Document:

Exhibit 4.3.1

                              SPECTRIAN CORPORATION

                                       and

                          Mellon Investor Services, LLC

                                  Rights Agent

          THIRD AMENDED AND RESTATED PREFERRED SHARES RIGHTS AGREEMENT

                          Dated as of January 18, 2001

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<TABLE>
                                                       TABLE OF CONTENTS
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<S>               <C>                                                                                                <C>
Section 1.        Certain Definitions.................................................................................1

Section 2.        Appointment of Rights Agent.........................................................................7

Section 3.        Issuance of Rights Certificates.....................................................................7

Section 4.        Form of Rights Certificates.........................................................................9

Section 5.        Countersignature and Registration..................................................................10

Section 6.        Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
                  Destroyed, Lost or Stolen Rights Certificates......................................................10

Section 7.        Exercise of Rights; Exercise Price; Expiration Date of Rights......................................11

Section 8.        Cancellation and Destruction of Rights Certificates................................................13

Section 9.        Reservation and Availability of Preferred Shares...................................................13

Section 10.       Record Date........................................................................................15

Section 11.       Adjustment of Exercise Price, Number of Shares or Number of Rights.................................15

Section 12.       Certificate of Adjusted Exercise Price or Number of Shares.........................................21

Section 13.       Consolidation, Merger or Sale or Transfer of Assets or Earning Power...............................22

Section 14.       Fractional Rights and Fractional Shares............................................................25

Section 15.       Rights of Action...................................................................................26

Section 16.       Agreement of Rights Holders........................................................................27

Section 17.       Rights Certificate Holder Not Deemed a Stockholder.................................................27

Section 18.       Concerning the Rights Agent........................................................................27

Section 19.       Merger or Consolidation or Change of Name of Rights Agent..........................................28

Section 20.       Duties of Rights Agent.............................................................................29

Section 21.       Change of Rights Agent.............................................................................31

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                               TABLE OF CONTENTS
                                  (continued)

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Section 22.       Issuance of New Rights Certificates................................................................31

Section 23.       Redemption.........................................................................................32

Section 24.       Exchange...........................................................................................33

Section 25.       Notice of Certain Events...........................................................................34

Section 26.       Notices............................................................................................35

Section 27.       Supplements and Amendments.........................................................................35

Section 28.       Successors.........................................................................................36

Section 29.       Determinations and Actions by the Board of Directors, etc..........................................36

Section 30.       Benefits of this Agreement.........................................................................36

Section 31.       Severability.......................................................................................36

Section 32.       Governing Law......................................................................................37

Section 33.       Counterparts.......................................................................................37

Section 34.       Descriptive Headings...............................................................................37

EXHIBITS

Exhibit A         Form of Certificate of Incorporation

Exhibit B         Form of Rights Certificate

Exhibit C         Summary of Rights
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                                      -iii-

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          THIRD AMENDED AND RESTATED PREFERRED SHARES RIGHTS AGREEMENT

         This Third Amended and Restated  Preferred Shares Rights Agreement,  is
dated  as of  January  18,  2001,  between  Spectrian  Corporation,  a  Delaware
corporation,  and Mellon Investor  Services,  LLC, formerly known as ChaseMellon
Shareholder  Services,  LLC, a New Jersey limited liability  company,  as rights
agent (the "Rights Agent").

         WHEREAS,  the Company and the Rights  Agent are parties to that certain
Rights Agreement entered into as of October 23, 1996 and amended and restated in
full as of January 15, 1997 and August 4, 2000 (the "Prior Agreement");

         WHEREAS, on December 30, 1996 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company  authorized and declared a dividend of one
Preferred Share purchase right (a "Right") for each Common Share (as hereinafter
defined) of the Company  outstanding as of the Close of Business (as hereinafter
defined) on March 21, 1997 (the  "Record  Date"),  each Right  representing  the
right  to  purchase  one  one-thousandth  of a share of  Series A  Participating
Preferred  Stock (as such number may be adjusted  pursuant to the  provisions of
this Agreement),  having the rights, preferences and privileges set forth in the
form of Certificate of  Designations  of Rights,  Preferences  and Privileges of
Series A  Participating  Preferred  Stock attached hereto as Exhibit A, upon the
terms and subject to the conditions herein set forth, and further authorized and
directed the  issuance of one Right (as such number may be adjusted  pursuant to
the provisions of this  Agreement)  with respect to each Common Share that shall
become  outstanding  between the Record Date and the earlier of the Distribution
Date and the Expiration  Date (as such terms are  hereinafter  defined),  and in
certain circumstances after the Distribution Date.

         WHEREAS, the Company has determined that, pursuant to Section 27 of the
Prior  Agreement,  the Prior  Agreement may be amended and restated as set forth
herein  without  the  approval  of the  holders of the  Rights  (as  hereinafter
defined)  and the Company  wishes to amend and restate  that Prior  Agreement to
provide as follows.

         NOW,  THEREFORE,  in  consideration  of the  promises  and  the  mutual
agreements herein set forth, the parties hereby agree as follows:

         Section 1. Certain  Definitions.  For purposes of this  Agreement,  the
following terms have the meanings indicated:

                  (a)  "Acquiring  Person" shall mean any Person,  who or which,
together  with  all  Affiliates  and  Associates  of such  Person,  shall be the
Beneficial Owner of 15% or more of the Common Shares then outstanding, but shall
not include the Company,  any Subsidiary of the Company or any employee  benefit
plan of the Company or of any  Subsidiary of the Company,  or any entity holding
Common Shares for or pursuant to the terms of any such plan; provided,  however,
that Kopp Investment  Advisors,  Inc. ("Kopp") shall not be deemed an "Acquiring
Person" until such

<PAGE>

time as Kopp shall be the Beneficial Owner of more than 30% of the Common Shares
then  outstanding  or until such time as Kopp shall be required to file a report
of  beneficial  ownership  on  Schedule  13D with the  Securities  and  Exchange
Commission with respect to its holdings of the Company's  Common Stock; and that
the  State of  Wisconsin  Investment  Board  ("SWIB")  shall  not be  deemed  an
"Acquiring Person" until such time as SWIB shall be the Beneficial Owner of more
than 20% of the Common Shares then  outstanding or until such time as SWIB shall
be required to report a beneficial ownership on Schedule 13D with the Securities
and Exhange  Commission  with  respect to its holdings of the  Company's  Common
Stock (collectively the "Limitations"). Notwithstanding the foregoing, no Person
shall be deemed to be an  Acquiring  Person as the result of an  acquisition  of
Common  Shares  by  the  Company  which,   by  reducing  the  number  of  shares
outstanding,  increases the proportionate number of shares beneficially owned by
such Person to 15% or more of the Common Shares of the Company then  outstanding
or with  respect to Kopp and SWIB,  Kopp or SWIB is not in  compliance  with the
Limitations;  provided,  however,  that if a Person shall become the  Beneficial
Owner of 15% or more of the Common  Shares of the Company then  outstanding,  or
with  respect  to Kopp and SWIB,  Kopp or SWIB  shall  fail to  comply  with the
Limitations,  by reason of share purchases by the Company and shall,  after such
share  purchases by the Company,  become the Beneficial  Owner of any additional
Common Shares of the Company (other than pursuant to a dividend or  distribution
paid or made by the Company on the outstanding Common Shares in Common Shares or
pursuant to a split or subdivision of the outstanding, Common Shares), then such
Person  shall be deemed to be an  Acquiring  Person  unless  upon  becoming  the
Beneficial  Owner of such  additional  Common  Shares of the Company such Person
does not  beneficially  own 15% or more of the Common Shares of the Company then
outstanding or with respect to Kopp and SWIB, Kopp or SWIB is in compliance with
the Limitations.  Notwithstanding  the foregoing,  (i) if the Company's Board of
Directors  determines  in good  faith that a Person  who would  otherwise  be an
"Acquiring  Person," as defined  pursuant to the  foregoing  provisions  of this
paragraph (a), has become such  inadvertently  (including,  without  limitation,
because (A) such Person was unaware that it  beneficially  owned a percentage of
the Common  Shares that would  otherwise  cause such Person to be an  "Acquiring
Person," as defined pursuant to the foregoing  provisions of this paragraph (a),
or (B) such Person was aware of the extent of the Common Shares it  beneficially
owned  but had no  actual  knowledge  of the  consequences  of  such  beneficial
ownership  under this  Agreement)  and  without  any  intention  of  changing or
influencing  control of the Company,  and if such Person  divested or divests as
promptly as practicable a sufficient number of Common Shares so that such Person
would no longer be an "Acquiring  Person," as defined  pursuant to the foregoing
provisions of this  paragraph (a), then such Person shall not be deemed to be or
to have become an  "Acquiring  Person" for any purposes of this  Agreement;  and
(ii) if, as of the date  hereof,  any Person is the  Beneficial  Owner of 15% or
more of the Common Shares outstanding, or with respect to Kopp and SWIB, Kopp or
SWIB is in compliance with the  Limitations,  such Person shall not be or become
an "Acquiring  Person," as defined pursuant to the foregoing  provisions of this
paragraph  (a),  unless  and until  such time as such  Person  shall  become the
Beneficial Owner of additional  Common Shares (other than pursuant to a dividend
or distribution paid or made by the Company on the outstanding  Common Shares in
Common Shares or pursuant to a split or  subdivision of the  outstanding  Common
Shares),  unless,  upon becoming the Beneficial Owner of such additional  Common
Shares, such Person is not then the Beneficial Owner of 15% or

                                      -2-
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more of the Common  Shares then  outstanding  or with  respect to Kopp and SWIB,
Kopp or SWIB is not in compliance.

                  (b) "Adjustment  Fraction" shall have the meaning set forth in
Section 11(a)(i) hereof.

                  (c)  "Affiliate"  and  "Associate"  shall have the  respective
meanings  ascribed  to such  terms  in  Rule  12b-2  of the  General  Rules  and
Regulations under the Exchange Act, as in effect on the date of this Agreement.

                  (d) A Person  shall be deemed  the  "Beneficial  Owner" of and
shall be deemed to "beneficially own" any securities:

                           (i)  which  such  Person  or  any  of  such  Person's
Affiliates or Associates beneficially owns, directly or indirectly, for purposes
of  Section  13(d)  of the  Exchange  Act  and  Rule  13d-3  thereunder  (or any
comparable or successor law or regulation);

                           (ii)  which  such  Person  or  any of  such  Person's
Affiliates  or  Associates  has (A) the right to acquire  (whether such right is
exercisable  immediately  or only  after the  passage of time)  pursuant  to any
agreement,  arrangement or understanding  (other than customary  agreements with
and between  underwriters  and selling group members with respect to a bona fide
public  offering of  securities),  or upon the  exercise of  conversion  rights,
exchange  rights,  rights  (other than the  Rights),  warrants  or  options,  or
otherwise; provided, however, that a Person shall not be deemed pursuant to this
Section  1(d)(ii)(A) to be the Beneficial Owner of, or to beneficially  own, (1)
securities  tendered pursuant to a tender or exchange offer made by or on behalf
of such  Person or any of such  Person's  Affiliates  or  Associates  until such
tendered  securities  are accepted for purchase or exchange,  or (2)  securities
which a Person or any of such Person's Affiliates or Associates may be deemed to
have the right to acquire pursuant to any merger or other acquisition  agreement
between  the  Company  and  such  Person  (or one or more of its  Affiliates  or
Associates) if such agreement has been approved by the Board of Directors of the
Company  prior to there  being an  Acquiring  Person;  or (B) the  right to vote
pursuant to any agreement, arrangement or understanding; provided, however, that
a Person shall not be deemed the Beneficial  Owner of, or to  beneficially  own,
any security under this Section  1(d)(ii)(B)  if the  agreement,  arrangement or
understanding  to vote such security (1) arises solely from a revocable proxy or
consent  given  to  such  Person  in  response  to a  public  proxy  or  consent
solicitation  made pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then  reportable on Schedule
13D under the Exchange Act (or any comparable or successor report); or

                           (iii)  which  are  beneficially  owned,  directly  or
indirectly,  by any other Person (or any  Affiliate or Associate  thereof)  with
which such  Person or any of such  Person's  Affiliates  or  Associates  has any
agreement,  arrangement or understanding,  whether or not in writing (other than
customary  agreements  with and between  underwriters  and selling group members
with respect to a bona fide public  offering of  securities)  for the purpose of
acquiring, holding, voting

                                      -3-

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(except to the extent  contemplated  by the proviso to Section  1(d)(ii)(B))  or
disposing of any securities of the Company;  provided,  however, that in no case
shall an officer or director of the Company be deemed (x) the  Beneficial  Owner
of any  securities  beneficially  owned by another  officer or  director  of the
Company solely by reason of actions undertaken by such persons in their capacity
as  officers  or  directors  of the  Company  or (y)  the  Beneficial  Owner  of
securities  held of record by the trustee of any  employee  benefit  plan of the
Company or any  Subsidiary of the Company for the benefit of any employee of the
Company or any Subsidiary of the Company, other than the officer or director, by
reason of any  influence  that such officer or director may have over the voting
of the securities held in the plan.

                  (e)  "Business  Day" shall mean any day other than a Saturday,
Sunday or a day on which  banking  institutions  in New York are  authorized  or
obligated by law or executive order to close.

                  (f) "Close of  Business"  on any given date shall mean 5:00 P.
M., New York time, on such date; provided,  however,  that if such date is not a
Business  Day it shall mean 5:00 P.M.,  New York  time,  on the next  succeeding
Business Day.

                  (g) "Common  Shares"  when used with  reference to the Company
shall  mean the  shares of Common  Stock of the  Company,  par value  $0.001 per
share.  Common  Shares  when used with  reference  to any Person  other than the
Company  shall mean the capital  stock (or equity  interest)  with the  greatest
voting power of such other  Person or, if such other  Person is a Subsidiary  of
another   Person,   the  Person  or  Persons  which   ultimately   control  such
first-mentioned Person.

