjustments which by reason of this Section 15.5(j)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Article 15 shall be made
by the Company and shall be made to the nearest cent or to the nearest one
hundredth of a share, as the case may be. No adjustment need be made for a
change in the par value or no par value of the Common Stock.

         (k) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Trustee and any conversion agent other than
the Trustee an Officers' Certificate setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment. Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Price
to the holder of each Note at his last address appearing on the Note register
provided for in Section 2.5, within twenty (20) days of the effective date of
such adjustment. Failure to deliver such notice shall not effect the legality or
validity of any such adjustment.

         (l) In any case in which this Section 15.5 provides that an adjustment
shall become effective immediately after a Record Date for an event, the Company
may defer until the occurrence of such event (i) issuing to the holder of any
Note converted after such Record Date and before the occurrence of such event
the additional shares of Common Stock issuable upon such conversion by reason of
the adjustment required by such event over and above the Common Stock issuable
upon such conversion before giving effect to such adjustment and (ii) paying to
such holder any amount in cash in lieu of any fraction pursuant to Section 15.3.

         (m) For purposes of this Section 15.5, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.

         (n) In lieu of making any adjustment to the Conversion Price pursuant
to Section 15.5(e), the Company may elect to reserve an amount of cash for
distribution to the holders of the Notes upon the conversion of the Notes so
that any such holder converting Notes will receive upon such conversion, in
addition to the shares of Common Stock and other items to which such holder is
entitled, the full amount of cash which such holder would have received if such
holder had, immediately prior to the Record Date for such distribution of cash,
converted its Notes into Common Stock, together with any interest accrued with
respect to such amount, in accordance with this Section 15.5(n). The Company may
make such election by providing an

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<PAGE>

Officers' Certificate to the Trustee to such effect on or prior to the payment
date for any such distribution and depositing with the Trustee on or prior to
such date an amount of cash equal to the aggregate amount the holders of the
Notes would have received if such holders had, immediately prior to the Record
Date for such distribution, converted all of the Notes into Common Stock. Any
such funds so deposited by the Company with the Trustee shall be invested by the
Trustee in marketable obligations issued or fully guaranteed by the United
States government with a maturity not more than three (3) months from the date
of issuance. Upon conversion of Notes by a holder, the holder will be entitled
to receive, in addition to the Common Stock issuable upon conversion, an amount
of cash equal to the amount such holder would have received if such holder had,
immediately prior to the Record Date for such distribution, converted its Note
into Common Stock, along with such holder's pro rata share of any accrued
interest earned as a consequence of the investment of such funds. Promptly after
making an election pursuant to this Section 15.5(n), the Company shall give or
shall cause to be given notice to all Noteholders of such election, which notice
shall state the amount of cash per $1,000 principal amount of Notes such holders
shall be entitled to receive (excluding interest) upon conversion of the Notes
as a consequence of the Company having made such election.

         Section 15.6. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. If any of the following events occur, namely (i) any reclassification or
change of the outstanding shares of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such Common Stock,
or (iii) any sale or conveyance of the properties and assets of the Company as,
or substantially as, an entirety to any other corporation as a result of which
holders of Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, then the Company or the successor or purchasing corporation, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the Trust Indenture Act as in force at the date of execution
of such supplemental indenture if such supplemental indenture is then required
to so comply) providing that such Note shall be convertible into the kind and
amount of shares of stock and other securities or property or assets (including
cash) receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of such Notes (assuming, for such purposes, a
sufficient number of authorized shares of Common Stock available to convert all
such Notes) immediately prior to such reclassification, change, consolidation,
merger, combination, sale or conveyance assuming such holder of Common Stock did
not exercise his rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
statutory exchange, sale or conveyance (provided that, if the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
statutory exchange, sale or conveyance is not the same for each share of Common
Stock in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purposes of this Section 15.6 the kind and
amount of securities, cash or other property receivable upon such consolidation,

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<PAGE>

merger, statutory exchange, sale or conveyance for 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 shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article. If, in the case of any such
reclassification, change, consolidation, merger, combination, sale or
conveyance, the stock or other securities and assets receivable thereupon by a
holder of shares of Common Stock include shares of stock or other securities and
assets of a corporation other than the successor or purchasing corporation, as
the case may be, in such reclassification, change, consolidation, merger,
combination, sale or conveyance, then such supplemental indenture shall also be
executed by such other corporation and shall contain such additional provisions
to protect the interests of the holders of the Notes as the Board of Directors
shall reasonably consider necessary by reason of the foregoing, including to the
extent practicable the provisions providing for the repurchase rights set forth
in Article 16 herein.

         The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at his address appearing on the
Note register provided for in Section 2.5 of this Indenture, within twenty (20)
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of such supplemental indenture.

         The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.

         If this Section 15.6 applies to any event or occurrence, Section 15.5
shall not apply.

         Section 15.7. TAXES ON SHARES ISSUED. The issue of stock certificates
on conversions of Notes shall be made without charge to the converting
Noteholder for any tax in respect of the issue thereof. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of stock in any name other than that
of the holder of any Note converted, and the Company shall not be required to
issue or deliver any such stock certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.

         Section 15.8. RESERVATION OF SHARES; SHARES TO BE FULLY PAID; LISTING
OF COMMON STOCK. The Company shall provide, free from preemptive rights, out of
its authorized but unissued shares or shares held in treasury, sufficient shares
to provide for the conversion of the Notes from time to time as such Notes are
presented for conversion.

         Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.

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<PAGE>

         The Company covenants that all shares of Common Stock issued upon
conversion of Notes will be fully paid and non-assessable by the Company and
free from all taxes, liens and charges with respect to the issue thereof.

         The Company further covenants that if at any time the Common Stock
shall be listed on the Nasdaq National Market or any other national securities
exchange or automated quotation system the Company will, if permitted by the
rules of such exchange or automated quotation system, list and keep listed, so
long as the Common Stock shall be so listed on such exchange or automated
quotation system, all Common Stock issuable upon conversion of the Notes.

         Section 15.9. RESPONSIBILITY OF TRUSTEE. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same. The Trustee and any other conversion agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, which may at any time
be issued or delivered upon the conversion of any Note; and the Trustee and any
other conversion agent make no representations with respect thereto. Subject to
the provisions of Section 8.1, neither the Trustee nor any conversion agent
shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property or cash upon the surrender of any note for the purpose of conversion or
to comply with any of the duties, responsibilities or covenants of the Company
contained in this Article. Without limiting the generality of the foregoing,
neither the Trustee nor any conversion agent shall be under any responsibility
to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 15.6 relating either to the kind or
amount of shares of stock or securities or property (including cash) receivable
by Noteholders upon the conversion of their Notes after any event referred to in
such Section 15.6 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 8.1, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.

         Section 15.10. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS.  In case:

         (a) the Company shall declare a dividend (or any other distribution) on
its Common Stock (that would require an adjustment in the Conversion Price
pursuant to Section 15.5); or

         (b) the Company shall authorize the granting to the holders of its
Common Stock of rights or warrants to subscribe for or purchase any share of any
class or any other rights or warrants; or

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<PAGE>

         (c) of any reclassification of the Common Stock of the Company (other
than a subdivision or combination of its outstanding Common Stock, or a change
in par value, or from par value to no par value, or from no par value to par
value), or of any consolidation or merger to which the Company is a party and
for which approval of any shareholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company; or

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

the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register, provided for in
Section 2.5 of this Indenture, as promptly as possible but in any event at least
fifteen days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights 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 or rights are to be determined, or (y) the date
on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective or occur,
and the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.

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                                   ARTICLE 16.

                       REPURCHASE UPON A REPURCHASE EVENT

         Section 16.1. REPURCHASE RIGHT.

         (a) If, at any time prior to March 15, 2005 there shall occur a
Repurchase Event, then each Noteholder shall have the right, at such holder's
option, to require the Company to repurchase all of such holder's Notes, or
any portion thereof (in principal amounts of $1,000 or integral multiples
thereof), on the date (the "repurchase date") that is forty (40) calendar
days after the date of the Company Notice (as defined in Section 16.2 below)
of such Repurchase Event (or, if such 40th day is not a Business Day, the
next succeeding Business Day). Such repurchase shall be made in cash at a
price equal to 105% of the principal amount of Notes such holder elects to
require the Company to repurchase, together with accrued interest, if any, to
the repurchase date (the "Repurchase Price") (or, at the option of the
Company, by delivery of Common Stock in accordance with the provisions of
Section 16.3); PROVIDED, HOWEVER, that if such repurchase date is March 15 or
September 15 then the interest payable on such date shall be paid to the
holder of record of the Note on the next preceding March 1 or September 1,
respectively. No Notes may be redeemed at the option of holders upon a
Repurchase Event if there has occurred and is continuing an Event of Default,
other than a default in the payment of the Repurchase Price with respect to
such Notes on the repurchase date.

         Section 16.2. NOTICES; METHOD OF EXERCISING REPURCHASE RIGHT, ETC.

         (a) Unless the Company shall have theretofore called for redemption all
of the outstanding Notes, on or before the fifteenth (15th) calendar day after
the occurrence of a Repurchase Event, the Company or, at the written request of
the Company, the Trustee, shall mail to all holders of record of the Notes a
notice (the "Company Notice") in the form as prepared by the Company of the
occurrence of the Repurchase Event and of the repurchase right set forth herein
arising as a result thereof. The Company shall also deliver a copy of such
notice of a repurchase right to the Trustee and cause a copy of such notice of a
repurchase right, or a summary of the information contained therein, to be
published once in a newspaper of general circulation in The City of New York.
The Company Notice shall contain the following information:

                  (1) the repurchase date,

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

                  (3) the last date by which the election to require repurchase,
                      if submitted, must be revoked;

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<PAGE>

                  (4) the Repurchase Price and whether the Repurchase Price
                      shall be payable in cash or Common Stock and, if
                      payable in Common Stock, the method of calculating
                      the amount of the Common Stock to be delivered upon
                      the repurchase as provided in Section 16.3(a);

                  (5) a description of the procedure which a holder must follow
                      to exercise a repurchase right, and

                  (6) the Conversion Price then in effect, the date on
                      which the right to convert the principal amount of
                      the Notes to be repurchased will terminate and the
                      place or places where Notes may be surrendered for
                      conversion.

                  No failure of the Company to give the foregoing notices or
         defect therein shall limit any holder's right to exercise a repurchase
         right or affect the validity of the proceedings for the repurchase of
         Notes.

                  If any of the foregoing provisions are inconsistent with
applicable law, such law shall govern.

         (b) To exercise a repurchase right, a holder shall deliver to the
Trustee on or before the thirty-fifth (35th) day after the Company Notice was
delivered (i) written notice to the Company (or agent designated by the Company
for such purpose) of the holder's exercise of such right, which notice shall set
forth the name of the holder, the principal amount of the Notes to be
repurchased, a statement that an election to exercise the repurchase right is
being made thereby, and, in the event that the Repurchase Price shall be paid in
shares of Common Stock, the name or names (with addresses) in which the
certificate or certificates for shares of Common Stock shall be issued, and (ii)
the Notes with respect to which the repurchase right is being exercised, duly
endorsed for transfer to the Company. Election of repurchase by a holder shall
be revocable at any time prior to, but excluding, the repurchase date, by
delivering written notice to that effect to the Trustee prior to the close of
business on the Business Day prior to the repurchase date.

         (c) If the Company fails to repurchase on the repurchase date any Notes
(or portions thereof) as to which the repurchase right has been properly
exercised, then the principal of such Notes shall, until paid, bear interest to
the extent permitted by applicable law from the repurchase date at the rate
borne by the Note and each such Note shall be convertible into Common Stock in
accordance with this Indenture (without giving effect to Section 16.2(b)) until
the principal of such Note shall have been paid or duly provided for.

         (d) Any Note which is to be repurchased only in part shall be
surrendered to the Trustee duly endorsed for transfer to the Company and
accompanied by appropriate evidence of genuineness and authority satisfactory to
the Company and the Trustee duly executed by, the holder thereof (or his
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the holder of such Note without
service charge, a new Note or Notes, containing identical terms and conditions,
of any authorized denomination as

                                       74
<PAGE>

requested by such holder in aggregate principal amount equal to and in exchange
for the unrepurchased portion of the principal of the Note so surrendered.

         (e) On or prior to the repurchase date, the Company shall deposit with
the Trustee or with a paying agent (or, if the Company is acting as its own
paying agent, segregate and hold in trust as provided in Section 5.4) the
Repurchase Price in cash for payment to the holder on the repurchase date;
PROVIDED that if payment is to be made in cash, such cash payment is made on the
repurchase date it must be received by the Trustee or paying agent, as the case
may be, by 10:00 a.m., New York City time, on such date; PROVIDED FURTHER that
if the Repurchase Price is to be paid in shares of Common Stock, such shares of
Common Stock are to be paid as promptly after the repurchase date as
practicable.

         (f) Any issuance of shares of Common Stock in respect of the Repurchase
Price shall be deemed to have been effected immediately prior to the close of
business on the repurchase date and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such repurchase shall be deemed to have become on the repurchase date the
holder or holders of record of the shares represented thereby; provided,
however, that any surrender for repurchase on a date when the stock transfer
books of the Company shall be closed shall constitute the person or persons in
whose name or names the certificate or certificates for such shares are to be
issued as the record holder or holders thereof for all purposes at the opening
of business on the next succeeding day on which such stock transfer books are
open. No payment or adjustment shall be made for dividends or distributions on
any Common Stock issued upon repurchase of any Security declared prior to the
repurchase date.

         (g) No fractions of shares shall be issued upon repurchase of Notes. If
more than one Note shall be repurchased from the same holder and the Repurchase
Price shall be payable in shares of Common Stock, the number of full shares
which shall be issuable upon such repurchase shall be computed on the basis of
the aggregate principal amount of the Notes so repurchased. Instead of any
fractional share of Common Stock which would otherwise be issuable on the
repurchase of any Note or Notes, the Company will deliver to the applicable
holder its check for the current market value of such fractional share. The
current market value of a fraction of a share is determined by multiplying the
current market price of a full share by the fraction, and rounding the result to
the nearest cent. For purposes of this Section, the current market price of a
share of Common Stock is the Closing Price of the Common Stock on the Trading
Day immediately preceding the repurchase date.

         (h) Any issuance and delivery of certificates for shares of Common
Stock on repurchase of Notes shall be made without charge to the holder of Notes
being repurchased for such certificates or for any tax or duty in respect of the
issuance or delivery of such certificates or the securities represented thereby;
provided, however, that the Company shall not be required to pay any tax or duty
which may be payable in respect of (i) income of the holder or (ii) any transfer
involved in the issuance or delivery of certificates for shares of Common Stock
in a name other than that of the holder of the Notes being repurchased, and no
such issuance or

                                       75
<PAGE>

delivery shall be made unless and until the person requesting such issuance or
delivery has paid to the Company the amount of any such tax or duty or has
established, to the satisfaction of the Company, that such tax or duty has been
paid.

         (i) All Notes delivered for repurchase shall be delivered to the
Trustee to be canceled in accordance with the provisions of Section 2.8.

         Section 16.3. CONDITIONS TO THE COMPANY'S ELECTION TO PAY THE
REPURCHASE PRICE IN COMMON STOCK.

         The Company may elect to pay the Repurchase Price by delivery of shares
of Common Stock pursuant to Section 16.1 if and only if the following conditions
shall have been satisfied:

         (a) The shares of Common Stock deliverable in payment of the Repurchase
Price shall have a fair market value as of the repurchase date of not less than
the Repurchase Price. For purposes of Section 16.1 and this Section 16.3, the
fair market value of shares of Common Stock shall be determined by the Company
and shall be equal to 95% of the average of the Closing Prices of the Common
Stock for the five consecutive Trading Days immediately preceding and including
the third Trading Day prior to the repurchase date;

         (b) The Repurchase Price shall be paid only in cash in the event any
shares of Common Stock to be issued upon repurchase of Notes hereunder (i)
require registration under any federal securities law before such shares may be
freely transferable without being subject to any transfer restrictions under the
Securities Act upon repurchase and if such registration is not completed or does
not become effective prior to the repurchase date, and/or (ii) require
registration with or approval of any governmental authority under any state law
or any other federal law before such shares may be validly issued or delivered
upon repurchase and if such registration is not completed or does not become
effective or such approval is not obtained prior to the repurchase date;

         (c) Payment of the Repurchase Price may not be made in Common Stock
unless such stock is, or shall have been, or approved for quotation on the
Nasdaq National Market or listed on a national securities exchange, in either
case, prior to the repurchase date; and

         (d) All shares of Common Stock which may be issued upon repurchase of
the Notes will be issued out of the Company's authorized but unissued Common
Stock and, will upon issue, be duly and validly issued and fully paid and
non-assessable and free of any preemptive rights.

         If all of the conditions set forth in this Section 16.3 are not
satisfied in accordance with the terms thereof, the Repurchase Price shall be
paid by the Company only in cash.

         Section 16.4. CERTAIN DEFINITIONS.  For purposes of this Article 16:

                                       76
<PAGE>

         (a) the term "beneficial owner" shall be determined in accordance with
Rule 13d-3 and 13d-5, as in effect on the date of the original execution of this
Indenture, promulgated by the Securities and Exchange Commission pursuant to the
Exchange Act;

         (b) the term "person" or "group" shall include any syndicate or group
which would be deemed to be a "person" under Section 13(d) and 14(d) of the
Exchange Act as in effect on the date of the original execution of this
Indenture; and

         (c) the term "Continuing Director" means at any date a member of the
Company's Board of Directors (i) who was a member of such board on December 31,
1999 or (ii) who was nominated or elected by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election or whose election to the Company's Board of Directors was recommended
or endorsed by at least a majority of the directors who were Continuing
Directors at the time of such nomination or election or such lesser number
comprising a majority of a nominating committee if authority for such
nominations or elections has been delegated to a nominating committee whose
authority and composition have been approved by at least a majority of the
directors who were continuing directors at the time such committee was formed.
(Under this definition, if the Board of Directors of the Company as of the date
of this Indenture were to approve a new director or directors and then resign,
no Change in Control would occur even though the current Board of Directors
would thereafter cease to be in office).

         (d) the term "Repurchase Event" means a Change in Control or a
Termination of Trading.

         (e) a "Change in Control" shall be deemed to have occurred when (i) any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rules 13-d3
and 13-d5 under the Exchange Act) of shares representing more than 50% of the
combined voting power of the then outstanding securities entitled to vote
generally in elections of directors of the Company (the "Voting Stock"); (ii)
approval by stockholders of the Company of any plan or proposal for the
liquidation, dissolution or winding up of the Company; (iii) the Company (A)
consolidates with or merges into any other corporation or any other corporation
merges into the Company, and in the case of any such transaction, the
outstanding Common Stock of the Company is changed or exchanged into other
assets or securities as a result, unless the stockholders of the Company
immediately before such transaction own, directly or indirectly immediately
following such transaction, at least 51% of the combined voting power of the
outstanding voting securities of the corporation resulting from such transaction
in substantially the same proportion as their ownership of the Voting Stock
immediately before such transaction, or (B) conveys, transfers or leases all or
substantially all of its assets to any person; or (iv) any time Continuing
Directors do not constitute a majority of the Board of Directors of the Company
(or, if applicable, a successor corporation to the Company); PROVIDED that a
Change in Control shall not be deemed to have occurred if either (x) the Closing
Price (as defined in Section 15.5(h)(1) hereof) of the Common Stock for any five
(5) Trading Days during the ten (10) Trading Days immediately preceding the
Change in Control is at least equal to 105% of the Conversion Price in effect on
the date on

                                       77
<PAGE>

which the Change in Control occurs or (y) in the case of a merger or
consolidation otherwise constituting a Change in Control, all of the
consideration (excluding cash payments for fractional shares) in such merger or
consolidation constituting the Change in Control consists of common stock traded
on a United States national securities exchange or quoted on the Nasdaq National
Market (or which will be so traded or quoted when issued or exchanged in
connection with such Change in Control) and as a result of such transaction or
transactions such Notes become convertible solely into such common stock.

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

                                   ARTICLE 17.

                            MISCELLANEOUS PROVISIONS

         Section 17.1. PROVISIONS BINDING ON COMPANY'S SUCCESSORS. All the
covenants, stipulations, promises and agreements of the Company in this
Indenture contained shall bind its successors and assigns whether so expressed
or not.

         Section 17.2. OFFICIAL ACTS BY SUCCESSOR CORPORATION. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.

         Section 17.3. ADDRESSES FOR NOTICES, ETC. Any notice or demand which
by any provision of this Indenture is required or permitted to be given or
served by the Trustee or by the holders of Notes on the Company shall be deemed
to have been sufficiently given or made, for all purposes if given or served by
being deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to 20 Second Avenue, Burlington, Massachusetts 01803, Attention: Chief
Financial Officer. Any notice, direction, request or demand hereunder to or upon
the Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or served by being deposited postage prepaid by registered or
certified mail in a post office letter box addressed to the Corporate Trust
Office.

         The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.

                                       78
<PAGE>

         Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail, postage prepaid, at his address as it appears on the
Note register and shall be sufficiently given to him if so mailed within the
time prescribed.

         Failure to mail a notice or communication to a Noteholder or any defect
in it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.

         Section 17.4. GOVERNING LAW. This Indenture and each Note shall be
deemed to be a contract made under the laws of New York, and for all purposes
shall be construed in accordance with the laws of New York (without regard to
the conflict of laws provisions thereof).

         Section 17.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT;
CERTIFICATES TO TRUSTEE. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.

         Each certificate or opinion provided for by or on behalf of the Company
in this Indenture and delivered to the Trustee with respect to compliance with a
condition or covenant provided for in this Indenture shall include (1) a
statement that the person making such certificate or opinion has read such
covenant or condition; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion contained in
such certificate or opinion is based; (3) a statement that, in the opinion of
such person, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (4) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.

         Section 17.6. LEGAL HOLIDAYS. In any case where the date of maturity
of interest on or principal of the Notes or the date fixed for redemption of any
Note will not be a Business Day, then payment of such interest on or principal
of the Notes need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period from and after such date.

         Section 17.7. NO SECURITY INTEREST CREATED. Nothing in this Indenture
or in the Notes, expressed or implied, shall be construed to constitute a
security interest under the Uniform Commercial Code or similar legislation, as
now or hereafter enacted and in effect, in any jurisdiction.

         Section 17.8. TRUST INDENTURE ACT. This Indenture is hereby made
subject to, and shall be governed by, the provisions of the Trust Indenture Act
required to be part of and to govern

                                       79
<PAGE>

indentures qualified under the Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof which is required
to be included in an indenture qualified under the Trust Indenture Act, such
required provision shall control.

         Section 17.9. BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Notes, expressed or implied, shall give to any person, other than the
parties hereto, any paying agent, any authenticating agent, any Note registrar
and their successors hereunder, the holders of Notes and the holders of Senior
Indebtedness, any benefit or any legal or equitable right, remedy or claim under
this Indenture.

         Section 17.10. TABLE OF CONTENTS, HEADINGS, ETC. The table of contents
and the titles and headings of the articles and sections of this Indenture have
been inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.

         Section 17.11. AUTHENTICATING AGENT. The Trustee may appoint an
authenticating agent which shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7 and 3.3, as fully to all intents and
purposes as though the authenticating agent had been expressly authorized by
this Indenture and those Sections to authenticate and deliver Notes. For all
purposes of this Indenture, the authentication and delivery of Notes by the
authenticating agent shall be deemed to be authentication and delivery of such
Notes "by the Trustee" and a certificate of authentication executed on behalf of
the Trustee by an authenticating agent shall be deemed to satisfy any
requirement hereunder or in the Notes for the Trustee's certificate of
authentication. Such authenticating agent shall at all times be a person
eligible to serve as trustee hereunder pursuant to Section 8.9.

         Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or the authenticating agent or such successor
corporation.

         Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any authenticating agent by giving written notice
of termination 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
any authenticating agent shall cease to be eligible under this Section, the
Trustee shall promptly appoint a successor authenticating agent (which may be
the Trustee), shall give written notice of such appointment to the Company and
shall mail notice of such appointment to all holders of Notes as the names and
addresses of such holders appear on the Note register.

                                       80
<PAGE>

         The Trustee agrees to pay to the authenticating agent from time to time
reasonable compensation for its services (to the extent pre-approved by the
Company in writing), and the Trustee shall be entitled to be reimbursed for such
pre-approved payments, subject to Section 8.6.

         The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 17.11
shall be applicable to any authenticating agent.

         Section 17.12. EXECUTION IN COUNTERPARTS. This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.

         [The Bank of New York] hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.

                                       81
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.

                                  IBASIS, INC.

                                  By:       /s/ Gordon J. VanderBrug
                                            ----------------------------
                                      Name:     Gordon J. VanderBrug
                                            ----------------------------
                                      Title:    Executive Vice President
                                            ----------------------------

Attest:

/s/ Erin C. Hartigan
------------------------------
Name:  Erin C. Hartigan
       -----------------------
Title: Executive Assistant
       -----------------------
          [Corporate Seal]

                                  THE BANK OF NEW YORK,
                                  as Trustee

                                  By: /s/ Michael Culhane
                                      --------------------------------
                                      Name:  Michael Culhane
                                             -------------------------
                                      Title: Vice President
                                             -------------------------

                                       82
<PAGE>

                                    EXHIBIT A

                                  FORM OF NOTE

[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL NOTE:

         THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A
NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND
ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS NOTE FOR ALL PURPOSES.

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

         UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE
INDENTURE, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY.]

                                      A-1
<PAGE>

                                  IBASIS, INC.

                       ____% CONVERTIBLE SUBORDINATED NOTE
                                    DUE 2005

No. ________________                               U.S.$___________________

CUSIP NO. ______________

         IBASIS, INC., a corporation duly organized and existing under the laws
of the State of Delaware (herein called the "Company", which term includes any
successor person under the Indenture referred to on the reverse hereof), for
value received, hereby promises to pay to ________________________, the
principal sum of ________ United States Dollars (U.S.$______ ) (which principal
amount may from time to time be increased or decreased to such other principal
amounts (which, taken together with the principal amounts of all other
outstanding Notes under the Indenture, shall not exceed U.S.$172,500,000 in the
aggregate at any time) by adjustments made on the records of the Trustee
hereinafter referred to in accordance with the Indenture) on _____________, 2005
and to pay interest thereon, from _______________, 2000, or from the most recent
Interest Payment Date (as defined below) to which interest has been paid or duly
provided for, semi-annually in arrears on ________ and __________ in each year
(each, an "Interest Payment Date"), commencing ___________, 2000, at the rate of
____% per annum, until the principal hereof is due, and at the rate of ___% per
annum on any overdue principal and premium, if any, and, to the extent permitted
by law, on any overdue interest. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the record date
with respect to any interest payment date, which shall be the __________ or
_________ (whether or not a Business Day), as the case may be, next preceding
such interest payment date. Except as otherwise provided in the Indenture, any
such interest not so punctually paid or duly provided for ("Defaulted Interest)
will forthwith cease to be payable to the Noteholder on the relevant record date
by virtue of his having been such Noteholder and may either be paid to the
Person in whose name this Note (or one or more Predecessor Note) is registered
at the close of business on a special record date for the payment of such
Defaulted Interest to be fixed in accordance with the Indenture or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any automated quotation system or securities exchange on which the Notes may be
quoted or listed, and upon such notice as may be required by such exchange, all
as more fully provided in the Indenture. Payments of principal shall be made
upon the surrender of this Note at the Corporate Trust Office of the Trustee, or
at such other office or agency of the Company as may be designated by the
Company for such purpose in the Borough of Manhattan, The City of New York, in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts, by United
States Dollar check drawn on, or transfer to, a United States Dollar account.
Payments of interest on this Note may be made by United States Dollar check,
drawn on a United States Dollar Account, mailed to the address of the Person
entitled thereto as such address shall appear in the Note

                                      A-2
<PAGE>

Registry, or, upon written application by the Noteholder to the Trustee setting
forth wire instructions not later than two days prior to the applicable record
date, by transfer to a United States Dollar account; provided, however, that
transfers to United States Dollar accounts will be made only to Noteholders of
an aggregate principal amount of Notes in excess of $2,000,000; provided,
further that any payment to the Depositary or its nominee shall be made by wire
transfer of immediately available funds to the account of the Depositary or its
nominee.

         Except as specifically provided herein and in the Indenture, the
Company shall not be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.

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

         Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof or an authenticating agent by the
manual signature of one of their respective authorized signatories, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

                                      A-3
<PAGE>

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

                                  IBASIS, INC.

[Corporate Seal]

                                  By: _____________________________________
                                      Name: _______________________________
                                      Title: ______________________________

                                  By: _____________________________________
                                      Name: _______________________________
                                      Title: ______________________________

Attest:

__________________________
Name:
Title:

                    (Trustee's Certificate of Authentication)

        This is one of the _____% Convertible Subordinated Notes due 2005
referred to in the within-mentioned Indenture.

                                  [THE BANK OF NEW YORK], as Trustee

                                  By: ____________________________________
                                         Authorized Signatory

                                      A-4
<PAGE>

                                [FORM OF REVERSE]

         This Note is one of a duly authorized issue of securities of the
Company designated as its "___% Convertible Subordinated Notes due 2005" (herein
called the "Notes"), limited in aggregate principal amount to U.S. $172,500,000,
issued and to be issued under an Indenture, dated as of ____________, 2000
(herein called the "Indenture"), between the Company and [The Bank of New York],
as Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture) to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee, the holders of senior indebtedness and the holders of the Notes and of
the terms upon which the Notes are, and are to be, authenticated and delivered.
As provided in the Indenture and subject to certain limitations therein set
forth, Notes are exchangeable for a like aggregate principal amount of Notes of
any authorized denominations as requested by the holder surrendering the same
upon surrender of the Note or Notes to be exchanged, initially, at the Corporate
Trust Office of the Trustee. The Trustee upon such surrender by the holder will
issue the new Notes in the requested denominations.

         No sinking fund is provided for the Notes.