                  (h)  "Common  Stock  Equivalents"  shall have the  meaning set
forth in Section 11(a)(iii) hereof.

                  (i) "Company"  shall mean  Spectrian  Corporation,  a Delaware
corporation, subject to the terms of Section 13(a)(iii)(C) hereof.

                  (j)  "Current  Per  Share  Market  Price" of any  security  (a
"Security" for purposes of this  definition),  for all  computations  other than
those made pursuant to Section 11(a)(iii) hereof,  shall mean the average of the
daily closing prices per share of such Security for the thirty (30)  consecutive
Trading Days  immediately  prior to such date, and for purposes of  computations
made pursuant to Section  11(a)(iii)  hereof, the Current Per Share Market Price
of any  Security  on any date  shall be  deemed to be the  average  of the daily
closing prices per share of such Security for the ten (10)  consecutive  Trading
Days immediately prior to such date; provided,  however,  that in the event that
the Current Per Share Market Price of the Security is determined during a period
following the  announcement  by the issuer of such Security of (i) a dividend or
distribution  on such Security  payable in shares of such Security or securities
convertible   into  such  shares  or  (ii)  any   subdivision,   combination  or
reclassification of such Security, and prior to the expiration of the applicable
thirty (30)  Trading Day or ten (10) Trading Day period,  after the  ex-dividend
date for such dividend or

                                      -4-

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distribution,   or  the  record  date  for  such  subdivision,   combination  or
reclassification,  then,  and in each such case,  the Current  Per Share  Market
Price shall be  appropriately  adjusted to reflect the current  market price per
share  equivalent of such Security.  The closing price for each day shall be the
last sale price,  regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices,  regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities  listed or admitted to trading on the New York Stock  Exchange or,
if the  Security  is not  listed or  admitted  to  trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national  securities exchange
on which the  Security is listed or  admitted to trading or, if the  Security is
not listed or admitted to trading on any national securities exchange,  the last
sale price or, if such last sale price is not reported,  the average of the high
bid and low asked prices in the  over-the-counter  market, as reported by Nasdaq
or such other  system then in use,  or, if on any such date the  Security is not
quoted by any such organization, the average of the closing bid and asked prices
as  furnished  by a  professional  market  maker making a market in the Security
selected by the Board of Directors of the Company. If on any such date no market
maker is making a market in the Security,  the fair value of such shares on such
date as  determined in good faith by the Board of Directors of the Company shall
be used. If the Preferred Shares are not publicly traded,  the Current Per Share
Market  Price of the  Preferred  Shares shall be  conclusively  deemed to be the
product  of (x) the  Current  Per Share  Market  Price of the  Common  Shares as
determined  pursuant to this Section 1(j), as appropriately  adjusted to reflect
any stock split, stock dividend or similar transaction  occurring after the date
hereof,  multiplied  by (y) 1000.  If the  Security is not  publicly  held or so
listed or traded,  Current Per Share  Market Price shall mean the fair value per
share as  determined  in good faith by the Board of  Directors  of the  Company,
whose  determination  shall be  described  in a statement  filed with the Rights
Agent and shall be conclusive for all purposes.

                  (k)  "Current  Value"  shall  have the  meaning  set  forth in
Section 11(a)(iii) hereof.

                  (l)  "Distribution  Date"  shall  mean the  earlier of (i) the
Close of Business on the tenth day (or such later date as may be  determined  by
action of the Company's Board of Directors)  after the Shares  Acquisition  Date
(or, if the tenth day after the Shares Acquisition Date occurs before the Record
Date, the Close of Business on the Record Date) or (ii) the Close of Business on
the tenth Business Day (or such later date as may be determined by action of the
Company's Board of Directors)  after the date that a tender or exchange offer by
any Person (other than the Company,  any Subsidiary of the Company, any employee
benefit plan of the Company or of any  Subsidiary of the Company,  or any Person
or entity organized,  appointed or established by the Company for or pursuant to
the  terms of any such  plan) is first  published  or sent or given  within  the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act, if, assuming the successful  consummation  thereof, such Person would be an
Acquiring Person.

                  (m)  "Equivalent  Shares" shall mean Preferred  Shares and any
other class or series of capital  stock of the Company  which is entitled to the
same rights, privileges and preferences as the Preferred Shares.

                                      -5-

<PAGE>

                  (n) "Exchange Act" shall mean the  Securities  Exchange Act of
1934, as amended.

                  (o)  "Exchange  Ratio"  shall  have the  meaning  set forth in
Section 24(a) hereof.

                  (p)  "Exercise  Price"  shall  have the  meaning  set forth in
Section 4(a) hereof.

                  (q) "Expiration Date" shall mean the earliest to occur of: (i)
the Close of Business on the Final Expiration Date, (ii) the Redemption Date, or
(iii) the time at which the Board of Directors orders the exchange of the Rights
as provided in Section 24 hereof.

                  (r) "Final Expiration Date" shall mean January 18, 2011.

                  (s) "Nasdaq" shall mean the National Association of Securities
Dealers, Inc. Automated Quotations System.

                  (t) "Person" shall mean any individual,  firm,  corporation or
other  entity,  and shall include any successor (by merger or otherwise) of such
entity.

                  (u) "Post-Event  Transferee"  shall have the meaning set forth
in Section 7(e) hereof.

                  (v)   "Preferred   Shares"  shall  mean  shares  of  Series  A
Participating Preferred Stock, par value $0.001 per share, of the Company.

                  (w) "Pre-Event Transferee" shall have the meaning set forth in
Section 7(e) hereof.

                  (x)  "Principal  Party"  shall have the  meaning  set forth in
Section 13(b) hereof.

                  (y)  "Record  Date"  shall have the  meaning  set forth in the
recitals at the beginning of this Agreement.

                  (z)  "Redemption  Date"  shall have the  meaning  set forth in
Section 23(a) hereof.

                  (aa)  "Redemption  Price"  shall have the meaning set forth in
Section 23(a) hereof.

                  (bb) "Rights Agent" shall mean (i) Mellon  Investor  Services,
LLC, (ii) its successor or  replacement as provided in Sections 19 and 21 hereof
or (iii) any additional Person appointed pursuant to Section 2 hereof.

                                      -6-

<PAGE>

                  (cc)   "Rights   Certificate"   shall   mean   a   certificate
substantially in the form attached hereto as Exhibit B.

                  (dd) "Rights  Amendment Date" shall have the meaning set forth
in the recitals at the beginning of this Agreement.

                  (ee) "Section  11(a)(ii)  Trigger Date" shall have the meaning
set forth in Section 11(a)(iii) hereof.

                  (ff)  "Section  13 Event"  shall mean any event  described  in
clause (i), (ii) or (iii) of Section 13(a) hereof.

                  (gg)  "Securities  Act" shall mean the Securities Act of 1933,
as amended.

                  (hh)  "Shares  Acquisition  Date" shall mean the first date of
public  announcement  (which,  for purposes of this  definition,  shall include,
without limitation,  a report filed pursuant to Section 13(d) under the Exchange
Act) by the Company or an Acquiring  Person that an Acquiring  Person has become
such;  provided  that,  if such  Person  is  determined  not to have  become  an
Acquiring  Person  pursuant to Section 1(a) hereof,  then no Shares  Acquisition
Date shall be deemed to have occurred.

                  (ii)  "Spread"  shall  have the  meaning  set forth in Section
11(a)(iii) hereof.

                  (jj)  "Subsidiary" of any Person shall mean any corporation or
other  entity  of which an amount of  voting  securities  sufficient  to elect a
majority  of  the  directors  or  Persons  having  similar   authority  of  such
corporation or other entity is beneficially  owned,  directly or indirectly,  by
such Person,  or any  corporation or other entity  otherwise  controlled by such
Person.

                  (kk) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.

                  (ll)  "Summary  of  Rights"  shall  mean  a  summary  of  this
Agreement substantially in the form attached hereto as Exhibit C.

                  (mm) "Total  Exercise  Price" shall have the meaning set forth
in Section 4(a) hereof.

                                      -7-

<PAGE>

                  (nn)  "Trading  Day" shall  mean a day on which the  principal
national  securities  exchange  on which a  referenced  security  is  listed  or
admitted to trading is open for the  transaction of business or, if a referenced
security  is not  listed or  admitted  to  trading  on any  national  securities
exchange, a Business Day.

                  (oo) A  "Triggering  Event"  shall be deemed to have  occurred
upon any Person becoming an Acquiring Person.

         Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights  Agent to act as agent for the Company in  accordance  with the terms and
conditions  hereof,  and the Rights Agent hereby accepts such  appointment.  The
Company  may from  time to time  appoint  such  co-Rights  Agents as it may deem
necessary or desirable,  upon ten (10) days' prior written  notice to the Rights
Agent.  The Rights Agent shall have no duty to supervise,  and shall in no event
be liable for, the acts or omissions of any co-Rights Agent.

         Section 3. Issuance of Rights Certificates.

                  (a)  Until  the  Distribution  Date,  (i) the  Rights  will be
evidenced  (subject to the  provisions  of Sections 3(b) and 3(c) hereof) by the
certificates  for Common Shares  registered in the names of the holders  thereof
(which  certificates shall also be deemed to be Rights  Certificates) and not by
separate Rights  Certificates and (ii) the right to receive Rights  Certificates
will be  transferable  only in  connection  with the transfer of Common  Shares.
Until the earlier of the Distribution Date or the Expiration Date, the surrender
for  transfer  of  certificates  for Common  Shares  shall also  constitute  the
surrender  for  transfer  of  the  Rights  associated  with  the  Common  Shares
represented  thereby.  As soon as practicable  after the Distribution  Date, the
Company  will prepare and execute,  the Rights Agent will  countersign,  and the
Company will send or cause to be sent (and the Rights Agent will,  if requested,
send) by  first-class,  postage-prepaid  mail,  to each record  holder of Common
Shares as of the Close of Business on the  Distribution  Date, at the address of
such holder shown on the records of the Company, a Rights Certificate evidencing
one Right for each  Common  Share so held,  subject to  adjustment  as  provided
herein. In the event that an adjustment in the number of Rights per Common Share
has been made pursuant to Section 11 hereof, then at the time of distribution of
the Rights  Certificates,  the Company shall make the necessary and  appropriate
rounding  adjustments  (in accordance  with Section 14(a) hereof) so that Rights
Certificates  representing only whole numbers of Rights are distributed and cash
is paid in lieu of any  fractional  Rights.  As of the  Distribution  Date,  the
Rights  will  be  evidenced  solely  by  such  Rights  Certificates  and  may be
transferred  by the transfer of the Rights  Certificates  as  permitted  hereby,
separately and apart from any transfer of Common Shares, and the holders of such
Rights  Certificates  as listed in the  records of the  Company or any  transfer
agent or registrar for the Rights shall be the record holders thereof.

                  (b) On the Record Date or as soon as  practicable  thereafter,
the  Company  will  send a  copy  of  the  Summary  of  Rights  by  first-class,
postage-prepaid  mail, to each record holder of Common Shares as of the Close of
Business on the Record Date,  at the address of such holder shown

                                      -8-

<PAGE>

on the records of the Company's  transfer agent and  registrar.  With respect to
certificates  for Common  Shares  outstanding  as of the Record Date,  until the
Distribution Date, the Rights will be evidenced by such certificates  registered
in the names of the holders thereof together with the Summary of Rights.

                  (c) Unless the Board of Directors by resolution  adopted at or
before the time of the  issuance of any Common  Shares after the Record Date but
prior to the earlier of the  Distribution  Date or the  Expiration  Date (or, in
certain  circumstances  provided  in Section 22 hereof,  after the  Distribution
Date) specifies to the contrary, Rights shall be issued in respect of all Common
Shares that are so issued,  and  Certificates  representing  such Common  Shares
shall also be deemed to be certificates for Rights, and shall bear the following
legend:

         THIS  CERTIFICATE  ALSO  EVIDENCES  AND ENTITLES  THE HOLDER  HEREOF TO
         CERTAIN  RIGHTS AS SET FORTH IN THE THIRD  AMENDED AND RESTATED  RIGHTS
         AGREEMENT BETWEEN SPECTRIAN  CORPORATION AND MELLON INVESTOR  SERVICES,
         LLC, AS THE RIGHTS  AGENT,  DATED AS OF JANUARY 18, 2001,  (THE "RIGHTS
         AGREEMENT"),  THE  TERMS OF WHICH  ARE  HEREBY  INCORPORATED  HEREIN BY
         REFERENCE  AND A COPY OF  WHICH IS ON FILE AT THE  PRINCIPAL  EXECUTIVE
         OFFICES OF SPECTRIAN  CORPORATION UNDER CERTAIN  CIRCUMSTANCES,  AS SET
         FORTH  IN THE  RIGHTS  AGREEMENT,  SUCH  RIGHTS  WILL BE  EVIDENCED  BY
         SEPARATE   CERTIFICATES  AND  WILL  NO  LONGER  BE  EVIDENCED  BY  THIS
         CERTIFICATE.  SPECTRIAN  CORPORATION  WILL  MAIL TO THE  HOLDER OF THIS
         CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT
         OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN
         THE RIGHTS AGREEMENT,  RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS,
         WAS OR  BECOMES  AN  ACQUIRING  PERSON OR ANY  AFFILIATE  OR  ASSOCIATE
         THEREOF  (AS SUCH TERMS ARE DEFINED IN THE RIGHTS  AGREEMENT),  WHETHER
         CURRENTLY  HELD BY OR ON  BEHALF OF SUCH  PERSON  OR BY ANY  SUBSEQUENT
         HOLDER, MAY BECOME NULL AND VOID.

With respect to such  certificates  containing the foregoing  legend,  until the
earlier of the Distribution  Date or the Expiration Date, the Rights  associated
with the Common Shares  represented by such  certificates  shall be evidenced by
such certificates  alone, and the surrender for transfer of any such certificate
shall also  constitute  the  transfer of the Rights  associated  with the Common
Shares represented thereby.

                  (d) In the event that the Company  purchases  or acquires  any
Common  Shares  after the Record Date but prior to the  Distribution  Date,  any
Rights  associated  with such Common Shares shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Shares which are no longer outstanding.

         Section 4. Form of Rights Certificates.

                                      -9-

<PAGE>

                  (a) The  Rights  Certificates  (and the forms of  election  to
purchase  Common Shares and of assignment to be printed on the reverse  thereof)
shall be  substantially  in the form of Exhibit B hereto and may have such marks
of  identification  or designation  and such legends,  summaries or endorsements
printed thereon as the Company may deem  appropriate and as are not inconsistent
with the provisions of this Agreement,  or as may be required to comply with any
applicable law or with any rule or regulation made pursuant  thereto or with any
rule or regulation of any stock exchange or a national  market system,  on which
the Rights may from time to time be listed or included,  or to conform to usage.
Subject  to the  provisions  of Section  11 and  Section  22 hereof,  the Rights
Certificates,  whenever distributed, shall be dated as of the Record Date (or in
the case of Rights  issued with respect to Common  Shares  issued by the Company
after the Record Date, as of the date of issuance of such Common  Shares) and on
their  face  shall  entitle  the  holders  thereof to  purchase  such  number of
one-thousandths  of a Preferred Share as shall be set forth therein at the price
set forth therein (such  exercise  price per one  one-thousandth  of a Preferred
Share being  hereinafter  referred to as the "Exercise  Price" and the aggregate
Exercise Price of all Preferred Shares issuable upon exercise of one Right being
hereinafter  referred to as the "Total Exercise Price"), but the number and type
of securities purchasable upon the exercise of each Right and the Exercise Price
shall be subject to adjustment as provided herein.

                  (b) Any Rights  Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring  Person,  (ii) a Post-Event
Transferee,  (iii) a  Pre-Event  Transferee  or (iv) any  subsequent  transferee
receiving  transferred  Rights  from  a  Post-Event  Transferee  or a  Pre-Event
Transferee, either directly or through one or more intermediate transferees, and
any Rights  Certificate  issued  pursuant to Section 6 or Section 11 hereof upon
transfer,  exchange,  replacement or adjustment of any other Rights  Certificate
referred  to in this  sentence,  shall  contain  (to the  extent  feasible)  the
following legend:

         THE  RIGHTS   REPRESENTED  BY  THIS  RIGHTS  CERTIFICATE  ARE  OR  WERE
         BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR
         AN AFFILIATE  OR  ASSOCIATE  OF AN ACQUIRING  PERSON (AS SUCH TERMS ARE
         DEFINED  IN  THE  THIRD   AMENDED  AND  RESTATED   RIGHTS   AGREEMENT).
         ACCORDINGLY,  THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
         MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
         OF THE THIRD AMENDED AND RESTATED RIGHTS AGREEMENT.

         Section 5. Countersignature and Registration.

                  (a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board,  its Chief  Executive  Officer,  its Chief
Financial  Officer,  its President or any Vice President,  either manually or by
facsimile  signature,  and by the  Secretary  or an  Assistant  Secretary of the
Company,  either  manually or by  facsimile  signature,  and shall have  affixed
thereto  the  Company's  seal  (if  any)  or a  facsimile  thereof.  The  Rights
Certificates  shall be manually

                                      -10-

<PAGE>

countersigned  by the Rights Agent and shall not be valid for any purpose unless
countersigned.  In case any  officer of the Company who shall have signed any of
the Rights  Certificates  shall cease to be such  officer of the Company  before
countersignature  by the Rights  Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights  Certificates on behalf of the Company had not
ceased to be such  officer of the  Company;  and any Rights  Certificate  may be
signed on behalf of the  Company by any person  who,  at the actual  date of the
execution of such Rights  Certificate,  shall be a proper officer of the Company
to sign such Rights  Certificate,  although at the date of the execution of this
Rights Agreement any such person was not such an officer.

                  (b) Following  the  Distribution  Date,  the Rights Agent will
keep or cause to be kept, at its office designated for such purposes,  books for
registration  and transfer of the Rights  Certificates  issued  hereunder.  Such
books shall show the names and addresses of the respective holders of the Rights
Certificates,  the number of Rights  evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.

         Section 6.  Transfer,  Split Up,  Combination  and  Exchange  of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.

                  (a)  Subject to the  provisions  of Sections  7(e),  14 and 24
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the Expiration Date, any Rights Certificate
or Rights  Certificates may be transferred,  split up, combined or exchanged for
another  Rights  Certificate  or Rights  Certificates,  entitling the registered
holder to purchase a like number of  one-thousandths  of a Preferred  Share (or,
following a Triggering  Event,  other  securities,  cash or other assets, as the
case may be) as the Rights Certificate or Rights  Certificates  surrendered then
entitled such holder to purchase.  Any registered  holder  desiring to transfer,
split up,  combine or exchange  any Rights  Certificate  or Rights  Certificates
shall make such  request in writing  delivered  to the Rights  Agent,  and shall
surrender the Rights Certificate or Rights Certificates to be transferred, split
up, combined or exchanged at the office of the Rights Agent  designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action  whatsoever with respect to the transfer of any such  surrendered  Rights
Certificate  until the  registered  holder shall have  completed  and signed the
certificate  contained  in the form of  assignment  on the reverse  side of such
Rights  Certificate  and shall have  provided  such  additional  evidence of the
identity of the Beneficial Owner (or former  Beneficial  Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Sections 7(e), 14 and 24 hereof, countersign and deliver
to the person entitled thereto a Rights Certificate or Rights  Certificates,  as
the case may be, as so  requested.  The  Company  may  require  payment of a sum
sufficient  to cover  any tax or  governmental  charge  that may be  imposed  in
connection  with any  transfer,  split up,  combination  or  exchange  of Rights
Certificates.

                                      -11-

<PAGE>

                  (b)  Upon  receipt  by the  Company  and the  Rights  Agent of
evidence  reasonably  satisfactory  to them of the loss,  theft,  destruction or
mutilation of a Rights Certificate,  and, in case of loss, theft or destruction,
of indemnity or security reasonably  satisfactory to them, and, at the Company's
request,  reimbursement  to the Company and the Rights  Agent of all  reasonable
expenses  incidental  thereto,  and  upon  surrender  to the  Rights  Agent  and
cancellation of the Rights  Certificate if mutilated,  the Company will make and
deliver a new Rights  Certificate of like tenor to the Rights Agent for delivery
to the  registered  holder in lieu of the Rights  Certificate  so lost,  stolen,
destroyed or mutilated.

         Section 7.  Exercise  of Rights;  Exercise  Price;  Expiration  Date of
Rights.

                  (a)  Subject to Sections  7(e),  23(b) and 24(b)  hereof,  the
registered  holder of any Rights  Certificate may exercise the Rights  evidenced
thereby  (except as otherwise  provided  herein) in whole or in part at any time
after the Distribution Date and prior to the Close of Business on the Expiration
Date by  surrender  of the  Rights  Certificate,  with the form of  election  to
purchase on the reverse side thereof duly  executed,  to the Rights Agent at the
office of the Rights Agent designated for such purpose, together with payment of
the Exercise Price for each one-thousandth of a Preferred Share (or, following a
Triggering Event, other securities,  cash or other assets as the case may be) as
to which the Rights are exercised.

                  (b) The Exercise Price for each  one-thousandth of a Preferred
Share  issuable  pursuant  to the  exercise of a Right  shall  initially  be One
Hundred Twenty Six Dollars  ($126.00),  shall be subject to adjustment from time
to time as  provided in Sections 11 and 13 hereof and shall be payable in lawful
money of the United States of America in accordance with paragraph (c) below.

                  (c)  Upon  receipt  of  a  Rights   Certificate   representing
exercisable  Rights,  with the  form of  election  to  purchase  duly  executed,
accompanied by payment of the Exercise  Price for the number of  one-thousandths
of a Preferred Share (or, following a Triggering Event,  other securities,  cash
or other assets as the case may be) to be  purchased  and an amount equal to any
applicable  transfer  tax  required  to be paid  by the  holder  of such  Rights
Certificate  in  accordance  with Section  9(e) hereof,  the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the Preferred  Shares (or make available,  if the Rights Agent
is the transfer agent for the Preferred  Shares) a certificate  or  certificates
for the  number  of  one-thousandths  of a  Preferred  Share  (or,  following  a
Triggering Event, other securities,  cash or other assets as the case may be) to
be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply  with all such  requests  or (B) if the  Company  shall  have  elected to
deposit the total number of  one-thousandths of a Preferred Share (or, following
a Triggering Event,  other securities,  cash or other assets as the case may be)
issuable  upon  exercise  of  the  Rights  hereunder  with a  depositary  agent,
requisition  from the depositary  agent depositary  receipts  representing  such
number of  one-thousandths  of a Preferred  Share (or,  following  a  Triggering
Event, other securities, cash or other assets as the case

                                      -12-

<PAGE>

may be) as are to be purchased  (in which case  certificates  for the  Preferred
Shares (or, following a Triggering Event, other securities, cash or other assets
as the case may be)  represented  by such  receipts  shall be  deposited  by the
transfer  agent with the  depositary  agent) and the Company  hereby directs the
depositary agent to comply with such request, (ii) when appropriate, requisition
from the Company the amount of cash to be paid in lieu of issuance of fractional
shares in  accordance  with  Section  14  hereof,  (iii)  after  receipt of such
certificates or depositary  receipts,  cause the same to be delivered to or upon
the order of the  registered  holder of such Rights  Certificate,  registered in
such  name  or  names  as may  be  designated  by  such  holder  and  (iv)  when
appropriate,  after receipt  thereof,  deliver such cash to or upon the order of
the registered  holder of such Rights  Certificate.  The payment of the Exercise
Price (as such  amount may be reduced  (including  to zero)  pursuant to Section
11(a)(iii)  hereof) and an amount equal to any applicable  transfer tax required
to be paid by the holder of such Rights  Certificate in accordance  with Section
9(e) hereof, may be made in cash or by certified bank check,  cashier's check or
bank draft payable to the order of the Company. In the event that the Company is
obligated to issue  securities of the Company other than Preferred  Shares,  pay
cash and/or  distribute  other  property  pursuant to Section 11(a) hereof,  the
Company will make all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when appropriate.

                  (d) In case the  registered  holder of any Rights  Certificate
shall  exercise  less  than  all the  Rights  evidenced  thereby,  a new  Rights
Certificate  evidencing  Rights  equivalent to the Rights remaining  unexercised
shall be issued by the  Rights  Agent to the  registered  holder of such  Rights
Certificate or to his or her duly authorized assigns,  subject to the provisions
of Section 14 hereof.

                  (e)   Notwithstanding   anything  in  this  Agreement  to  the
contrary,  from and after the first occurrence of a Triggering Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring  Person,  (ii) a  transferee  of an  Acquiring  Person (or of any such
Associate or  Affiliate)  who becomes a transferee  after the  Acquiring  Person
becomes such (a  "Post-Event  Transferee"),  (iii) a transferee  of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer  (whether or not for  consideration)  from the
Acquiring  Person to holders of equity  interests in such Acquiring Person or to
any  Person  with  whom  the  Acquiring  Person  has any  continuing  agreement,
arrangement or understanding  regarding the transferred Rights or (B) a transfer
which  the  Company's  Board  of  Directors  has  determined  is part of a plan,
arrangement  or  understanding  which has as a  primary  purpose  or effect  the
avoidance of this Section 7(e) (a "Pre-Event Transferee") or (iv) any subsequent
transferee  receiving  transferred  Rights  from a  Post-Event  Transferee  or a
Pre-Event  Transferee,  either  directly  or  through  one or more  intermediate
transferees, shall become null and void without any further action and no holder
of such Rights  shall have any rights  whatsoever  with  respect to such Rights,
whether  under any provision of this  Agreement or otherwise.  The Company shall
use all  reasonable  efforts to ensure that the  provisions of this Section 7(e)
and Section  4(b) hereof are complied  with,  but shall have no liability to any
holder of Rights  Certificates or to any other Person as a result of its failure
to make any  determinations  with respect to an Acquiring  Person or any of such
Acquiring Person's Affiliates, Associates or transferees hereunder.

                                      -13-

<PAGE>

                  (f)   Notwithstanding   anything  in  this  Agreement  to  the
contrary,  neither  the  Rights  Agent nor the  Company  shall be  obligated  to
undertake any action with respect to a registered  holder upon the occurrence of
any  purported  exercise as set forth in this  Section 7 unless such  registered
holder shall,  in addition to having  complied with the  requirements of Section
7(a),  have (i)  completed and signed the  certificate  contained in the form of
election to purchase  set forth on the  reverse  side of the Rights  Certificate
surrendered for such exercise and (ii) provided such additional  evidence of the
identity of the Beneficial Owner (or former  Beneficial  Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.

         Section 8.  Cancellation  and Destruction of Rights  Certificates.  All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination  or exchange  shall,  if surrendered to the Company or to any of its
agents,  be delivered to the Rights Agent for  cancellation or in canceled form,
or, if surrendered  to the Rights Agent,  shall be canceled by it, and no Rights
Certificates  shall be issued in lieu thereof  except as expressly  permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement,  and the Rights Agent shall so cancel and
retire,  any Rights  Certificate  purchased or acquired by the Company otherwise
than upon the  exercise  thereof.  The Rights  Agent shall  deliver all canceled
Rights  Certificates  to the Company,  or shall,  at the written  request of the
Company,  destroy  such  canceled  Rights  Certificates,  and in such case shall
deliver a certificate evidencing the destruction thereof to the Company.

         Section 9. Reservation and Availability of Preferred Shares.