         The Notes are subject to Provisional Redemption by the Company, in
whole or in part, at any time prior to _____________, 2003, upon notice as set
forth in Section 3.2 of the Indenture, at a redemption price equal to $1,000 per
Note to be redeemed plus accrued and unpaid interest, if any, to the Provisional
Redemption Date if (i) the closing price of the Common Stock shall have exceeded
150% of the Conversion Price then in effect for at least 20 Trading Days in any
consecutive 30-Trading Day period ending on the Trading Day prior to the Notice
Date. Upon any such Provisional Redemption, the Company shall make a Make-Whole
Payment with respect to the Notes called for redemption to holders on the Notice
Date in an amount equal to $_____ per $1,000 Note, less the amount of any
interest actually paid on such Note prior to the Notice Date. The Company shall
make the Make-Whole Payment on all Notes called for Provisional Redemption,
including any Notes converted into Common Stock pursuant to the terms of the
Indenture after the Notice Date and prior to the Provisional Redemption Date.

         The Notes are also subject to redemption at the option of the Company
at any time on or after ____________, 2003, in whole or in part, upon not less
than 20 nor more than 60 days' notice to the holders prior to the date fixed for
redemption at the following optional redemption prices (expressed as percentages
of the principal amount) for the twelve-month period beginning on _______ of the
following years:

               YEAR                      REDEMPTION PRICE

               2003                        ________%

               2004                        ________%

                                      A-5
<PAGE>

and on ________, 2005 and thereafter at an optional redemption price equal to
100% of the principal amount, together, in each case, with accrued and unpaid
interest to (but excluding) the date fixed for redemption; provided, however,
that interest installments on Notes will be payable to the holders of such
Notes, or one or more Predecessor Notes, of record at the close of business on
the relevant record dates referred to on the face hereof, all as provided in the
Indenture.

         None of the Company, the Trustee, the Note registrar or any
co-registrar shall be required to exchange or register a transfer of (a) any
Notes for a period of fifteen (15) days next preceding any selection of Notes to
be redeemed or (b) any Notes called for redemption or, if a portion of any Note
is selected or called for redemption, such portion thereof selected or called
for redemption or (c) any Notes surrendered for conversion or, if a portion of
any Note is surrendered for conversion, such portion thereof surrendered for
conversion or (d) any Notes, or a portion of any Note, surrendered for
repurchase (and not withdrawn) in connection with a Repurchase Event.

         In any case where the due date for the payment of the principal of,
premium, if any, or interest on any Note or the last day on which a holder of a
Note has a right to convert his Note shall not be a Business Day, then payment
of principal, premium, if any, interest or delivery for conversion of such Note
need not be made on or by such date at such place but may be made on or by the
next succeeding Business Day, with the same force and effect as if made on the
date for such payment or the date fixed for redemption or repurchase, or by such
last day for conversion, and no interest shall accrue on the amount so payable
for the period after such date.

         Subject to and upon compliance with the provisions of the Indenture,
the holder of this Note is entitled, at his option, at any time following the
original issue date of the Notes and on or before the close of business on the
Business Day immediately preceding ____________, 2005, or in case this Note or a
portion hereof is called for redemption or the holder hereof has exercised his
right to require the Company to repurchase this Note or such portion hereof,
then in respect of this Note until but (unless the Company defaults in making
the payment due upon redemption or repurchase, as the case may be) not after,
the close of business on Business Day immediately preceding the any optional
redemption date or Provisional Redemption Date or the date fixed for repurchase,
as the case may be, to convert this Note (or any portion of the principal amount
hereof that is an integral multiple of U.S.$1,000, provided that the unconverted
portion of such principal amount is U.S.$1,000 or any integral multiple of
U.S.$1,000 in excess thereof) into fully paid and nonassessable shares of Common
Stock of the Company at an initial Conversion Rate of _______ shares of Common
Stock for each $1,000 principal amount of Notes (or at the current adjusted
Conversion Rate if an adjustment has been made as provided in the Indenture,
including pursuant to Section 15.5 of the Indenture) by surrender of this Note,
duly endorsed and, in case such surrender shall be made during the period from
the close of business on any record date next preceding any interest payment
date to the opening of business on such Interest Payment Date (except if this
Note or portion thereof has been called for redemption on a Provisional
Redemption Date or optional redemption date or is repurchasable on a date fixed
for repurchase), also accompanied by payment in New York Clearing House or other
funds

                                      A-6
<PAGE>

acceptable to the Company of an amount equal to the interest payable on such
interest payment date on the principal amount of this Note then being converted,
and also the conversion notice hereon duly executed, to the Company at the
Corporate Trust Office of the Trustee, or at such other office or agency of the
Company, subject to any laws or regulations applicable thereto and subject to
the right of the Company to terminate the appointment of any Conversion Agent
(as defined below) as may be designated by it for such purpose in the Borough of
Manhattan, The City of New York, or at such other offices or agencies as the
Company may designate (each a "Conversion Agent"), provided, however, that if
this Note or portion hereof has been called for redemption on a Provisional
Redemption Date or optional redemption date or is repurchasable on a repurchase
rate, then the holder of this Note on such record date will be entitled to
receive the interest accruing hereon from the interest payment date next
preceding the date of such conversion to such succeeding interest payment date
and the holder of this Note who converts this Note or a portion hereof during
such period shall not be required to pay such interest upon surrender of this
Note for conversion. Subject to the provisions of the preceding sentence, no
cash payment or adjustment is to be made on conversion for interest accrued
hereon from the interest payment date next preceding the day of conversion, or
for dividends on the Common Stock issued on conversion hereof. The Company shall
thereafter deliver to the holder the fixed number of shares of Common Stock
(together with any cash adjustment, as provided in the Indenture) into which
this Note is convertible and such delivery will be deemed to satisfy the
Company's obligation to pay the principal amount of this Note. No fractions of
shares or scrip representing fractions of shares will be issued on conversion,
but instead of any fractional interest (calculated to the nearest 1/100th of a
share) the Company shall pay a cash adjustment as provided in the Indenture. The
Conversion Rate 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 (other than a consolidation or merger
that does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock) or the conveyance, transfer, sale or lease of
all or substantially all of the property and assets of the Company, the
Indenture shall be amended, without the consent of any holders of Notes, so that
this Note, if then outstanding, will be convertible thereafter, during the
period this Note shall be convertible as specified above, only into the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, transfer, sale or lease by a holder of the
number of shares of Common Stock of the Company into which this Note could have
been converted immediately prior to such consolidation, merger, conveyance,
transfer, sale or lease (subject to the provisions of, and as more explicitly
set forth in, the Indenture). No adjustment in the Conversion Rate will be made
until such adjustment would require an increase or decrease of at least one
percent of such price, provided that any adjustment that would otherwise be made
will be carried forward and taken into account in the computation of any
subsequent adjustment. At any time of determination, the term "Conversion Price"
shall mean an amount equal U.S.$1,000 divided by the Conversion Rate (rounded to
the nearest cent)

         If a Repurchase Event occurs, the holder of this Note, at the holder's
option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Note (or any portion of the
principal amount hereof that is at least $1,000 or an

                                      A-7
<PAGE>

integral multiple) for cash at a price equal to 105% of the principal amount
thereof plus interest accrued to the repurchase date. At the option of the
Company, the Repurchase Price may be paid in cash or, subject to the conditions
provided in the Indenture, by delivery of shares of Common Stock having a fair
market value equal to the Repurchase Price. For purposes of this paragraph, the
fair market value of shares of Common Stock shall be determined by the Company
and shall be equal to 95% of the average of the Closing Prices Per Share for the
five consecutive Trading Days immediately preceding and including the third
Trading Day prior to the repurchase date. Whenever in this Note there is a
reference, in any context, to the principal of any Note as of any time, such
reference shall be deemed to include reference to the Repurchase Price payable
in respect of such Note to the extent that such Repurchase Price is, was or
would be so payable at such time, and express mention of the Repurchase Price in
any provision of this Note shall not be construed as excluding the Repurchase
Price so payable in those provisions of this Note when such express mention is
not made; provided, however, that, for the purposes of the second succeeding
paragraph, such reference shall be deemed to include reference to the Repurchase
Price only to the extent the Repurchase Price is payable in cash.

         [The following paragraph shall appear in each Global Security:

         In the event of a deposit or withdrawal of an interest in this Note,
including an exchange, transfer, redemption, repurchase or conversion of this
Note in part only, the Trustee, as custodian of the Depositary, shall make an
adjustment on its records to reflect such deposit or withdrawal in accordance
with the rules and procedures of The Depository Trust Company applicable to, and
as in effect at the time of, such transaction.]

         [The following paragraph shall appear in each Note that is not a Global
Security:

         In the event of redemption, repurchase or conversion of this Note in
part only, a new Note or Notes for the unredeemed, unrepurchased or unconverted
portion hereof will be issued in the name of the holder hereof.]

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

         If an Event of Default shall occur and be continuing, the principal of
all the Notes, together with accrued interest to the date of declaration, may be
declared due and payable in the manner and with the effect provided in the
Indenture. Upon payment (i) of the amount of principal so declared due and
payable, together with accrued interest to the date of declaration, and (ii) of
interest on any overdue principal and, to the extent permitted by applicable
law,

                                      A-8
<PAGE>

overdue interest, all of the Company's obligations in respect of the payment of
the principal of and interest on the Notes 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 Notes under the Indenture at any
time by the Company and the Trustee with either (a) the written consent of the
holders of not less than a majority in principal amount of the Notes at the time
outstanding, or (b) by the adoption of a resolution, at a meeting of holders of
the Outstanding Notes at which a quorum is present, by the holders of at least
66-2/3% in aggregate principal amount of the Outstanding Notes represented and
entitled to vote at such meeting. The Indenture also contains provisions
permitting the holders of specified percentages in principal amount of the Notes
at the time outstanding, on behalf of the holders of all the Notes, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the holder of this Note shall be conclusive and binding upon such
holder and upon all future holders of this Note and of any Note issued in
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note or such other Note.

         As provided in and subject to the provisions of the Indenture, the
holder of this Note 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, the holders of not less
than 25% in principal amount of the outstanding Notes shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default 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
the outstanding Notes 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 Note for the enforcement of any payment of
principal hereof, premiums if any, or interest hereon on or after the respective
due dates expressed herein or for the enforcement of the right to convert this
Note as provided in the Indenture.

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

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable on the Note register upon
surrender of this Note for registration of transfer at the Corporate Trust
Office of the Trustee or at such other office or agency of the Company as may be
designated by it for such purpose in the Borough of Manhattan, The City of New
York (which shall initially be an office or agency of the Trustee), or at such
other offices or agencies as the Company may designate, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the

                                      A-9
<PAGE>

Note registrar duly executed by, the holder thereof or his attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees by the Note registrar. 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 recover any tax or other governmental
charge payable in connection therewith, other than as provided in the Indenture.

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

         No recourse for the payment of the principal (and premium, if any) or
interest on this Note and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any indenture supplemental thereto
or in any Note, 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, all
such liability being, by the acceptance hereof and as part of consideration for
the issue hereof, expressly waived and released.

         THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA
(WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF).

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

                                      A-10
<PAGE>

                                  ABBREVIATIONS

         The following abbreviations, when used in the inscription of the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:

         TEN COM           -    as tenants in common

         TEN ENT           -    as tenants by the entireties (Cust)

         JT TEN            -    as joint tenants with right of survivorship and
                                not as tenants in common

         UNIF GIFT MIN ACT -    _________________ Custodian _____________
                                                               (Minor)
                                 under Uniform Gifts to Minors Act _____________
                                                                     (State)

         Additional abbreviations may also be used though not in the above list.

                                      A-11
<PAGE>

                    ELECTION OF HOLDER TO REQUIRE REPURCHASE

         (1) Pursuant to Article 16 of the Indenture, the undersigned hereby
elects to have this Note repurchased by the Company.

         (2) The undersigned hereby directs the Trustee or the Company to pay to
the undersigned an amount in cash or, at the Company's election, Common Stock
valued as set forth in the Indenture, equal to 100% of the principal amount to
be repurchased (as set forth below), plus interest accrued to the Repurchase
Date, as provided in the Indenture.

                               Dated: _________________________________________
                               ________________________________________________
                               ________________________________________________

                               Signature(s)

                               Signature(s) must be guaranteed by an Eligible
                               Guarantor Institution with membership in an
                               approved signature guarantee program pursuant to
                               Rule 17Ad-15 under the Securities Exchange Act of
                               1934.

                               ________________________________________________
                               Signature Guaranteed

Principal amount to be repurchased (at least U.S. $1,000 or an integral multiple
thereof $1,000): _______________________________

Remaining principal amount following such repurchase:
_________________________________

NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.

                                      A-12
<PAGE>

                                CONVERSION NOTICE

         The undersigned holder of this Note hereby irrevocably exercises the
option to convert this Note, or any portion of the principal amount hereof
(which is U.S.$1,000 or an integral multiple of U.S.$1,000 in excess thereof,
PROVIDED that the unconverted portion of such principal amount is U.S. $1,000 or
any integral multiple of U.S. $1,000 in excess thereof) below designated, into
shares of Common Stock in accordance with the terms of the Indenture referred to
in this Note, and directs that such shares, together with a check in payment for
any fractional share and any Notes representing any unconverted principal amount
hereof, be delivered to and be registered in the name of the undersigned unless
a different name has been indicated below. If shares of Common Stock or Notes
are to be registered in the name of a Person other than the undersigned, (a) the
undersigned will pay all transfer taxes payable with respect thereto and (b)
signature(s) must be guaranteed by an Eligible Guarantor Institution with
membership in an approved signature guarantee program pursuant to Rule 17Ad-15
under the Securities Exchange Act of 1934. Any amount required to be paid by the
undersigned on account of interest accompanies this Note.

Dated: _____________________      ________________________________________

                                  ________________________________________
                                  Signature(s)

If shares or Notes are to be registered in the name of a Person other than the
holder, please print such Person's name and address:

_______________________________
         Name

_______________________________
         Address

_______________________________
Social Security or other Identification
Number, if any

_______________________________
Signature Guaranteed

                                      A-13
<PAGE>

If only a portion of the Notes is to be converted, please indicate:

1.    Principal amount to be converted:

               U.S. $ ___________

2.    Principal amount and denomination of Notes representing unconverted
      principal amount to be issued:

               Amount U.S. $___________

      (U.S.$1,000 or any integral multiple of U.S.$1,000 in excess thereof,
      provided that the unconverted portion of such principal amount is U.S.
      $1,000 or any integral multiple of U.S. $1,000 in excess thereof)

                                      A-14
<PAGE>

                               FORM OF ASSIGNMENT

         For value received ________________ hereby sell(s), assign(s) and
transfer(s) unto ________________ (Please insert social security or other
identifying number of assignee) the within Note, and hereby irrevocably
constitutes and appoints ____________________ as attorney to transfer the said
Note on the books of the Company, with full power of substitution in the
premises.

Dated: _____________________      ________________________________________

                                  ________________________________________
                                  Signature(s)

                                  Signature(s) must be guaranteed by an Eligible
                                  Guarantor Institution with membership in an
                                  approved signature guarantee program pursuant
                                  to Rule 17Ad-15 under the Securities Exchange
                                  Act of 1934.

                                      A-15
<PAGE>

================================================================================

                                  IBASIS, INC.

                                       and

                             [THE BANK OF NEW YORK]

                                   AS TRUSTEE

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

                                    INDENTURE

                        DATED AS OF __________ ___, 2000

================================================================================

                   __% CONVERTIBLE SUBORDINATED NOTES DUE 2005
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                 PAGE

<S>               <C>                                                                                            <C>
ARTICLE 1. DEFINITIONS                                                                                            2
   Section 1.1.   DEFINITIONS                                                                                     2

ARTICLE 2 ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES                                       8
   Section 2.1.   DESIGNATION, AMOUNT AND ISSUE OF NOTES                                                          8
   Section 2.2.   FORM OF NOTES.                                                                                  8
   Section 2.3.   DATE AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST                                            9
   Section 2.4.   EXECUTION OF NOTES                                                                             10
   Section 2.5.   EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES; DEPOSITARY                                     11
   Section 2.6.   MUTILATED, DESTROYED, LOST OR STOLEN NOTES                                                     13
   Section 2.7.   TEMPORARY NOTES                                                                                14
   Section 2.8.   CANCELLATION OF NOTES PAID, ETC.                                                               15

ARTICLE 3.  REDEMPTION OF NOTES                                                                                  15
   Section 3.1.   REDEMPTION PRICES                                                                              15
   Section 3.2.   NOTICE OF REDEMPTION; SELECTION OF NOTES                                                       16
   Section 3.3.   PAYMENT OF NOTES CALLED FOR REDEMPTION                                                         17
   Section 3.4.   CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION                                                  18

ARTICLE 4.  SUBORDINATION OF NOTES                                                                               19
   Section 4.1.   AGREEMENT OF SUBORDINATION                                                                     19
   Section 4.2.   PAYMENTS TO NOTEHOLDERS                                                                        19
   Section 4.3.   BANKRUPTCY AND DISSOLUTION, ETC.                                                               21
   Section 4.4.   SUBROGATION OF NOTES                                                                           22
   Section 4.5.   AUTHORIZATION BY NOTEHOLDERS                                                                   23
   Section 4.6.   NOTICE TO TRUSTEE                                                                              23
   Section 4.7.   TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS                                                      25
   Section 4.8.   NO IMPAIRMENT OF SUBORDINATION                                                                 25
   Section 4.9.   CERTAIN CONVERSIONS DEEMED PAYMENT                                                             25

ARTICLE 5.  PARTICULAR COVENANTS OF THE COMPANY                                                                  26
   Section 5.1.   PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST                                                     26
   Section 5.2.   MAINTENANCE OF OFFICE OR AGENCY                                                                26
   Section 5.3.   APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE                                             27
   Section 5.4.   PROVISIONS AS TO PAYING AGENT                                                                  27
   Section 5.5.   EXISTENCE                                                                                      28
   Section 5.6.   RESERVED                                                                                       28
   Section 5.7.   STAY, EXTENSION AND USURY LAWS                                                                 28
   Section 5.8.   COMPLIANCE CERTIFICATE                                                                         28
   Section 5.9.   FURTHER INSTRUMENTS AND ACTS                                                                   29
   Section 5.10.  Payment of Taxes and Other Claims                                                              29

ARTICLE 6.  NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE                                        29
   Section 6.1.   NOTEHOLDERS' LISTS                                                                             29
   Section 6.2.   PRESERVATION AND DISCLOSURE OF LISTS                                                           30
   Section 6.3.   REPORTS BY TRUSTEE                                                                             30
   Section 6.4.   REPORTS BY COMPANY                                                                             30

ARTICLE 7.  DEFAULTS AND REMEDIES                                                                                31
   Section 7.1.   EVENTS OF DEFAULT                                                                              31
   Section 7.2.   PAYMENTS OF NOTES ON DEFAULT; SUIT THEREFOR                                                    34
   Section 7.3.   APPLICATION OF MONIES COLLECTED BY TRUSTEE                                                     35
<PAGE>

   Section 7.4.   PROCEEDINGS BY NOTEHOLDER                                                                      36
   Section 7.5.   PROCEEDINGS BY TRUSTEE                                                                         37
   Section 7.6.   REMEDIES CUMULATIVE AND CONTINUING                                                             37
   Section 7.7.   DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY OF NOTEHOLDERS.                    37
   Section 7.8.   NOTICE OF DEFAULTS.                                                                            38
   Section 7.9.   UNDERTAKING TO PAY COSTS.                                                                      38
   Section 7.10.  DELAY OR OMISSION NOT WAIVER                                                                   38

ARTICLE 8  CONCERNING THE TRUSTEE                                                                                39
   Section 8.1.   DUTIES AND RESPONSIBILITIES OF TRUSTEE.                                                        39
   Section 8.2.   RELIANCE ON DOCUMENTS, OPINIONS, ETC.                                                          40
   Section 8.3.   NO RESPONSIBILITY FOR RECITALS, ETC.                                                           41
   Section 8.4.   TRUSTEE, PAYING AGENTS, CONVERSION AGENTS OR REGISTRAR MAY OWN NOTES.                          41
   Section 8.5.   MONIES TO BE HELD IN TRUST.                                                                    41
   Section 8.6.   COMPENSATION AND EXPENSES OF TRUSTEE.                                                          42
   Section 8.7.   OFFICERS' CERTIFICATE AS EVIDENCE.                                                             42
   Section 8.8.   CONFLICTING INTERESTS OF TRUSTEE.                                                              43
   Section 8.9.   ELIGIBILITY OF TRUSTEE.                                                                        43
   Section 8.10.  RESIGNATION OR REMOVAL OF TRUSTEE.                                                             43
   Section 8.11.  ACCEPTANCE BY SUCCESSOR TRUSTEE                                                                44
   Section 8.12.  SUCCESSION BY MERGER, ETC.                                                                     45
   Section 8.13.  LIMITATION ON RIGHTS OF TRUSTEE AS CREDITOR                                                    45

ARTICLE 9  CONCERNING THE NOTEHOLDERS                                                                            46
   Section 9.1.   ACTION BY NOTEHOLDERS                                                                          46
   Section 9.2.   PROOF OF EXECUTION BY NOTEHOLDERS.                                                             46
   Section 9.3.   WHO ARE DEEMED ABSOLUTE OWNERS                                                                 46
   Section 9.4.   COMPANY-OWNED NOTES DISREGARDED                                                                47
   Section 9.5.   REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND                                                   47

ARTICLE 10. NOTEHOLDERS' MEETINGS                                                                                47
   Section 10.1.    PURPOSE OF MEETINGS                                                                          47
   Section 10.2.    CALL OF MEETINGS BY TRUSTEE                                                                  48
   Section 10.3.    QUORUM                                                                                       48
   Section 10.4.    CALL OF MEETINGS BY COMPANY OR NOTEHOLDERS                                                   49
   Section 10.5.    QUALIFICATIONS FOR VOTING                                                                    49
   Section 10.6.    REGULATIONS                                                                                  49
   Section 10.7.    VOTING                                                                                       50
   Section 10.8.    NO DELAY OF RIGHTS BY MEETING                                                                50

ARTICLE 11.  SUPPLEMENTAL INDENTURES                                                                             51
   Section 11.1.    SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS                                       51
   Section 11.2.    SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS                                          52
   Section 11.3.    EFFECT OF SUPPLEMENTAL INDENTURES                                                            53
   Section 11.4.    NOTATION ON NOTES                                                                            54
   Section 11.5.    Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee                     54

ARTICLE 12. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE                                                    54
   Section 12.1.    COMPANY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS                                               54
   Section 12.2.    SUCCESSOR CORPORATION TO BE SUBSTITUTED                                                      55
   Section 12.3.    OPINION OF COUNSEL TO BE GIVEN TRUSTEE                                                       56

ARTICLE 13.  SATISFACTION AND DISCHARGE OF INDENTURE                                                             56
   Section 13.1.    DISCHARGE OF INDENTURE                                                                       56
   Section 13.2.    DEPOSITED MONIES TO BE HELD IN TRUST BY TRUSTEE                                              56
   Section 13.3.    PAYING AGENT TO REPAY MONIES HELD                                                            57
   Section 13.4.    RETURN OF UNCLAIMED MONIES                                                                   57
<PAGE>

   Section 13.5.    REINSTATEMENT                                                                                57

ARTICLE 14. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS                                      57
   Section 14.1.    INDENTURE AND NOTES SOLELY CORPORATE OBLIGATIONS                                             57

ARTICLE 15.  CONVERSION OF NOTES                                                                                 58
   Section 15.1.    RIGHT TO CONVERT                                                                             58
   Section 15.2.    EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK ON CONVERSION;
   NO ADJUSTMENT FOR INTEREST OR DIVIDENDS                                                                       58
   Section 15.3.    CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES                                                   60
   Section 15.4.    CONVERSION PRICE                                                                             60
   Section 15.5.    ADJUSTMENT OF CONVERSION PRICE                                                               61
   Section 15.6.    EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE                                    70
   Section 15.7.    TAXES ON SHARES ISSUED                                                                       72
   Section 15.8.    RESERVATION OF SHARES; SHARES TO BE FULLY PAID; LISTING OF COMMON STOCK                      72
   Section 15.9.    RESPONSIBILITY OF TRUSTEE                                                                    72
   Section 15.10.   NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS                                                   73

ARTICLE 16.  REPURCHASE UPON A REPURCHASE EVENT                                                                  74
   Section 16.1.    REPURCHASE RIGHT                                                                             74
   Section 16.2.    NOTICES; METHOD OF EXERCISING REPURCHASE RIGHT, ETC.                                         74
   Section 16.3.    CONDITIONS TO THE COMPANY'S ELECTION TO PAY THE REPURCHASE PRICE IN COMMON STOCK             77
   Section 16.4.    CERTAIN DEFINITIONS                                                                          78

ARTICLE 17.  MISCELLANEOUS PROVISIONS                                                                            79
   Section 17.1.    PROVISIONS BINDING ON COMPANY'S SUCCESSORS                                                   79
   Section 17.2.    OFFICIAL ACTS BY SUCCESSOR CORPORATION                                                       79
   Section 17.3.    ADDRESSES FOR NOTICES, ETC                                                                   79
   Section 17.4.    GOVERNING LAW                                                                                80
   Section 17.5.    EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT; CERTIFICATES TO TRUSTEE                    80
   Section 17.6.    LEGAL HOLIDAYS                                                                               81
   Section 17.7.    NO SECURITY INTEREST CREATED                                                                 81
   Section 17.8.    TRUST INDENTURE ACT                                                                          81
   Section 17.9.    BENEFITS OF INDENTURE                                                                        81
   Section 17.10.   TABLE OF CONTENTS, HEADINGS, ETC.                                                            81
   Section 17.11.   AUTHENTICATING AGENT                                                                         81
   Section 17.12.   EXECUTION IN COUNTERPARTS                                                                    82
</TABLE>
<PAGE>

Reconciliation and tie between Trust Indenture Act of 1939 (the "TIA" or "Trust
Indenture Act") and this Indenture, dated as of ___________, 2000.

<TABLE>
<CAPTION>
TRUST INDENTURE ACT SECTION                                                        INDENTURE SECTION

<S>             <C>                                                                       <C>
Section  310    (a)(1)....................................................................8.9
                (a)(2)....................................................................8.9
                (b).......................................................................8.8, 8.9
Section  311    (a).......................................................................8.13
                (b).......................................................................8.13
Section  312    (a).......................................................................6.1
                (b).......................................................................6.2
Section  313    (a).......................................................................6.3
                (b).......................................................................6.3
                (c).......................................................................6.3
                (d).......................................................................6.3
Section  314    (a).......................................................................6.4
                (a)(4)....................................................................5.8
                (b).......................................................................N.A.
                (c)(1)....................................................................17.5
                (c)(2)....................................................................17.5
                (c)(3)....................................................................17.8
                (e).......................................................................17.5
Section  315    (a)........................................................................8.1
                (b).......................................................................7.8
                (c).......................................................................8.1
                (d).......................................................................8.1
                (e).......................................................................7.9
Section  316    (a) (last sentence).......................................................9.4
                (a)(1)(A).................................................................7.7
                (a)(1)(B).................................................................7.7
                (b).......................................................................7.4
                (c).......................................................................9.1
Section  317    (a)(1)....................................................................7.2
                (a)(2)....................................................................7.2
                (b).......................................................................5.4
Section  318    (a).......................................................................17.8
                (c).......................................................................17.8
</TABLE>

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

NOTE:         This reconciliation and tie shall not, for any purpose, be deemed
              to be a part of this Indenture.

              Attention should also be directed to Section 318(c) of the Trust
Indenture Act, which provides that the provisions of Sections 310 to and
including 317 of the Trust Indenture Act are a part of and govern every
qualified indenture, whether or not physically contained therein.<PAGE>

                                                                  EXHIBIT 10.1

                          AGREEMENT AND PLAN OF MERGER
                                  BY AND AMONG
                             THE TITAN CORPORATION,
                             V T ACQUISITION CORP.
                                      AND
                                 AVERSTAR, INC.
                           DATED AS OF MARCH 24, 2000
<PAGE>
                               TABLE OF CONTENTS
                                    ARTICLES

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
ARTICLE I THE MERGER........................................      2
  SECTION 1.01 The Merger...................................      2
  SECTION 1.02 Effective Time; Closing Date.................      2
  SECTION 1.03 Effect of the Merger.........................      2
  SECTION 1.04 Certificate of Incorporation; Bylaws.........      2
  SECTION 1.05 Directors and Officers.......................      2

ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF
  CERTIFICATES..............................................      3
  SECTION 2.01 The Merger...................................      3
  SECTION 2.02 Exchange of Certificates.....................      5
  SECTION 2.03 Stock Options................................      7
  SECTION 2.04 Certain Adjustments..........................      8
  SECTION 2.05 Closing......................................      8
  SECTION 2.06 Escrow Stock; Determination of Closing
    Adjustment..............................................      9

ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY.......     12
  SECTION 3.01 Organization and Qualification...............     12
  SECTION 3.02 Subsidiaries.................................     12
  SECTION 3.03 Articles of Incorporation and Bylaws.........     12
  SECTION 3.04 Capitalization...............................     12
  SECTION 3.05 Authority; Binding Obligation................     13
  SECTION 3.06 No Conflict; Required Filings and Consents...     14
  SECTION 3.07 Intellectual Property........................     15
  SECTION 3.08 Financial Statements and Condition...........     16
  SECTION 3.09 Absence of Certain Developments..............     16
  SECTION 3.10 Absence of Undisclosed Liabilities...........     17
  SECTION 3.11 Litigation; Disputes.........................     18
  SECTION 3.12 Real Property Leases; Real Property..........     18
  SECTION 3.13 Other Agreements; No Default.................     19
  SECTION 3.14 Labor Relations..............................     19
  SECTION 3.15 Pension and Benefit Plans....................     20
  SECTION 3.16 Taxes and Tax Matters........................     21
  SECTION 3.17 Insurance....................................     22
  SECTION 3.18 Arrangements with Related Parties............     22
  SECTION 3.19 Books and Records............................     22
  SECTION 3.20 Assets.......................................     22
  SECTION 3.21 Board Recommendation.........................     23
  SECTION 3.22 Directors and Officers.......................     23
  SECTION 3.23 [Intentionally Omitted]......................     23
  SECTION 3.24 Environmental Matters........................     23
  SECTION 3.25 [Intentionally Omitted]......................     23
</TABLE>

                                      A-i
<PAGE>

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
  SECTION 3.26 Government Contracts and Other Commitments...     23
  SECTION 3.27 Relations with Governments...................     24
  SECTION 3.28 Broker's Fees................................     25
  SECTION 3.29 Registration Statement; Proxy
    Statement/Prospectus....................................     25
  SECTION 3.30 [Intentionally Omitted]......................     25
  SECTION 3.31 Interest Rate and Foreign Exchange
    Contracts...............................................     25
  SECTION 3.32 Pooling/Tax Matters..........................     26
  SECTION 3.33 Disclosure...................................     26

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND
  ACQUIROR SUB..............................................     26
  SECTION 4.01 Organization and Qualification...............     26
  SECTION 4.02 Certificate or Articles of Incorporation and
    Bylaws..................................................     27
  SECTION 4.03 Capitalization...............................     27
  SECTION 4.04 Authority; Binding Obligation................     27
  SECTION 4.05 No Conflict; Required Filings and Consents...     27
  SECTION 4.06 No Prior Activities of Acquiror Sub..........     28
  SECTION 4.07 SEC Filings; Financial Statements............     28
  SECTION 4.08 No Undisclosed Liabilities...................     29
  SECTION 4.09 Absence of Certain Changes or Events.........     29
  SECTION 4.10 Absence of Litigation........................     29
  SECTION 4.11 Certain Practices............................     29
  SECTION 4.12 Government Contracts.........................     30
  SECTION 4.13 Intellectual Property........................     30
  SECTION 4.14 Interest Rate and Foreign Exchange
    Contracts...............................................     31
  SECTION 4.15 Brokers......................................     31
  SECTION 4.16 Pooling/Tax Matters..........................     31
  SECTION 4.17 Registration Statement; Proxy
    Statement/Prospectus....................................     31
  SECTION 4.18 Board Recommendation.........................     32
  SECTION 4.19 Disclosure...................................     32

ARTICLE V PRE-CLOSING COVENANTS.............................     32
  SECTION 5.01 Conduct of Business of Company Until
    Effective Time..........................................     32
  SECTION 5.02 Best Efforts to Satisfy Conditions...........     34
  SECTION 5.03 Other Actions................................     34
  SECTION 5.04 Certain Tax Matters..........................     34
  SECTION 5.05 Access and Information.......................     34
  SECTION 5.06 Notification Filing Required Under HSR Act...     35
  SECTION 5.07 Related Party Matters........................     35
  SECTION 5.08 Proxy Statement/Prospectus and Registration
    Statement; Company Stockholders Meeting.................     35
  SECTION 5.09 [Intentionally Omitted]......................     36
  SECTION 5.10 No Solicitation..............................     36
  SECTION 5.11 NYSE Listing.................................     37
  SECTION 5.12 Affiliates...................................     37
</TABLE>

                                      A-ii
<PAGE>

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
  SECTION 5.13 Tax Treatment................................     38
  SECTION 5.14 Pooling......................................     38
  SECTION 5.15 Negative Covenants of Acquiror...............     38

ARTICLE VI ADDITIONAL AGREEMENTS............................     39
  SECTION 6.01 Stockholder Approval.........................     39
  SECTION 6.02 Appropriate Action; Consents; Filings........     39
  SECTION 6.03 Disclosure...................................     40
  SECTION 6.04 Public Announcements.........................     40
  SECTION 6.05 Obligations of Acquiror Sub..................     40
  SECTION 6.06 Transaction Expenses.........................     41
  SECTION 6.07 Board of Directors...........................     41
  SECTION 6.08 Company Common Stock.........................     41

ARTICLE VII CONDITIONS PRECEDENT............................     41
  SECTION 7.01 Conditions to Obligations of Each Party Under
    This Merger Agreement...................................     41
  SECTION 7.02 Additional Conditions to Obligations of
    Acquiror and Acquiror Sub...............................     42
  SECTION 7.03 Additional Conditions to Obligations of
    Company.................................................     44

ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..............     45
  SECTION 8.01 Termination..................................     45
  SECTION 8.02 Effect of Termination........................     46
  SECTION 8.03 Transaction Fees, Termination Fees, Expenses
    and Other Payments......................................     46
  SECTION 8.04 Amendment....................................     46
  SECTION 8.05 Extension; Waiver............................     46

ARTICLE IX SURVIVAL OF REPRESENTATIONS; REMEDIES............     47
  SECTION 9.01 Survival of Representations..................     47
  SECTION 9.02 Indemnification by Company Stockholders......     47
  SECTION 9.03 Third Party Claims...........................     48
  SECTION 9.04 No Recourse Against the Company..............     49
  SECTION 9.05 Specific Performance.........................     49
  SECTION 9.06 Remedies Cumulative..........................     49

ARTICLE X GENERAL PROVISIONS................................     49
  SECTION 10.01 Notices.....................................     49
  SECTION 10.02 Headings....................................     50
  SECTION 10.03 Severability................................     51
  SECTION 10.04 Entire Agreement............................     51
  SECTION 10.05 Assignment..................................     51
  SECTION 10.06 Parties in Interest.........................     51
  SECTION 10.07 Mutual Drafting.............................     51
  SECTION 10.08 Governing Law...............................     51
  SECTION 10.09 Counterparts................................     52
  SECTION 10.10 Singular and Plural.........................     52

ARTICLE XI DEFINITIONS......................................     52
</TABLE>

                                     A-iii
<PAGE>
                                    EXHIBITS

<TABLE>
<S>             <C>
Exhibit A       Certificate of Merger
Exhibit B       Initial Officers and Directors of Surviving Corporation
Exhibit C       Form of Exchange Agreement
Exhibit D       Form of Escrow Agreement
Exhibit E       Form of Company Affiliate Letter
Exhibit F       Form of Acquiror Affiliate Letter
Exhibit G       Form of Company's Counsel Opinion
Exhibit H       Form of Acquiror's Counsel Opinion
</TABLE>

                                      A-iv

<PAGE>
                          AGREEMENT AND PLAN OF MERGER

    This AGREEMENT AND PLAN OF MERGER, dated as of March 24, 2000 (this "Merger
Agreement"), is entered into by and among The Titan Corporation, a corporation
organized under the laws of the State of Delaware ("Acquiror"), V T Acquisition
Corp., a corporation organized under the laws of the State of Delaware
("Acquiror Sub"), and AverStar, Inc., a corporation organized under the laws of
the State of Delaware ("Company") ("Acquiror," "Acquiror Sub" and "Company"
individually hereinafter referred to as "Party" and collectively hereinafter
referred to as the "Parties");

    WHEREAS, Acquiror Sub, upon the terms and subject to the conditions of this
Merger Agreement and in accordance with the Delaware General Corporation Law
("Delaware Law"), will merge with and into Company (the "Merger");

    WHEREAS, the Board of Directors of Company has (i) determined that the
Merger is advisable and fair to the holders of Company Common Stock (as defined
in Section 3.04 of this Merger Agreement) and is in the best interests of such
stockholders, (ii) advised, authorized, approved and adopted this Merger
Agreement and the transactions contemplated hereby and (iii) recommended
approval and adoption of this Merger Agreement by the stockholders of Company
(the "Company Stockholders");

    WHEREAS, the Board of Directors of Acquiror has determined that the Merger
is advisable and in the best interests of Acquiror and its stockholders, the
Board of Directors of Acquiror Sub has determined that the Merger is advisable
and in the best interests of Acquiror Sub and its stockholder, and the Boards of
Directors of Acquiror and Acquiror Sub and the sole stockholder of Acquiror Sub
have advised, authorized, approved and adopted this Merger Agreement and the
transactions contemplated hereby;

    WHEREAS, as a condition and inducement to Acquiror's and Acquiror Sub's
entering into this Merger Agreement and incurring the obligations set forth
herein, concurrently with the execution and delivery of this Merger Agreement,
Acquiror and Acquiror Sub are entering into a Stockholders Agreement with
certain stockholders of the Company (the "Company Stockholders Agreement"),
pursuant to which, among other things, such stockholders have agreed to vote
their shares of Company Common Stock in favor of the Merger and have granted
Acquiror an irrevocable proxy to vote such shares of Company Common Stock;

    WHEREAS, for United States federal income tax purposes, it is intended that
the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code (as defined in Article XI) and that this Merger
Agreement qualifies as a "plan of reorganization" as defined in Treasury
Regulation 1.368-2(g); and

    WHEREAS, for accounting purposes it is intended that the Merger shall be
accounted for as a "pooling of interests" under GAAP (as defined in
Article XI).

    NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this Merger
Agreement, and intending to be legally bound hereby, the Parties agree as
follows.

                                      A-1
<PAGE>
                                   ARTICLE I
                                   THE MERGER

SECTION 1.01 THE MERGER

    Upon the terms and subject to the conditions set forth in this Merger
Agreement, and in accordance with Delaware Law, at the Effective Time (as
defined in Section 1.02 of this Merger Agreement) Acquiror Sub shall be merged
with and into Company, with Company being the surviving corporation (hereinafter
sometimes called "Surviving Corporation") in the Merger. Upon consummation of
the Merger, the separate corporate existence of Acquiror Sub shall cease, and
Surviving Corporation shall continue to exist as a Delaware corporation.

SECTION 1.02 EFFECTIVE TIME; CLOSING DATE

    Subject to the provisions of Section 2.05 of this Merger Agreement, as
promptly as practicable after the satisfaction or, if permissible, waiver of the
conditions set forth in Article VII of this Merger Agreement, the Parties shall
cause the Merger to be consummated by filing the Certificate of Merger, attached
hereto as Exhibit A (the "Certificate of Merger"), and any other appropriate
documents with the Delaware Secretary of State, in such form as required by, and
executed in accordance with the relevant provisions of, Delaware Law (the date
and time of such filing being the "Effective Time"). The day on which the
Effective Time shall occur shall hereinafter be referred to as the "Closing
Date."

SECTION 1.03 EFFECT OF THE MERGER

    At the Effective Time, the effect of the Merger shall be as provided in
Section 259 and other applicable provisions of Delaware Law. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time, all
the property, rights, privileges, powers and franchises of Company and Acquiror
Sub shall vest in Surviving Corporation, and all debts, liabilities and duties
of Company and Acquiror Sub shall become the debts, liabilities and duties of
Surviving Corporation.

SECTION 1.04 CERTIFICATE OF INCORPORATION; BYLAWS

    (a) Unless otherwise determined by Acquiror prior to the Effective Time, at
the Effective Time, the certificate of incorporation of Acquiror Sub shall
continue unchanged and shall be the certificate of incorporation of Surviving
Corporation until thereafter amended as provided by Law and such certificate of
incorporation, except that Acquiror Sub's certificate of incorporation shall be
amended at the Effective Time to reflect that the name of the Surviving
Corporation shall be AverStar, Inc.

    (b) Unless otherwise determined by Acquiror prior to the Effective Time, at
the Effective Time, the bylaws of Acquiror Sub shall continue unchanged and
shall be the bylaws of Surviving Corporation until thereafter amended as
provided by Law, the certificate of incorporation of Surviving Corporation and
such bylaws.

SECTION 1.05 DIRECTORS AND OFFICERS

    At the Effective Time, the initial officers and directors of Surviving
Corporation shall be the persons listed on Exhibit B, each to hold office in
accordance with the certificate of incorporation and bylaws of Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.

                                      A-2
<PAGE>
                                   ARTICLE II
               CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES

SECTION 2.01 THE MERGER

    At the Effective Time, by virtue of the Merger and without any action on the
part of Acquiror, Acquiror Sub, the Company or the holders of any of the
securities referred to in this Section 2.01:

    (a)  COMMON STOCK.  Subject to Section 2.06, (i) each share of Company
Common Stock (excluding any shares described in Section 2.01(c) and (f)) issued
and outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for the right to receive a
portion of a share of common stock, par value $0.01, of Acquiror ("Acquiror
Common Stock") equal to the Exchange Ratio (as defined below). The shares of
Acquiror Common Stock issuable to the holders of Company Common Stock pursuant
hereto is sometimes referred to herein, collectively, as the "Merger
Consideration". All such shares of Company Common Stock shall cease to be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each certificate previously evidencing any such shares shall
thereafter represent only the right to receive the Merger Consideration. Except
as otherwise provided herein or by applicable law, the holders of certificates
previously evidencing such shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of Company Common Stock. Each such certificate previously
evidencing such shares of Company Common Stock shall be exchanged for the number
of shares indicated in the certificate provided by the Company pursuant to
Section 6.08 in accordance with the provisions of Section 2.02 multiplied by the
Exchange Ratio, rounded up to the nearest whole number.

    The "Exchange Ratio" shall be determined as follows:

        (i) if the Acquiror Stock Price is less than or equal to $56.00 per
    share and greater than or equal to $44.00 per share, the Exchange Ratio
    shall be equal to the quotient obtained by dividing the Company Stock Value
    by the Acquiror Stock Price;

        (ii) if the Acquiror Stock Price is less than $44.00 per share and
    greater than or equal to $39.60 per share, the Exchange Ratio shall be equal
    to the quotient obtained by dividing the Company Stock Value by $44.00;

       (iii) if the Acquiror Stock Price is greater than $56.00 per share and
    less than or equal to $61.60 per share, the Exchange Ratio shall be equal to
    the quotient obtained by dividing the Company Stock Value by $56.00;

        (iv) if the Acquiror Stock Price is greater than $61.60 per share,
    (A) Acquiror may terminate this Merger Agreement pursuant to
    Section 8.01(d)(i), unless the Company makes a "Company Floating Rate
    Election" prior to the Scheduled Closing Date, in which case the Exchange
    Ratio shall be equal to the quotient obtained by dividing (x) the product of
    the Company Stock Value multiplied by 1.10 by (y) the Acquiror Stock Price
    or (B) in the event that Acquiror does not terminate this Agreement pursuant
    to clause (A) and the Company does not make a Company Floating Rate
    Election, the Exchange Ratio shall be equal to the quotient obtained by
    dividing the Company Stock Value by $56.00;

        (v) if the Acquiror Stock Price is less than $39.60 per share,
    (A) Company may terminate this Merger Agreement pursuant to
    Section 8.01(d)(ii), unless the Acquiror makes an "Acquiror Floating Rate
    Election" prior to the Scheduled Closing Date, in which case the Exchange
    Ratio shall be equal to the quotient obtained by dividing (x) the product of
    the Company Stock Value multiplied by 0.90 by (y) the Acquiror Stock Price
    or (B) in the event that Company does not terminate this Agreement pursuant
    to clause (A) and Acquiror does not make the Acquiror

                                      A-3
<PAGE>
    Floating Rate Election, the Exchange Ratio shall be equal to the quotient
    obtained by dividing the Company Stock Value by $44.00.

    (b)  CERTAIN DEFINITIONS.  For purposes of this Merger Agreement, (i) the
term "Acquiror Stock Price" shall mean the average of the closing sale prices of
a share of Acquiror Common Stock as reported on the New York Stock Exchange
("NYSE") for the ten (10) consecutive trading days ending with and including the
second trading day immediately preceding the date of the Scheduled Closing Date;
(ii) the term "Acquiror Floating Rate Election" shall mean an election made by
Acquiror to use the Exchange Ratio calculated pursuant to
Section 2.01(a)(v)(A); and (iii) the term "Company Floating Rate Election" shall
mean an election made by the Company to use the Exchange Ratio calculated
pursuant to Section 2.01(a)(iv)(A).

    (c)  TREASURY STOCK.  All shares of capital stock of the Company held in the
treasury of the Company immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof and no amount shall be
delivered or deliverable in exchange therefor.

    (d)  ACQUIROR SUB STOCK.  Each share of common stock, par value $.01 per
share, of Acquiror Sub issued and outstanding immediately prior to the Effective
Time ("Acquiror Sub Stock") shall be converted into and exchanged for one
(1) duly and validly issued, fully paid and nonassessable share of common stock
of the Surviving Corporation.

    (e)  [Intentionally Omitted].

    (f)  DISSENTING SHARES.  Notwithstanding anything in this Merger Agreement
to the contrary and unless otherwise provided by applicable law, shares of
Company Common Stock that are issued and outstanding immediately prior to the
Effective Time and that are owned by Company Stockholders who have properly
demanded payment of the fair value of their stock (the "Dissenting Shares")
within the meaning of Section 262 of Delaware Law shall not be converted into
the right to receive the Merger Consideration unless and until such Company
Stockholders shall have failed to perfect or shall have effectively withdrawn
their demand, or lost their right of payment under applicable law. If any such
Company Stockholder shall have failed to perfect or shall have effectively
withdrawn or lost such right of payment, each share of Company Common Stock held
by such Company Stockholder shall thereupon be deemed converted into the right
to receive and exchangeable for, at the Effective Time, the Merger Consideration
pursuant to Section 2.02 of this Merger Agreement. Subject to the terms and
conditions of this Merger Agreement, at and after the Effective Time, any holder
of shares of Company Common Stock who complies with Section 262 of Delaware Law
(a "Company Dissenting Stockholder") shall be entitled to obtain payment from
Surviving Corporation of the fair value of such Company Dissenting Stockholder's
shares of Company Common Stock as determined pursuant to Delaware Law; PROVIDED,
HOWEVER, that, to the extent permissible under Delaware Law, no such payment
shall be made unless and until such Company Dissenting Stockholder has
surrendered to the Exchange Agent the Certificate representing the shares of
Company Common Stock for which payment is being made.

    (g)  PROCEDURE WITH RESPECT TO DISSENTING SHARES.  Company shall give
Acquiror (i) prompt notice of any written notice of intent to demand payment for
shares filed pursuant to Section 262 of Delaware Law received by Company,
withdrawals of such notices, and any other instruments served in connection with
such notices pursuant to the relevant provisions of Delaware Law and received by
Company and (ii) the opportunity to direct all negotiations and proceedings with
respect to such notices under Delaware Law consistent with the obligations of
Company thereunder. Company shall not, except with the prior written consent of
Acquiror (which shall not be unreasonably withheld), (A) make any payment with
respect to any such notice, (B) offer to settle or settle any such notices or
(C) waive any failure to timely deliver a written notice in accordance with the
Delaware Law.

                                      A-4
<PAGE>
    (h)  FLOATING RATE ELECTION.  The Company and the Acquiror shall deliver the
Company Floating Rate Election or the Acquiror Floating Rate Election, as the
case may be, by notice to the other Party prior to the Scheduled Closing Date.
The Company Floating Rate Election and the Acquiror Floating Rate Election may
be delivered notwithstanding the fact that the other Party has not then elected
to terminate this Merger Agreement pursuant to Section 2.01(a) and
Section 8.01(d), in which event the other Party shall not be entitled to
terminate this Merger Agreement pursuant to Section 2.01(a) or Section 8.01(d).

SECTION 2.02 EXCHANGE OF CERTIFICATES

    (a)  EXCHANGE AGENT.  As soon as reasonably practicable after the Effective
Time, but in no event later than four (4) business days after the Effective Time
(assuming the Company has provided to Acquiror an electronic list of the names,
addresses, and tax identification numbers of the Company Stockholders and the
information provided in the certificate in Section 6.08 at least one
(1) business day prior to the Effective Time), Acquiror shall deposit with an
exchange agent designated by Acquiror and reasonably acceptable to Company (the
"Exchange Agent") pursuant to an exchange agreement in the form attached hereto
as Exhibit C, for the benefit of the former holders of shares of Company Common
Stock (excluding any shares described in Section 2.01(c)), for issuance and
payment in accordance with this Article II the shares of Acquiror Common Stock
(but not including the Escrow Stock) issuable pursuant to Section 2.01(a) (such
shares of Acquiror Common Stock being hereinafter referred to as the "Exchange
Fund"). Acquiror shall cause the Exchange Agent, pursuant to irrevocable
instructions, to deliver Acquiror Common Stock contemplated to be delivered
pursuant to Section 2.01(a) out of the Exchange Fund within three (3) business
days of the Exchange Agent's receipt of all information and documentation
required pursuant to Section 2.02(b). The Exchange Fund shall not be used for
any purpose other than as set forth in this Section 2.02(a).

    (b)  PAYMENT PROCEDURES.  As soon as reasonably practicable after the
Effective Time, but in no event later than four (4) business days after the
Effective Time (assuming the Company has provided to Acquiror an electronic list
of the names, addresses, and tax identification numbers of the Company
Stockholders and the information provided in the certificate in Section 6.08 at
least one (1) business day prior to the Effective Time), Acquiror shall cause
the Exchange Agent to mail to each record holder, as of the Effective Time, of
an outstanding certificate or certificates (each a "Certificate" and
collectively, the "Certificates") that immediately prior to the Effective Time
evidenced outstanding shares of Company Common Stock (excluding any shares
described in Sections 2.01(c)): (i) a form letter of transmittal and
(ii) instructions for use in effecting the surrender of the Certificates for
payment therefor. The Exchange Agent shall provide to the Company (for delivery
to the Company Stockholders) all such documentation in advance of the Effective
Time, but in any event not less than one (1) week prior to the Closing Date.
Upon surrender to the Exchange Agent of a Certificate, together with such letter
of transmittal duly executed and any other required documents, the holder of
such Certificate shall be entitled to receive in exchange therefor the
applicable consideration set forth in Section 2.01, and such Certificate shall
forthwith be canceled. In the event of a surrender of a Certificate representing
shares of Company Common Stock which are not registered in the transfer records
of the Company under the name of the Person surrendering such Certificate, a
certificate representing the proper number of shares of Acquiror Common Stock
may be issued to a Person other than the Person in whose name the Certificate so
surrendered is registered if (x) such Certificate shall be properly endorsed or
otherwise be in proper form for transfer to the Person surrendering such
Certificate and requesting such issuance, (y) such Person surrendering such
Certificate and requesting such issuance shall pay any transfer or other Taxes
required by reason of the issuance of shares of Acquiror Common Stock to a
Person other than the registered holder of such Certificate or shall establish
to the satisfaction of Acquiror that such Taxes have been paid or are not
applicable, and (z) such Person surrendering such certificate shall, if required
by Acquiror, have such Person's signature

                                      A-5
<PAGE>
guaranteed by a bank, brokerage firm or other financial intermediary that is a
member of a medallion guarantee program. Until surrendered in accordance with
the provisions of this Section 2.02, each Certificate shall represent for all
purposes only the right to receive the applicable consideration set forth in
Section 2.01, without any interest thereon.

    (c)  ISSUANCES TO AFFILIATES.  Notwithstanding anything herein to the
contrary, any Certificate surrendered for exchange by any "affiliate" of the
Company (as that term is used in SEC Accounting Series Release Nos. 130 and 135
and Rule 145 of the rules and regulations of the SEC under the Securities Act)
shall not be exchanged until Acquiror shall have received a signed agreement
from such "affiliate" as provided in Section 5.12 hereof.

    (d)  NO FURTHER RIGHTS IN STOCK.  All shares of Acquiror Common Stock issued
upon the surrender for exchange of Certificates in accordance with the terms of
Sections 2.01 and 2.02 hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to the shares of Company Common Stock
theretofore represented by such Certificates, and there shall be no further
registration of transfer on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock represented by such
Certificates which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, any such Certificates are presented to Acquiror, the
Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Article II, except as otherwise
provided by law.

    (e)  [Intentionally Omitted]

    (f)  TERMINATION OF EXCHANGE FUND.  Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Stock for twelve
(12) months after the Effective Time shall be delivered to Acquiror, upon
demand, and any holder of Company Common Stock that has not theretofore complied
with this Article II shall thereafter look only to the Surviving Corporation and
Acquiror for the Merger Consideration to which such holder is entitled pursuant
hereto.

    (g)  NO LIABILITY.  Neither Acquiror nor the Surviving Corporation shall be
liable to any holder of shares of Company Common Stock for any Acquiror Common
Stock or cash delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.

    (h)  WITHHOLDING OF TAX.  Acquiror or the Exchange Agent shall be entitled
to deduct and withhold from the applicable amount of the Merger Consideration
otherwise issuable to any former holder of Company Common Stock such amounts as
Acquiror (or any Affiliate thereof) or the Exchange Agent are required to deduct
and withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign Tax law. To the extent that amounts are so
withheld by Acquiror (or any Affiliate thereof) or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Merger Agreement as
having been paid to the former holder of Company Common Stock in respect of whom
such deduction and withholding was made by Acquiror (or any Affiliate thereof)
or the Exchange Agent.

    (i)  LOST, STOLEN OR DESTROYED CERTIFICATES.  In the event any Certificate
evidencing shares of Company Common Stock shall have been lost, stolen or
destroyed, upon the making of an affidavit setting forth that fact by the Person
claiming such lost, stolen or destroyed Certificate and the granting of a
reasonable indemnity against any claim that may be made against Acquiror or the
Exchange Agent with respect to such Certificate (and if required by Acquiror in
the case of any Certificate or Certificates from any Company Stockholder
representing more than seven thousand five hundred (7,500) shares of Company
Common Stock, the posting by such Person of a bond, in such reasonable amount as
Acquiror may direct), Acquiror shall cause the Exchange Agent to pay to such
Person the applicable amount of the Merger Consideration with respect to such
lost, stolen or destroyed Certificate.

                                      A-6
<PAGE>
    (j)  DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES OF ACQUIROR COMMON
STOCK.  No dividends or other distributions declared or made after the Effective
Time with respect to Acquiror Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Acquiror Common Stock evidenced thereby until the
holder of such Certificate shall properly surrender such Certificate in
accordance with the requirements of Section 2.02(b). Subject to the effect of
escheat, tax or other applicable laws, following surrender of any such
Certificate, there shall be paid to the holder of the certificates evidencing
whole shares of Acquiror Common Stock issued in exchange therefor, without
interest, (i) promptly the amount of dividends or other distributions with a
record date after the Effective Time and theretofore paid with respect to such
whole shares of Acquiror Common Stock, and (ii) at the appropriate payment date,
the amount of dividends or other distributions, with a record date after the
Effective Time but prior to surrender and a payment date occurring after
surrender, payable with respect to such whole shares of Acquiror Common Stock.

    (k)  APPOINTMENT OF STOCKHOLDERS' REPRESENTATIVES.  Michael B. Alexander,
Sigmund H. Goldblum and Peter Schulte shall, by virtue of the Merger, be
appointed attorneys-in-fact and authorized and empowered to act, for and on
behalf of any or all of the Company Stockholders (with full power of
substitution in the premises), in connection with the provisions of Article IX
as they relate to the Company and the Company Stockholders generally, and such
other matters as are reasonably necessary for the consummation of the
transactions contemplated hereby including, without limitation, (i) to
compromise on their behalf with Acquiror any claims asserted thereunder,
(ii) to execute and deliver on behalf of the Company Stockholders any documents
or agreements contemplated by or necessary or desirable in connection with this
Merger Agreement and (iii) to take such further actions including coordinating
and administering post-closing matters related to the rights and obligations of
the Company Stockholders as are authorized in this Merger Agreement (the above
named representatives, as well as any subsequent representative(s) of the
Company Stockholders appointed by the Company Stockholders being referred to
herein as the "Stockholders' Representatives"). The Stockholders'
Representatives shall not be liable to any Company Stockholder, Acquiror, the
Surviving Corporation or their respective Affiliates or any other Person with
respect to any action taken or omitted to be taken by the any of Stockholders'
Representatives in their role as Stockholders' Representatives under or in
connection with this Merger Agreement unless such action or omission results
from or arises out of fraud, gross negligence, willful misconduct or bad faith
on the part of the Stockholders' Representatives. Acquiror, Acquiror Sub and the
Surviving Corporation shall be entitled to rely on such appointment and treat
such Stockholders' Representatives, or any one of them, as the duly appointed
attorney-in-fact of each Company Stockholder. Each Company Stockholder who votes
in favor of the Merger pursuant to the terms hereof, by such vote and without
any further action, and each Company Stockholder who receives Merger
Consideration in connection with the Merger, by acceptance thereof and without
any further action, confirms such appointment and authority. In the event
Acquiror receives conflicting instructions from different Stockholders'
Representatives, Acquiror shall be permitted to take no action with respect
thereto until it receives written instructions signed by all Stockholders'
Representatives or directed by court order.

SECTION 2.03 STOCK OPTIONS

    (a) As of the Effective Time, each outstanding Option shall be converted
into an option to acquire Acquiror Common Stock as provided in this
Section 2.03. Following the Effective Time, each Option shall continue to have,
and shall be subject to, the terms and conditions of each agreement pursuant to
which such Option was subject immediately prior to the Effective Time
(including, in the case of each Option granted under the Company's 1998 Long
Term Incentive Plan, the terms and conditions of the Company's 1998 Long Term
Incentive Plan under which such Option was granted), except that: (i) each
Option (as converted pursuant to this Section 2.03) shall be exercisable for
that number of whole shares of Acquiror Common Stock equal to the product of
(A) the aggregate number

                                      A-7
<PAGE>
of shares of Company Common Stock for which such Option was exercisable at the
Effective Time, multiplied by (B) the Exchange Ratio, rounded up to the nearest
whole share (provided that all references in such Company Stock Option Plans and
the agreement under which such Option was granted to the Company shall be
references to Acquiror and references to the Company's Common Stock shall be
references to Acquiror Common Stock); and (ii) the exercise price per share of
Acquiror Common Stock issuable pursuant to each Option (as converted pursuant to
this Section 2.03) shall be equal to the exercise price per share of Company
Common Stock under such Option at the Effective Time divided by the Exchange
Ratio, rounded to the nearest whole cent.

    (b) The assumption and substitution of Options as provided herein shall not
give the holders of such Options additional benefits or additional (or
accelerated) vesting rights that they did not have immediately prior to the
Effective Time or relieve the holders of such Options from any obligations or
restrictions applicable to their Options or the shares obtainable upon exercise
of the Options. The adjustment provided herein with respect to any Options that
are "incentive stock options" (as defined in Section 422 of the Code) shall be
and is intended to be, effected in a manner that is consistent with continued
treatment of such Options as "incentive stock options" under Section 424(a) of
the Code. The duration and other terms of the converted options provided for in
this Section 2.03 shall be the same as the Options except that all references to
the Company shall be references to Acquiror and references to the Company's
Common Stock shall be references to Acquiror Common Stock. Acquiror shall take
all corporate action necessary to reserve for issuance, at all times any
converted Options provided for in this Section 2.03 are outstanding, a
sufficient number of shares of Acquiror Common Stock for delivery upon the
exercise of such converted Options. The Company will take such action as shall
be reasonably necessary (including but not limited to obtaining waivers from
holders of Options) so that each Option that was unvested or subject to a
repurchase option, risk of forfeiture or other condition under any applicable
Company Stock Option Plans immediately prior to the Effective Time shall
continue to be subject to such vesting, repurchase, forfeiture or other
conditions with respect to the Acquiror Common Stock that may be issuable with
respect thereto after the occurrence of the Effective Time or the consummation
of the transactions contemplated by this Merger Agreement. As of the Effective
Time, the Company shall effect the termination of each other outstanding
unexpired and unexercised option to purchase shares of Company Common Stock.