                  (a) The Company covenants and agrees that it will use its best
efforts to cause to be reserved and kept  available  out of its  authorized  and
unissued  Preferred Shares not reserved for another purpose (and,  following the
occurrence of a Triggering  Event,  out of its  authorized  and unissued  Common
Shares and/or other securities),  the number of Preferred Shares (and, following
the occurrence of the Triggering  Event,  Common Shares and/or other securities)
that  will be  sufficient  to permit  the  exercise  in full of all  outstanding
Rights.

                  (b) If the Company shall  hereafter  list any of its Preferred
Shares on a national securities  exchange,  then so long as the Preferred Shares
(and, following the occurrence of a Triggering Event, Common Shares and/or other
securities)  issuable and deliverable  upon exercise of the Rights may be listed
on such  exchange,  the Company  shall use its best  efforts to cause,  from and
after such time as the Rights become exercisable (but only to the extent that it
is reasonably likely that the Rights will be exercised), all shares reserved for
such issuance to be listed on such  exchange  upon  official  notice of issuance
upon such exercise.

                  (c) The  Company  shall use its best  efforts to (i) file,  as
soon as practicable  following the earliest date after the first occurrence of a
Triggering Event in which the  consideration to be delivered by the Company upon
exercise of the Rights is described in Section  11(a)(ii) or Section  11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration  statement  under the Securities Act with respect to
the securities  purchasable

                                      -14-

<PAGE>

upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing and (iii)
cause such registration  statement to remain effective (with a prospectus at all
times meeting the  requirements  of the Securities Act) until the earlier of (A)
the date as of which the Rights are no longer  exercisable  for such  securities
and (B) the date of  expiration  of the  Rights.  The  Company  may  temporarily
suspend, for a period not to exceed ninety (90) days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file such registration statement and permit it to
become  effective.  Upon any such  suspension,  the Company shall issue a public
announcement  stating,  and notify the Rights Agent, that the  exercisability of
the Rights has been temporarily suspended,  as well as a public announcement and
notification  to the Rights Agent at such time as the suspension is no longer in
effect.  The Company will also take such action as may be appropriate  under, or
to ensure  compliance  with,  the  securities  or "blue sky" laws of the various
states in connection with the exercisability of the Rights.  Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any  jurisdiction,  unless the requisite  qualification in such  jurisdiction
shall have been  obtained,  or an exemption  therefrom  shall be available,  and
until a registration statement has been declared and remains effective.

                  (d) The  Company  covenants  and agrees  that it will take all
such action as may be  necessary to ensure that all  Preferred  Shares (or other
securities of the Company)  delivered upon exercise of Rights shall, at the time
of delivery of the certificates  for such securities  (subject to payment of the
Exercise  Price),  be duly and validly  authorized and issued and fully paid and
nonassessable.

                  (e) The Company further  covenants and agrees that it will pay
when due and payable any and all  federal and state  transfer  taxes and charges
which may be payable in respect of the  original  issuance  or  delivery  of the
Rights  Certificates  or of any  Preferred  Shares (or other  securities  of the
Company)  upon the  exercise  of Rights.  The  Company  shall not,  however,  be
required to pay any transfer tax which may be payable in respect of any transfer
or delivery of Rights  Certificates  to a person other than,  or the issuance or
delivery of  certificates  or depositary  receipts for the Preferred  Shares (or
other  securities  of the Company) in a name other than that of, the  registered
holder of the Rights  Certificate  evidencing Rights surrendered for exercise or
to issue or to deliver any  certificates  or  depositary  receipts for Preferred
Shares (or other  securities  of the  Company)  upon the  exercise of any Rights
until any such tax shall  have  been  paid  (any such tax being  payable  by the
holder of such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.

         Section 10. Record Date.  Each Person in whose name any certificate for
a number of  one-thousandths  of a Preferred  Share (or other  securities of the
Company) is issued upon the  exercise of Rights shall for all purposes be deemed
to have become the holder of record of Preferred  Shares (or other securities of
the Company)  represented  thereby on, and such certificate  shall be dated, the
date  upon  which  the  Rights  Certificate  evidencing  such  Rights  was  duly
surrendered  and payment of the Total  Exercise  Price with respect to which the
Rights  have  been  exercised  (and any  applicable

                                      -15-

<PAGE>

transfer taxes) was made; provided,  however, that if the date of such surrender
and payment is a date upon which the  transfer  books of the Company are closed,
such Person shall be deemed to have become the record  holder of such shares on,
and such certificate  shall be dated, the next succeeding  Business Day on which
the transfer books of the Company are open.  Prior to the exercise of the Rights
evidenced  thereby,  the holder of a Rights Certificate shall not be entitled to
any rights of a holder of Preferred  Shares (or other securities of the Company)
for which the Rights shall be exercisable,  including,  without limitation,  the
right to vote, to receive  dividends or other  distributions  or to exercise any
preemptive  rights,  and shall not be  entitled  to  receive  any  notice of any
proceedings of the Company, except as provided herein.

         Section 11. Adjustment of Exercise Price, Number of Shares or Number of
Rights.  The  Exercise  Price,  the number and kind of shares or other  property
covered  by each  Right and the  number of Rights  outstanding  are  subject  to
adjustment from time to time as provided in this Section 11.

                  (a)  (i)   Anything  in  this   Agreement   to  the   contrary
notwithstanding,  in the event that the Company shall at any time after the date
of this  Agreement  (A) declare a dividend on the  Preferred  Shares  payable in
Preferred Shares,  (B) subdivide the outstanding  Preferred Shares,  (C) combine
the  outstanding  Preferred  Shares (by reverse stock split or otherwise) into a
smaller number of Preferred Shares, or (D) issue any shares of its capital stock
in  a   reclassification   of  the   Preferred   Shares   (including   any  such
reclassification  in  connection  with a  consolidation  or  merger in which the
Company is the continuing or surviving  corporation),  then, in each such event,
except as otherwise provided in this Section 11 and Section 7(e) hereof: (1) the
Exercise  Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification shall be
adjusted so that the Exercise Price  thereafter  shall equal the result obtained
by dividing the  Exercise  Price in effect  immediately  prior to such time by a
fraction (the "Adjustment Fraction"),  the numerator of which shall be the total
number  of  Preferred  Shares  (or  shares  of  capital  stock  issued  in  such
reclassification of the Preferred Shares) outstanding immediately following such
time and the denominator of which shall be the total number of Preferred  Shares
outstanding immediately prior to such time; provided,  however, that in no event
shall the  consideration  to be paid upon the exercise of one Right be less than
the aggregate pare value of the shares of capital stock of the Company  issuable
upon  exercise  of such  Right;  and  (2) the  number  of  one-thousandths  of a
Preferred  Share  (or  share of such  other  capital  stock)  issuable  upon the
exercise of each Right shall equal the number of  one-thousandths of a Preferred
Share (or share of such other capital  stock) as was issuable upon exercise of a
Right  immediately  prior to the  occurrence  of the event  described in clauses
(A)-(D)  of  this  Section  11(a)(i),  multiplied  by the  Adjustment  Fraction;
provided,  however,  that,  no such  adjustment  shall be made  pursuant to this
Section 11(a)(i) to the extent that there shall have simultaneously  occurred an
event  described  in  clause  (A),  (B),  (C)  or (D) of  Section  11(n)  with a
proportionate  adjustment  being made  thereunder.  Each Common Share that shall
become  outstanding  after an adjustment  has been made pursuant to this Section
11(a)(i) shall have associated with it the number of Rights,  exercisable at the
Exercise Price and for the number of  one-thousandths  of a Preferred  Share (or
shares of such other capital stock) as one Common Share has  associated  with it
immediately following the adjustment made pursuant to this Section 11(a)(i).

                                      -16-

<PAGE>

                           (ii) Subject to Section 24 of this Agreement,  in the
event that a Triggering Event shall have occurred,  then promptly following such
Triggering  Event each holder of a Right,  except as  provided  in Section  7(e)
hereof, shall thereafter have the right to receive for each Right, upon exercise
thereof  in  accordance  with the terms of this  Agreement  and  payment  of the
Exercise Price in effect  immediately  prior to the occurrence of the Triggering
Event, in lieu of a number of  one-thousandths of a Preferred Share, such number
of Common Shares of the Company as shall equal the quotient obtained by dividing
(A) the  product  obtained  by  multiplying  (1) the  Exercise  Price in  effect
immediately prior to the occurrence of the Triggering Event by (2) the number of
one-thousandths of a Preferred Share for which a Right was exercisable (or would
have been exercisable if the Distribution  Date had occurred)  immediately prior
to the first  occurrence  of a Triggering  Event,  by (B) 50% of the Current Per
Share Market Price for Common Shares on the date of occurrence of the Triggering
Event;  provided,  however,  that the  Exercise  Price and the  number of Common
Shares of the Company so receivable upon exercise of a Right shall be subject to
further  adjustment as  appropriate  in accordance  with Section 11(e) hereof to
reflect  any events  occurring  in respect of the Common  Shares of the  Company
after the occurrence of the Triggering Event.

                           (iii) In lieu of issuing  Common Shares in accordance
with  Section  11(a)(ii)  hereof,  the Company  may, if the  Company's  Board of
Directors  determines  that such  action is  necessary  or  appropriate  and not
contrary to the  interest of holders of Rights and, in the event that the number
of  Common  Shares  which  are  authorized  by  the  Company's   Certificate  of
Incorporation  but not  outstanding  or reserved for issuance for purposes other
than upon  exercise of the Rights are not  sufficient  to permit the exercise in
full of the Rights,  or if any necessary  regulatory  approval for such issuance
has not been  obtained by the Company,  the Company  shall:  (A)  determine  the
excess of (1) the value of the Common  Shares  issuable  upon the  exercise of a
Right (the  "Current  Value")  over (2) the  Exercise  Price (such  excess,  the
"Spread")  and (B) with  respect  to each  Right,  make  adequate  provision  to
substitute for such Common Shares,  upon exercise of the Rights, (1) cash, (2) a
reduction in the Exercise  Price,  (3) other  equity  securities  of the Company
(including,  without  limitation,  shares or units of  shares  of any  series of
preferred  stock which the  Company's  Board of Directors has deemed to have the
same value as Common  Shares (such shares or units of shares of preferred  stock
are herein called  "Common Stock  Equivalents")),  except to the extent that the
Company has not obtained any necessary  stockholder  or regulatory  approval for
such issuance, (4) debt securities of the Company, except to the extent that the
Company has not obtained any necessary  stockholder  or regulatory  approval for
such issuance, (5) other assets or (6) any combination of the foregoing,  having
an aggregate  value equal to the Current Value,  where such aggregate  value has
been  determined by the Company's  Board of Directors based upon the advice of a
nationally recognized investment banking firm selected by the Company's Board of
Directors;  provided,  however, that if the Company shall not have made adequate
provision to deliver value  pursuant to clause (B) above within thirty (30) days
following the later of (x) the first  occurrence  of a Triggering  Event and (y)
the date on which the Company's  right of  redemption  pursuant to Section 23(a)
expires  (the  later of (x) and (y) being  referred  to  herein as the  "Section
11(a)(ii) Trigger Date"),  then the Company shall be obligated to deliver,  upon
the  surrender  for  exercise  of a Right and without  requiring  payment of the
Exercise Price,  Common Shares (to the extent  available),  except to the extent
that the  Company has not  obtained  any  necessary  stockholder  or  regulatory
approval for such issuance,  and then, if necessary,  cash,  which shares and/or
cash have an  aggregate

                                      -17-

<PAGE>

value equal to the Spread.  If the Company's  Board of Directors shall determine
in good faith that it is likely that sufficient  additional  Common Shares could
be  authorized  for  issuance  upon  exercise  in full of the Rights or that any
necessary  regulatory  approval for such issuance  will be obtained,  the thirty
(30) day period set forth above may be extended to the extent necessary, but not
more than ninety (90) days after the Section  11(a)(ii)  Trigger  Date, in order
that the Company may seek  stockholder  approval for the  authorization  of such
additional  shares or take  action  to obtain  such  regulatory  approval  (such
period, as it may be extended,  the "Substitution  Period").  To the extent that
the Company  determines  that some  action  need be taken  pursuant to the first
and/or  second  sentences  of this  Section  11(a)(iii),  the  Company (x) shall
provide,  subject to Section 7(e) hereof, that such action shall apply uniformly
to all outstanding  Rights and (y) may suspend the  exercisability of the Rights
until  the  expiration  of  the  Substitution   Period  in  order  to  seek  any
authorization  of additional  shares,  to take any action to obtain any required
regulatory  approval and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof.  In the
event of any such  suspension,  the Company  shall  issue a public  announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public  announcement  at such time as the  suspension  is no longer in
effect. For purposes of this Section 11(a)(iii),  the value of the Common Shares
shall be the Current Per Share Market Price of the Common  Shares on the Section
11(a)(ii)  Trigger  Date and the value of any Common Stock  Equivalent  shall be
deemed to have the same value as the Common Shares on such date.