SECTION 2.04 CERTAIN ADJUSTMENTS

    If between the date hereof and the Effective Time, the outstanding shares of
Company Common Stock or of Acquiror Common Stock shall be changed into a
different number of shares by reason of any reclassification, recapitalization,
split-up, combination or exchange of shares, or any dividend payable in stock or
other securities shall be declared thereon with a record date within such
period, the Exchange Ratio (and any other references herein to a price per share
of Acquiror Common Stock) shall be adjusted accordingly to provide the same
economic effect as contemplated by this Merger Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange or dividend.

SECTION 2.05 CLOSING

    Subject to the terms and conditions of this Merger Agreement, the closing of
the Merger (the "Closing" and the date of such Closing, the "Scheduled Closing
Date") will take place on the second Business Day after the satisfaction of the
latest to occur or, if permissible, waiver of the conditions set forth in
Article VII of this Merger Agreement at the offices of Hogan & Hartson L.L.P.,
8300 Greensboro Drive, Suite 1100, McLean, Virginia 22102, unless another date
or place is agreed to in writing by the Parties.

                                      A-8

<PAGE>
SECTION 2.06 ESCROW STOCK; DETERMINATION OF CLOSING ADJUSTMENT

    (a)  ESCROW STOCK.  When making the issuances of Acquiror Common Stock
pursuant to Section 2.01(a) above, Acquiror shall withhold from the Company
Stockholders a number of shares of Acquiror Common Stock equal to the quotient
of five percent (5%) of the Transaction Value divided by the Acquiror Stock
Price (the "Escrow Stock"). The Escrow Stock will be placed in escrow as
security for the performance of the indemnity obligations of the Company
Stockholders under Section 9.02 of this Merger Agreement and to pay Acquiror any
Closing Adjustment required to be paid to Acquiror pursuant to this
Section 2.06, all pursuant to the terms and conditions of an escrow agreement
among Acquiror, the Surviving Corporation, the Stockholders' Representatives and
First Union National Bank or another escrow agent designated by Acquiror and
reasonably acceptable to the Company (the "Escrow Agent"), in form attached
hereto as Exhibit D (the "Escrow Agreement"). The Escrow Stock shall be
registered in the name of the Escrow Agent as nominee for the Company
Stockholders. The Merger Consideration otherwise distributable as of the
Effective Time to each Company Stockholder in connection with the Merger as
provided in Section 2.01(a) shall be proportionately reduced to reflect the
Escrow Stock required to be deposited in Escrow pursuant to this
Section 2.06(a) and the Escrow Agreement, and such Escrow Stock shall be
released to the Company Stockholders or Acquiror, as the case may be, only in
accordance with the terms of this Merger Agreement and the Escrow Agreement. The
fees of the Escrow Agent shall be paid by Acquiror. On the earlier to occur of
(i) five (5) business days after the final determination of the Closing
Adjustment and the Loss Adjustment pursuant to Section 2.06(b) (including,
without limitation, final resolution of any disputes with respect thereto) or
(ii) ninety (90) days after Closing, the Escrow Agent shall deliver to the
Company Stockholders, pro-rata in accordance with the number of shares of
Company Common Stock held by each such Company Stockholder immediately prior to
the Effective Time, the Escrow Stock, after deducting therefrom an amount of
Escrow Stock having a value equal to the sum (which shall not be less than zero)
of the Closing Adjustment, if any, and the Loss Adjustment, if any, and shall
deliver to Acquiror an amount of Escrow Stock having a value equal to such sum;
PROVIDED, HOWEVER, that in the event of any dispute over the sum of the Closing
Adjustment and the Loss Adjustment pursuant to Section 2.06(b), the Escrow Stock
having a value equal to the amount of any disputed Closing Adjustment and Loss
Adjustment (together with a number of shares of Escrow Stock which are, in
Acquiror's reasonable judgment, necessary to cover any expenses of Acquiror
necessary to resolve such dispute) need not be delivered until such dispute is
finally resolved. For purposes of this Section 2.06, the value of each share of
Escrow Stock shall be equal to the Closing Acquiror Stock Price.

    (b)  DETERMINATION OF CLOSING ADJUSTMENT AND LOSS ADJUSTMENT.  The "Closing
Adjustment" shall equal (i) the amount by which the Net Debt of the Company and
the Company Subsidiaries as of the Closing Date is greater or less than
(ii) the Estimated Net Debt as set forth in the certificate required to be
delivered pursuant to Section 7.02(k) of this Merger Agreement. The "Loss
Adjustment" shall equal the amount of any Losses for which Acquiror Indemnified
Persons are entitled to indemnification pursuant to Section 9.02. The Company
will use its best efforts to close its books and records for the period ending
on the Closing Date within five (5) days after the Closing Date and shall
deliver to the Acquiror or, at the request of the Acquiror, to Acquiror and
Arthur Andersen LLP, such books and records as shall be requested by Acquiror or
Arthur Andersen LLP to enable Arthur Andersen LLP to perform an audit of the
consolidated financial statements of the Company as of the Closing Date and to
determine the amount of the Closing Adjustment and the Loss Adjustment. Upon
receipt of such books and records, the Acquiror shall use its best efforts to
cause Arthur Andersen LLP to complete an audit of the consolidated financial
statements of the Company in order to provide Acquiror the information necessary
to calculate the amount of the Closing Adjustment and the Loss Adjustment within
sixty (60) days following receipt of the books and records of the Company.
Acquiror shall deliver to the Stockholders' Representatives a draft copy of such
audited financial statements and the draft

                                      A-9
<PAGE>
determination of the amount of the Closing Adjustment and the Loss Adjustment
promptly upon receipt of such items from Arthur Andersen LLP. The Stockholders'
Representatives shall have the right to review and copy the computations and
review workpapers used in connection with the preparation of the audited
financial statements after providing Arthur Andersen LLP with written releases
reasonably acceptable to Arthur Andersen LLP and the computation of the Closing
Adjustment and the Loss Adjustment. If the Stockholders' Representatives
disagree with the determination of the Closing Adjustment or the Loss
Adjustment, the Stockholders' Representatives shall so notify the Acquiror in
writing within ten (10) days after the date of their receipt of the audited
financial statements and the computation of the Closing Adjustment and the Loss
Adjustment, specifying in detail any point of disagreement; PROVIDED, HOWEVER,
that if the Stockholders' Representatives fail to notify the Acquiror in writing
of the Stockholders' Representatives' disagreement within such ten (10) day
period, the determination of the Closing Adjustment and the Loss Adjustment
shall be final, conclusive and binding on the Parties for purposes of
determining the amount of the Escrow Stock to be delivered to Company
Stockholders pursuant to this Section 2.06, PROVIDED, FURTHER, HOWEVER, that the
sum of the Closing Adjustment and the Loss Adjustment shall not exceed five
percent (5%) of the Transaction Value. The Acquiror and the Stockholders'
Representatives shall negotiate in good faith to resolve any such disagreement.
It is the intent of the Parties hereto that upon final determination of the
Closing Adjustment, if any, and the Loss Adjustment, if any, the net amount of
such adjustments, provided such amount is in Acquiror's favor, shall be paid to
Acquiror from the Escrow Stock pursuant to this section. There shall be no
adjustment in the case of a net sum in the Company's favor but the escrow stock
shall be distributed to the Company Stockholders as provided above.

    (c)  RESOLUTION OF CLOSING ADJUSTMENT.  If any such disagreement with
respect to the Closing Adjustment cannot be resolved by the Acquiror and the
Stockholders' Representatives within fifteen (15) days after the Stockholders'
Representatives have received notice from the Acquiror in accordance with
Section 2.06(b) of the existence of such disagreement, the Acquiror and the
Stockholders' Representatives shall jointly select a nationally recognized
independent public accounting firm (which has not performed any service since
January 1, 1996 for either the Company or the Acquiror or any of their
respective Affiliates (the "Accounting Firm")), to act as an arbitrator to
resolve as expeditiously as possible all points of disagreement with respect to
the Closing Adjustment (or, in the event they are unable to agree, either may
request the San Diego, CA office of the American Arbitration Association to make
such selection, which shall be final and binding on the Parties). All
determinations made by the Accounting Firm with respect to the Closing
Adjustment shall be final, conclusive and binding on the Parties hereto. Each
party shall be responsible for its fees and expenses, as well as one-half of the
fees and expenses of the Accounting Firm, incurred in connection with the
resolution of the Closing Adjustment; PROVIDED, HOWEVER, that any such fees and
expenses incurred on behalf of the Company Stockholders may be paid from any
excess Escrow Stock (that is, any Escrow Stock remaining after the final
distribution to Acquiror of Escrow Stock, if any, in respect of the Closing
Adjustment or the Loss Adjustment) pursuant to the Escrow Agreement.

    (d)  RESOLUTION OF LOSS ADJUSTMENT.  If any such disagreement with respect
to the Loss Adjustment cannot be resolved by the Acquiror and the Stockholders'
Representatives within fifteen (15) days after the Stockholders' Representatives
have received notice from the Acquiror in accordance with Section 2.06(b) of the
existence of such disagreement, the Acquiror and the Stockholders'
Representatives shall submit the matter to the San Diego, CA office of the
American Arbitration Association ("AAA") for binding arbitration to be conducted
in accordance with the AAA commercial arbitration rules in effect at the time
such matter is submitted. If any such matter is submitted to the AAA as provided
herein, (A) each of the Acquiror and the Stockholders' Representatives will
furnish to AAA such workpapers and other documents and information as AAA may
request and will be afforded the opportunity to present to AAA any material
relevant to the matter, (B) the determination by AAA, as set forth in a notice
delivered to the Acquiror and the Stockholders' Representatives by

                                      A-10
<PAGE>
AAA, will be binding and conclusive on such parties and (C) the non-prevailing
party shall be responsible for the fees and expenses incurred in connection with
the resolution of the Loss Adjustment; provided, however, that any such fees and
expenses that are to be paid by the Company Stockholders may be paid from any
excess Escrow Stock (that is, any Escrow Stock remaining after the final
distribution to Acquiror of Escrow Stock, if any, in respect of the Closing
Adjustment or Loss Adjustment) pursuant to the Escrow Agreement.

                                      A-11
<PAGE>
                                  ARTICLE III
                   REPRESENTATIONS AND WARRANTIES OF COMPANY

    Except as specifically set forth in the Disclosure Letter delivered by
Company to Acquiror prior to the execution and delivery of this Merger Agreement
(the "Company Disclosure Letter") and referenced in the Company Disclosure
Letter to the Section(s) of this Article III to which such disclosure applies,
Company hereby represents, warrants to and agrees with Acquiror and Acquiror Sub
as follows, in each case as of the date of this Merger Agreement and as of the
Closing Date:

SECTION 3.01 ORGANIZATION AND QUALIFICATION

    Company is a corporation duly organized, validly existing and in good
standing under Delaware Law, and has the corporate power and authority to own,
operate and lease its Assets, to carry on its business as currently conducted,
to execute and deliver this Merger Agreement and to carry out the transactions
contemplated hereby. Company is duly qualified to conduct business as a foreign
corporation and is in good standing in the states, countries and territories
listed in the Company Disclosure Letter and in each jurisdiction where the
nature of its business or the ownership, operation or leasing of its Assets
makes such qualification necessary except where failure to so qualify would not
have a Company Material Adverse Effect.

SECTION 3.02 SUBSIDIARIES

    Section 3.02 of the Company Disclosure Letter lists each Company Subsidiary.
Neither Company nor any Company Subsidiary has any equity investment or other
interest in, nor has Company or any Company Subsidiary made advances or loans to
any Person (other than intra-company transactions between or among Company and a
Company Subsidiary). Section 3.02 of the Company Disclosure Letter sets forth
(a) the authorized capital stock or other equity interests of each Company
Subsidiary and (b) the percentage of the issued and outstanding capital stock or
other equity interests of each Company Subsidiary owned by Company. All of such
shares of capital stock or other equity interests of each Company Subsidiary
have been duly authorized and validly issued and are outstanding, fully paid and
nonassessable and are owned by Company free and clear of all Encumbrances other
than Encumbrances arising under applicable securities Laws. Each Company
Subsidiary is a corporation duly organized, validly existing and in good
standing under the Laws of its state or jurisdiction of incorporation (as listed
in Section 3.02 of the Company Disclosure Letter), and has the requisite
corporate power and authority to own, operate and lease its Assets and to carry
on its business as currently conducted. Each Company Subsidiary is duly
qualified to conduct business as a foreign Person and is in good standing in
each jurisdiction where the nature of its business or the ownership, operation
or the leasing of its Assets makes such qualification necessary except where
failure to so qualify would not have a Company Material Adverse Effect.

SECTION 3.03 ARTICLES OF INCORPORATION AND BYLAWS

    Company has furnished to Acquiror a true and complete copy of the
certificate or articles of incorporation of Company and each Company Subsidiary,
as currently in effect on the date of this Merger Agreement, and a true and
correct copy of Company's bylaws and the bylaws of each Company Subsidiary, as
currently in effect on the date of this Merger Agreement. Neither the Company
nor any Company Subsidiary is in violation of any of the provisions of its
respective articles of incorporation or bylaws.

SECTION 3.04 CAPITALIZATION

    The authorized capital stock of the Company consists of Seventeen Million
(17,000,000) shares of Company Common Stock, of which (i) 2,280,471 shares are
designated as Voting Class A Common

                                      A-12
<PAGE>
Stock and 105,190 shares are designated as Non-Voting Class A Common Stock,
(ii) 1,867,808 shares are designated as Voting Class B Common Stock and 290,873
shares are designated as Non-Voting Class B Common Stock, (iii) 182,939 shares
are designated as Voting Class C Common Stock, (iv) 3,681,251 are designated as
Voting Class D Common Stock and 756,608 are designated as Non-Voting Class D
Common Stock, (v) 91,470 shares are designated as Voting Class E Common Stock,
(vi) 6,000,000 shares are designated as Voting Class F Common Stock,
(vii) 756,608 shares are designated as Non-Voting Class G Common Stock, and
(viii) 986,782 shares of additional classes of stock which may be issued in one
or more series, from time to time, with such designations, preferences and
relative, participating, optional or other special rights and qualifications,
limitations or restrictions thereon (including, without limitation, voting
rights) as may be provided in a resolution or resolutions adopted by the Board
of Directors of the Company. Section 3.04 of the Company Disclosure Letter sets
forth the names and addresses of all holders of record of Company Common Stock
and the number and class of shares held by each such stockholder. No other
shares of Company Common Stock have been reserved for any purpose. There are no
outstanding securities convertible into or exchangeable for Company Common
Stock, any other securities of Company, or any capital stock or other securities
of any Company Subsidiary and no outstanding options, rights (preemptive or
otherwise), or warrants to purchase or to subscribe for any shares of such stock
or other securities of Company or any Company Subsidiary. There are no
outstanding Agreements affecting or relating to the voting, issuance, purchase,
redemption, registration, repurchase or transfer of Company Common Stock, any
other securities of Company, or any capital stock or other securities of any
Company Subsidiary, except as contemplated hereunder. Each of the outstanding
shares of Company Common Stock and of capital stock of, or other equity
interests in, each Company Subsidiary was issued in compliance with all
applicable federal and state Laws concerning the issuance of securities. There
are no obligations, contingent or otherwise, of Company or any Company
Subsidiary to provide funds to, make any investment (in the form of a loan,
capital contribution or otherwise) in, or provide any guarantee with respect to,
any Person other than Company or any Company Subsidiary. There are no Agreements
pursuant to which any Person (other than Company or any Company Subsidiary) is
or may be entitled to receive any of the revenues or earnings, or any payment
based thereon or calculated in accordance therewith, of Company or any Company
Subsidiary. As of the Effective Time, Company shall have only one class of
capital stock.

SECTION 3.05 AUTHORITY; BINDING OBLIGATION

    The execution and delivery by Company of this Merger Agreement, the
execution and delivery by Company of all other Agreements, documents,
certificates or other instruments contemplated hereby, and the consummation by
Company of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of Company are necessary to authorize this Merger Agreement and the
other Agreements, documents, certificates or other instruments contemplated
hereby, or to consummate the transactions contemplated hereby and thereby, other
than approval by the Company Stockholders and the approval and adoption of this
Merger Agreement by Company in accordance with Delaware Law and Company's
certificate of incorporation and bylaws. This Merger Agreement has been duly
executed and delivered by Company and constitutes a legal, valid and binding
obligation of Company (assuming the Merger Agreement has been duly executed and
delivered by Acquiror and Acquiror Sub and constitutes a legal, valid and
binding obligation of Acquiror and Acquiror Sub), enforceable in accordance with
its terms, except as such enforceability may be subject to the effects of any
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar Laws affecting creditors' rights generally and subject to
the effects of general equitable principles (whether considered in a proceeding
in equity or at law).

                                      A-13
<PAGE>
SECTION 3.06 NO CONFLICT; REQUIRED FILINGS AND CONSENTS

    (a) The execution, delivery and performance by Company of this Merger
Agreement and all other Agreements, documents, certificates or other instruments
contemplated hereby, the fulfillment of and compliance with the respective terms
and provisions hereof and thereof, and the consummation by Company of the
transactions contemplated hereby and thereby, do not and will not: (i) conflict
with, or violate any provision of, the certificate of incorporation or bylaws of
Company; (ii) subject to (A) obtaining the requisite approval and adoption of
this Merger Agreement by Company Stockholders in accordance with Delaware Law
and Company's certificate of incorporation and bylaws and (B) obtaining the
consents, approvals, authorizations and permits of, and making filings with or
notifications to, the applicable Governmental Entity pursuant to the applicable
requirements, if any, of the HSR Act, and the filing and recordation of the
Certificate of Merger as required by Delaware Law, conflict with or violate any
Law applicable to Company or any Company Subsidiary, or any of their Assets;
(iii) conflict with, result in any breach of, or constitute a default (or an
event that with notice or lapse of time or both would become a default) or
result in the termination or acceleration, or create in another Person, a put
right, purchase obligation or similar right under any Agreement to which Company
or any Company Subsidiary is a party or by which Company or any Company
Subsidiary, or any of their Assets, may be bound; or (iv) result in or require
the creation or imposition of, or result in the acceleration of, any
indebtedness or any Encumbrance of any nature upon, or with respect to, Company
or any Company Subsidiary or any of the Assets now owned or hereafter acquired
by Company; except for any such conflict or violation described in clause (ii)
above, any such conflict, breach or default described in clause (iii) above, or
any such creation, imposition or acceleration described in clause (iv) above
that would not have a Company Material Adverse Effect and that would not prevent
Company from consummating the Merger on a timely basis.

    (b) The execution, delivery and performance by Company and each Company
Subsidiary of this Merger Agreement and all other Agreements, documents,
certificates or other instruments contemplated hereby, the fulfillment of and
compliance with the respective terms and provisions hereof and thereof, and the
consummation by Company and each Company Subsidiary of the transactions
contemplated hereby and thereby, do not and will not: (i) require any consent,
approval, authorization or permit of, or filing with or notification to, any
Person not party to this Merger Agreement, except (A) pursuant to the applicable
requirements, if any, of the HSR Act and Laws of other Governmental Entities,
(B) the filing and recordation of the Certificate of Merger as required by
Delaware Law and (C) where the failure to obtain any consent, approval,
authorization or permit or to make any filing or notification otherwise required
to be disclosed hereunder would not have a Company Material Adverse Effect; or
(ii) result in or give rise to any penalty, forfeiture, Agreement termination,
right of termination, amendment or cancellation, or restriction on business
operations of Company or any Company Subsidiary that would have a Company
Material Adverse Effect.

    (c) All returns (other than Tax Returns), reports (other than reports
required to be filed pursuant to the terms of any Government Contract),
statements and other documents required to be filed by the Company or any
Company Subsidiary with any Governmental Entity have been filed in a timely
manner and complied with and are true, correct and complete in all material
respects, except for returns, reports, statements and other documents where the
failure to so file would not be reasonably expected to have a Company Material
Adverse Effect. All material records of every type and nature relating to the
business, operations or Assets of the Company and each Company Subsidiary have
been maintained in all material respects in accordance with good business
practices and are maintained at the Company or Company Subsidiary.

    (d) No Governmental Entity or any other Person has notified Company or any
Company Subsidiary in writing that such Governmental Entity or other Person
intends to object to the transactions contemplated hereunder which shall include
for this purpose any objection to the operations of the business of Company or
any Company Subsidiary as part of Acquiror. The Company

                                      A-14
<PAGE>
is not aware of any fact or circumstance related to it or to any Company
Subsidiary that would reasonably be expected to (i) cause the filing of any
objection to any application for any Governmental consent required hereunder,
(ii) lead to any delay in processing such application or (iii) require any
waiver of any Governmental rule, policy or other applicable law, in each case
which would reasonably be expected to materially delay the consummation of the
transaction contemplated hereunder.

SECTION 3.07 INTELLECTUAL PROPERTY

    (a) Section 3.07 of the Company Disclosure Letter sets forth an accurate,
correct and complete list, as of the date hereof, of (i) all Intellectual
Property (other than non-registered copyrights) of Company or any Company
Subsidiaries, (ii) all Software of Company or any Company Subsidiary that has
been expensed, if the cost of such Software was greater than $100,000, and all
Software of Company or any Company Subsidiary capitalized on Company's books and
records at any time within the last three (3) fiscal years, (iii) all Software
of Company or any Company's Subsidiary sold or licensed to Persons by Company or
any Company Subsidiary at any time within the last three (3) fiscal years and
(iv) all pending Software development projects approved by senior management of
Company which, if completed as currently anticipated by Company, would be
required to be listed on Section 3.07 of the Company Disclosure Letter pursuant
to clauses (ii) and (iii) above, together with an identification of the division
undertaking such projects. Prior to the Closing, Company will provide to
Acquiror an accurate, correct and complete list and make available to Acquiror
at Company's offices, accurate, correct and complete copies of all written
Agreements with respect to Intangible and Other Property and written summaries
of each oral Agreement with respect to Intangible and Other Property entered
into by Company or any Company Subsidiary from the date hereof through the
Closing Date of a type that is described in this Section 3.07(a).

    (b) Company and Company Subsidiaries own, have licensed or otherwise have
the right to use all Intangible and Other Property used in the business of
Company and Company Subsidiaries, as presently conducted or as proposed to be
conducted, except for such Intangible and Other Property the loss of the use of
which is not reasonably likely, individually or in the aggregate (together with
the items set forth in Section 3.07 of the Company Disclosure Letter), to have a
Company Material Adverse Effect. To the knowledge of Company, except as
specifically noted in Section 3.07 of the Company Disclosure Letter, none of the
Software owned, licensed or used by Company or any Company Subsidiary is owned
by or licensed from any employees of Company or any Company Subsidiary.

    (c) (i) The use of the Intangible and Other Property by Company or any
Company Subsidiary does not infringe upon or otherwise violate the rights of any
third party in or to such Intangible and Other Property (except as any
Commercial Software licensed or sold to Company or any Company Subsidiary by
unrelated Persons may involve such infringement or violation) and (ii) no claim
has been asserted, and Company is not aware of any claim which can be asserted,
by any Person against Company or Company Subsidiaries with respect to the use of
any item of Intangible and Other Property challenging or questioning the
validity or effectiveness of such use of any such item, except for such
infringements, violations or claims which are not reasonably likely,
individually or in the aggregate (together with the items set forth in
Section 3.07 of the Company Disclosure Letter), to have a Company Material
Adverse Effect. Unless specifically noted in Section 3.07 of the Company
Disclosure Letter, no employee of Company or any Company Subsidiary has a right
to receive a royalty or similar payment, or has any other monetary rights, in
respect of any item of Intangible and Other Property of Company or any Company
Subsidiary. Unless specifically noted in Section 3.07 of the Company Disclosure
Letter, no Person (other than employees of Company or any Company Subsidiary)
has a right to receive a royalty or similar payment, or has any other monetary
rights, in respect of any item of Intangible and Other Property, except for such
rights which are not reasonably likely, individually or in the aggregate
(together with the items set forth in Section 3.07 of the Company Disclosure
Letter),

                                      A-15
<PAGE>
to have a Company Material Adverse Effect. The Merger will not violate any
provision of any Agreements relating to any of the Intangible or Other Property.
Each of Company and Company Subsidiaries has taken reasonable measures to
protect the proprietary nature of each item of Intellectual Property and
Software, and to maintain the confidentiality of all confidential information,
that it owns or uses and are not aware of any unauthorized disclosure of
confidential information.

SECTION 3.08 FINANCIAL STATEMENTS AND CONDITION

    (a) Company has prepared the audited consolidated balance sheets of Company
and the Company Subsidiaries as of the end of the fiscal periods ending
February 28, 1997, December 31, 1997, December 31, 1998 and December 31, 1999
(collectively, the "Company Audited Balance Sheet") and the audited consolidated
statements of income, Company's and the Company Subsidiaries' equity and changes
in financial position for each of such fiscal years in each case audited by
Ernst & Young LLP, the Company's independent public accountants, in accordance
with generally accepted auditing standards (other than the report and notes
thereto in the case of the fiscal period ending December 31, 1999) and
accompanied by the related report of Ernst & Young LLP (such balance sheets and
such consolidated statements of income, Company's equity and changes in
financial position are hereinafter referred to collectively as the "Company
Financial Statement"). A true and complete copy of the Company Financial
Statement has been delivered to Acquiror and is attached as an exhibit to, and
constitutes an integral part of, the Company Disclosure Letter.

    (b) The Company Financial Statement, including, without limitation, the
notes thereto (other than the notes to the December 31, 1999 financial statement
which will be provided to Acquiror prior to the Effective Time), (i) has been
prepared in accordance with the books and records of Company and its
Subsidiaries and (ii) presents fairly in all material respects the consolidated
financial position of Company and its Subsidiaries at the respective dates
thereof and their consolidated results of operations and cash flows for the
periods indicated, in accordance with GAAP applied throughout the periods
involved (except as noted therein).

SECTION 3.09 ABSENCE OF CERTAIN DEVELOPMENTS

    Since December 31, 1999:

    (a) the business of Company and each Company Subsidiary has been conducted
in all material respects only in the Ordinary Course of Business;

    (b) neither Company nor any Company Subsidiary has become liable in respect
of any guarantee or has incurred or otherwise become liable in respect of any
debt, except for borrowings, letters of credit and bankers' acceptances in the
Ordinary Course of Business under credit facilities in existence on
December 31, 1999;

    (c) neither Company nor any Company Subsidiary has mortgaged, pledged or
subjected to any lien any of their respective property, business or assets,
except for Permitted Encumbrances or purchase money or similar security
interests granted in connection with the purchase of equipment or supplies in
the Ordinary Course of Business in an amount not exceeding $100,000 in the
aggregate;

    (d) neither Company nor any Company Subsidiary has made any declaration,
setting aside or payment of any dividend or other distribution with respect to,
or repurchase of, any of their respective capital stock or other equity
interests;

    (e) neither Company nor any Company Subsidiary has (i) acquired or leased
from any other Person any material assets, or sold or leased to any other Person
or otherwise disposed of any material assets (in each case except for assets
acquired or sold in the Ordinary Course of Business in connection with goods and
services provided to customers); (ii) entered into any contractual obligation
relating to (A) the purchase or sale of any capital stock, partnership interest
or other equity interest in any

                                      A-16
<PAGE>
Person, (B) the purchase of assets constituting a business or (C) any merger,
consolidation or other business combination; (iii) entered into or amended any
lease of real property or material personal property (whether as lessor or
lessee); (iv) canceled or compromised any debt or claim other than accounts
receivable in the Ordinary Course of Business; (v) sold, transferred, licensed
or otherwise disposed of any material intangible assets other than in the
Ordinary Course of Business; (vi) waived or released any right of substantial
value; (vii) instituted, settled or agreed to settle any material action; or
(viii) entered into or consummated any transaction with any Affiliate;

    (f) there has been no loss, destruction or damage to any material item of
property of Company or any Company Subsidiary, whether or not insured, which has
had or could reasonably be expected to have a Company Material Adverse Effect;

    (g) other than in the Ordinary Course of Business and consistent with past
practices, neither Company nor any Company Subsidiary has made any changes in
the rate of compensation payable or paid, or agreed or orally promised to pay,
conditionally or otherwise, any extra compensation, or severance or vacation
pay, to any director, officer, employee, consultant or agent of Company or any
Company Subsidiary;

    (h) neither Company nor any Company Subsidiary has made any change in
(x) its methods of accounting or accounting practices, except as required by
GAAP, or (y) its pricing policies or payment or credit practices or failed to
pay any creditor any amount owed to such creditor when due or granted any
extensions or credit other than in the Ordinary Course of Business;

    (i) neither Company nor any Company Subsidiary has terminated or closed any
facility, business or operation which is material to the Company and the Company
Subsidiaries, taken as a whole;

    (j) neither Company nor any Company Subsidiary has made any loan, advance or
capital contributions to, or any other investment in, any Person other than
loans in the Ordinary Course of Business;

    (k) neither Company nor any Company Subsidiary has adopted or increased any
benefits under any Plan in any material manner;

    (l) neither Company nor any Company Subsidiary has written up or written
down any of its respective material assets; and

    (m) neither Company nor any Company Subsidiary has entered into any
contractual obligation to do any of the things referred to elsewhere in this
Section 3.09.

SECTION 3.10 ABSENCE OF UNDISCLOSED LIABILITIES

    To the knowledge of Company, there are no liabilities or obligations
(whether absolute or contingent, matured or unmatured, known or unknown) of
Company or any Company Subsidiary, including but not limited to liabilities for
Taxes and that are not reflected, or reserved against, in the Company Financial
Statement, except for those that may have been incurred after December 31, 1999
in the Ordinary Course of Business or that would not be reasonably be expected
to have a Company Material Adverse Effect. Since December 31, 1999, neither
Company nor any Company Subsidiary has incurred any liabilities or obligations
(whether absolute or contingent, matured or unmatured, known or unknown) other
than in the Ordinary Course of Business or those which would not reasonably be
expected to have a Company Material Adverse Effect.

                                      A-17

<PAGE>
SECTION 3.11 LITIGATION; DISPUTES

    (a) Company has not received notice of, and there is no pending, or, to the
knowledge of Company, threatened, action, suit, claim, arbitration, proceeding
or investigation against, affecting or involving Company or any Company
Subsidiary or their respective businesses or Assets, or the transactions
contemplated by this Merger Agreement, at law or in equity, or before or by any
domestic or foreign court, arbitrator or Governmental Entity that, alone or in
the aggregate, would have a Company Material Adverse Effect. Neither Company nor
any Company Subsidiary is (i) operating under or subject to any order, award,
writ, injunction, decree or judgment of any court, arbitrator or Governmental
Entity which would reasonably be expected to have a Company Material Adverse
Effect or that would prevent or enjoin, or delay in any material respect,
consummation of the Merger or the transactions contemplated hereby or (ii) in
default with respect to any order, award, writ, injunction, decree or judgment
of any court, arbitrator or Governmental Entity which default would reasonably
be expected to have a Company Material Adverse Effect.

    (b) Company and each Company Subsidiary have complied and are in compliance
in all material respects with all laws, ordinances, regulations, awards, orders,
judgments, decrees and injunctions applicable to Company and each Company
Subsidiary and their respective businesses or Assets, including all federal,
state and local laws, ordinances, regulations and orders pertaining to
employment or labor, safety, health, zoning and other matters, the failure to
comply with which, in each case, or in the aggregate would reasonably be
expected to have a Company Material Adverse Effect. Company and each Company
Subsidiary have obtained and hold all permits, licenses and approvals (none of
which has been materially modified or rescinded and all of which are in full
force and effect) from all government authorities necessary in order to own, use
and maintain their respective Assets and to conduct their respective businesses
as presently conducted, which the failure to obtain and hold would reasonably be
expected to have a Company Material Adverse Effect.

SECTION 3.12 REAL PROPERTY LEASES; REAL PROPERTY

    (a) Section 3.12 of the Company Disclosure Letter lists each real property
lease under which Company or any Company Subsidiary is the lessee or lessor.
Company and each Company Subsidiary are the owners and holders of the leasehold
estates purported to be granted to them by the leases listed in Section 3.12 of
the Company Disclosure Letter. Each such lease is in full force and effect and,
to the knowledge of Company, constitutes a legal, valid and binding obligation
of, and is legally enforceable in all material respects against, the respective
parties thereto. Company and each Company Subsidiary have in all material
respects performed all material obligations thereunder required to be performed
by any of them to date. To the knowledge of Company, no party is in default in
any material respect under any of the foregoing, and there has not occurred any
event which (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute such a material default.
Section 3.12 of the Company Disclosure Letter lists and describes any Real
Property in which Company or any Company Subsidiary holds an interest.

    (b) Section 3.12 of the Company Disclosure Letter lists and sets forth a
description for all the Real Property, specifying the owner of each parcel
thereof, and all such Real Property is suitable and adequate for the uses for
which it is currently devoted.

    (c) Company and the Company Subsidiaries are the sole owners of good, valid,
fee simple, marketable and insurable (at standard rates) title to the Real
Property respectively owned by them, including, without limitation, all
buildings, structures, fixtures and improvements thereon and all equipment,
machinery and personal property therein, in each case free and clear of all
Encumbrances, except as would not materially detract from the use of the Real
Property.

    (d) All buildings, structures, fixtures and other improvements on the Real
Property are in good repair, free of defects (latent or patent), and fit for the
uses to which they are currently devoted. All

                                      A-18
<PAGE>
such buildings, structures, fixtures and improvements on the Real Property
conform to all Laws. The buildings, structures, fixtures and improvements on
each parcel of the Real Property lie entirely within the boundaries of such
parcel of the Real Property, and no structures of any kind encroach on the Real
Property, except as would not materially detract from the use of the Real
Property.

    (e) None of the Real Property is subject to any Agreement or other
restriction of any nature whatsoever (recorded or unrecorded) preventing or
limiting Company's or any Company Subsidiary's right to convey or to use it for
its intended use.

    (f) The Real Property has direct and unobstructed access to electric, gas,
water, sewer and telephone lines, all of which are adequate for the uses to
which the Real Property is currently devoted and intended to be devoted.

SECTION 3.13 OTHER AGREEMENTS; NO DEFAULT

    Sections 3.12 and 3.13 of the Company Disclosure Letter list each Agreement
(other than (w) Agreements solely between Company and any Company Subsidiary,
(x) Government Contracts, (y) Agreements which are purchase or task orders under
a Company Contract and (z) real property leases identified in Section 3.12, to
which Company or any Company Subsidiary is a party or by which Company or any
Company Subsidiary, or any of their respective Assets, is bound, and which
(i) involves expenditures or receipts by Company or any Company Subsidiary
(other than contracts, commitments or Agreements which do not require payments
or yield receipts of more than $250,000 in any twelve (12) month period or more
than $1,000,000 in the aggregate); or (ii) contain covenants that limit the
freedom of Company or any Company Subsidiary to engage in a line of business or
to compete with any third party (Agreements listed pursuant to clauses (i) and
(ii) above, collectively the "Company Contracts"). Each Company Contract is in
full force and effect, constitutes a valid and binding obligation of and is
legally enforceable in accordance with its terms against Company and, to the
knowledge of Company, the Company Contracts are valid, binding and enforceable
obligations of the other parties thereto, except as such enforceability may be
subject to the effects of any applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar Laws affecting creditors'
rights generally or subject to the effects of general equitable principles
(whether considered in a proceeding in equity or at law). Company has complied
with all of the provisions of such Company Contracts and is not in default
thereunder, and there has not occurred any event which (whether with or without
notice, lapse of time, or the happening or occurrence of any other event) would
constitute such a default, and the execution of this Merger Agreement by Company
and its performance hereunder will not cause, or result in, a breach or default
under any Company Contract in each case which would reasonably be expected to
have a Company Material Adverse Effect. There has not been (A) any failure by
Company or, to the knowledge of Company, any other party to any such Company
Contract to comply with all material provisions thereof which default or failure
to perform would reasonably be expected to have a Company Material Adverse
Effect, (B) any default by Company or, to the knowledge of Company, any other
party thereunder, which default or failure to perform would reasonably be
expected to have a Company Material Adverse Effect or (C) to the knowledge of
Company (X) any cancellation thereof in writing which has not been cured or
(Y) any outstanding dispute thereunder which has not been cured. Neither Company
nor any Company Subsidiary is a guarantor or otherwise liable for any liability
or obligation (including indebtedness) of any other Person other than any
Company Subsidiary.

SECTION 3.14 LABOR RELATIONS

    There are no collective bargaining or other labor union Agreements to which
Company or any Company Subsidiary is a party. There are, and for the past two
(2) years have been, no strikes, work stoppages, union organization efforts or
lawsuits (other than grievance proceedings) pending or, to the knowledge of
Company, threatened between Company or any Company Subsidiary and (a) any
current

                                      A-19
<PAGE>
or former employees of Company or any Company Subsidiary except where such
activity or lawsuits would not reasonably be expected to have a Company Material
Adverse Effect or (b) any union or other collective bargaining unit representing
such employees. Company and each Company Subsidiary have complied and are in
compliance with all Laws relating to employment or the workplace, including,
without limitation, Laws relating to wages, hours, collective bargaining, safety
and health, work authorization, equal employment opportunity, immigration,
withholding, unemployment compensation, worker's compensation, employee privacy
and right to know, except where the failure so to comply would not reasonably be
expected to have a Company Material Adverse Effect.

SECTION 3.15 PENSION AND BENEFIT PLANS

    (a) Company has delivered to Acquiror prior to the execution of this Merger
Agreement true and complete copies (or written descriptions, where no written
plan exists) (and, where applicable, the most recent actuarial, valuation or
annual (Form 5500 with attachments) reports with respect thereto) of all
pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus or other incentive
plans, employment agreements of executive officers or change in control
agreements, medical, vision, dental or other health plans, life insurance plans
and other employee benefit plans or fringe benefit plans, programs, arrangements
or Agreements, including, without limitation, all Company Benefit Plans. No
Company Benefit Plan is or has been a Multiemployer Plan or could subject
Company or any Company Subsidiary to liability under Sections 4063 or 4064 of
ERISA. Company has set forth in the Company Disclosure Letter (i) a list of all
of the Company Benefit Plans, (ii) a list of the Company Benefit Plans that are
Company Pension Plans, (iii) a list of the Company Benefit Plans that are
Company Stock Plans, and (iv) a list of the number of shares covered by,
exercise prices for, and holders of, all stock options granted and available for
grant under the Company Stock Plans.

    (b) From their inception, all Company Benefit Plans have been and are in
material compliance (in form and in operation) with the applicable terms of
ERISA and the Code and any other applicable Laws, including the terms of such
plans.

    (c) All liabilities (contingent or otherwise) under any Company Benefit Plan
are fully accrued or reserved against in the Company Financial Statement in
accordance with GAAP. Each Company Pension Plan that is subject to Title IV of
ERISA or Section 412 of the Code satisfies the minimum funding standards
(without regard to any waiver) provided for in Section 412 of the Code.

    (d) Neither Company nor any Company Subsidiary has any obligations for
retiree health or other welfare benefits for retirees under any Company Benefit
Plan or otherwise except as required by Section 4908(b) of the Code and Sections
601-608 of ERISA, and there are no restrictions on the rights of Company or any
Company Subsidiary to unilaterally amend or terminate any such Company Benefit
Plan at any time without incurring any material liability thereunder.

    (e) Neither the execution and delivery of this Merger Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, golden parachute or
otherwise) becoming due to any person under any Company Benefit Plan or
otherwise, (ii) increase any benefits otherwise payable under any Company
Benefit Plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits.

    (f) Each Company Benefit Plan which is intended to be qualified under
Section 401(a) or 401(k) of the Code or qualified as a voluntary employees'
beneficiary association under Sections 501(a) and 501(c)(9) of the Code has
received a favorable determination letter from the IRS that it is so qualified
and so exempt, and no fact or event has occurred that could adversely affect
such qualified or exempt status.

                                      A-20
<PAGE>
    (g) Company and each Company Subsidiary have not incurred any material
liability under, and have complied in all material respects with, the Worker
Adjustment Retraining Notification Act and the regulations promulgated
thereunder and do not reasonably expect to incur any such material liability as
a result of actions taken or not taken prior to the consummation of the Merger.

SECTION 3.16 TAXES AND TAX MATTERS

    (a) The Company and each Company Subsidiary have paid, or reserved in
accordance with GAAP, all Taxes due and payable by any of them for or with
respect to all periods up to and including the date hereof (without regard to
whether or not such Taxes are or were disputed), whether or not shown on any Tax
Return.

    (b) The Company and each Company Subsidiary have filed on a timely basis all
material Company Tax Returns that it was required to file. All such Company Tax
Returns were accurate and complete in all material respects. None of Company or
any Company Subsidiary is the beneficiary of any extension of time within which
to file any Tax Return which has not yet been filed. No written claim has ever
been made (which has not been satisfactorily resolved) by an authority in a
jurisdiction where Company or any Company Subsidiary does not file Company Tax
Returns that any one of them is or may be subject to taxation by that
jurisdiction. None of Company or any Company Subsidiary has given any currently
effective waiver of any statute of limitations in respect of Taxes or agreed to
any currently effective extension of time with respect to a Tax assessment or
deficiency. There are no security interests on any of the assets of Company or
any Company Subsidiary that arose in connection with any failure (or alleged
failure) to pay any Tax except for Permitted Encumbrances.

    (c) Company and each Company Subsidiary has withheld and paid all material
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party.

    (d) None of Company or any Company Subsidiary has knowledge of any facts or
circumstances which could give rise to a reasonable expectation that any
authority may assess any additional Taxes for any period for which Company Tax
Returns have been filed. There is no dispute or claim concerning any liability
for Taxes of Company or any Company Subsidiary either (i) claimed or raised by
any authority in writing or (ii) as to which Company has knowledge based upon
personal contact with any agent of such authority. Company and each Company
Subsidiary has delivered to the Acquiror copies of, and Section 3.16 of the
Company Disclosure Letter sets forth a complete and accurate list of, Company
Tax Returns filed with respect to the taxable periods of Company and any Company
Subsidiary ended on or after December 31, 1996; indicates those Company Tax
Returns that have been audited; and indicates those Company Tax Returns that
currently are the subject of an audit.

    (e) The unpaid Taxes of Company and any Company Subsidiary (i) did not, as
of the date of any financial statements of Company and the Company Subsidiaries
furnished to Acquiror pursuant to Section 3.08 of this Merger Agreement, exceed
the reserve for any Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the such financial statements (rather than in any notes thereto)
and (ii) do not exceed that reserve as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of Company or
any Company Subsidiary in filing their Company Tax Returns.

    (f) None of Company or any Company Subsidiary has filed a consent under
Section 341(f) of the Code, concerning collapsible corporations. None of Company
or any Company Subsidiary has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. The Company
and each Company Subsidiary has disclosed on its federal income Company Tax
Returns all positions taken therein that could reasonably be expected to give
rise to a substantial understatement of federal income

                                      A-21
<PAGE>
Tax within the meaning of Section 6662 of the Code. None of Company or any
Company Subsidiary is a party to any Tax allocation or sharing agreement. None
of Company or any Company Subsidiary (A) has been a member of an "affiliated
group," as defined in Section 1504(a) of the Code, filing a consolidated federal
income Tax Return (other than a group the common parent of which was Company) or
(B) has any Liability for the Taxes of any Person (other than any of Company)
under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract or otherwise.

SECTION 3.17 INSURANCE

    Section 3.17 of the Company Disclosure Letter lists all policies of title,
asset, fire, hazard, casualty, liability, life, worker's compensation and other
forms of insurance of any kind owned or held by Company or any Company
Subsidiary. All such policies: (a) are with insurance companies reasonably
believed by Company to be financially sound and reputable; (b) to the knowledge
of Company are in full force and effect; (c) are sufficient for compliance in
all material respects by Company and by each Company Subsidiary with all
requirements of Law and of all Agreements to which Company or any Company
Subsidiary is a party; (d) to the knowledge of the Company are valid and
outstanding policies enforceable against the insurer; (e) insure against risks
of the kind customarily insured against and in amounts customarily carried by
companies similarly situated and by companies engaged in similar businesses and
owning similar Assets; and (f) have the policy expiration dates set forth in
Section 3.17 of the Company Disclosure Letter.

SECTION 3.18 ARRANGEMENTS WITH RELATED PARTIES

    No present or former officer, director, stockholder or Person known by the
Company to be an Affiliate of the Company or the any Company Subsidiary, nor any
Person known by the Company to be an Affiliate of such Person, is currently a
party to any transaction or agreement with the Company or any Company
Subsidiary, including any agreement providing for any loans, advances, the
employment of, furnishing of services by, rental of its Assets from or to, or
otherwise requiring payments to, any such officer, director, stockholder or
affiliate.

SECTION 3.19 BOOKS AND RECORDS

    The books of account, stock records, minute books and other corporate and
financial records of Company and each Company Subsidiary are complete and
correct in all material respects and have been maintained in accordance with
reasonable business practices for companies similar to Company and each Company
Subsidiary (except where the failure to do so would not reasonably be expected
to have a Company Material Adverse Effect), and Company and each Company
Subsidiary will have prior to Closing prepared and made available to Acquiror
the minutes for all meetings of the Board of Directors and/or stockholders of
the Company and each Company Subsidiary held as of the date hereof (or written
consents in lieu of such meetings).

SECTION 3.20 ASSETS

    Company and each Company Subsidiary have good, valid and marketable title to
all Assets respectively owned by them, including, without limitation, all
material Assets reflected in the Company Financial Statement and all Assets
acquired by Company or by any Company Subsidiary since December 31, 1999 (except
for Assets reflected in the Company Financial Statement or acquired since such
date which have been sold or otherwise disposed of in the Ordinary Course of
Business), free and clear of all Encumbrances other than Permitted Encumbrances.
All material personal property of Company and each Company Subsidiary is in good
operating condition and repair, ordinary wear and tear excepted, and is suitable
and adequate for the uses for which it is intended or is being used. All
material Inventory of Company and each Company Subsidiary (i) consists of items
which are good and

                                      A-22
<PAGE>
merchantable and of a quality and quantity presently usable and salable in the
Ordinary Course of Business and (ii) have been reflected in the Company
Financial Statement in accordance with GAAP.

SECTION 3.21 BOARD RECOMMENDATION

    The Board of Directors of Company has unanimously adopted, in compliance
with Delaware Law, a resolution advising, authorizing, approving and adopting
this Merger Agreement and the transactions contemplated hereby, and recommending
approval and adoption of this Merger Agreement and the transactions contemplated
hereby by the Company Stockholders.

SECTION 3.22 DIRECTORS AND OFFICERS

    Section 3.22 of the Company Disclosure Letter lists all current directors
and officers of Company and each Company Subsidiary, showing each such person's
name, positions, annual remuneration, bonuses and fringe benefits paid by
Company or any Company Subsidiary for the current fiscal year and the most
recently completed fiscal year.

SECTION 3.23 [INTENTIONALLY OMITTED]

SECTION 3.24 ENVIRONMENTAL MATTERS

    Each of the Company and each Company Subsidiary is in material compliance
with all Environmental Laws except where the failure to comply would not
reasonably be expected to have a Company Material Adverse Effect. Neither the
Company nor any Company Subsidiary has any material liability under any
Environmental Law, nor is any of the Company or any Company Subsidiary
responsible for any liability of any other person under any Environmental Law
except for any material liability which would not reasonably be expected to have
a Company Material Adverse Effect. There are no pending or, to the knowledge of
the Company, threatened actions, suits, claims, legal proceedings or other
proceedings based on, and neither the Company nor any Company Subsidiary
directly or indirectly received any notice of any complaint, order, directive,
citation, notice of responsibility, notice of potential responsibility, or
information request from any Governmental Entity or any other person arising out
of or attributable to: (i) the current or past presence at any part of the real
property owned or leased by the Company or any Company Subsidiary (the "Real
Property") of Hazardous Materials (as defined below) or any substances that pose
a hazard to human health or an impediment to working conditions; (ii) the
current or past release or threatened release into the environment from the Real
Property (including, without limitation, into any storm drain, sewer, septic
system or publicly owned treatment works) of any Hazardous Materials or any
substances that pose a hazard to human health or an impediment to working
conditions; (iii) the off-site disposal of Hazardous Materials originating on or
from the Real Property; or (iv) any violation of Environmental Laws at any part
of the Real Property or otherwise arising from the Company's or any Company
Subsidiary's activities involving Hazardous Materials, which in each case, or in
the aggregate, would reasonably be expected to have a Company Material Adverse
Effect.

SECTION 3.25 [INTENTIONALLY OMITTED]

SECTION 3.26 GOVERNMENT CONTRACTS AND OTHER COMMITMENTS

    (a) Except as disclosed in Section 3.26 of the Company Disclosure Letter, to
the knowledge of the Company, with respect to Government Contracts held by the
Company or any of its Subsidiaries, there is, as of the date hereof, no
(i) civil fraud or criminal investigation by any government investigative
agency, (ii) suspension or debarment proceeding (or equivalent proceeding)
against the Company or

                                      A-23
<PAGE>
any Company Subsidiaries, (iii) request by the government for a contract price
adjustment based on a claimed disallowance by any governmental agency or at the
direction of a governmental entity or written notice of defective pricing other
than as reserved for on the Company Financial Statement in accordance with GAAP,
(iv) claim or equitable adjustment by the Company or any Company Subsidiaries
against the U.S. Government or any third party in excess of $500,000,
(v) written notice challenging, questioning or disallowing any cost(s) in excess
of $500,000, or (vi) notice of contract termination, cure notice or show cause
notice.

    (b) Each Government Contract is in full force and effect, constitutes a
valid and binding obligation of and is legally enforceable in accordance with
its terms against Company and, to the knowledge of Company, the Government
Contracts are valid, binding and enforceable obligations of the other parties
thereto, except as such enforceability may be subject to the effects of any
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar Laws affecting creditors' rights generally or subject to
the effects of general equitable principles (whether considered in a proceeding
in equity or at law). Company has complied with all of the provisions of such
Government Contracts and is not in default thereunder, and there has not
occurred any event which (whether with or without notice, lapse of time, or the
happening or occurrence of any other event) would constitute such a default, and
the execution of this Merger Agreement by Company and its performance hereunder
will not cause, or result in, a breach or default under any Government Contract
in each case. There has not been (A) any failure by Company or, to the knowledge
of Company, any other party to any such Government Contract to comply with all
material provisions thereof which default or failure to perform would have a
Company Material Adverse Effect, (B) any default by Company or, to the knowledge
of Company, any other party thereunder, which default or failure to perform
would not have a Company Material Adverse Effect or (C) to the knowledge of
Company (X) any written cancellation thereof which has been cured or (Y) any
outstanding dispute thereunder which has not been cured. Neither Company nor any
Company Subsidiary is a guarantor or otherwise liable for any liability or
obligation (including indebtedness) of any other Person other than any Company
Subsidiary.

    (c) For the purposes of this Merger Agreement, with respect to any party,
"Government Contract" means any prime contract, subcontract, teaming agreement
or arrangement, joint venture, basic ordering agreement, pricing agreement,
letter contract, purchase order, delivery order, change order, Bid or other
arrangement of any kind between such party or any of its Subsidiaries and
(i) the U.S. Government (acting on its own behalf or on behalf of another
country or international organization), (ii) any prime contractor of the U.S.
Government or (iii) any subcontractor with respect to any contract of a type
described in clauses (i) or (ii) above. For the purposes of this Merger
Agreement, with respect to any party, "Bid" means any quotation, bid or proposal
made by such party or any of its Subsidiaries that if accepted or awarded would
lead to a contract with the U.S. Government or any other person for the design,
manufacture and sale of products or the provision of services.

SECTION 3.27 RELATIONS WITH GOVERNMENTS

    Neither the Company, any Company Subsidiary nor, to the knowledge of the
Company, any of the Company's or any Company Subsidiary's officers, directors,
employees or agents (or stockholders, distributors, representatives or other
persons acting on the express, implied or apparent authority of the Company or
any Company Subsidiary) have paid, given or received or have offered or promised
to pay, give or receive, any bribe or other unlawful payment of money or other
thing of value, any unlawful discount, or any other unlawful inducement, to or
from any person or Governmental Entity in the United States or elsewhere in
connection with or in furtherance of the business of the Company or any Company
Subsidiary (including, without limitation, any offer, payment or promise to pay
money or other thing of value (a) to any foreign official, political party (or
official thereof) or candidate for

                                      A-24
<PAGE>
political office for the purposes of influencing any act, decision or omission
in order to assist the Company or any Company Subsidiary in obtaining business
for or with, or directing business to, any person, or (b) to any person, while
knowing that all or a portion of such money or other thing of value will be
offered, given or promised to any such official or party for such purposes);
except for minimal payments, discounts or inducements which would not reasonably
be expected to have a Company Material Adverse Effect. Neither the business of
the Company nor any Company Subsidiary is in any manner dependent upon the
making or receipt of such payments, discounts or other inducements except for
minimal payments, discounts or inducements which would not reasonably be
expected to have a Company Material Adverse Effect. Neither the Company nor any
Company Subsidiary has otherwise taken any action that would cause the Company
or any Company Subsidiary to be in violation of the Foreign Corrupt Practices
Act of 1977, as amended, or any applicable Laws of similar effect.

SECTION 3.28 BROKER'S FEES

    Neither the Company nor any Company Subsidiary has any liability or
obligation to pay any fees or commissions to any broker, finder, or similar
agent with respect to the transactions contemplated by this Merger Agreement.

SECTION 3.29 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS

    The information supplied by the Company or required to be supplied by the
Company (except to the extent revised or superseded by amendments or
supplements) for inclusion in the registration statement on Form S-4, or any
amendment or supplement thereto, pursuant to which the shares of Acquiror Common
Stock to be issued in the Merger will be registered under the Securities Act
(including any amendments or supplements, the "Registration Statement") shall
not, at the time the Registration Statement (including any amendments or
supplements thereto) is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The information
supplied by the Company or required to be supplied by the Company (except to the
extent revised or superseded by amendments or supplements) for inclusion in the
proxy statement relating to the Company Stockholders Meeting (such proxy
statement, together with the prospectus relating to the shares of Acquiror
Common Stock to be issued in the Merger, in each case as amended or supplemented
from time to time, the "Proxy Statement/ Prospectus") shall not, on the date the
Proxy Statement/Prospectus is first mailed to the Company's stockholders, at the
time of the Company Stockholders Meeting and at the Effective Time, contain any
statement which, at such time, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not false or misleading, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies by or on behalf of the Company for the Company
Stockholders Meeting which has become false or misleading. Notwithstanding the
foregoing, the Company makes no representation, warranty or covenant with
respect to any information supplied or required to be supplied by Acquiror which
is contained in or omitted from any of the foregoing documents.

SECTION 3.30 [INTENTIONALLY OMITTED]

SECTION 3.31 INTEREST RATE AND FOREIGN EXCHANGE CONTRACTS

    All material interest rate swaps, caps, floors and option agreements and
other interest rate risk management arrangements and foreign exchange contracts
to hedge the Company's investments in foreign subsidiaries, whether entered into
for the account of the Company or any Company Subsidiary,

                                      A-25
<PAGE>
were entered into in the Ordinary Course of Business and, to the Company's
knowledge, in accordance with prudent business practice and applicable rules,
regulations and policies of any Governmental Entity and with counterparties
believed to be financially responsible at the time and at the date hereof, and
in all material respects are valid and binding obligations of the Company or a
Company Subsidiary enforceable in accordance with their terms (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally and the availability of equitable
remedies), and are in full force and effect in all material respects. The
Company and each Company Subsidiary has duly performed in all material respects
its material obligations thereunder to the extent that such obligations to
perform have accrued, and, to the Company's knowledge, there are no material
breaches, violations or defaults or allegations or assertions of such by any
other party thereunder.

SECTION 3.32 POOLING /TAX MATTERS

    (a) Neither Company nor any of its "affiliates" (as defined in
Section 5.12) has taken or has agreed to take any action or failed to take any
action that would prevent the Merger from (i) being treated for financial
accounting purposes as a "pooling of interests" in accordance with GAAP and the
regulations and interpretations of the SEC, or (ii) from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.

    (b) At or prior to the date hereof, Company has received a draft of the
letter described in Section 7.02(h)(i).

SECTION 3.33 DISCLOSURE

    No representation or warranty of the Company in this Merger Agreement when
read together with the information in the Section of the Company Disclosure
Letter applicable thereto is misleading with respect to any material fact or
omits to state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES
                          OF ACQUIROR AND ACQUIROR SUB

    Except as specifically set forth in the Disclosure Letter delivered by
Acquiror and Acquiror Sub to Company prior to the execution and delivery of this
Merger Agreement (the "Acquiror Disclosure Letter") and referenced in the
Acquiror Disclosure Letter to the Section(s) of this Article IV to which such
disclosure applies, Acquiror and Acquiror Sub hereby jointly and severally
represent, warrant to and agree with Company as follows, in each case as of the
date of this Merger Agreement and as of the Closing Date:

SECTION 4.01 ORGANIZATION AND QUALIFICATION

    Acquiror and each Subsidiary of Acquiror (each a "Titan Subsidiary" and
collectively the "Titan Subsidiaries") is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, and has the corporate power and authority to own, operate and
lease its Assets, and to carry on its business as currently conducted. Acquiror
and each Titan Subsidiary is duly qualified to conduct business as a foreign
corporation and is in good standing in the states, countries and territories
listed in the Acquiror Disclosure Letter and in each jurisdiction where the
nature of its business or the ownership, operation or leasing of its Assets
makes such qualification necessary except where failure to so qualify would not
reasonably be expected to have an Acquiror Material Adverse Effect.

                                      A-26
<PAGE>
SECTION 4.02 CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS

    Acquiror has furnished to Company a true and complete copy of the
certificate of incorporation of Acquiror and the certificate of incorporation of
Acquiror Sub, as currently in effect on the date of this Merger Agreement,
certified as of a recent date by the Secretary of State of Delaware and a true
and complete copy of the bylaws of Acquiror and Acquiror Sub. Neither Acquiror
nor Acquiror Sub is in violation of any of the provisions of its respective
certificate of incorporation or bylaws.

SECTION 4.03 CAPITALIZATION

    The authorized capital stock of Acquiror consists of one hundred million
(100,000,000) shares of Acquiror Common Stock and two million five hundred
thousand (2,500,000) shares of preferred stock, par value $.01 per share
("Acquiror Preferred Stock"). As of March 15, 2000: (i) 50,618,107 shares of
Acquiror Common Stock were issued and outstanding; (ii) 693,300 shares of
Acquiror Preferred Stock were issued and outstanding; (iii) 1,000,000 shares of
Acquiror Common Stock were reserved for issuance upon the exercise of
outstanding employee stock options or other rights to purchase or receive
Acquiror Common Stock granted under Acquiror's Stock Option Plan of 1997 or
under any other Acquiror Employee Stock Option Plan (collectively, the "Acquiror
Stock Option Plan"); (iv) 500,000 shares of Acquiror Common Stock were reserved
for issuance pursuant to Acquiror's Employee Stock Purchase Plan (the "Acquiror
Stock Purchase Plan"); and (v) 1,119,465 shares of Acquiror Common Stock were
held by Acquiror in Acquiror's treasury. No other shares of Acquiror Common
Stock have been reserved for any purpose. Except as described above, there are
no outstanding securities convertible into or exchangeable for Acquiror Common
Stock, any other securities of any Acquiror, or any capital stock or other
securities of any Acquiror Subsidiary and no outstanding options, rights
(preemptive or otherwise), or warrants to purchase or to subscribe for any
shares of such stock or other securities of Acquiror or any Acquiror Subsidiary.