                  (b) In case the Company  shall,  at any time after the date of
this  Agreement,  fix a record  date for the  issuance  of  rights,  options  or
warrants to all holders of Preferred Shares entitling such holders (for a period
expiring  within  forty-five  (45)  calendar  days  after such  record  date) to
subscribe for or purchase  Preferred  Shares or Equivalent  Shares or securities
convertible into Preferred Shares or Equivalent  Shares at a price per share (or
having a conversion  price per share, if a security  convertible  into Preferred
Shares or  Equivalent  Shares) less than the then Current Per Share Market Price
of the Preferred Shares or Equivalent  Shares on such record date, then, in each
such case,  the  Exercise  Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record  date by a  fraction,  the  numerator  of which  shall be the  number  of
Preferred Shares and Equivalent Shares (if any) outstanding on such record date,
plus the number of Preferred  Shares or Equivalent  Shares,  as the case may be,
which the aggregate  offering  price of the total number of Preferred  Shares or
Equivalent  Shares,  as the case may be, to be  offered  or issued  (and/or  the
aggregate initial  conversion price of the convertible  securities to be offered
or issued) would purchase at such current market price,  and the  denominator of
which shall be the number of  Preferred  Shares and  Equivalent  Shares (if any)
outstanding on such record date, plus the number of additional  Preferred Shares
or  Equivalent  Shares,  as the case may be, to be offered for  subscription  or
purchase  (or  into  which  the  convertible  securities  so to be  offered  are
initially  convertible);   provided,   however,  that  in  no  event  shall  the
consideration  be paid upon the exercise of one Right be less than the aggregate
par value of the shares of capital  stock of the Company  issuable upon exercise
of on Right. In case such subscription price may be paid in a consideration part
or  all of  which  shall  be in a form  other  than  cash,  the  value  of  such
consideration  shall be as determined  in good faith by the  Company's  Board of
Directors,  whose determination shall be described in a statement filed with the
Rights  Agent and shall be binding on the  Rights

                                      -18-

<PAGE>

Agent and the  holders of the Rights.  Preferred  Shares and  Equivalent  Shares
owned by or held for the account of the Company shall not be deemed  outstanding
for  the  purpose  of any  such  computation.  Such  adjustment  shall  be  made
successively  whenever  such a record date is fixed,  and in the event that such
rights,  options or  warrants  are not so issued,  the  Exercise  Price shall be
adjusted to be the  Exercise  Price which would then be in effect if such record
date had not been fixed.

                  (c) In case the Company  shall,  at any time after the date of
this  Agreement,  fix a record  date for the  making  of a  distribution  to all
holders of the Preferred  Shares or of any class or series of Equivalent  Shares
(including any such  distribution  made in connection  with a  consolidation  or
merger in which the  Company is the  continuing  or  surviving  corporation)  of
evidences  of  indebtedness  or  assets  (other  than a regular  quarterly  cash
dividend,  if any, or a dividend  payable in Preferred  Shares) or  subscription
rights,  options or warrants  (excluding  those  referred to in Section  11(b)),
then,  in each such case,  the Exercise  Price to be in effect after such record
date shall be determined by multiplying the Exercise Price in effect immediately
prior to such  record date by a fraction,  the  numerator  of which shall be the
Current Per Share Market Price of a Preferred  Share or an  Equivalent  Share on
such record date,  less the fair market value per Preferred  Share or Equivalent
Share (as  determined  in good faith by the Board of  Directors  of the Company,
whose  determination  shall be  described  in a statement  filed with the Rights
Agent) of the portion of the cash,  assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a Preferred
Share or  Equivalent  Share,  as the case may be, and the  denominator  of which
shall be such Current Per Share Market Price of a Preferred  Share or Equivalent
Share  on such  record  date;  provided,  however,  that in no event  shall  the
consideration  to be paid  upon  the  exercise  of one  Right  be less  than the
aggregate par value of the shares of capital stock of the Company  issuable upon
exercise of one Right. Such adjustments shall be made successively whenever such
a record date is fixed, and in the event that such  distribution is not so made,
the Exercise  Price shall be adjusted to be the Exercise  Price which would have
been in effect if such record date had not been fixed.

                  (d)  Anything  herein  to  the  contrary  notwithstanding,  no
adjustment in the Exercise Price shall be required unless such adjustment  would
require an increase or decrease of at least one percent  (1.0%) of the  Exercise
Price;  provided,  however, that any adjustments which by reason of this Section
11(d) are not  required  to be made  shall be  carried  forward  and taken  into
account in any subsequent  adjustment.  All  calculations  under this Section 11
shall be made to the nearest cent or to the nearest  ten-thousandth  of a Common
Share or other share or one hundred-thousandth of a Preferred Share, as the case
may be. Notwithstanding the first sentence of this Section 11(d), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the  transaction  which  requires such  adjustment or
(ii) the Expiration Date.

                  (e) If as a result of an  adjustment  made pursuant to Section
11(a) or Section  13(a)  hereof,  the holder of any Right  thereafter  exercised
shall  become  entitled  to  receive  any  shares of  capital  stock  other than
Preferred Shares,  thereafter the number of such other shares so receivable upon
exercise of any Right and, if required,  the Exercise  Price  thereof,  shall be
subject  to  adjustment

                                      -19-

<PAGE>

from time to time in a manner and on terms as nearly  equivalent as  practicable
to the  provisions  with respect to the Preferred  Shares  contained in Sections
11(a), 11(b), 11(c), 11(d), 11(g), 11(h), 11(i), 11(j), 11(k) and 11(l), and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred  Shares
shall apply on like terms to any such other shares.

                  (f) All Rights originally issued by the Company  subsequent to
any adjustment  made to the Exercise Price hereunder shall evidence the right to
purchase,  at the adjusted  Exercise Price, the number of  one-thousandths  of a
Preferred  Share  purchasable  from time to time  hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.

                  (g) Unless the Company  shall have  exercised  its election as
provided in Section  11(h),  upon each  adjustment  of the  Exercise  Price as a
result of the calculations made in Section 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase,  at the  adjusted  Exercise  Price,  that number of Preferred
Shares (calculated to the nearest one hundred-thousandth of a share) obtained by
(i)  multiplying  (x)  the  number  of  Preferred  Shares  covered  by  a  Right
immediately  prior to this  adjustment,  by (y) the  Exercise  Price  in  effect
immediately  prior to such adjustment of the Exercise  Price,  and (ii) dividing
the product so obtained by the Exercise Price in effect  immediately  after such
adjustment of the Exercise Price.

                  (h)  The  Company  may  elect  on or  after  the  date  of any
adjustment of the Exercise Price as a result of the calculations made in Section
11(b) or (c) to adjust the number of Rights,  in substitution for any adjustment
in the number of Preferred Shares purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of  one-thousandths  of a Preferred Share for which a
Right was exercisable  immediately prior to such adjustment.  Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of  Rights  (calculated  to the  nearest  one  hundred-thousandth)  obtained  by
dividing the Exercise  Price in effect  immediately  prior to  adjustment of the
Exercise Price by the Exercise Price in effect  immediately  after adjustment of
the Exercise Price. The Company shall make a public announcement of its election
to adjust the number of Rights,  indicating the record date for the  adjustment,
and, if known at the time, the amount of the adjustment to be made.  This record
date  may be the  date on  which  the  Exercise  Price  is  adjusted  or any day
thereafter,  but, if any Rights Certificates have been issued, shall be at least
ten (10)  days  later  than  the  date of the  public  announcement.  If  Rights
Certificates  have been  issued,  upon each  adjustment  of the number of Rights
pursuant to this Section 11(h),  the Company shall,  as promptly as practicable,
cause to be  distributed  to  holders of record of Rights  Certificates  on such
record date Rights  Certificates  evidencing,  subject to Section 14 hereof, the
additional  Rights to which such  holders  shall be entitled as a result of such
adjustment,  or, at the option of the Company,  shall cause to be distributed to
such  holders  of  record  in  substitution   and  replacement  for  the  Rights
Certificates  held by such  holders  prior to the date of  adjustment,  and upon
surrender  thereof,  if  required  by  the  Company,   new  Rights  Certificates
evidencing  all the Rights to which such  holders  shall be entitled  after such
adjustment.  Rights Certificates so to be distributed shall be issued,  executed
and

                                      -20-
<PAGE>

countersigned  in the manner provided for herein (and may bear, at the option of
the Company,  the adjusted  Exercise Price) and shall be registered in the names
of the holders of record of Rights  Certificates on the record date specified in
the public announcement.

                  (i)  Irrespective  of any adjustment or change in the Exercise
Price or the  number of  Preferred  Shares  issuable  upon the  exercise  of the
Rights, the Rights  Certificates  theretofore and thereafter issued may continue
to express the Exercise Price per one  one-thousandth  of a Preferred  Share and
the number of  one-thousandths  of a Preferred Share which were expressed in the
initial Rights Certificates issued hereunder.

                  (j) Before  taking any action that would  cause an  adjustment
reducing the Exercise Price below the par or stated value, if any, of the number
of  one-thousandths  of a Preferred  Share issuable upon exercise of the Rights,
the Company  shall take any  corporate  action  which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue as
fully  paid  and  nonassessable  shares  such  number  of  one-thousandths  of a
Preferred Share at such adjusted Exercise Price.

                  (k) In any case in which this Section 11 shall require that an
adjustment  in the  Exercise  Price be made  effective as of a record date for a
specified  event,  the Company may elect to defer until the  occurrence  of such
event the issuing to the holder of any Right exercised after such record date of
the number of  one-thousandths  of a Preferred  Share and other capital stock or
securities  of the Company,  if any,  issuable upon such exercise over and above
the number of  one-thousandths  of a Preferred  Share and other capital stock or
securities of the Company,  if any,  issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment;  provided,  however, that
the  Company  shall  deliver  to such  holder a due  bill or  other  appropriate
instrument  evidencing  such holder's  right to receive such  additional  shares
(fractional  or  otherwise)  upon the  occurrence  of the event  requiring  such
adjustment.

                  (l)   Anything   in   this   Section   11  to   the   contrary
notwithstanding,  prior to the Distribution  Date, the Company shall be entitled
to make such reductions in the Exercise Price, in addition to those  adjustments
expressly  required by this Section 11, as and to the extent that it in its sole
discretion  shall determine to be advisable in order that any (i)  consolidation
or subdivision of the Preferred or Common Shares,  (ii) issuance wholly for cash
of any Preferred or Common Shares at less than the current  market price,  (iii)
issuance  wholly for cash of Preferred or Common Shares or  securities  which by
their terms are convertible into or exchangeable for Preferred or Common Shares,
(iv) stock dividends or (v) issuance of rights,  options or warrants referred to
in this Section 11, hereafter made by the Company to holders of its Preferred or
Common Shares shall not be taxable to such stockholders.

                  (m)  The  Company   covenants  and  agrees  that,   after  the
Distribution  Date,  it will not,  except as  permitted by Sections 23, 24 or 27
hereof,  take (or permit to be taken)  any action if at

                                      -21-

<PAGE>

the time such action is taken it is reasonably foreseeable that such action will
diminish  substantially  or  otherwise  eliminate  the  benefits  intended to be
afforded by the Rights.

                  (n) In the event that the Company  shall at any time after the
date of this  Agreement (A) declare a dividend on the Common  Shares  payable in
Common Shares,  (B) subdivide the  outstanding  Common  Shares,  (C) combine the
outstanding  Common Shares (by reverse stock split or otherwise)  into a smaller
number of Common  Shares,  or (D) issue  any  shares of its  capital  stock in a
reclassification  of the Common Shares (including any such  reclassification  in
connection with a consolidation or merger in which the Company is the continuing
or  surviving  corporation),  then,  in each such  event,  except  as  otherwise
provided in this Section  11(a) and Section  7(e) hereof:  (1) each Common Share
(or  shares of  capital  stock  issued in such  reclassification  of the  Common
Shares) outstanding  immediately  following such time shall have associated with
it the number of Rights as were  associated  with one Common  Share  immediately
prior to the occurrence of the event described in clauses (A)-(D) above; (2) the
Exercise  Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification shall be
adjusted so that the Exercise Price  thereafter  shall equal the result obtained
by multiplying the Exercise Price in effect  immediately prior to such time by a
fraction,  the  numerator  of which shall be the total  number of Common  Shares
outstanding  immediately  prior to the event described in clauses (A)-(D) above,
and the  denominator  of which  shall  be the  total  number  of  Common  Shares
outstanding  immediately after such event;  provided,  however, that in no event
shall the  consideration  to be paid upon the exercise of one Right be less than
the aggregate  par value of the shares of capital stock of the Company  issuable
upon  exercise  of such  Right;  and  (3) the  number  of  one-thousandths  of a
Preferred  Share (or  shares of such  other  capital  stock)  issuable  upon the
exercise  of each Right  outstanding  after such event shall equal the number of
one-thousandths  of a Preferred Share (or shares of such other capital stock) as
were issuable with respect to one Right  immediately  prior to such event.  Each
Common Share that shall become  outstanding  after an  adjustment  has been made
pursuant  to this  Section  11(n)  shall have  associated  with it the number of
Rights,  exercisable at the Exercise Price and for the number of one-thousandths
of a Preferred Share (or shares of such other capital stock) as one Common Share
has  associated  with it immediately  following the adjustment  made pursuant to
this Section 11(n).  If an event occurs which would require an adjustment  under
both this Section 11(n) and Section  11(a)(ii) hereof,  the adjustment  provided
for in this  Section  11(n) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii) hereof.

         Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an  adjustment  is made as  provided in Sections 11 and 13 hereof,  the
Company shall promptly (a) prepare a certificate  setting forth such  adjustment
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Preferred Shares a copy of
such certificate and (c) mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 26 hereof.  Notwithstanding the foregoing
sentence,  the  failure of the Company to make such  certification  or give such
notice shall not affect the validity of such  adjustment  or the force or effect
of the  requirement  for  such  adjustment.  The  Rights  Agent  shall  be fully
protected in relying on any such  certificate  and on any  adjustment  contained
therein and shall

                                      -22-
<PAGE>

not be deemed to have  knowledge  of such  adjustment  unless and until it shall
have received such certificate.

         Section  13.  Consolidation,  Merger or Sale or  Transfer  of Assets or
Earning Power.