SECTION 4.04 AUTHORITY; BINDING OBLIGATION

    The execution and delivery by Acquiror and Acquiror Sub of this Merger
Agreement and all other Agreements, documents, certificates or other instruments
contemplated hereby, and the consummation by Acquiror and Acquiror Sub of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
Acquiror or Acquiror Sub are necessary to authorize this Merger Agreement and
the other Agreements, documents, certificates or other instruments contemplated
hereby, or to consummate the transactions contemplated hereby and thereby. This
Merger Agreement has been duly executed and delivered by Acquiror and Acquiror
Sub and constitutes a legal, valid and binding obligation of each of Acquiror
and Acquiror Sub (assuming the Merger Agreement has been duly executed and
delivered by Company and constitutes a legal, valid and binding obligation of
Company), enforceable in accordance with its terms, except as such
enforceability may be subject to the effect of any applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws
affecting creditors' rights generally and subject to the effect of general
equitable principles (whether considered in a proceeding in equity or at law).

SECTION 4.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS

    (a) The execution, delivery and performance by Acquiror and Acquiror Sub of
this Merger Agreement and all other Agreements, documents, certificates or other
instruments contemplated hereby, the fulfillment of and compliance with the
respective terms and provisions hereof and thereof, and the consummation by
Acquiror and Acquiror Sub of the transactions contemplated hereby and thereby,
do not and will not: (i) conflict with, or violate any provision of, the
certificate of incorporation or the bylaws of Acquiror, or the certificate of
incorporation or the bylaws of Acquiror

                                      A-27
<PAGE>
Sub; (ii) subject to obtaining the consents, approvals, authorizations and
permits of, and making filings with or notifications to, the applicable
Governmental Entity pursuant to the applicable requirements, if any, of the HSR
Act and the filing and recordation of the Certificate of Merger as required by
Delaware Law, conflict with or violate any Law applicable to Acquiror or
Acquiror Sub or any of their respective Assets; (iii) conflict with, result in
any breach of, constitute a default (or an event that with notice or lapse of
time or both would become a default) under any Agreement to which Acquiror or
Acquiror Sub is a party or by which Acquiror or Acquiror Sub or any of their
respective Assets may be bound; or (iv) result in or require the creation or
imposition of, or result in the acceleration of, any indebtedness or any
Encumbrance of any nature upon, or with respect to, Acquiror or Acquiror Sub;
except for any such conflict or violation described in clause (ii) above, any
such conflict, breach or default described in clause (iii) above, or any such
creation, imposition or acceleration described in clause (iv) above that would
not have an Acquiror Material Adverse Effect and that would not prevent Acquiror
or Acquiror Sub from consummating the Merger on a timely basis.

    (b) The execution, delivery and performance by Acquiror and Acquiror Sub of
this Merger Agreement and all other Agreements, documents, certificates or other
instruments contemplated hereby, the fulfillment of and compliance with the
respective terms and provisions hereof and thereof, and the consummation by
Acquiror and Acquiror Sub of the transactions contemplated hereby and thereby,
do not and will not: (i) require any consent, approval, authorization or permit
of, or filing with or notification to, any Person not party to this Merger
Agreement, except (A) pursuant to the applicable requirements, if any, of the
HSR Act, (B) the filing and recordation of the Certificate of Merger as required
by Delaware Law and (C) where the failure to obtain any consent, approval,
authorization or permit or to make any filing or notification otherwise required
to be disclosed hereunder would not have an Acquiror Material Adverse Effect; or
(ii) result in or give rise to any penalty, forfeiture, Agreement termination,
right of termination, amendment or cancellation, or restriction on business
operations of Acquiror or Surviving Corporation that would have an Acquiror
Material Adverse Effect.

SECTION 4.06 NO PRIOR ACTIVITIES OF ACQUIROR SUB

    Acquiror Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Merger Agreement and has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.

SECTION 4.07 SEC FILINGS; FINANCIAL STATEMENTS

    (a) Acquiror has filed all forms, reports, statements and other documents
required to be filed with the SEC since January 1, 1997, and has heretofore
delivered to the Company, in the form filed with the SEC since such date,
together with any amendments thereto, all of its (i) Annual Reports on
Form 10-K, (ii) Quarterly Reports on Form 10-Q, (iii) proxy statements relating
to meetings of stockholders (whether annual or special), (iv) reports on
Form 8-K and (v) other reports or registration statements filed by Acquiror and
such Acquiror Subsidiaries (collectively, the "Acquiror SEC Reports"). As of
their respective filing dates, the Acquiror SEC Reports (i) complied as to form
in all material respects with the requirements of the Exchange Act and the
Securities Act, as applicable, and (ii) did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

                                      A-28

<PAGE>
    (b) The audited consolidated financial statements and unaudited interim
financial statements of Acquiror included in the Acquiror SEC Reports, including
all related notes and schedules, complied in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto. The financial statements, including all related
notes and schedules, contained in the Acquiror SEC Reports (or incorporated by
reference therein) present fairly in all material respects the consolidated
financial position of Acquiror and the Acquiror Subsidiaries as at the
respective dates thereof and the consolidated results of operations and cash
flows of Acquiror and the Acquiror Subsidiaries for the periods indicated, in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be noted therein) and subject in the case of interim
financial statements to normal year-end adjustments.

SECTION 4.08 NO UNDISCLOSED LIABILITIES

    To the knowledge of Acquiror, neither Acquiror nor any of the Titan
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, except: (a) liabilities or obligations
reflected in the Acquiror SEC Reports; (b) liabilities or obligations incurred
since September 30, 1999, in the Ordinary Course of Business that have not had,
and are not reasonably likely to have (without taking into account the effects
of the consummation of the Merger), an Acquiror Material Adverse Effect; and
(c) liabilities or obligations that have not had, and are not reasonably likely
to have (without taking into account the effects of the consummation of the
Merger), an Acquiror Material Adverse Effect.

SECTION 4.09 ABSENCE OF CERTAIN CHANGES OR EVENTS

    Since September 30, 1999, except as contemplated by this Merger Agreement or
as disclosed in any Acquiror SEC Report filed since September 30, 1999, Acquiror
and the Titan Subsidiaries have conducted their businesses only in the ordinary
course and in a manner consistent with past practice and, since such date, there
has not been (a) any change in the business, operations, properties, condition
(financial or otherwise), assets or liabilities (including, without limitation,
contingent liabilities) of Acquiror or any Titan Subsidiary having, individually
or in the aggregate, an Acquiror Material Adverse Effect, (b) any declaration,
setting aside or payment of any dividend or distribution in respect of the
shares of its capital stock or any redemption, purchase or other acquisition of
any of its securities, or (c) any agreement by Acquiror or any Titan Subsidiary
to take any of the actions described in this Section 4.09 except as expressly
contemplated by this Merger Agreement.

SECTION 4.10 ABSENCE OF LITIGATION

    Except as set forth in the Acquiror SEC Reports, there are: (a) no claims,
actions, suits, investigations, or proceedings pending or, to Acquiror's
knowledge, threatened against Acquiror or any of the Titan Subsidiaries before
any court, administrative, governmental, arbitral, mediation or regulatory
authority or body, domestic or foreign, that would be reasonably likely to have
an Acquiror Material Adverse Effect or that would prevent or enjoin, or delay in
any material respect, consummation of the Merger or the transactions
contemplated hereby; and (b) no orders of any Governmental Entity or arbitrator
outstanding against Acquiror or any Titan Subsidiary that would reasonably be
likely to have an Acquiror Material Adverse Effect or that would prevent or
enjoin, or delay in any material respect, consummation of the Merger or the
transactions contemplated hereby.

SECTION 4.11 CERTAIN PRACTICES

    Except as would not, individually or in the aggregate, reasonably be
expected to have an Acquiror Material Adverse Effect, none of Acquiror or any
Titan Subsidiary or any director, officer, agent, consultant or employee of
Acquiror or any Titan Subsidiary has: (a) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (b) directly or

                                      A-29
<PAGE>
indirectly, paid or delivered any fee, commission or other sum of money or item
or property, however characterized, to any finder, agent, government official or
other party, in the United States or any other country, which is in any manner
related to the business or operations of Acquiror or any Titan Subsidiary, that
was illegal under any federal, state or local Laws of the United States or any
other country having jurisdiction; (c) made any payment to any customer or
supplier of Acquiror or any Titan Subsidiary or any officer, director, partner,
employee, consultant or agent of any such customer or supplier, for the unlawful
sharing of fees or to any such customer or supplier or any such officer,
director, partner, employee, consultant or agent for the unlawful rebating of
charges, or engaged in any other unlawful reciprocal practice, or made any other
unlawful payment or given any other unlawful consideration to any such customer
or supplier or any such officer, director, partner, employee, consultant or
agent, in respect of the business of Acquiror or any Titan Subsidiary; (d) made
any other unlawful payment; or (e) established or maintained any fund or asset
that has not been appropriately recorded in the books and records of Acquiror
that would be in violation of law.

SECTION 4.12 GOVERNMENT CONTRACTS

    To the knowledge of Acquiror, with respect to Government Contracts held by
Acquiror or any of the Titan Subsidiaries, there is, as of the date hereof, no
(i) civil fraud or criminal investigation by any government investigative agency
that is reasonably likely to have an Acquiror Material Adverse Effect,
(ii) suspension or debarment proceeding (or equivalent proceeding) against the
Acquiror or any Titan Subsidiaries that is reasonably likely to have an Acquiror
Material Adverse Effect, (iii) request by the government for a contract price
adjustment based on a claimed disallowance by Defense Contract Audit Agency or
claim of defective pricing, (iv) claim or equitable adjustment by the Acquiror
or any Titan Subsidiaries against the U.S. Government or any third party in
excess of $500,000, (v) written notice challenging, questioning or disallowing
any cost(s) in excess of $500,000, or (vi) notice of contract termination, cure
notice or show cause notice.

SECTION 4.13 INTELLECTUAL PROPERTY

    (a) Acquiror and Titan Subsidiaries own, have licensed or otherwise have the
right to use all Intangible and Other Property used in the business of Acquiror
and Titan Subsidiaries, as presently conducted or as proposed to be conducted,
except for such Intangible and Other Property the loss of the use of which is
not reasonably likely, individually or in the aggregate, to have a Acquiror
Material Adverse Effect. To the knowledge of Acquiror, except as specifically
noted in Section 4.13 of the Acquiror Disclosure Letter, none of the Software
owned, licensed or used by Acquiror or any Titan Subsidiary is owned by or
licensed from any employees of Acquiror or any Titan Subsidiary.

    (b) (i) The use of the Intangible and Other Property by Acquiror or any
Titan Subsidiary does not infringe upon or otherwise violate the rights of any
third party in or to such Intangible and Other Property (except as any
Commercial Software licensed or sold to Acquiror or any Titan Subsidiary by
unrelated Persons may involve such infringement or violation) and (ii) except as
set forth in Section 4.13 of the Acquiror Disclosure Letter, no claim has been
asserted, and Acquiror is not aware of any claim which can be asserted, by any
Person against Acquiror or Titan Subsidiaries with respect to the use of any
item of Intangible and Other Property challenging or questioning the validity or
effectiveness of such use of any such item, except for such infringements,
violations or claims which are not reasonably likely, individually or in the
aggregate, to have an Acquiror Material Adverse Effect. No employee of Acquiror
or any Acquiror Subsidiary has a right to receive a royalty or similar payment,
or has any other monetary rights, in respect of any item of Intangible and Other
Property of Acquiror or any Titan Subsidiary. No Person (other than employees of
Acquiror or any Titan Subsidiary) has a right to receive a royalty or similar
payment, or has any other monetary rights, in respect of any item of Intangible
and Other Property, except for such rights which are not reasonably likely,
individually or in the aggregate, to have an Acquiror Material Adverse Effect.
Each of Acquiror and Titan Subsidiaries

                                      A-30
<PAGE>
has taken reasonable measures to protect the proprietary nature of each item of
Intellectual Property and Software, and to maintain the confidentiality of all
confidential information, that it owns or uses and is not aware of any
unauthorized disclosure of confidential information.

SECTION 4.14 INTEREST RATE AND FOREIGN EXCHANGE CONTRACTS

    All material interest rate swaps, caps, floors and option agreements and
other interest rate risk management arrangements and foreign exchange contracts
to hedge Acquiror's investments in foreign subsidiaries, whether entered into
for the account of the Acquiror or any Titan Subsidiary, were entered into in
the Ordinary Course of Business and, to the Acquiror's knowledge, in accordance
with prudent business practice and applicable rules, regulations and policies of
any Governmental Entity and with counterparties believed to be financially
responsible at the time and at the date hereof, and in all material respects are
valid and binding obligations of the Acquiror or the applicable Titan Subsidiary
enforceable in accordance with their terms (except as may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors generally and the availability of equitable remedies), and
are in full force and effect in all material respects. Acquiror and each Titan
Subsidiary has duly performed in all material respects its material obligations
thereunder to the extent that such obligations to perform have accrued, and, to
the Acquiror's knowledge, there are no material breaches, violations or defaults
or allegations or assertions of such by any other party thereunder.

SECTION 4.15 BROKERS

    Except for Credit Suisse First Boston, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Merger Agreement based
upon arrangements made by or on behalf of Acquiror.

SECTION 4.16 POOLING/TAX MATTERS

    (a) Neither Acquiror nor any of its "affiliates" (as defined in
Section 5.12) has taken or agreed to take any action or failed to take any
action that would prevent the Merger from (i) being treated for financial
accounting purposes as a "pooling of interests" in accordance with GAAP and the
regulations and interpretations of the SEC, or (ii) from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.

    (b) At or prior to the date hereof, Acquiror has received a draft of the
letter described in Section 7.02(h)(ii).

SECTION 4.17 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS.

    The information supplied by Acquiror or required to be supplied by Acquiror
(except to the extent revised or superseded by amendments or supplements) for
inclusion in the Registration Statement, or any amendment or supplement thereto,
shall not, at the time the Registration Statement (including any amendments or
supplements thereto) is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The information
supplied by Acquiror or required to be supplied by Acquiror (except to the
extent revised or superseded by amendments or supplements) for inclusion in the
Proxy Statement/Prospectus shall not, on the date the Proxy Statement/Prospectus
is first mailed to the Company's stockholders and at the Effective Time, contain
any statement which, at such time, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not false or misleading, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies by or on behalf of Company for the Company Stockholders
Meeting which

                                      A-31
<PAGE>
has become false or misleading. The Registration Statement will comply as to
form in all material respects with the provisions of the Securities Act.
Notwithstanding the foregoing, Acquiror makes no representation, warranty or
covenant with respect to any information supplied or required to be supplied by
the Company which is contained in or omitted from any of the foregoing
documents.

SECTION 4.18 BOARD RECOMMENDATION

    The Board of Directors of Acquiror and Acquiror Sub have each unanimously
adopted, in compliance with Delaware law, a resolution advising, authorizing,
approving and adopting this Merger Agreement and the transactions contemplated
hereby, and the resolutions adopted by the Board of Directors of Merger Sub
recommend approval and adoption of this Merger Agreement and the transactions
contemplated hereby by the sole shareholder of Acquiror Sub.

SECTION 4.19 DISCLOSURE

    No representation or warranty of the Acquiror in this Merger Agreement when
read together with the information in the Section of the Acquiror Disclosure
Letter applicable thereto is misleading with respect to any material fact or
omits to state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.

                                   ARTICLE V
                             PRE-CLOSING COVENANTS

SECTION 5.01 CONDUCT OF BUSINESS OF COMPANY UNTIL EFFECTIVE TIME

    The Company hereby covenants and agrees that, from the date of this Merger
Agreement until the Effective Time, Company, unless otherwise expressly
contemplated by this Merger Agreement or consented to in writing by Acquiror,
will, and will cause each Company Subsidiary to, carry on their respective
businesses only in the Ordinary Course of Business, use their respective best
efforts to preserve intact their business organizations and Assets, maintain
their rights and franchises, retain the services of their officers and employees
and maintain their relationships with customers, suppliers, licensors, licensees
and others having business dealings with them, and use their respective best
efforts to keep in full force and effect liability insurance and bonds
comparable in amount and scope of coverage to that currently maintained. Except
as set forth on Section 5.01 of the Company Disclosure Letter, without limiting
the generality of the foregoing, neither Company nor any Company Subsidiary
will:

    (a) (i) increase in any manner the compensation or fringe benefits of, or
pay any bonus to, any employee (who is not an officer or director) other than in
the Ordinary Course of Business, or to any officer or director; (ii) grant any
severance or termination pay (other than pursuant to the normal severance
practices or existing agreements of the Company in effect on the date of this
Merger Agreement) to, or enter into any severance agreement with, any director,
officer or employee, or enter into any employment agreement with any employee
(who is not an officer or director) (other than in the Ordinary Course of
Business) or with any officer or director or otherwise without the prior written
consent of Acquiror; (iii) establish, adopt, enter into or amend any Company
Benefit Plan or other arrangement, except as may be required to comply with
applicable Law; (iv) pay any benefit not provided for under any Company Benefit
Plan or other arrangement; (v) grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or Company Benefit Plan or
other arrangement (including the grant of stock options, stock appreciation
rights, stock-based or stock-related awards, performance units or restricted
stock, or the removal of existing restrictions in any Company Benefit Plan or
other arrangement or agreement or awards made thereunder), (vi) take any action
to fund or in any other way secure the payment of compensation or benefits under
any

                                      A-32
<PAGE>
agreement or (vii) promote or fire any director or officer, or other than in the
Ordinary Course of Business, any employee (who is not an officer or director);

    (b) declare, set aside or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock;

    (c) (i) redeem, purchase or otherwise acquire any shares of capital stock of
the Company or any Company Subsidiary or any securities or obligations
convertible into or exchangeable for any shares of capital stock of the Company
or any Company Subsidiary, or any options, warrants or conversion or other
rights to acquire any shares of capital stock of the Company or any Company
Subsidiary or any such securities or obligations, or any other securities
thereof, other than pursuant to the Stockholders Agreement, dated February 27,
1998, by and among the Company and the Company Stockholders who are signatories
thereto; (ii) effect any reorganization, recapitalization, merger or share
exchange; or (iii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock;

    (d) issue, deliver, award, grant or sell, or authorize the issuance,
delivery, award, grant or sale (including the grant of any limitations in voting
rights or other Encumbrances) of, any shares of any class of its capital stock
(including shares held in treasury but excluding shares issuable upon the
exercise of options outstanding on the date hereof in accordance with their
terms as of the date hereof), any securities convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or options to acquire,
any such shares, or amend or otherwise modify the terms of any such rights,
warrants or options the effect of which shall be to make such terms more
favorable to the holders thereof;

    (e) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the Assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any Assets of any other person (other than the purchase of assets from
suppliers or vendors in the Ordinary Course of Business);

    (f) sell, lease, exchange, mortgage, pledge, transfer or otherwise subject
to any Encumbrance or dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer or otherwise subject to any Encumbrance or dispose of, any of
its Assets, except for sales, dispositions, pledges, encumbrances or transfers
in the Ordinary Course of Business;

    (g) propose or adopt any amendments to its certificate of incorporation,
bylaws or other comparable charter or organizational documents;

    (h) make or rescind any express or deemed election relating to Taxes, settle
or compromise any claim, action, lawsuit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes (except where the amount
of such settlements or controversies, individually or in the aggregate, does not
exceed $100,000), or change any of its methods of reporting income or deductions
for federal income tax purposes from those employed in the preparation of the
federal income tax returns for the taxable year ended December 31, 1998, except,
as may be required by applicable Law or GAAP;

    (i) make or agree to make any new capital expenditures which are not
included in the Company's 2000 capital budget, a copy of which was furnished to
Acquiror, to the extent that such new capital expenditures exceed in the
aggregate $100,000;

    (j) (i) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the Company or any Company
Subsidiary, guarantee any debt securities of another person, enter into any
"keep well" or other agreement to maintain any financial statement condition of
another person or enter into any agreement having the economic effect of any of
the foregoing, except for borrowings

                                      A-33
<PAGE>
incurred in the Ordinary Course of Business, or (ii) make any loans, advances or
capital contributions to, or investments in, any other person other than travel,
entertainment, loans for tuition expenses and payroll advances made to employees
in the Ordinary Course of Business;

    (k) pay, discharge, settle or satisfy any claims, liabilities or obligations
(whether absolute or contingent, matured or unmatured, known or unknown), other
than the payments, discharges or satisfactions, in the Ordinary Course of
Business which are materially in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the Company Financial
Statement or waive any material benefits of, or agree to modify in any material
respect, any confidentiality, standstill or similar agreements to which the
Company or any Company Subsidiary is a party;

    (l) waive, release or assign any rights or claims, or modify, amend or
terminate any agreement to which the Company or any Company Subsidiary is a
party, which would reasonably be expected to have a Company Material Adverse
Effect;

    (m) make any change in any method of accounting or accounting practice or
policy other than those required by generally accepted accounting principles or
a Governmental Entity;

    (n) take any action or fail to take any action that would reasonably be
expected to result in a Company Material Adverse Effect prior to or after the
Effective Time or that would adversely affect the ability of the Company or any
Company Subsidiary prior to the Effective Time to obtain consents of third
parties or approvals of Government Entities required to consummate the
transactions contemplated in this Merger Agreement; or

    (o) authorize, or commit or agree to do any of the foregoing.

SECTION 5.02 BEST EFFORTS TO SATISFY CONDITIONS

    Acquiror and Company shall use their respective best efforts to cause all
conditions to the obligations of Acquiror and Company set forth in Article VII
of this Merger Agreement to be satisfied on or before the Closing Date.

SECTION 5.03 OTHER ACTIONS

    Acquiror and Company shall not, and shall not permit any of their respective
Affiliates to, take any action that would, or that could reasonably be expected
to, result in (a) any of the representations and warranties of such Party set
forth in this Merger Agreement becoming untrue, or (b) any of the conditions to
the Merger set forth in Article VII of this Merger Agreement not being
satisfied.

SECTION 5.04 CERTAIN TAX MATTERS

    From the date hereof until the Effective Time, Company and each Company
Subsidiary (a) will prepare and timely file with the relevant Taxing authority
all Company Tax Returns required to be filed during such period ("Post-Signing
Returns"), which Post-Signing Returns shall be accurate in all material
respects, or permitted extensions with respect thereto, (b) will timely pay all
Taxes due and payable with respect to such Post-Signing Returns, (c) will pay or
otherwise make adequate provision for all Taxes payable by Company and Company
Subsidiary for which no Post-Signing Return is due prior to the Effective Time,
and (d) will promptly notify Acquiror of any action, suit, proceeding, claim or
audit pending against or with respect to Company or any Company Subsidiary in
respect of any Taxes.

SECTION 5.05 ACCESS AND INFORMATION

    For so long as this Merger Agreement is in effect, and subject to applicable
Laws, each Party shall, and shall cause each of their respective Subsidiaries
to, (a) afford to the other Party and its officers,

                                      A-34
<PAGE>
employees, accountants, consultants, legal counsel and other representatives
reasonable access during normal business hours, subject to reasonable advance
notice, to all of their respective properties, Agreements, books, records and
personnel and (b) furnish promptly to the other Party (i) a copy of each
Agreement, document, certificate or other instrument filed with, or received
from any Governmental Entity and (ii) all other information concerning their
respective businesses, operations, prospects, conditions (financial or
otherwise), Assets, liabilities and personnel as such other Party may reasonably
request.

SECTION 5.06 NOTIFICATION FILING REQUIRED UNDER HSR ACT

    If required, the parties shall make good faith efforts to complete and file
without delay, and in any event within thirty (30) days after the date of this
Merger Agreement, any notification filing required under the HSR Act with
respect to the transactions contemplated by this Merger Agreement. Acquiror and
Company shall in good faith take (or fully cooperate in the taking of) all
actions, and provide any additional information that may be, required or
reasonably requested in order to comply with the requirements of the HSR Act. If
a notification filing is required under the HSR Act, Acquiror shall pay all
filing fees in connection therewith.

SECTION 5.07 RELATED PARTY MATTERS

    Company shall use commercially reasonable efforts to have each person
identified on Exhibit I to Section 3.18 of the Company Disclosure Letter execute
an agreement reasonably acceptable to Acquiror to pay-off as soon as practicable
after the Effective Time all indebtedness (including principal and interest)
owed by such person to the Company which is secured by Company Common Stock and
which was issued to such persons to purchase the capital stock of the Company or
any of its predecessors.

SECTION 5.08 PROXY STATEMENT/PROSPECTUS AND REGISTRATION STATEMENT; COMPANY
  STOCKHOLDERS MEETING

    (a) As soon as practicable following the date of this Merger Agreement, the
Company and Acquiror shall prepare and file with the SEC the Proxy
Statement/Prospectus, and Acquiror shall prepare and file with the SEC the
Registration Statement in which the Proxy Statement/Prospectus will be included
as a prospectus. Each of the Company and Acquiror shall use its best efforts to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. The Company shall use its best
efforts to cause the Proxy Statement/Prospectus to be mailed to the Company
Stockholders as promptly as practicable after the Registration Statement is
declared effective under the Securities Act. Acquiror also shall take any action
(other than qualifying to do business in any jurisdiction in which it is not now
so qualified or filing a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the issuance
of Acquiror Common Stock in the Merger, and the Company shall furnish all
information concerning the Company and the holders of Company Common Stock as
may be reasonably requested in connection with any such action. No filing of, or
amendment or supplement to, the Registration Statement or the Proxy
Statement/Prospectus will be made by either Acquiror or the Company without the
other party's prior consent (which shall not be unreasonably withheld, delayed
or conditioned) and without providing the other party the opportunity to review
and comment thereon. Acquiror shall advise the Company, promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of Acquiror Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or any request by the SEC for amendment of the Proxy Statement/Prospectus or the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information. If at any time prior to the Effective Time
any

                                      A-35
<PAGE>
information relating to the Company or Acquiror, or any of their respective
"affiliates" (as defined in Section 5.12), officers or directors, should be
discovered by the Company or Acquiror which should be set forth in an amendment
or supplement to any of the Registration Statement or the Proxy Statement/
Prospectus, so that any of such documents would not include any misstatement of
a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly notify
the other parties hereto and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the extent
required by law, disseminated to the Company Stockholders.

    (b) The Company shall, as promptly as practicable after the Registration
Statement is declared effective under the Securities Act, duly call, give notice
of, convene and hold a meeting of its stockholders (the "Company Stockholders
Meeting") in accordance with Delaware Law and its certificate of incorporation
and bylaws for the purpose of obtaining the requisite approval of the Company
Stockholders and shall, through the unanimous action of its Board of Directors,
declare that this Merger Agreement is advisable and recommend to its
stockholders the approval and adoption of this Merger Agreement, the Merger and
the other transactions contemplated hereby.

SECTION 5.09 [INTENTIONALLY OMITTED]

SECTION 5.10 NO SOLICITATION.

    (a) From the date of this Merger Agreement until the Effective Time or the
termination of this Merger Agreement pursuant to the terms of this Merger
Agreement, the Company shall not and shall not permit any of its Subsidiaries,
Affiliates, directors, officers, employees, agents or representatives,
including, without limitation, any investment banker, attorney or accountant of
the Company or any of its Subsidiaries (collectively, "Representatives")
directly or indirectly, to (i) initiate, solicit, encourage or knowingly
facilitate (including by way of furnishing information), the making of any
proposal or offer that constitutes, an Acquisition Proposal (as defined below),
(ii) enter into or maintain or continue discussions or negotiate with any Person
in furtherance of such inquiries or to obtain an Acquisition Proposal,
(iii) agree to, approve, recommend, or endorse any Acquisition Proposal,
(iv) disclose any non-public information relating to the Company or any Company
Subsidiary or afford access to the properties, books or records of the Company
or any Company Subsidiary to any person that has made or may reasonably be
expected to make a proposal regarding a Acquisition Proposal or that has advised
the Company that it is or may be interested in making a proposal regarding a
Acquisition Proposal, or (v) authorize or permit any of its or their
Subsidiaries or Representatives to take any such action and, the Company shall
promptly notify Acquiror of any such inquiries and proposals received by the
Company or any of its Subsidiaries or Representatives, relating to any of such
matters

    (b) Notwithstanding the foregoing, nothing contained in clause (a) above
shall prohibit the Board of Directors of the Company from furnishing information
to or entering into discussions or negotiations with any Person that makes a
BONA FIDE proposal or offer with respect to the Company that constitutes an
Acquisition Proposal for the Company, if: (A) the Board of Directors of the
Company determines in good faith, taking into account the advice of outside
counsel, that such action is reasonably likely to be required for the Board of
Directors to comply with its fiduciary duties to stockholders under applicable
law; (B) prior to furnishing such information to, or entering into discussions
or negotiations with, such Person, the Company provides written notice to
Acquiror of the identity of the Person making the Acquisition Proposal for the
Company and that it intends to furnish information to, or intends to enter into
discussions or negotiations with, such Person; (C) the Company enters into a
customary confidentiality agreement; (D) the Company keeps Acquiror informed on
a timely basis of the status of such negotiations and all material terms and
conditions thereof and promptly provides Acquiror with

                                      A-36
<PAGE>
copies of any and all written inquiries or proposals relating thereto; and
(E) such Acquisition Proposal for the Company was not solicited in violation of
this Merger Agreement.

    (c) For purposes of this Merger Agreement, "Acquisition Proposal" means an
inquiry, offer or proposal regarding any of the following (other than the
transactions contemplated by this Merger Agreement) involving the Company or its
Subsidiaries: (a) any merger, consolidation, share exchange, business
combination, or other similar transaction (other than the Merger); (b) any sale,
lease, license, exchange, mortgage, pledge, transfer or other disposition of 15%
or more of the fair market value of the business or assets of the Company and
the Company Subsidiaries, taken as a whole, in a single transaction or series of
transactions; (c) any tender offer or exchange offer for outstanding shares of
capital stock of the Company or the filing of a registration statement under the
Securities Act in connection therewith; (d) any solicitation of proxies in
opposition to approval by the Company's stockholders of the Merger; (e) the
acquisition by any person, after the date hereof, of beneficial ownership or the
right to acquire beneficial ownership of, or the formation of any "group" (as
such term is defined under Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder) that beneficially owns or has the right to
acquire beneficial ownership of, 5% or more of the then outstanding shares of
capital stock of the Company, or the acquisition by any person or "group" that,
as of the date hereof, beneficially owns 5% or more of the outstanding shares of
capital stock of the Company or beneficial ownership or the right to acquire
beneficial ownership of any additional shares of capital stock of the Company;
(f) the adoption by the Company of a plan of liquidation, the declaration or
payment by the Company of an extraordinary dividend on any of its shares of
capital stock or the effectuation by the Company of a recapitalization or other
type of transaction that would involve either a change in the Company's
outstanding capital stock or a distribution of assets of any kind to the holders
of such capital stock; (g) the repurchase by the Company or any Company
Subsidiary of any shares of Company Common Stock other than pursuant to the
Stockholders Agreement, dated February 27, 1998, by and among the Company and
the Company Stockholders who are signatories thereto; or (h) any resolution or
agreement to, or public announcement by the Company or any other person or
entity of a proposal, plan or intention to, do any of the foregoing.

SECTION 5.11 NYSE LISTING

    Acquiror shall use reasonable efforts to cause the Acquiror Common Stock to
be issued pursuant to Section 2.01(a) of this Merger Agreement to be approved
for listing on the NYSE, subject to official notice of issuance, prior to the
Effective Time.

SECTION 5.12 AFFILIATES

    (a) Each of the Company and Acquiror: (i) has disclosed to the other in
Section 5.12 of the Company Disclosure Letter or the Acquiror Disclosure Letter,
as the case may be, all Persons who are, or may be, as of the date hereof its
"affiliates" as that term is used in SEC Accounting Series Release Nos. 130 and
135 and Rule 145 of the rules and regulations of the SEC under the Securities
Act; and (ii) shall use all reasonable efforts to cause each Person who is
identified as an "affiliate" of it in Section 5.12 of the Company Disclosure
Letter or the Acquiror Disclosure Letter, as the case may be, to deliver to the
other as promptly as practicable but in no event later than thirty-one
(31) days prior to the Closing Date, a signed agreement substantially in the
form attached hereto as Exhibit E, in the case of the Company, and Exhibit F, in
the case of Acquiror. The Company and Acquiror shall notify each other from time
to time of all other Persons who then are, or may be, such an "affiliate" and
use all reasonable efforts to cause each additional Person who is identified as
an "affiliate" to execute a signed agreement as set forth in this
Section 5.12(a).

                                      A-37

<PAGE>
    (b) Shares of Company Common Stock and shares of Acquiror Common Stock held
by the "affiliates" of the Company or Acquiror set forth in Section 5.12 of the
Company Disclosure Letter or the Acquiror Disclosure Letter, as the case may be,
shall not be transferable during the thirty (30) day period prior to the
Effective Time, and shares of Acquiror Common Stock issued to, or as of the
Effective Time held by, such "affiliates" of the Company and Acquiror shall not
be transferable until such time as financial results covering at least thirty
(30) days of combined operations of the Company and Acquiror have been published
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies, regardless of whether each such "affiliate" has provided the
signed agreement referred to in Section 5.12(a), except to the extent permitted
by, and in accordance with, SEC Accounting Series Release 135 and SEC Staff
Accounting Bulletins 65 and 76. Any Company Common Stock and any Acquiror Common
Stock held by any such "affiliate" shall not be transferable, regardless of
whether such "affiliate" has provided the applicable signed agreement referred
to in Section 5.12(a), if such transfer, either alone or in the aggregate with
other transfers by "affiliates", would preclude the ability of the parties to
account for the transactions contemplated by this Merger Agreement as a "pooling
of interests" in accordance with GAAP, Accounting Principles Board Opinion
No. 16 and all rules, regulations and policies of the SEC. Acquiror shall not
register the transfer of any shares of Acquiror Common Stock unless such
transfer is made in compliance with the foregoing.

SECTION 5.13 TAX TREATMENT

    Each of Acquiror and the Company shall use reasonable efforts to cause the
Merger to qualify as a reorganization under the provisions of Section 368 of the
Code. The parties will characterize the Merger as such a reorganization for
purposes of all Tax Returns and other filings.

SECTION 5.14 POOLING

    Each of the Company and Acquiror shall use reasonable efforts to cause the
transactions contemplated by this Merger Agreement, including the Merger, to be
accounted for as a "pooling of interests" in accordance with GAAP Accounting
Principles Board Opinion No. 16 and all published rules, regulations and
policies of the SEC, and each of the Company and Acquiror agrees that it shall
take no action that would cause such accounting treatment not to be obtained.

SECTION 5.15 NEGATIVE COVENANTS OF ACQUIROR

    Except as expressly contemplated by this Merger Agreement, from the date
hereof until the Effective Time, without the written consent of the Company
(which consent shall not be unreasonably withheld, delayed or conditioned)
Acquiror shall not, and shall not permit any Acquiror Subsidiary to, do any of
the following:

    (a) (i) declare or pay any dividend on, or make any other distribution in
respect of, outstanding shares of Acquiror Common Stock; (ii) repurchase, redeem
or otherwise acquire any outstanding shares of capital stock or other securities
of, or other ownership interests in, Acquiror or any Acquiror Subsidiary (except
for those repurchases related to shares owned by employees or former employees
of Acquiror or any Acquiror Subsidiary); or (iii) except to the extent not
accounted for in Section 2.06 hereof, split, combine or reclassify any shares of
Acquiror Common Stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for, shares of Acquiror
Common Stock or other securities;

    (b) take any action that is intended or would reasonably be expected to
result in any of Acquiror's representations and warranties set forth in this
Merger Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger set forth
in Article VII not being satisfied or in a violation of any provision of this
Merger Agreement;

                                      A-38
<PAGE>
    (c) take any action that would, or would be reasonably likely to, prevent
the Merger from being accounted for as a "pooling of interests" in accordance
with GAAP and the rules and regulations of the SEC;

    (d) take any action that would, or would be reasonably likely to, prevent
the Merger from qualifying as a reorganization under the provisions of
Section 368(a) of the Code; or

    (e) agree in writing or otherwise to do any of the foregoing.

                                   ARTICLE VI
                             ADDITIONAL AGREEMENTS

SECTION 6.01 STOCKHOLDER APPROVAL

    Promptly after the date of this Merger Agreement, Company shall take all
additional action, if any, necessary in accordance with Delaware Law and its
certificate of incorporation and bylaws to secure the vote or consent of Company
Stockholders required by Delaware Law to approve this Merger Agreement and the
transactions contemplated hereby. In all events, this Merger Agreement shall be
submitted to the Company Stockholders whether or not the board of directors of
the Company determines that this Merger Agreement is no longer advisable and
recommends that the Company Stockholders reject it.

SECTION 6.02 APPROPRIATE ACTION; CONSENTS; FILINGS

    (a) Upon the terms and subject to the conditions set forth in this Merger
Agreement, the Parties shall use their reasonable best efforts to take, or cause
to be taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the transactions contemplated by this Merger Agreement as
promptly as practicable, including, without limitation, (i) executing and
delivering any additional instruments necessary, proper or advisable to
consummate the transactions contemplated by, and to carry out fully the purposes
of, this Merger Agreement, (ii) obtaining from any Governmental Entities any
material Licenses required to be obtained or made by Acquiror, or any of its
Subsidiaries, or Company, or any Company Subsidiary, in connection with the
authorization, execution and delivery of this Merger Agreement and the
consummation of the transactions contemplated herein, including, without
limitation, the Merger, and (iii) making all necessary filings, and thereafter
making any other required submissions, with respect to this Merger Agreement and
the Merger required under (A) the HSR Act and (B) any other applicable Law;
PROVIDED that Acquiror and Company shall cooperate with each other in connection
with the making of all such filings, including providing copies of all such
documents to the non-filing Party and its advisors prior to filing and
discussing all reasonable additions, deletions or changes suggested in
connection therewith. Company and Acquiror shall furnish to each other all
information required for any application or other filing to be made pursuant to
the rules and regulations of any applicable Law in connection with the
transactions contemplated by this Merger Agreement.

    (b) (i) Except as the Parties may otherwise agree, Company, each Company
Stockholder and Acquiror shall give (and, in the case of Company, shall cause
each Company Subsidiary to give, and, in the case of Acquiror, shall cause its
Subsidiaries to give) any notices to third parties, and use (and, in the case of
Company, shall cause each Company Subsidiary to use, and, in the case of
Acquiror, shall cause its Subsidiaries to use) their reasonable best efforts to
obtain any third-party consents, approvals or waivers (A) necessary, proper or
advisable to consummate the transactions contemplated in this Merger Agreement,
(B) disclosed or required to be disclosed in the Company Disclosure Letter or
the Acquiror Disclosure Letter, as the case may be, or (C) required to prevent a
Company Material Adverse Effect or an Acquiror Material Adverse Effect.

                                      A-39
<PAGE>
        (ii) In the event that any of Company, any Company Stockholder or
    Acquiror shall fail to obtain any third-party consent, approval or waiver
    described in Section 6.02(b)(i) of this Merger Agreement, such Party shall
    use its reasonable best efforts, and shall take any such actions reasonably
    requested by the other Parties, to minimize any adverse effect upon Company
    or any Company Subsidiary and Acquiror or its Subsidiaries and their
    respective businesses resulting, or which could reasonably be expected to
    result after the Effective Time, from the failure to obtain such consent,
    approval or waiver.

    (c) From the date of this Merger Agreement until the Effective Time, Company
and Acquiror shall promptly notify each other in writing of any pending or, to
the knowledge of Company or any Company Subsidiary or Acquiror or any one of its
Subsidiaries, threatened action, proceeding or investigation by any Governmental
Entity or any other Person (i) challenging or seeking damages in connection with
the Merger or the conversion of Company Common Stock into the Merger
Consideration pursuant to the Merger or the transactions contemplated hereunder
or (ii) seeking to restrain or prohibit the consummation of the Merger or the
transactions contemplated hereunder or otherwise limit the right of Acquiror or
its Subsidiaries to own or operate all or any portion of the businesses or
Assets of Company or any Company Subsidiary. Company and Acquiror shall
cooperate with each other in defending any such action, proceeding or
investigation, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed.

SECTION 6.03 DISCLOSURE

    Prior to the Effective Time, each Party shall notify the other Parties by
written update to its respective Disclosure Letter of (i) any representation or
warranty made by it in connection with this Merger Agreement becoming untrue or
inaccurate, (ii) the occurrence or non-occurrence of any event, the occurrence
or non-occurrence of which would be likely to cause any condition to the
obligations of any Party to effect the Merger and the other transactions
contemplated by this Merger Agreement not to be satisfied or (iii) the failure
of Company, any Company Subsidiary, Acquiror or Acquiror Sub, as the case may
be, to comply with or satisfy any covenant, condition or Agreement to be
complied with or satisfied by it pursuant to this Merger Agreement which would
be likely to result in any condition to the obligations of any Party to effect
the Merger and the other transactions contemplated by this Merger Agreement not
to be satisfied; PROVIDED, HOWEVER, the delivery of any notice pursuant to this
Section 6.03 shall not cure any breach of any representation or warranty
requiring disclosure of such matter as of the date of this Merger Agreement or
otherwise limit or affect the rights and remedies available hereunder to the
Party receiving such notice.

SECTION 6.04 PUBLIC ANNOUNCEMENTS

    Acquiror, Acquiror Sub and Company shall consult with each other before
issuing or making, and shall give each other the opportunity to review and
comment upon, any press release or other public statement with respect to the
Merger and the other transactions contemplated in this Merger Agreement, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by Law or any applicable listing
agreements.

SECTION 6.05 OBLIGATIONS OF ACQUIROR SUB

    Acquiror shall take all action necessary to cause Acquiror Sub to perform
its obligations under this Merger Agreement and to consummate the Merger on the
terms and conditions set forth in this Merger Agreement.

                                      A-40
<PAGE>
SECTION 6.06 TRANSACTION EXPENSES

    Each Party to this Merger Agreement shall bear their own expenses in
connection herewith, including, without limitation, the fees of each Party's
respective legal counsel, financial advisors, accountants, brokers, finders or
investment bankers.

SECTION 6.07 BOARD OF DIRECTORS

    At the first meeting of the Board of Directors of Acquiror after later of
(a) the Effective Time or (b) Acquiror's May 2000 Stockholders Meeting, Acquiror
shall cause Michael B. Alexander to be appointed to the Board of Directors of
Acquiror for a term of approximately one (1) year; PROVIDED, HOWEVER, such term
shall not be less than eleven (11) months.

SECTION 6.08 COMPANY COMMON STOCK

    On or prior to the Effective Time, the Company shall deliver to the Acquiror
and the Exchange Agent a calculation, certified as being true, correct and
complete by the Company's chief financial officer, of (a) the number of shares
of Company Common Stock that will be outstanding as of the Effective Time and
(b) the number of shares of Company Common Stock that would be issuable with
respect to Options outstanding as of the Effective Time if such Options were
fully vested and immediately exercisable, when, as of the Effective Time, all
shares of Company Common Stock are converted into a single class of Company
Common Stock.

                                  ARTICLE VII
                              CONDITIONS PRECEDENT

SECTION 7.01 CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER THIS MERGER AGREEMENT

    The respective obligations of each Party to effect the Merger and the other
transactions contemplated herein shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions, any or all of which may
be waived by agreement of Acquiror and Company, in whole or in part, to the
extent permitted by applicable Law:

    (a)  STOCKHOLDER APPROVAL.  This Merger Agreement and the Merger shall have
been approved and adopted by the requisite vote or consent of Company
Stockholders.

    (b)  EFFECTIVENESS OF REGISTRATION STATEMENT.  The Registration Statement
shall have been declared effective by the SEC under the Securities Act prior to
the mailing of the Proxy Statement/Prospectus by the Company to its stockholders
and no stop order suspending the effectiveness of such Registration Statement
shall have been issued by the SEC and no proceedings for that purpose shall have
been initiated or, to the knowledge of Acquiror or the Company, threatened by
the SEC.

    (c)  NO ORDER.  No Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, judgment,
injunction or other order (whether temporary, preliminary or permanent), in any
case which is in effect and which prevents or prohibits consummation of the
Merger; PROVIDED, HOWEVER, that the Parties shall use their reasonable best
efforts to cause any such decree, judgment, injunction or other order to be
vacated or lifted.

    (d)  HSR ACT.  The applicable waiting period with respect to the Merger and
the other transactions contemplated hereby, together with any extensions
thereof, under the HSR Act shall have expired or been terminated.

                                      A-41
<PAGE>
SECTION 7.02 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ACQUIROR AND ACQUIROR SUB

    The obligations of Acquiror and Acquiror Sub to effect the Merger and the
other transactions contemplated in this Merger Agreement are also subject to the
satisfaction at or prior to the Effective Time of the following conditions, any
or all of which may be waived by Acquiror, in whole or in part, to the extent
permitted by applicable Law:

    (a)  REPRESENTATIONS AND WARRANTIES.  Each of the representations and
warranties of Company contained in this Merger Agreement shall be true and
correct as of the date of this Merger Agreement and shall be true and correct
(except that where any statement in a representation or warranty expressly
includes a standard of materiality, such statement shall be true and correct in
all respects giving effect to such standard) as of the Effective Time as though
made as of the Effective Time, except for (i) representations and warranties
which address matters only as of a particular date, which representations and
warranties shall be true and correct in all material respects (except that where
any statement in a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all respects giving
effect to such standard) as of such date and (ii) changes permitted by or
consistent with this Merger Agreement. Acquiror shall have received a
certificate of the chief executive officer or chief financial officer of Company
to the foregoing effect.

    (b)  AGREEMENTS AND COVENANTS.  Company shall have performed or complied in
all respects with all Agreements and covenants required by this Merger Agreement
to be performed or complied with by Company on or prior to the Effective Time.
Acquiror shall have received a certificate of the chief executive officer or
chief financial officer of Company (as to Company) to that effect.

    (c)  OPINION OF COUNSEL.  Acquiror shall have received from Swidler Berlin
Shereff Friedman, LLP, counsel to Company, an opinion dated the Closing Date, in
the form attached hereto as Exhibit G.

    (d)  NO CHALLENGE.  There shall not be pending any enforcement action or
similar proceeding by any state or federal Governmental Entity that is likely to
have a Company Material Adverse Effect or, if such action arises in connection
with the transactions contemplated hereby, an Acquiror Material Adverse Effect.

    (e)  COMPANY MATERIAL ADVERSE EFFECT.  Since December 31, 1999, there shall
not have occurred a Company Material Adverse Effect (or any development that,
insofar as reasonably can be foreseen, is reasonably likely to result in any
Company Material Adverse Effect) not disclosed in the Company Disclosure Letter
as of the date hereof.

    (f)  NO LITIGATION.  There shall be no pending or threatened suit, action,
proceeding or investigation: (i) challenging or seeking to restrain or prohibit
the consummation of the Merger or any of the other transactions contemplated by
this Merger Agreement, (ii) relating to the Merger and seeking to obtain from
Acquiror or any Acquiror Subsidiary any damages that may be material to
Acquiror, (iii) seeking to prohibit or limit in any respect Acquiror's ability
to vote, receive dividends with respect to or otherwise exercise ownership
rights with respect to the stock of the Surviving Corporation; (iv) which would
materially and adversely affect the right of the Surviving Corporation to own
the assets or operate the business of the Company; or (v) which, if adversely
determined, could have a Company Material Adverse Effect or Acquiror Adverse
Effect.

    (g)  CONSENTS.  Company and Company Subsidiary shall have procured all
consents of third-parties and Governmental Entities specified in Section 3.06 of
the Company Disclosure Letter.

    (h)  ACCOUNTANT LETTER.  Acquiror shall have received:

        (i) a letter from the Company's independent accountants, dated as of the
    Closing Date and addressed to Acquiror, the Company and Acquiror's
    independent accountants, reasonably satisfactory in form and substance to
    Acquiror and Acquiror's independent accountants, to the

                                      A-42
<PAGE>
    effect that, after reasonable investigation, the Company's independent
    accountants are not aware of any fact concerning the Company or any of the
    Company's stockholders or Affiliates that could preclude Acquiror from
    accounting for the Merger as a "pooling of interests" in accordance with
    GAAP, Accounting Principles Board Opinion No. 16 and all published rules,
    regulations and policies of the SEC; and

        (ii) a letter from Acquiror's independent accountants, dated as of the
    Closing Date and addressed to Acquiror, reasonably satisfactory in form and
    substance to Acquiror, to the effect that Acquiror's independent accountants
    concur in Acquiror's management's conclusion that Acquiror may account for
    the Merger as a "pooling of interests" in accordance with generally accepted
    accounting principles, Accounting Principles Board Opinion No. 16 and all
    published rules, regulations and policies of the SEC.

    (i)  DISSENTING COMPANY STOCKHOLDERS.  The Company Dissenting Stockholders
shall not hold more than five percent (5%) of the Company Common Stock.

    (j)  TAX OPINION.  Acquiror shall have received a legal opinion addressed to
Acquiror from Hogan & Hartson LLP, dated as of the Closing Date to the effect
that the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code.

    (k)  ESTIMATED NET DEBT AS OF CLOSING DATE.  Acquiror shall have received
from Company two (2) days prior to the Closing Date a certificate of the chief
financial officer of the Company of the Net Debt of the Company estimated as of
the Closing Date (the "Estimated Net Debt") and prepared on a good faith basis
consistent with the Company Financial Statement. The Parties acknowledge and
agree that the amounts set forth on the Estimated Balance Sheet shall be used in
computing an estimate of the Transaction Value as of the Closing Date.

    (l)  CONSULTING AGREEMENTS.  All of the consulting agreements with and of
Westgate Capital Co., Joel N. Levy, Peter M. Schulte and Joel N. Levy/Peter M.
Schulte, L.L.C. shall have been terminated, and each party to each such
agreement shall have released the Company (in a form satisfactory to Acquiror)
from any liability as a result of such termination.

    (m)  NO ACQUIROR STOCKHOLDER VOTE.  No approval or adoption or consent of
the stockholders of Acquiror with respect to the transactions contemplated by
this Merger Agreement shall be required pursuant to the rules of the NYSE.

    (n)  1999 FINANCIALS.  Company shall have prepared and delivered to Acquiror
and Acquiror Sub, and shall provide a certificate signed by its chief financial
officer in which Company represents and warrants to Acquiror and Acquiror Sub
that Company has prepared and delivered to Acquiror and Acquiror Sub a true and
complete copy of, the audited consolidated balance sheet of Company and the
Company Subsidiaries as of the end of the fiscal period ending December 31, 1999
and the audited consolidated statement of income and the statement of cash flows
and equity and changes in financial position for the Company and the Company's
Subsidiaries for such fiscal year audited by Ernst & Young LLP, the Company's
independent public accountants, in accordance with generally accepted auditing
standards and accompanied by the related report of Ernst & Young LLP (such
balance sheet and such consolidated statement of income, Company's equity and
changes in financial position are hereinafter referred to collectively as the
"1999 Company Financial Statement"). In the certificate to be delivered to
Acquiror and Acquiror Sub pursuant to the immediately preceding sentence,
Company shall also represent and warrant to Acquiror and Acquiror Sub that the
1999 Company Financial Statement, including, without limitation, the notes
thereto, (i) has been prepared in accordance with the books and records of
Company and its Subsidiaries and (ii) presents fairly in all material respects
the consolidated financial position of Company and its Subsidiaries at the date
thereof and their consolidated results of operations and cash flows for the
period indicated, in accordance with GAAP applied throughout the periods
involved (except as noted therein). The representations and warranties

                                      A-43
<PAGE>
contained in such certificate shall survive for the same period of time as the
representations and warranties contained in Section 3.08 survive.

SECTION 7.03 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY

    The obligations of Company to effect the Merger and the other transactions
contemplated by this Merger Agreement are also subject to the satisfaction at or
prior to the Effective Time of the following conditions, any or all of which may
be waived by Company, in whole or in part, to the extent permitted by applicable
Law:

    (a)  REPRESENTATIONS AND WARRANTIES.  Each of the representations and
warranties of Acquiror and Acquiror Sub contained in this Merger Agreement shall
be true and correct as of the date of this Merger Agreement and shall be true
and correct (except that where any statement in a representation or warranty
expressly includes a standard of materiality, such statement shall be true and
correct in all respects giving effect to such standard) as of the Effective Time
as though made as of the Effective Time, except for (i) representations and
warranties which address matters only as of a particular date, which
representations and warranties shall be true and correct in all material
respects (except that where any statement in a representation or warranty
expressly includes a standard of materiality, such statement shall be true and
correct in all respects giving effect to such standard) as of such date and
(ii) changes permitted by or consistent with this Merger Agreement. Company
shall have received a certificate of the chief executive officer or chief
financial officer of Acquiror to the foregoing effect.

    (b)  AGREEMENTS AND COVENANTS.  Acquiror and Acquiror Sub shall have
performed or complied in all respects with all Agreements and covenants required
by this Merger Agreement to be performed or complied with by them on or prior to
the Effective Time except for such noncompliance that does not have an Acquiror
Material Adverse Effect. Company shall have received a certificate of the chief
executive officer or chief financial officer of Acquiror and Acquiror Sub to
that effect.

    (c)  OPINION OF COUNSEL.  The Company shall have received from Hogan &
Hartson L.L.P., counsel to Acquiror, an opinion dated the Closing Date, in the
form attached hereto as Exhibit H.

    (d)  LISTING.  The approval for listing described in Section 5.11 shall have
been received.

    (e)  LEGAL OPINION.  The Company and the Company Stockholders shall have
received a legal opinion addressed to the Company and the Company Stockholders
from Swidler Berlin Shereff Friedman LLP ("Company's Legal Counsel"), dated as
of the Closing Date to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code.

    (f)  NO CHALLENGE.  There shall not be pending any enforcement action or
similar proceeding by any state or federal Governmental Entity that is likely to
have an Acquiror Material Adverse Effect.

    (g)  NO LITIGATION.  There shall be no pending or threatened suit, action,
proceeding or investigation: (i) challenging or seeking to restrain or prohibit
the consummation of the Merger or any of the other transactions contemplated by
this Merger Agreement or (ii) which, if adversely determined, could have an
Acquiror Adverse Effect.

    (h)  CONSENTS.  Acquiror and Acquiror Sub shall have procured all consents
of third-parties and Governmental Entities specified in Section 4.05 of the
Acquiror Disclosure Letter.

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<PAGE>
                                  ARTICLE VIII
                       TERMINATION, AMENDMENT AND WAIVER

SECTION 8.01 TERMINATION

    This Merger Agreement may be terminated at any time (except where otherwise
indicated) prior to the Effective Time, whether before or after approval of this
Merger Agreement and the Merger by Company Stockholders:

    (a) by mutual written consent of Acquiror and Company;

    (b) (i) by Acquiror, if any of the conditions provided in Section 7.01
(other than Section 7.01(a)) or Section 7.02 (other than Section 7.02(i)) have
not been met as of the Scheduled Closing Date and such failure has not been
cured within twenty (20) business days following receipt by Company of written
notice of such failure describing the extent and nature thereof in reasonable
detail, or to the extent permitted by applicable law, such conditions have not
been waived in writing by Acquiror;

        (ii) by Company, if any of the conditions provided in Section 7.01
    (other than Section 7.01(a)) or Section 7.03 have not been met as of the
    Scheduled Closing Date and such failure has not been cured within twenty
    (20) business days following receipt by Acquiror of written notice of such
    failure describing the extent and nature thereof in reasonable detail, or,
    to the extent permitted by applicable law, such conditions have not been
    waived in writing by Company.

    (c) by either Acquiror or Company if any decree, permanent injunction,
judgment, order or other action by any court of competent jurisdiction or any
other federal or state (but not county or municipal) Governmental Entity
preventing or prohibiting consummation of the Merger shall have been filed or in
effect;

    (d) subject to the provisions of Section 2.01(h), (i) by Acquiror, if the
Acquiror Stock Price is greater than $61.60 per share unless the Company makes a
Company Floating Rate Election, in which case the Acquiror shall have no right
of termination pursuant to this Section 8.01(d)(i); or

        (ii) by Company, if the Acquiror Stock Price is less than $39.60 per
    share unless Acquiror makes an Acquiror Floating Rate Election, in which
    case the Company shall have no right to a termination pursuant to this
    Section 8.01(d)(ii);

PROVIDED, that any such termination pursuant to this Section 8.01(d) shall be
without any liability to the parties hereto solely by virtue of the fact that
Acquiror Stock Price is greater than $61.60 or less than $39.60 per share, as
the case may be.

    (e) by either Acquiror or Company if the Merger shall not have been
consummated by the date which is 180 days following the date of this Merger
Agreement; PROVIDED HOWEVER, that the right to terminate this Merger Agreement
under this Section 8.01(d) shall not be available to (i) Acquiror, where
Acquiror's failure to fulfill any obligation under this Merger Agreement has
been the cause of, or resulted in, the failure of the Effective Time to occur on
or before such date, or (ii) Company, where Company's failure to fulfill any
obligation under this Merger Agreement has been the cause of, or resulted in,
the failure of the Effective Time to occur on or before such date;

    (f) by Acquiror, if (i) the board of directors of Company (A) fails to make
or withdraws or modifies its recommendation referred to in Section 3.21 of this
Merger Agreement or (B) recommends to the Company Stockholders approval or
acceptance of an Acquisition Proposal, or (ii) the condition set forth in
Section 7.02(i) has not been satisfied; or

    (g) by either Acquiror or the Company if the stockholder approval
contemplated by Section 7.01(a) shall not have been received at the Company
Stockholders Meeting.

                                      A-45

<PAGE>
SECTION 8.02 EFFECT OF TERMINATION

    In the event of termination of this Merger Agreement by either Acquiror or
Company as provided in Section 8.01 of this Merger Agreement, this Merger
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Acquiror, Acquiror Sub or Company or any of their
respective directors or officers except (i) nothing herein shall relieve any
Party from liability for any breach hereof, (ii) each Party shall be entitled to
any remedies at law or in equity for such breach and (iii) Sections 6.06, 8.02
and 8.03 and Article IX of this Merger Agreement shall remain in full force and
effect and survive any termination of this Merger Agreement.

SECTION 8.03 TRANSACTION FEES, TERMINATION FEES, EXPENSES AND OTHER PAYMENTS

    (a) Except as otherwise set forth in this Section 8.03, all costs and
expenses incurred by the parties hereto shall be borne solely and entirely by
the party that has incurred such costs and expenses, whether or not the Merger
is consummated; PROVIDED, HOWEVER, that in the event that the Merger and the
other transactions contemplated hereby are not consummated, Acquiror and the
Company shall share equally all costs and expenses (other than attorneys' and
accountants' fees and expenses) incurred in relation to printing and filing and,
as applicable, mailing the Registration Statement and the Proxy Statement and
any amendments or supplements thereto and all SEC and other regulatory filing
fees incurred in connection with the Registration Statement and the Proxy
Statement and the fees required under the applicable foreign laws, if any,
incurred in connection with the transactions contemplated under this Merger
Agreement up to one hundred thousand dollars ($100,000) and Acquiror shall bear
all such costs and expenses in excess of one hundred thousand dollars
($100,000).

    (b) If this Merger Agreement is terminated pursuant to Section 8.01(f), or
if this Merger Agreement is terminated pursuant to Section 8.01(g) and at the
time of the Company Stockholder Meeting an Acquisition Proposal from a Person
other than Acquiror shall have been made and disclosed to the Company
Stockholders, the Company shall pay to Acquiror an amount equal to two million
dollars ($2,000,000) within one (1) Business Day after such termination.

    (c) If this Merger Agreement is terminated pursuant to Section 8.01(f), or
if this Merger Agreement is terminated pursuant to Section 8.01(g) and at the
time of the Company Stockholder Meeting an Acquisition Proposal from a Person
other than Acquiror shall have been made and disclosed to the Company
Stockholders, and the Company (i) enters into a definitive agreement in
connection with an Acquisition Proposal within nine (9) months after the date of
such termination (regardless of when such definitive agreement is consummated)
or (ii) consummates an Acquisition Proposal within nine (9) months after the
date of such termination, the Company shall pay to Acquiror, in addition to the
amounts set forth in Section 8.03(b) above, an amount equal to two million
dollars ($2,000,000) within five (5) Business Days after the consummation of
such definitive agreement or such Acquisition Proposal, as the case may be.

SECTION 8.04 AMENDMENT

    Subject to applicable Law, this Merger Agreement may be amended by the
Parties at any time prior to the Effective Time. This Merger Agreement may not
be amended except by an instrument in writing signed by the Parties.