                  (a) In the event that, following a Triggering Event,  directly
or indirectly:

                           (i) the Company shall consolidate with, or merge with
and into, any other Person (other than a wholly-owned  Subsidiary of the Company
in a  transaction  the  principal  purpose  of which is to  change  the state of
incorporation of the Company and which complies with Section 11(m) hereof);

                           (ii) any Person shall  consolidate  with the Company,
or merge with and into the Company and the Company  shall be the  continuing  or
surviving  corporation of such  consolidation  or merger and, in connection with
such merger, all or part of the Common Shares shall be changed into or exchanged
for stock or other securities of any other person (or the Company); or

                           (iii) the Company  shall sell or  otherwise  transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power aggregating 50% or more of the assets
or earning power of the Company and its  Subsidiaries  (taken as a whole) to any
other  Person or Persons  (other  than the  Company or one or more of its wholly
owned Subsidiaries in one or more transactions,  each of which individually (and
together) complies with Section 11(m) hereof),

                                 then, concurrent with and in each such case,

each  holder of a Right  (except as  provided  in  Section  7(e)  hereof)  shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the Total Exercise Price  applicable  immediately  prior to the occurrence of
the Section 13 Event in accordance with the terms of this Agreement, such number
of validly authorized and issued, fully paid, nonassessable and freely tradeable
Common  Shares of the  Principal  Party (as  hereinafter  defined),  free of any
liens,  encumbrances,  rights of first refusal or other adverse claims, as shall
be equal to the result  obtained by  dividing  such Total  Exercise  Price by an
amount equal to fifty percent (50%) of the Current Per Share Market Price of the
Common  Shares  of such  Principal  Party  on the date of  consummation  of such
Section 13 Event,  provided,  however, that the Exercise Price and the number of
Common Shares of such  Principal  Party so  receivable  upon exercise of a Right
shall be subject to further adjustment as appropriate in accordance with Section
11(e) hereof;

such Principal Party shall thereafter be liable for, and shall assume, by virtue
of such Section 13 Event, all the obligations and duties of the Company pursuant
to this Agreement;

the term "Company" shall  thereafter be deemed to refer to such Principal Party,
it being  specifically  intended that the  provisions of Section 11 hereof shall
apply only to such Principal Party  following the first  occurrence of a Section
13 Event;

                                      -23-

<PAGE>

such Principal Party shall take such steps  (including,  but not limited to, the
reservation of a sufficient  number of its Common Shares) in connection with the
consummation  of any such  transaction  as may be  necessary  to ensure that the
provisions  hereof shall  thereafter be applicable,  as nearly as reasonably may
be, in relation to its Common Shares thereafter deliverable upon the exercise of
the Rights; and

upon the subsequent occurrence of any consolidation, merger, sale or transfer of
assets or other  extraordinary  transaction in respect of such Principal  Party,
each holder of a Right shall thereupon be entitled to receive,  upon exercise of
a Right and payment of the Total  Exercise  Price as  provided  in this  Section
13(a), such cash, shares, rights,  warrants and other property which such holder
would  have  been  entitled  to  receive  had such  holder,  at the time of such
transaction,  owned the Common Shares of the Principal Party receivable upon the
exercise of such Right pursuant to this Section 13(a),  and such Principal Party
shall take such steps (including,  but not limited to,  reservation of shares of
stock) as may be  necessary to permit the  subsequent  exercise of the Rights in
accordance  with the terms hereof for such cash,  shares,  rights,  warrants and
other property.

For purposes  hereof,  the "earning  power" of the Company and its  Subsidiaries
shall be  determined  in good faith by the  Company's  Board of Directors on the
basis of the operating  income of each business  operated by the Company and its
Subsidiaries   during  the  three  fiscal  years  preceding  the  date  of  such
determination  (or, in the case of any  business  not operated by the Company or
any Subsidiary  during three full fiscal years  preceding such date,  during the
period such business was operated by the Company or any Subsidiary).

                  (b) For purposes of this Agreement, the term "Principal Party"
shall mean:

                           (i)  in the  case  of any  transaction  described  in
clause (i) or (ii) of Section 13(a) hereof: (A) the Person that is the issuer of
the  securities  into which the Common  Shares are  converted  in such merger or
consolidation,  or, if there is more than one such issuer, the issuer the Common
Shares of which have the greatest aggregate market value of shares  outstanding,
or (B) if no securities are so issued, (x) the Person that is the other party to
the merger,  if such Person survives said merger,  or, if there is more than one
such Person,  the Person the Common Shares of which have the greatest  aggregate
market value of shares  outstanding or (y) if the Person that is the other party
to the merger  does not survive  the  merger,  the Person that does  survive the
merger  (including the Company if it survives) or (z) the Person  resulting from
the consolidation; and

                           (ii) in the  case  of any  transaction  described  in
clause (iii) of Section 13(a) hereof, the Person that is the party receiving the
greatest  portion of the assets or earning  power  transferred  pursuant to such
transaction or transactions, or, if more than one Person that is a party to such
transaction or  transactions  receives the same portion of the assets or earning
power so  transferred  and each such  portion  would,  were it not for the other
equal portions,  constitute the greatest  portion of the assets or earning power
so transferred, or if the Person receiving the greatest portion of the assets or
earning power cannot be  determined,  whichever of such Persons is the issuer of
Common Shares having the greatest aggregate market value of shares  outstanding;
provided,  however,  that in any such case  described  in the  foregoing  clause
(b)(i) or (b)(ii),  if the Common  Shares of such Person are not at such time or
have not been continuously  over the preceding  12-

                                      -24-

<PAGE>

month period  registered  under Section 12 of the Exchange Act, then (1) if such
Person is a direct or indirect Subsidiary of another Person the Common Shares of
which are and have been so registered, the term "Principal Party" shall refer to
such  other  Person,  or  (2)  if  such  Person  is a  Subsidiary,  directly  or
indirectly,  of more than one  Person,  the Common  Shares of which are and have
been so registered,  the term "Principal Party" shall refer to whichever of such
Persons is the issuer of Common  Shares  having the  greatest  aggregate  market
value of  shares  outstanding,  or (3) if such  Person  is  owned,  directly  or
indirectly, by a joint venture formed by two or more Persons that are not owned,
directly or  indirectly  by the same Person,  the rules set forth in clauses (1)
and (2)  above  shall  apply to each of the  owners  having an  interest  in the
venture as if the Person owned by the joint  venture was a Subsidiary of both or
all of such joint  venturers,  and the  Principal  Party in each such case shall
bear the  obligations  set forth in this  Section  13 in the same  ration as its
interest in such Person bears to the total of such interests.

                  (c) The  Company  shall not  consummate  any  Section 13 Event
unless the Principal Party shall have a sufficient  number of authorized  Common
Shares that have not been issued or reserved for issuance to permit the exercise
in full of the  Rights in  accordance  with this  Section  13 and  unless  prior
thereto the Company and such issuer  shall have  executed  and  delivered to the
Rights Agent a  supplemental  agreement  confirming  that such  Principal  Party
shall,  upon  consummation  of such Section 13 Event,  assume this  Agreement in
accordance  with  Sections  13(a) and  13(b)  hereof,  that all  rights of first
refusal or preemptive rights in respect of the issuance of Common Shares of such
Principal Party upon exercise of outstanding Rights have been waived, that there
are no rights, warrants, instruments or securities outstanding or any agreements
or  arrangements  which, as a result of the  consummation  of such  transaction,
would eliminate or substantially  diminish the benefits  intended to be afforded
by the  Rights and that such  transaction  shall not result in a default by such
Principal  Party under this  Agreement,  and further  providing that, as soon as
practicable after the date of such Section 13 Event, such Principal Party will:

                           (i) prepare and file a registration  statement  under
the  Securities  Act with respect to the Rights and the  securities  purchasable
upon  exercise of the Rights on an  appropriate  form,  use its best  efforts to
cause such  registration  statement to become  effective as soon as  practicable
after such filing and use its best efforts to cause such registration  statement
to remain  effective (with a prospectus at all times meeting the requirements of
the  Securities  Act) until the  Expiration  Date,  and  similarly  comply  with
applicable state securities laws;

                           (ii) use its best  efforts to list (or  continue  the
listing  of) the Rights and the  securities  purchasable  upon  exercise  of the
Rights on a national securities exchange or to meet the eligibility requirements
for quotation on Nasdaq and list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on Nasdaq; and

                           (iii)  deliver to  holders  of the Rights  historical
financial  statements for such Principal Party which comply in all respects with
the  requirements  for registration on Form 10 (or any successor form) under the
Exchange Act.

         In the event  that at any time  after the  occurrence  of a  Triggering
Event some or all of the Rights  shall not have been  exercised at the time of a
transaction  described in this Section 13, the

                                      -25-

<PAGE>

Rights which have not theretofore been exercised shall thereafter be exercisable
in the manner  described in Section 13(a) (without taking into account any prior
adjustment required by Section 11(a)(ii)).

                  (d) In case the  "Principal  Party"  for  purposes  of Section
13(b)  hereof  has  provision  in  any of its  authorized  securities  or in its
certificate  of  incorporation  or by-laws  or other  instrument  governing  its
corporate  affairs,  which  provision  would have the effect of (i) causing such
Principal Party to issue (other than to holders of Rights pursuant to Section 13
hereof),  in  connection  with, or as a consequence  of, the  consummation  of a
Section 13 Event,  Common Shares or Equivalent Shares of such Principal Party at
less  than the then  Current  Per  Share  Market  Price  thereof  or  securities
exercisable for, or convertible into, Common Shares or Equivalent Shares of such
Principal  Party at less than such then Current Per Share Market Price,  or (ii)
providing for any special payment,  tax or similar  provision in connection with
the  issuance  of the Common  Shares of such  Principal  Party  pursuant  to the
provisions of Section 13 hereof,  then, in such event, the Company hereby agrees
with each holder of Rights  that it shall not  consummate  any such  transaction
unless prior  thereto the Company and such  Principal  Party shall have executed
and delivered to the Rights Agent a  supplemental  agreement  providing that the
provision in question of such Principal  Party shall have been canceled,  waived
or amended,  or that the authorized  securities  shall be redeemed,  so that the
applicable  provision will have no effect in connection with or as a consequence
of, the consummation of the proposed transaction.

                  (e) The Company covenants and agrees that it shall not, at any
time  after the  Distribution  Date,  effect or permit to occur any  Section  13
Event,  if (i) at the time or immediately  after such Section 13 Event there are
any  rights,   warrants  or  other  instruments  or  securities  outstanding  or
agreements in effect which would  substantially  diminish or otherwise eliminate
the   benefits   intended  to  be  afforded  by  the  Rights,   (ii)  prior  to,
simultaneously with or immediately after such Section 13 Event, the stockholders
of the Person who constitutes,  or would  constitute,  the "Principal Party" for
purposes of Section  13(b) hereof shall have received a  distribution  of Rights
previously  owned by such Person or any of its Affiliates or Associates or (iii)
the form or nature of  organization  of the  Principal  Party would  preclude or
limit the exercisability of the Rights.

                  (f) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.

         Section 14. Fractional Rights and Fractional Shares.

                  (a) The Company  shall not be required to issue  fractions  of
Rights or to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Rights  Certificates  with  regard to which  such  fractional  Rights  would
otherwise  be  issuable,  an amount in cash  equal to the same  fraction  of the
current  market value of a whole Right.  For the purposes of this Section 14(a),
the current  market  value of a whole

                                      -26-

<PAGE>

Right shall be the closing  price of the Rights for the Trading Day  immediately
prior to the date on which such  fractional  Rights  would  have been  otherwise
issuable, as determined pursuant to the second sentence of Section 1(j) hereof.

                  (b) The Company  shall not be required to issue  fractions  of
Preferred  Shares  (other than  fractions  that are  integral  multiples  of one
one-thousandth  of a  Preferred  Share)  upon  exercise  of  the  Rights  or  to
distribute  certificates which evidence fractional  Preferred Shares (other than
fractions  that are  integral  multiples  of one  one-thousandth  of a Preferred
Share).  Interests in fractions of Preferred Shares in integral multiples of one
one-thousandth  of a Preferred  Share may, at the  election of the  Company,  be
evidenced by depositary receipts,  pursuant to an appropriate  agreement between
the Company and a depositary selected by it; provided, that such agreement shall
provide that the holders of such depositary  receipts shall have all the rights,
privileges and  preferences  to which they are entitled as beneficial  owners of
the  Preferred  Shares  represented  by  such  depositary  receipts.  In lieu of
fractional   Preferred   Shares  that  are  not   integral   multiples   of  one
one-thousandth  of a Preferred  Share,  the Company shall pay to the  registered
holders of Rights  Certificates  at the time such Rights are exercised as herein
provided  an amount in cash equal to the same  fraction  of the  current  market
value of a Preferred  Share.  For  purposes of this Section  14(b),  the current
market  value  of a  Preferred  Share  shall  be the  product  equal  to (x) one
thousandth  multiplied by (y) the closing price of a Common Share (as determined
pursuant  to the second  sentence  of Section  1(j)  hereof) for the Trading Day
immediately prior to the date of such exercise.

                  (c) The Company  shall not be required to issue  fractions  of
Common Shares or to distribute  certificates  which evidence  fractional  Common
Shares  upon the  exercise or  exchange  of Rights.  In lieu of such  fractional
Common  Shares,  the  Company  shall  pay to the  registered  holders  of Rights
Certificates  at the time such Rights are exercised as herein provided an amount
in cash  equal to the same  fraction  of the  current  market  value of a Common
Share.  For purposes of this Section 14(c), the current market value of a Common
Share shall be the closing  price of a Common Share (as  determined  pursuant to
the second  sentence of Section  1(j)  hereof)  for the Trading Day  immediately
prior to the date of such exercise.

                  (d) The  holder  of a Right  by the  acceptance  of the  Right
expressly  waives  his or her  right to  receive  any  fractional  Rights or any
fractional  shares  (other than  fractions  that are  integral  multiples of one
one-thousandth of a Preferred Share) upon exercise of a Right.

         Section 15.  Rights of Action.  All rights of action in respect of this
Agreement,  excepting the rights of action given to the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares);  and any registered holder of any Rights  Certificate (or, prior
to the  Distribution  Date,  of the Common  Shares),  without the consent of the
Rights Agent or of the holder of any other Rights  Certificate (or, prior to the
Distribution Date, of the Common Shares),  may, in his or her own behalf and for
his or her own benefit, enforce, and may institute and maintain any suit, action
or  proceeding  against the Company to enforce,  or otherwise act in respect of,
his or her right to exercise the Rights evidenced by such Rights  Certificate in
the manner provided in such

                                      -27-

<PAGE>

Rights Certificate and in this Agreement.  Without limiting the foregoing or any
remedies  available to the holders of Rights,  it is  specifically  acknowledged
that the  holders  of Rights  would not have an  adequate  remedy at law for any
breach of this  Agreement  and will be entitled to specific  performance  of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.