SECTION 8.05 EXTENSION; WAIVER

    At any time prior to the Effective Time, the Parties may (a) extend the time
for the performance of any of the obligations or other acts of the other
Parties, (b) waive any inaccuracies in the representations and warranties
contained herein or in any Agreements, documents, certificates or other
instruments delivered pursuant hereto and (c) waive compliance with any of the
Agreements or conditions contained in this Merger Agreement. Any such extension
or waiver shall be valid if set forth

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<PAGE>
in an instrument in writing signed by the Party or Parties to be bound thereby.
The failure of any Party to assert any of its rights under this Merger Agreement
or otherwise shall not constitute a waiver of such rights.

                                   ARTICLE IX
                     SURVIVAL OF REPRESENTATIONS; REMEDIES

SECTION 9.01 SURVIVAL OF REPRESENTATIONS

    All representations, warranties, covenants, indemnities and other agreements
made by any party to this Merger Agreement herein shall be deemed made on and as
of the Effective Time as though such representations, warranties, covenants,
indemnities and other agreements were made on and as of such date, and all such
representations, warranties, covenants, indemnities and other agreements shall
survive until the ninetieth (90(th)) day following the Effective Time; PROVIDED,
HOWEVER, that if Acquiror shall have given Stockholders' Representatives notice
of a claim on or prior to such 90(th) day, the representations, warranties,
covenants, indemnities, and other agreements applicable to such claim shall
survive with respect to such claim until such claim is finally resolved, and
provided further that (a) representations and warranties set forth in Sections
3.01 (Organization) and 3.04 (Capitalization) shall survive with the expiration
of the applicable statute of limitations and (b) in the event of fraud all such
representations, warranties, covenants, indemnities and other agreements shall
survive indefinitely.

SECTION 9.02 INDEMNIFICATION BY COMPANY STOCKHOLDERS

    (a) The Company Stockholders hereby agree to indemnify, defend and hold
Acquiror, the Surviving Corporation and their respective officers and directors,
and each person, if any, who controls or may control Acquiror or the Surviving
Corporation within the meaning of the Securities Act (all such persons
hereinafter are referred to individually as an "Acquiror Indemnified Person" and
collectively as "Acquiror Indemnified Persons," but in no event shall any
stockholder of the Company prior to the Effective Time be such an Acquiror
Indemnified Person) harmless (pro-rata in accordance with the their respective
beneficial holdings of Escrow Stock) against all Losses resulting from, imposed
upon or incurred by any Acquiror Indemnified Person, directly or indirectly, as
a result of any of the following, anything in this Merger Agreement to the
contrary notwithstanding:

        (i) any inaccuracy or breach of a representation or warranty of the
    Company given or made by the Company in this Merger Agreement, in the
    Certificate of Merger or in the Company Disclosure Letter or in any
    certificate, document or agreement delivered by or on behalf of the Company
    pursuant hereto; and

        (ii) any failure by the Company to perform or comply with any covenant
    or agreement contained in this Merger Agreement, in the Certificate of
    Merger or in the Company Disclosure Letter or in any certificate, document
    or agreement delivered by or on behalf of the Company pursuant hereto.

    (b) Notwithstanding anything in this Merger Agreement to the contrary, the
Company Stockholders shall not be responsible for any Loss pursuant to this
Section 9.02 (i) in excess of the Escrow Stock, and (ii) unless and until the
aggregate amount of all of such Losses shall exceed $250,000, in which case the
Company Stockholders severally shall be liable for the aggregate amount of all
such Losses in excess of $100,000.

    (c) The indemnity obligations of the Company Stockholders under this
Article IX shall be satisfied through the delivery to the Acquiror Indemnified
Persons of such number of shares of Escrow Stock having a value equal to the
amount of the Loss or Losses for which indemnification or payment is being made.

                                      A-47
<PAGE>
    (d) Neither the exercise of nor the failure to exercise any remedy under
this Merger Agreement will constitute an election of remedies or limit Acquiror
in any manner in the enforcement of any other remedies available to Acquiror.

SECTION 9.03 THIRD PARTY CLAIMS.

    The obligations and liabilities of the Company Stockholders with respect to
their respective indemnities pursuant to this Article IX, resulting from any
Third Party Claim shall be subject to the following terms and conditions:

    (a) The party seeking indemnification (the "Indemnified Party") must give
the party obligated to indemnify (the "Indemnifying Party"), notice of any Third
Party Claim which is asserted against, resulting to, imposed upon or incurred by
the Indemnified Party and which may give rise to liability of the Indemnifying
Party pursuant to this Article IX, stating (to the extent known or reasonably
anticipated) the nature and basis of such Third Party Claim and the amount
thereof; provided that the failure to give such notice shall not affect the
rights of the Indemnified Party hereunder except to the extent (i) that the
Indemnifying Party shall have suffered actual damage by reason of such failure,
or (ii) such failure or delay materially adversely affects the ability of the
Indemnifying Party to defend, settle or compromise such Third Party Claim.

    (b) Subject to Section 9.03(c) below, if the Indemnifying Party assumes
responsibility for Losses arising out of such Third Party Claim, then the
Indemnifying Party shall have the right to undertake, by counsel or other
representatives of its own choosing, the defense of such Third Party Claim at
the Indemnifying Party's risk and expense.

    (c) In the event that (i) the Indemnifying Party shall elect not to
undertake such defense, (ii) within a reasonable time after notice from the
Indemnified Party of any such Third Party Claim, the Indemnifying Party shall
fail to undertake to defend such Third Party Claim, or (iii) there is a
reasonable probability that such Third Party Claim may materially and adversely
affect the Indemnified Party other than as a result of money damages or other
money payments, then the Indemnified Party (upon further written notice to the
Indemnifying Party) shall have the right to undertake the defense, compromise or
settlement of such Third Party Claim, by counsel or other representatives of its
own choosing, on behalf of and for the account and risk of the Indemnifying
Party. In the event that the Indemnified Party undertakes the defense of a Third
Party Claim under this Section 9.03, the Indemnifying Party shall pay to the
Indemnified Party, in addition to the other sums required to be paid hereunder,
the reasonable costs and expenses incurred by the Indemnified Party in
connection with such defense, compromise or settlement as and when such costs
and expenses are so incurred.

    (d) Anything in this Section 9.03 to the contrary notwithstanding,
(i) neither the Indemnified Party nor the Indemnifying Party shall, without the
other party's written consent (which consent shall not be unreasonably withheld
or delayed), settle or compromise such Third Party Claim or consent to entry of
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such Third Party Claim in form and substance
satisfactory to the Indemnified Party; (ii) in the event that a party hereto
undertakes defense of such Third Party Claim in accordance with this
Section 9.03, the other parties, by counsel or other representative of their own
choosing and at their sole cost and expense, shall have the right to participate
in the defense, compromise or settlement thereof and each party and its counsel
and other representatives shall cooperate with the other party and its counsel
and representatives in connection therewith; and (iii) the party that undertakes
the defense of such Third Party Claim in accordance with this Section 9.03 shall
have an obligation to keep the other parties informed of the status of the
defense of such Third Party Claim and furnish the other parties with all
documents, instruments and information that the other parties shall reasonably
request in connection therewith.

                                      A-48
<PAGE>
SECTION 9.04 NO RECOURSE AGAINST THE COMPANY

    The Company Stockholders hereby irrevocably waive any and all right to
recourse against the Company and the Surviving Corporation with respect to any
misrepresentation or breach of any representation, warranty or indemnity, or
noncompliance with any conditions or covenants, given or made by the Company in
this Merger Agreement or any other agreements and documents executed or to be
executed by the Parties hereto in order to consummate the transactions
contemplated by this Merger Agreement. No Company Stockholder shall be entitled
to contribution from, subrogation to or recovery against the Company or the
Surviving Corporation with respect to any liability of any Company Stockholder
that may arise under or pursuant to this Merger Agreement or any of the other
agreements and documents executed or to be executed by the Parties hereto in
order to consummate the transactions contemplated by this Merger Agreement or
any other agreements and documents contemplated hereby.

SECTION 9.05 SPECIFIC PERFORMANCE

    In addition to any other remedies which the Parties may have at law or in
equity, the Parties hereby acknowledge that the transactions contemplated under
this Merger Agreement are unique, and that the harm to the Parties resulting
from breaches by the other Party of its obligation cannot be adequately
compensated by damages. Accordingly, the Parties agree that each Party shall
have the right prior to the Effective Time to have all obligations,
undertakings, agreements, covenants and other provisions of this Merger
Agreement specifically performed by the other Parties and that the Parties shall
have the right to obtain an order or decree of such specific performance in any
of the courts of the United States of America or any state or other political
subdivision thereof.

SECTION 9.06 REMEDIES CUMULATIVE

    Subject to the limitations and qualifications set forth in this Article IX,
the remedies provided herein shall be cumulative and shall not preclude the
assertion by the parties hereto of any other rights or the seeking of any other
remedies against the other parties, or their respective successors or assigns.

                                   ARTICLE X
                               GENERAL PROVISIONS

SECTION 10.01 NOTICES

    All notices and other communications given or made pursuant hereto shall be
in writing and shall be deemed to have been duly given or made as of the date
delivered, mailed or transmitted if delivered personally, mailed by registered
or certified mail (postage prepaid, return receipt requested) or sent by
overnight courier (providing proof of delivery) to the Parties at the following
addresses or sent by electronic transmission to the following facsimile numbers
(or at such other address or facsimile number for a Party as shall be specified
by like notice):

    (a) If to Acquiror or Acquiror Sub:

           The Titan Corporation 3033 Science Park Road
           San Diego, California 92121
           Facsimile: (619) 552-9759
           Attention: Nicholas J. Costanza, Esq.,
                    General Counsel

                                      A-49
<PAGE>
           With a copy (which shall not constitute notice) to:

           Hogan & Hartson L.L.P.
           8300 Greensboro Drive
           Suite 1100
           McLean, Virginia 22102
           Facsimile: (703) 610-6200
           Attention: Richard K.A. Becker, Esq.

    (b) If to Company:

           AverStar, Inc.
           23 Fourth Avenue
           Burlington, MA 01803
           Telecopier No.: (781) 221-6991
           Attention:

           With a copy (which shall not constitute notice) to:

           Swidler Berlin Shereff Friedman, LLP
           405 Lexington Avenue
           New York, NY 10174
           Telecopier No.: (212) 891-9598
           Attention: Gerald Adler, Esq.

    (c) If to Stockholders' Representatives:

           Michael B. Alexander
           AverStar, Inc.
           23 Fourth Avenue
           Burlington, MA 01803
           Telecopier No.: (781) 221-6991

           Sigmund H. Goldblum
           103 Birkdale Drive
           Blue Bell, PA 19422
           Telecopier No.: (610) 277-8963

           Peter Schulte
           CM Equity Partners
           135 East 57(th) Street, 27(th) Floor
           New York, NY 10022
           Telecopier No.: (212)829-0553

           With a copy (which shall not constitute notice) to:

           Swidler Berlin Shereff Friedman, LLP
           405 Lexington Avenue
           New York, NY 10174
           Telecopier No.: (212) 891-9598
           Attention: Gerald Adler, Esq.

SECTION 10.02 HEADINGS

    The headings contained in this Merger Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Merger Agreement.

                                      A-50
<PAGE>
SECTION 10.03 SEVERABILITY

    If any term or other provision of this Merger Agreement is invalid, illegal
or incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Merger Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any Party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the Parties shall negotiate
in good faith to modify this Merger Agreement so as to effect the original
intent of the Parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.

SECTION 10.04 ENTIRE AGREEMENT

    This Merger Agreement (together with the Exhibits, Schedules, the Company
Disclosure Letter and the Acquiror Disclosure Letter and the other documents
delivered pursuant hereto) constitute the entire agreement of the Parties and
supersede all prior agreements and undertakings, both written and oral, among
the Parties, or any of them, with respect to the subject matter hereof and,
except as otherwise expressly provided herein, are not intended to confer upon
any other Person any rights or remedies hereunder.

SECTION 10.05 ASSIGNMENT

    Neither this Merger Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the Parties hereto (whether by
operation of Law or otherwise) without the prior written consent of the other
Parties; PROVIDED, HOWEVER, that Acquiror and Acquiror Sub shall have the right
to assign this Merger Agreement without the prior written consent of the Company
to a direct or indirect Subsidiary of the Acquiror, but no such assignment shall
relieve Acquiror or Acquiror Sub, as the case may be, of its obligations
hereunder. Subject to the preceding sentence, this Merger Agreement shall be
binding upon, inure to the benefit of and be enforceable by the Parties and
their respective successors and assigns.

SECTION 10.06 PARTIES IN INTEREST

    This Merger Agreement shall be binding upon and inure solely to the benefit
of each Party, and nothing in this Merger Agreement, express or implied, other
than the right to receive the Merger Consideration pursuant to Article II of
this Merger Agreement and the rights of the Acquiror Indemnified Persons
pursuant to Article IX, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Merger Agreement.

SECTION 10.07 MUTUAL DRAFTING

    Each Party has participated in the drafting of this Merger Agreement, which
each Party acknowledges is the result of extensive negotiations between the
Parties. Consequently, this Merger Agreement shall be interpreted without
reference to any rule or precept of law that states that any ambiguity in a
document be construed against the drafter.

SECTION 10.08 GOVERNING LAW

    This Merger Agreement shall be governed by, and construed in accordance
with, the Laws of the State of Delaware, regardless of the Laws that might
otherwise govern under applicable principles of conflicts of law.

                                      A-51
<PAGE>
SECTION 10.09 COUNTERPARTS

    This Merger Agreement may be executed and delivered in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed and delivered shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.

SECTION 10.10 SINGULAR AND PLURAL

    Any reference in this Merger Agreement to the singular includes a reference
to the plural and VICE VERSA.

                                   ARTICLE XI
                                  DEFINITIONS

    For purposes of this Merger Agreement, the following terms, and the singular
and plural thereof, shall have the meanings set forth below:

    "Acquiror" is defined in the Preamble to this Merger Agreement.

    "Acquiror Common Stock" is defined in Section 2.01(a) of this Merger
Agreement.

    "Acquiror Disclosure Letter" is defined in Article IV of this Merger
Agreement.

    "Acquiror Material Adverse Effect" means, with respect to Acquiror or
Acquiror Sub, any event, change or effect that, individually or when taken
together with any related events, is or is reasonably likely to be materially
adverse to the business, operations, condition (financial or otherwise), Assets
or liabilities of the Acquiror and its Subsidiaries, taken as a whole, except to
the extent that any such event, change, circumstance, condition, development,
effect or occurrence is directly caused by: (a) the announcement, pendency or
process of effectuating the Merger or the transactions contemplated hereby that
directly results in a delay of, reduction in or cancellation or change in the
terms of customer engagements, projects or relationships; or (b) a change in the
market price or trading volume of the securities of Acquiror.

    "Acquiror SEC Reports" is defined in Section 4.07 of this Merger Agreement.

    "Acquiror Stock Price" is defined in Section 2.01(b) of the Merger
Agreement.

    "Acquiror Floating Rate Election" is defined in Section 2.01(a) of the
Merger Agreement.

    "Acquiror Sub" is defined in the Preamble to this Merger Agreement.

    "Acquiror Sub Stock" is defined in Section 2.01(d) of this Merger Agreement.

    "Acquisition Proposal" is defined in Section 5.10(c) of this Merger
Agreement.

    "Affiliate" means: (a) with respect to an individual, any member of such
individual's family residing in the same household; (b) with respect to an
entity, any officer, director, stockholder, partner or investor of or in such
entity or of or in any Affiliate of such entity; and (c) with respect to a
Person, any Person which directly or indirectly, through one or more
intermediaries, Controls, is Controlled by, or is under common Control with such
Person or entity.

    "Agreement" means any agreement between or among two or more Persons with
respect to their relative rights and/or obligations or with respect to a thing
done or to be done, including, without limitation, agreements denominated as
contracts, leases, promissory notes, covenants, easements, rights of way,
commitments, arrangements and understandings.

                                      A-52
<PAGE>
    "Assets" means assets of every kind and everything that is or may be
available for the payment of liabilities (whether inchoate, tangible or
intangible), including, without limitation, real and personal property.

    "business day" means a day other than a Saturday, a Sunday or any other day
on which commercial banks in the City of New York are authorized or obligated to
be closed.

    "Certificate" is defined in Section 2.02(b) of this Merger Agreement.

    "Certificate of Merger" is defined in Section 1.02 of this Merger Agreement.

    "Closing" is defined in Section 2.05 of this Merger Agreement.

    "Closing Date" is defined in Section 1.02 of this Merger Agreement.

    "Closing Stock Price" means, the average of the closing sale prices of a
share of Acquiror Common Stock as reported on the NYSE for the ten
(10) consecutive trading days ending with and including the Closing Date.

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

    "Commercial Software" means Software (other than Software of any Person or
any of its Subsidiaries sold as products) generally commercially available for
license or sale to the public and to such Person, its Subsidiaries and their
competitors and other Persons in the Software industry.

    "Company" is defined in the Preamble to this Merger Agreement.

    "Company Audited Balance Sheet" is defined in Section 3.08(a) of this Merger
Agreement.

    "Company Benefit Plans" means all "employee benefit plans" as that term is
defined in Section 3(3) of ERISA, whether or not terminated.

    "Company Common Stock" is defined in Section 3.04 of this Merger Agreement.

    "Company Contracts" is defined in Section 3.13 of this Merger Agreement.

    "Company Disclosure Letter" is defined in Article III of this Merger
Agreement.

    "Company Dissenting Stockholder" is defined in Section 2.02(f) of this
Merger Agreement.

    "Company Financial Statement" is defined in Section 3.08(a) of this Merger
Agreement.

    "Company Floating Rate Election" is defined in Section 2.01(b) of this
Merger Agreement.

    "Company Material Adverse Effect" means any event, change or effect that,
individually or when taken together with any related events, is or is reasonably
likely to be materially adverse to the business, operations, condition
(financial or otherwise), Assets or liabilities of the Company and any Company
Subsidiaries, taken as a whole.

    "Company Pension Plan" means any Company Benefit Plan that is an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA.

    "Company Stockholders" is defined in the Preamble to this Merger Agreement.

    "Company Stockholders Meeting" is defined in Section 5.08(d) of this Merger
Agreement.

    "Company Stock Plan" means any Company Benefit Plan pursuant to which
Company is or may become obligated to, or obligated to cause Company Subsidiary
or any other Person to, issue, deliver or sell shares of capital stock of
Company or Company Subsidiary, or grant, extend or enter into any option,
warrant, call, right, commitment or agreement to issue, deliver or sell shares,
or any other interest in respect of capital stock of Company or Company
Subsidiary.

                                      A-53

<PAGE>
    "Company Stock Value" means the result of dividing the Transaction Value by
the sum of (a) the number of shares of Company Common Stock outstanding as of
the Effective Time (assuming for such purposes, that as of the Effective Time,
all shares of Company capital stock were converted into a single class of
Company Common Stock) and (b) the number of shares of Company Common Stock which
would be issuable with respect to all vested Options outstanding as of the
Effective Time if all of the conditions to exercisability of such Options had
been satisfied at that time and (c) one-half of the number of shares of Company
Common Stock which would be issuable with respect to all unvested Options
outstanding as of the Effective Time if all of the conditions to exercisability
of such Options (including, without limitation, vesting) had been satisfied at
that time.

    "Company Subsidiary" means any Subsidiary of Company.

    "Company Tax Returns" means all Tax Returns required to be filed by Company
or any Company Subsidiary (without regard to extensions of time permitted by law
or otherwise).

    "Control" (including the terms "Controlled by" and "under common Control
with") means, as used with respect to any Person, possession of power (directly
or indirectly or as a trustee or executor) to direct or cause the direction of
management or policies of such Person (whether through ownership of voting
securities, as trustee or executor, by Agreement or otherwise).

    "Delaware Law" is defined in the Preamble to this Merger Agreement.

    "Effective Time" is defined in Section 1.02 of this Merger Agreement.

    "Encumbrance" means any mortgage, lien, pledge, encumbrance, security
interest, deed of trust, option, encroachment, reservation, order, decree,
judgment, condition, restriction, charge, Agreement, claim or equity of any
kind.

    "Environmental Laws" means any federal, state or local Law relating to
public health or safety, worker health or safety, or pollution, damage to or
protection of the environment including, without limitation, Laws relating to
emissions, discharges, releases or threatened release of Hazardous Materials
into the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, generation,
disposal, transport or handling of any Hazardous Material.

    "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all regulations promulgated pursuant thereto or in connection
therewith.

    "Escrow Agent" is defined in Section 2.06(a) of this Agreement.

    "Escrow Agreement" is defined in Section 2.06(a) of this Merger Agreement.

    "Escrow Stock" is defined in Section 2.06(a)(ii) of this Merger Agreement.

    "Estimated Net Debt" is defined in Section 7.02(k) of this Merger Agreement.

    "Exchange Agent" is defined in Section 2.02 of this Merger Agreement.

    "Exchange Fund" is defined in Section 2.02 of this Merger Agreement.

    "Exchange Ratio" is defined in Section 2.01(a) of this Merger Agreement.

    "GAAP" means United States generally accepted accounting principles
consistently applied in accordance with past practices.

    "Governmental Entities" (including the term "Governmental") means any
governmental, quasi-governmental or regulatory authority, whether domestic or
foreign.

    "Hazardous Material" means (i) any "hazardous substance" as now defined
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section9601(14); (ii) any

                                      A-54
<PAGE>
"pollutant or contaminant" as defined in 42 U.S.C. Section9601(33); (iii) any
material now defined as "hazardous waste" pursuant to 40 C.F.R. Part 261;
(iv) any petroleum, including crude oil and any fraction thereof; (v) natural
synthetic gas usable for fuel; (vi) any "hazardous chemical" as defined pursuant
to 29 C.F.R. Part 1910; and (vii) any asbestos, polychlorinated biphenyl
("PCB"), radium, or isomer of dioxin, or any material or thing containing or
composed of such substance or substances.

    "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and all Laws promulgated pursuant thereto or in connection therewith.

    "Intangible and Other Property" means all Agreements, certificates of
deposit, bank accounts, securities, partnership or other ownership interests,
rights to receive money or property by assignment, future interests, claims and
rights against third parties, accounts receivable, notes receivable,
Intellectual Property, Software, prepaid expenses, acquisition costs and other
intangible property of any nature owned, leased, licensed, used or held for use,
directly or indirectly, by, on behalf of or for the account of a Person.

    "Intellectual Property" means all patents, intellectual property capable of
being protected by a patent, trademarks, trademark rights, service marks,
service mark rights, trade secrets, trade names, product designations, service
marks, copyrights, and applications for any of the foregoing, used, licensed,
leased or owned, directly or indirectly, by, on behalf of or for the account of
a Person.

    "Inventory" means all new materials, work in progress, finished goods and
inventoriable supplies.

    "knowledge" will be deemed to be present with respect to a Party and each
Subsidiary of that Party when the matter in question is known, or upon
reasonable investigation, should have been known, to the officer, director or
employee primarily responsible for the matter in question.

    "Laws" means all foreign, federal, state and local statutes, laws,
ordinances, regulations, rules, resolutions, orders, tariffs, determinations,
writs, injunctions, awards (including, without limitation, awards of any
arbitrator), judgments and decrees applicable to the specified Person and to the
businesses and Assets thereof (including, without limitation, Laws relating to
the protection of classified information; the sale, leasing, ownership or
management of real property; employment practices, terms and conditions, and
wages and hours; building standards, land use and zoning; safety, health and
fire prevention; and environmental protection, including Environmental Laws).

    "License" means any franchise, grant, authorization, license, tariff,
permit, easement, variance, exemption, consent, certificate, approval or order
of any Governmental Entity.

    "Losses" means all demands, losses, claims, actions or causes of action,
assessments, damages, liabilities, costs and expenses, including, without
limitation, interest, penalties and reasonable attorneys' fees and
disbursements.

    "Merger" is defined in the Preamble to this Merger Agreement.

    "Merger Consideration" is defined in Section 2.01(a) of this Merger
Agreement.

    "Multiemployer Plan" means any "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA to which Company or Company Subsidiary contribute,
have an obligation to contribute, or have at any time since September 2, 1974,
contributed or been obligated to contribute.

    "Net Debt" means the average for the ten (10) consecutive business days
ending with and including the second business day immediately preceding the
Closing Date of all outstanding debt obligations to banks and financial
institutions on each such business day plus any additional consideration payable
to Mohan Kapani pursuant to the acquisition of CBSI by the Company as identified
in Section 3.10 of the Company Disclosure Letter less the sum of (i) cash
invested in overnight instruments as of 12:01 a.m. the morning of each such
business day, (ii) all receipts received as of such business day which were not
included in the overnight investments, (iii) collateralized notes

                                      A-55
<PAGE>
receivable that have not been written off or reserved on the Company's books,
and (iv) petty cash balances on the day prior to each such date.

    "NYSE" is defined in Section 2.01(b) of this Merger Agreement.

    "Option Exercise Consideration" means the sum of (a) the total consideration
payable to the Company upon the exercise of all vested Options issued and
outstanding immediately prior to the Effective Time and (b) one-half of the
total consideration payable to the Company upon the exercise of all unvested
Options issued and outstanding immediately prior to the Effective Time.

    "Option" means an option to acquire Company Common Stock granted under the
Company's 1998 Long Term Incentive Plan.

    "Ordinary Course of Business" means ordinary course of business consistent
with past practices.

    "Party" and "Parties" are defined in the Preamble to this Merger Agreement.

    "Permitted Encumbrance" means (i) easements, rights of way, minor
irregularities of title, and liens for taxes not yet due and payable,
(ii) landlord, warehouse and materialmen's liens and (ii) other Encumbrances
similar to clauses (i) and (ii); provided, however, that any or all of the
foregoing do not materially affect the utility or value of the Assets or other
matters to which they relate.

    "Person" means an individual, corporation, partnership, limited liability
company, joint venture, trust, unincorporated organization or other entity, or a
Governmental Entity.

    "Plan" means any plan, program or arrangement, whether or not written, that
is or was an "employee benefit plan" as such term is defined in Section 3(3) of
ERISA and (a) which was or is established or maintained by Company or Company
Subsidiary; (b) to which Company or Company Subsidiary contributed or was
obligated to contribute or to fund or provide benefits; or (c) which provides or
promises benefits to any person who performs or who has performed services for
Company or Company Subsidiary and because of those services is or has been
(i) a participant therein or (ii) entitled to benefits thereunder.

    "Post-Signing Returns" is defined in Section 5.04 of this Merger Agreement.

    "Proxy Statement/Prospectus" is defined in Section 3.29 of this Merger
Agreement.

    "Registration Statement" is defined in Section 3.29 of this Merger
Agreement.

    "Representatives" is defined in Section 5.10 of this Merger Agreement.

    "SEC" means the United States Securities and Exchange Commission.

    "Scheduled Closing Date" is defined in Section 2.05 of this Merger
Agreement.

    "Software" means all electronic data processing systems, information
systems, computer software programs, program specifications, designs, charts,
procedures, input data, routines, data bases, report layouts, formats, record
file layouts, written manifestations (in both source code and object code form),
diagrams, functional specifications, narrative descriptions and flow charts,
user manuals and similar documents, and other related material, used, licensed,
leased or owned, directly or indirectly, by, on behalf of or for the account of
a Person.

    "Stockholders' Representatives" is defined in Section 2.02(k) of this Merger
Agreement.

    "Subsidiary" means a corporation, partnership, joint venture or other entity
of which any Person owns, directly or indirectly, at least fifty percent (50%)
of the outstanding securities or other interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body or otherwise exercise control of such entity.

    "Surviving Corporation" is defined in Section 1.01 of this Merger Agreement.

                                      A-56
<PAGE>
    "Taxes" (including the terms "Tax" and "Taxing") means all federal, state,
local and foreign taxes (including, without limitation, income, profit,
franchise, sales, use, real property, personal property, AD VALOREM, excise,
employment, social security and wage withholding taxes) and installments of
estimated taxes, assessments, deficiencies, levies, imports, duties, license
fees, registration fees, withholdings, or other similar charges of every kind,
character or description imposed by any Governmental Entity, and any interest,
penalties or additions to tax imposed thereon or in connection therewith.

    "Tax Liabilities" means any action, suit, proceeding, audit, investigation
or claim pending or threatened in respect of any Taxes for which Company or any
Company Subsidiary is or may become liable, or any deficiency or claim for any
such Taxes that has been to Company's knowledge proposed, asserted or
threatened.

    "Tax Returns" means all federal, state, local, foreign and other applicable
returns, declarations, reports and information statements with respect to Taxes
required to be filed with the United States Internal Revenue Service, and its
successors, or any other Governmental Entity or Tax authority or agency,
including, without limitation, consolidated, combined and unitary tax returns.

    "Third Party Claim" means any claim or other assertion of liability by any
third party.

    "Transaction Value" means Two Hundred Five Million Dollars ($205,000,000)
plus the Option Exercise Consideration less Estimated Net Debt less all payments
made to Company Common Stockholders after the date hereof and prior to the
Effective Time to redeem Company Common Stock.

     [Remainder of Page Intentionally Left Blank; Signature Page Follows.]

                                      A-57
<PAGE>
    IN WITNESS WHEREOF, The Titan Corporation, VT Acquisition Corp. and
AverStar, Inc. have executed and delivered, or have caused this Merger Agreement
to be duly executed and delivered, as of the date first set forth hereinabove.

                                          THE TITAN CORPORATION

                                          By: /s/ GENE W. RAY
                                          --------------------------------------
                                          Name: Gene W. Ray
                                          Title:
                                          Chairman and Chief Executive Officer

                                          V T ACQUISITION CORP.

                                          By: /s/ GENE W. RAY
                                          --------------------------------------
                                          Name: Gene W. Ray
                                          Title:
                                          Chairman and Chief Executive Officer

                                          AVERSTAR, INC.

                                          By: /s/ MICHAEL B. ALEXANDER
                                          --------------------------------------
                                          Name: Michael B. Alexander
                                          Title: Chairman and Chief Executive
                                          Officer

    The undersigned hereby acknowledge their appointment as the Stockholders'
Representatives hereunder and their willingness to fulfill the duties of the
Stockholders' Representatives as contemplated by this Merger Agreement.

                                          /s/ MICHAEL B. ALEXANDER
                                          --------------------------------------
                                          Name: Michael B. Alexander

                                          /s/ SIGMUND H. GOLDBLUM
                                          --------------------------------------
                                          Name: Sigmund H. Goldblum

                                          /s/ PETER SCHULTE
                                          --------------------------------------
                                          Name: Peter Schulte

                                      A-58

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