         Section 16.  Agreement of Rights  Holders.  Every holder of a Right, by
accepting  the same,  consents  and agrees with the Company and the Rights Agent
and with every other holder of a Right that:

                  (a)  prior  to the  Distribution  Date,  the  Rights  will  be
transferable only in connection with the transfer of the Common Shares;

                  (b) after the Distribution  Date, the Rights  Certificates are
transferable  only on the registry  books of the Rights Agent if  surrendered at
the  principal  office  or  offices  of the  Rights  Agent  designated  for such
purposes,  duly endorsed or accompanied  by a proper  instrument of transfer and
with the appropriate forms and certificates fully executed; and

                  (c) subject to Sections 6(a) and 7(f) hereof,  the Company and
the  Rights  Agent  may deem and  treat  the  person  in whose  name the  Rights
Certificate  (or, prior to the Distribution  Date, the associated  Common Shares
certificate)  is  registered  as the  absolute  owner  thereof and of the Rights
evidenced thereby  (notwithstanding any notations of ownership or writing on the
Rights  Certificates or the associated Common Shares  certificate made by anyone
other than the Company or the Rights  Agent) for all  purposes  whatsoever,  and
neither the Company nor the Rights  Agent shall be affected by any notice to the
contrary.

         Section 17.  Rights  Certificate  Holder Not Deemed a  Stockholder.  No
holder, as such, of any Rights  Certificate  shall be entitled to vote,  receive
dividends or be deemed for any purpose to be the holder of the Preferred  Shares
or any other  securities of the Company which may at any time be issuable on the
exercise of the Rights represented  thereby, nor shall anything contained herein
or in any  Rights  Certificate  be  construed  to confer  upon the holder of any
Rights  Certificate,  as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter  submitted
to stockholders at any meeting  thereof,  or to give or withhold  consent to any
corporate  action,  or to receive notice of meetings or other actions  affecting
stockholders  (except as  specifically  provided  in Section 25  hereof),  or to
receive  dividends or  subscription  rights,  or  otherwise,  until the Right or
Rights  evidenced  by such  Rights  Certificate  shall  have been  exercised  in
accordance with the provisions hereof.

         Section 18. Concerning the Rights Agent.

                  (a) The Company  agrees to pay to the Rights Agent  reasonable
compensation  for all services  rendered by it hereunder and, from time to time,
on demand of the Rights  Agent,  its  reasonable  expenses  and counsel fees and
other  disbursements  incurred  in the  administration  and

                                      -28-

<PAGE>

execution  of this  Agreement  and the exercise  and  performance  of its duties
hereunder.  The Company  also agrees to  indemnify  the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without gross
negligence,  bad faith or willful misconduct as finally determined by a court of
competent  jurisdiction  on the part of the Rights Agent,  for any action taken,
suffered,  or omitted by the Rights Agent in connection  with the acceptance and
administration of this Agreement,  including the costs and expenses of defending
against  any claim of  liability  in the  premises.  In no event will the Rights
Agent be liable for special,  punitive,  indirect,  incidental or  consequential
loss or damage of any kind whatsoever, even if the Rights Agent has been advised
of the possibility of such loss or damage.

                  (b) The Rights  Agent  shall be  protected  and shall incur no
liability  for, or in respect of any action taken,  suffered or omitted by it in
connection  with,  its  administration  of this  Agreement in reliance  upon any
Rights  Certificate or certificate for the Preferred  Shares or Common Shares or
for other securities of the Company, instrument of assignment or transfer, power
of  attorney,  endorsement,   affidavit,  letter,  notice,  direction,  consent,
certificate,  statement or other paper or document  believed by it to be genuine
and to be signed,  executed and, where necessary,  verified or acknowledged,  by
the proper  Person or Persons,  or  otherwise  upon the advice of counsel as set
forth in Section 20 hereof.

         Section 19. Merger or Consolidation or Change of Name of Rights Agent.

                  (a)  Any  corporation  into  which  the  Rights  Agent  or any
successor  Rights Agent may be merged or with which it may be  consolidated,  or
any corporation  resulting from any merger or  consolidation to which the Rights
Agent  or any  successor  Rights  Agent  shall be a  party,  or any  corporation
succeeding to the corporate  trust business of the Rights Agent or any successor
Rights Agent,  shall be the  successor to the Rights Agent under this  Agreement
without the  execution  or filing of any paper or any further act on the part of
any of the parties hereto;  provided,  however,  that such corporation  would be
eligible for  appointment  as a successor  Rights Agent under the  provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement,  any of the Rights  Certificates  shall
have been  countersigned but not delivered,  any such successor Rights Agent may
adopt the  countersignature  of the  predecessor  Rights  Agent and deliver such
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been  countersigned,  any successor Rights Agent may
countersign  such  Rights  Certificates  either  in the name of the  predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such  Rights  Certificates  shall  have the full  force  provided  in the Rights
Certificates and in this Agreement.

                  (b) In case at any time the name of the Rights  Agent shall be
changed  and at  such  time  any of the  Rights  Certificates  shall  have  been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights  Certificates so  countersigned;  and in
case  at  that  time  any  of  the  Rights  Certificates  shall  not  have  been
countersigned,  the Rights Agent may countersign such Rights Certificates either
in its prior name or

                                      -29-

<PAGE>

in its changed name; and in all such cases such Rights  Certificates  shall have
the full force provided in the Rights Certificates and in this Agreement.

         Section 20. Duties of Rights  Agent.  The Rights Agent  undertakes  the
duties and  obligations  imposed by this Agreement upon the following  terms and
conditions,  by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:

                  (a) The Rights Agent may consult  with legal  counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete  authorization  and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance  with such  opinion.  (b)
Whenever in the  performance of its duties under this Agreement the Rights Agent
shall deem it necessary or desirable that any fact or matter (including, without
limitation,  the  identity  of any  Acquiring  Person and the  determination  of
Current Per Share Market Price) be proved or established by the Company prior to
taking or suffering  any action  hereunder,  such fact or matter  (unless  other
evidence in respect thereof be herein specifically  prescribed) may be deemed to
be conclusively proved and established by a certificate signed by any one of the
Chairman of the Board,  the Chief  Executive  Officer,  the President,  any Vice
President, the Chief Financial Officer, the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; and such certificate  shall be
full  authorization to the Rights Agent for any action taken or suffered in good
faith by it under  the  provisions  of this  Agreement  in  reliance  upon  such
certificate.

                  (c) The Rights Agent shall be liable  hereunder to the Company
and any other  Person  only for its own gross  negligence,  bad faith or willful
misconduct.

                  (d) The Rights  Agent  shall not be liable for or by reason of
any of the statements of fact or recitals  contained in this Agreement or in the
Rights  Certificates  (except  its  countersignature  thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.

                  (e) The Rights Agent shall not be under any  responsibility in
respect of the validity of this  Agreement or the execution and delivery  hereof
(except  the due  execution  hereof by the  Rights  Agent) or in  respect of the
validity or execution  of any Rights  Certificate  (except its  countersignature
thereof);  nor shall it be  responsible  for any  breach by the  Company  of any
covenant or condition  contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change in the  exercisability  of the Rights
or any adjustment in the terms of the Rights  (including  the manner,  method or
amount  thereof)  provided  for  in  Sections  3,  11,  13,  23 or  24,  or  the
ascertaining  of the  existence  of facts that would  require any such change or
adjustment  (except with  respect to the exercise of Rights  evidenced by Rights
Certificates  after  receipt  by the  Rights  Agent of a  certificate  furnished
pursuant to Section 12 describing  such change or  adjustment);  nor shall it by

                                      -30-

<PAGE>

any act  hereunder  be deemed to make any  representation  or warranty as to the
authorization  or reservation of any Preferred  Shares to be issued  pursuant to
this Agreement or any Rights  Certificate or as to whether any Preferred  Shares
will,  when  issued,   be  validly   authorized  and  issued,   fully  paid  and
nonassessable.

                  (f)  The  Company  agrees  that  it  will  perform,   execute,
acknowledge  and deliver or cause to be performed,  executed,  acknowledged  and
delivered  all such further and other acts,  instruments  and  assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.

                  (g) The Rights  Agent is hereby  authorized  and  directed  to
accept instructions with respect to the performance of its duties hereunder from
any  one  of the  Chairman  of the  Board,  the  Chief  Executive  Officer,  the
President, any Vice President, the Chief Financial Officer, the Secretary or any
Assistant Secretary of the Company,  and to apply to such officers for advice or
instructions in connection  with its duties,  and it shall not be liable for any
action taken or suffered by it in good faith in accordance with  instructions of
any  such  officer  or  for  any  delay  in  acting  while   waiting  for  those
instructions.  Any application by the Rights Agent for written instructions from
the  Company  may, at the option of the Rights  Agent,  set forth in writing any
action  proposed  to be taken or omitted by the  Rights  Agent  under this Third
Amended and Restated  Rights  Agreement  and the date on and/or after which such
action  shall be taken or such  omission  shall be  effective.  The Rights Agent
shall not be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified  in such  application  (which  date  shall  not be less  than five (5)
Business  Days  after  the date on which any  officer  of the  Company  actually
receives  such  application,  unless any such  officer  shall have  consented in
writing  to an earlier  date)  unless,  prior to taking any such  action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.

                  (h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the  Company  may be  interested,  or  contract  with or lend money to the
Company or otherwise  act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.

                  (i) The  Rights  Agent may  execute  and  exercise  any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through  its  attorneys  or agents,  and the Rights  Agent shall not be
answerable or  accountable  for any act,  default,  neglect or misconduct of any
such attorneys or agents or for any loss to the Company  resulting from any such

                                      -31-

<PAGE>

act, default,  neglect or misconduct,  provided reasonable care was exercised in
the selection and continued employment thereof.

                  (j) No provision of this  Agreement  shall  require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the  performance  of any of its duties  hereunder  or in the  exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds  or  adequate  indemnification  against  such  risk  or  liability  is not
reasonably assured to it.

                  (k) If, with respect to any Rights Certificate  surrendered to
the Rights Agent for exercise or transfer,  the certificate attached to the form
of  assignment  or form of election to purchase,  as the case may be, has either
not been  completed or indicates  an  affirmative  response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.

         Section 21. Change of Rights  Agent.  The Rights Agent or any successor
Rights Agent may resign and be discharged  from its duties under this  Agreement
upon  thirty  (30) days'  notice in writing  mailed to the  Company  and to each
transfer  agent of the  Preferred  Shares and the Common Shares by registered or
certified  mail,  and to the holders of the Rights  Certificates  by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days'  notice in writing,  mailed to the Rights  Agent or  successor
Rights Agent,  as the case may be, and to each  transfer  agent of the Preferred
Shares and the Common Shares by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become  incapable of acting,  the Company shall
appoint a successor to the Rights Agent.  If the Company shall fail to make such
appointment  within a period of thirty  (30) days  after  giving  notice of such
removal  or  after  it has been  notified  in  writing  of such  resignation  or
incapacity by the resigning or incapacitated  Rights Agent or by the holder of a
Rights  Certificate  (who  shall,  with such  notice,  submit  his or her Rights
Certificate  for inspection by the Company),  then the registered  holder of any
Rights  Certificate  may apply to any court of  competent  jurisdiction  for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court,  shall be a  corporation  organized and doing
business  under the laws of the  United  States  or of any  state of the  United
States,  in good  standing,  which is  authorized  under  such laws to  exercise
corporate trust or stockholder  services powers and is subject to supervision or
examination  by  federal  or state  authority  and  which has at the time of its
appointment  as Rights  Agent a combined  capital  and  surplus of at least $100
million. After appointment,  the successor Rights Agent shall be vested with the
same powers,  rights,  duties and  responsibilities as if it had been originally
named as Rights Agent without  further act or deed; but the  predecessor  Rights
Agent shall deliver and transfer to the  successor  Rights Agent any property at
the time held by it  hereunder,  and execute and deliver any further  assurance,
conveyance,  act or deed necessary for the purpose. Not later than the effective
date of any such  appointment,  the Company shall file notice thereof in writing
with the  predecessor  Rights  Agent and each  transfer  agent of the  Preferred
Shares  and the  Common  Shares,  and mail a notice  thereof  in  writing to the
registered  holders  of the  Rights

                                      -32-

<PAGE>

Certificates.  Failure  to give any  notice  provided  for in this  Section  21,
however, or any defect therein, shall not affect the legality or validity of the
resignation  or removal of the Rights Agent or the  appointment of the successor
Rights Agent, as the case may be.

         Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this  Agreement or of the Rights to the contrary,  the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the  Exercise  Price  and the  number  or kind or  class of  shares  or other
securities  or  property  purchasable  under  the  Rights  Certificates  made in
accordance  with the provisions of this  Agreement.  In addition,  in connection
with the issuance or sale of Common Shares following the  Distribution  Date and
prior to the redemption or expiration of the Rights, the Company (a) shall, with
respect to Common  Shares so issued or sold  pursuant  to the  exercise of stock
options  or  under  any  employee  plan or  arrangement  or upon  the  exercise,
conversion  or exchange of other  securities of the Company  outstanding  at the
date  hereof  or  upon  the  exercise,  conversion  or  exchange  of  securities
hereinafter  issued by the Company  and (b) may,  in any other  case,  if deemed
necessary or appropriate by the Board of Directors of the Company,  issue Rights
Certificates  representing  the appropriate  number of Rights in connection with
such issuance or sale;  provided,  however,  that (i) no such Rights Certificate
shall be issued  and this  sentence  shall be null and void ab initio if, and to
the extent that, such issuance or this sentence would create a significant  risk
of or result in material  adverse tax  consequences to the Company or the Person
to whom such Rights  Certificate  would be issued or would create a  significant
risk of or result in such options' or employee plans' or  arrangements'  failing
to qualify for otherwise available special tax treatment and (ii) no such Rights
Certificate shall be issued if, and to the extent that,  appropriate  adjustment
shall otherwise have been made in lieu of the issuance thereof.

         Section 23. Redemption.

                  (a) The Company  may,  at its option and with the  approval of
the  Board of  Directors,  at any time  prior to the  Close of  Business  on the
earlier  of (i) the fifth day  following  the Shares  Acquisition  Date (or such
later date as may be determined  by action of the  Company's  Board of Directors
and  publicly  announced by the  Company)  and (ii) the Final  Expiration  Date,
redeem  all but not less than all the then  outstanding  Rights at a  redemption
price of $0. 001 per Right,  appropriately  adjusted to reflect any stock split,
stock  dividend or similar  transaction  occurring  after the date hereof  (such
redemption  price being herein  referred to as the  "Redemption  Price") and the
Company may, at its option,  pay the  Redemption  Price either in Common  Shares
(based on the Current Per Share Market Price thereof at the time of  redemption)
or cash.  Such  redemption of the Rights by the Company may be made effective at
such time,  on such basis and with such  conditions as the Board of Directors in
its sole  discretion  may  establish.  The date on which the Board of  Directors
elects to make the redemption  effective shall be referred to as the "Redemption
Date."

                  (b)  Immediately  upon the action of the Board of Directors of
the Company ordering the redemption of the Rights,  evidence of which shall have
been filed with the Rights Agent, and without any further action and without any
notice,  the right to  exercise  the Rights  will  terminate  and the only right
thereafter  of the holders of Rights shall be to receive the  Redemption

                                      -33-

<PAGE>

Price.  The Company shall  promptly  give public notice of any such  redemption;
provided,  however,  that the failure to give, or any defect in, any such notice
shall not affect the validity of such redemption. Within ten (10) days after the
action of the Board of Directors  ordering  the  redemption  of the Rights,  the
Company shall give notice of such redemption to the Rights Agent and the holders
of the then  outstanding  Rights by mailing  such notice to all such  holders at
their last  addresses as they appear upon the registry books of the Rights Agent
or, prior to the Distribution  Date, on the registry books of the transfer agent
for the Common Shares.  Any notice which is mailed in the manner herein provided
shall be deemed given,  whether or not the holder receives the notice. Each such
notice  of  redemption  will  state  the  method  by which  the  payment  of the
Redemption Price will be made.  Neither the Company nor any of its Affiliates or
Associates  may redeem,  acquire or purchase for value any Rights at any time in
any  manner  other  than that  specifically  set forth in this  Section 23 or in
Section 24 hereof,  and other than in  connection  with the  purchase  of Common
Shares prior to the Distribution Date.

         Section 24. Exchange.

                  (a) Subject to applicable  laws,  rules and  regulations,  and
subject to subsection 24(c) below, the Company may, at its option,  by action of
the Board of Directors,  at any time after the occurrence of a Triggering Event,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include  Rights that have become void pursuant to the  provisions of Section
7(e)  hereof)  for Common  Shares at an exchange  ratio of one Common  Share per
Right,  appropriately  adjusted to reflect any stock  split,  stock  dividend or
similar  transaction  occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors  shall not be  empowered  to effect such  exchange at any
time after any Person  (other than the Company,  any  Subsidiary of the Company,
any employee benefit plan of the Company or any such  Subsidiary,  or any entity
holding  Common Shares for or pursuant to the terms of any such plan),  together
with all Affiliates and Associates of such Person,  becomes the Beneficial Owner
of 50% or more of the Common Shares then outstanding.

                  (b)  Immediately  upon the  action of the  Board of  Directors
ordering the exchange of any Rights pursuant to subsection 24(a) of this Section
24 and without any further action and without any notice,  the right to exercise
such Rights shall  terminate  and the only right  thereafter of a holder of such
Rights shall be to receive  that number of Common  Shares equal to the number of
such Rights held by such holder  multiplied by the Exchange  Ratio.  The Company
shall give  public  notice of any such  exchange;  provided,  however,  that the
failure to give,  or any defect in, such notice shall not affect the validity of
such  exchange.  The Company  shall mail a notice of any such exchange to all of
the  holders of such  Rights at their last  addresses  as they  appear  upon the
registry  books of the Rights  Agent.  Any notice  which is mailed in the manner
herein  provided shall be deemed given,  whether or not the holder  receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common  Shares  for  Rights  will be  effected  and,  in the event of any
partial  exchange,  the number of Rights  which will be  exchanged.  Any partial
exchange  shall be

                                      -34-

<PAGE>

effected  pro rata based on the number of Rights  (other than Rights  which have
become void  pursuant to the  provisions  of Section  7(e)  hereof) held by each
holder of Rights.

                  (c) In the event that  there  shall not be  sufficient  Common
Shares  issued but not  outstanding  or  authorized  but  unissued to permit any
exchange of Rights as contemplated in accordance with Section 24(a), the Company
shall either take such action as may be necessary to authorize additional Common
Shares for issuance upon exchange of the Rights or alternatively,  at the option
of a majority of the Board of Directors, with respect to each Right (i) pay cash
in an amount equal to the Current  Value (as  hereinafter  defined),  in lieu of
issuing  Common  Shares  in  exchange  therefor,  or (ii)  issue  debt or equity
securities or a combination thereof,  having a value equal to the Current Value,
in lieu of issuing  Common  Shares in exchange  for each such  Right,  where the
value  of  such  securities  shall  be  determined  by a  nationally  recognized
investment banking firm selected by majority vote of the Board of Directors,  or
(iii)  deliver any  combination  of cash,  property,  Common Shares and/or other
securities having a value equal to the Current Value in exchange for each Right.
For  purposes  of this  Section  24(c) only,  the  Current  Value shall mean the
product of the Current Per Share  Market  Price of Common  Shares on the date of
the occurrence of the event described above in subparagraph  (a),  multiplied by
the number of Common Shares for which the Right  otherwise would be exchangeable
if there  were  sufficient  shares  available.  To the extent  that the  Company
determines that some action need be taken pursuant to clauses (i), (ii) or (iii)
of this  Section  24(c),  the Board of  Directors  may  temporarily  suspend the
exercisability of the Rights for a period of up to sixty (60) days following the
date on which the event described in Section 24(a) shall have occurred, in order
to seek any  authorization  of  additional  Common  Shares  and/or to decide the
appropriate  form of distribution to be made pursuant to the above provision and
to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement  stating that the exercisability of the Rights
has been temporarily suspended.

                  (d) The Company  shall not be required to issue  fractions  of
Common Shares or to distribute  certificates  which evidence  fractional  Common
Shares.  In lieu of such  fractional  Common Shares,  there shall be paid to the
registered  holders  of the  Rights  Certificates  with  regard  to  which  such
fractional Common Shares would otherwise be issuable, an amount in cash equal to
the same  fraction  of the  current  market  value of a whole  Common  Share (as
determined pursuant to the second sentence of Section 1(j) hereof).

                  (e) The Company  may, at its option,  by majority  vote of the
Board of  Directors,  at any time  before any  Person  has  become an  Acquiring
Person,  exchange  all or part of the then  outstanding  Rights  for  rights  of
substantially  equivalent value, as determined reasonably and with good faith by
the  Board  of  Directors  based  upon  the  advice  of one or  more  nationally
recognized investment banking firms.

                  (f)  Immediately  upon the  action of the  Board of  Directors
ordering the exchange of any Rights pursuant to subsection 24(e) of this Section
24 and without any further action and without any notice,  the right to exercise
such Rights shall  terminate  and the only right  thereafter of a

                                      -35-

<PAGE>

holder of such  Rights  shall be to receive  that  number of rights in  exchange
therefor as has been  determined  by the Board of Directors in  accordance  with
subsection  24(e)  above.  The  Company  shall  give  public  notice of any such
exchange;  provided,  however,  that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange.  The Company shall mail a
notice of any such  exchange  to all of the holders of such Rights at their last
addresses as they appear upon the registry  books of the transfer  agent for the
Common  Shares of the Company.  Any notice which is mailed in the manner  herein
provided shall be deemed given,  whether or not the holder  receives the notice.
Each such notice of exchange  will state the method by which the exchange of the
Rights will be effected.

         Section 25. Notice of Certain Events.

                  (a) In case the Company  shall  propose to effect or permit to
occur any  Triggering  Event or Section 13 Event,  the Company shall give notice
thereof to each holder of Rights in  accordance  with Section 26 hereof at least
twenty (20) days prior to occurrence of such Triggering Event or such Section 13
Event.

                  (b) In case any  Triggering  Event or Section  13 Event  shall
occur,  then,  in any  such  case,  the  Company  shall  as soon as  practicable
thereafter  give to each  holder of a Rights  Certificate,  in  accordance  with
Section 26 hereof, a notice of the occurrence of such event, which shall specify
the event and the  consequences of the event to holders of Rights under Sections
11(a)(ii) and 13 hereof.

         Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights  Certificate
to or on the Company shall be sufficiently  given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:

                          Spectrian Corporation
                          350 West Jave Drive
                          Sunnyvale, CA 94089
                          Attention: Thomas H. Waechter

         Subject to the  provisions  of Section 21 hereof,  any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Rights  Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail,  postage prepaid,  addressed (until another
address is filed in writing with the Company) as follows:

                                      -36-

<PAGE>

                          MELLON INVESTOR SERVICES, LLC
                          50 California Street, 10th Floor
                          San Francisco, California 94111
                          Attention:  Relationship Manager

Notices  or  demands  authorized  by this  Agreement  to be given or made by the
Company or the Rights  Agent to the  holder of any Rights  Certificate  shall be
sufficiently  given  or  made  if sent by  first-class  mail,  postage  prepaid,
addressed  to such holder at the address of such holder as shown on the registry
books of the Company.

         Section 27.  Supplements and  Amendments.  Prior to the occurrence of a
Distribution  Date,  the Company may  supplement or amend this  Agreement in any
respect  without  the  approval  of any  holders of Rights and the Rights  Agent
shall, if the Company so directs, execute such supplement or amendment. From and
after the  occurrence of a  Distribution  Date, the Company and the Rights Agent
may from time to time supplement or amend this Agreement without the approval of
any  holders  of  Rights in order to (i) cure any  ambiguity,  (ii)  correct  or
supplement any provision contained herein which may be defective or inconsistent
with any other  provisions  herein,  (iii)  shorten or lengthen  any time period
hereunder or (iv) to change or supplement the provisions hereunder in any manner
that the Company may deem  necessary or desirable  and that shall not  adversely
affect the interests of the holders of Rights (other than an Acquiring Person or
an Affiliate or Associate of an Acquiring Person);  provided, this Agreement may
not be  supplemented  or amended to  lengthen,  pursuant to clause (iii) of this
sentence,  (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then  redeemable  or (B) any other time period unless
such  lengthening is for the purpose of protecting,  enhancing or clarifying the
rights  of,  and/or  the  benefits  to, the  holders  of Rights  (other  than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).  Upon the
delivery of a certificate from an appropriate officer of the Company that states
that the proposed  supplement  or amendment is in  compliance  with the terms of
this Section 27, the Rights Agent shall  execute such  supplement  or amendment.
Prior to the Distribution  Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Shares.

         Section  28.  Successors.  All the  covenants  and  provisions  of this
Agreement  by or for the benefit of the  Company or the Rights  Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

         Section 29. Determinations and Actions by the Board of Directors,  etc.
For all  purposes of this  Agreement,  any  calculation  of the number of Common
Shares outstanding at any particular time, including for purposes of determining
the particular  percentage of such outstanding Common Shares of which any Person
is the Beneficial  Owner,  shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.
The  Board of  Directors  of the  Company  shall  have the  exclusive  power and
authority to  administer  this  Agreement  and to exercise all rights and powers
specifically  granted to the Board,  or the  Company,  or as may be necessary or
advisable  in  the   administration  of  this  Agreement,   including,   without
limitation,  the  right  and  power  (i) to  interpret  the  provisions  of this
Agreement and (ii) to make all determinations

                                      -37-

<PAGE>

deemed  necessary  or  advisable  for  the   administration  of  this  Agreement
(including  a  determination  to redeem or not redeem the Rights or to amend the
Agreement). All such actions,  calculations,  interpretations and determinations
(including,  for purposes of clause (y) below, all omissions with respect to the
foregoing)  which  are done or made by the  Board in good  faith,  shall  (x) be
final,  conclusive and binding on the Company,  the Rights Agent, the holders of
the Rights  Certificates  and all other parties and (y) not subject the Board or
the Continuing Directors to any liability to the holders of the Rights.

         Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company,  the Rights Agent and
the  registered   holders  of  the  Rights   Certificates  (and,  prior  to  the
Distribution  Date, the Common Shares) any legal or equitable  right,  remedy or
claim pursuant to this  Agreement;  but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the  Rights  Certificates  (and,  prior to the  Distribution  Date,  the  Common
Shares).

         Section  31.  Severability.   If  any  term,  provision,   covenant  or
restriction  of this Agreement is held by a court of competent  jurisdiction  or
other  authority  to be invalid,  void or  unenforceable,  the  remainder of the
terms, provisions,  covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected,  impaired or invalidated;
provided,  however,  that  notwithstanding  anything  in this  Agreement  to the
contrary, if any such term,  provision,  covenant or restriction is held by such
court  or  authority  to be  invalid,  void or  unenforceable  and the  Board of
Directors of the Company determines in its good faith judgment that severing the
invalid  language  from this  Agreement  would  adversely  affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be  reinstated  and shall not expire  until the Close of  Business  on the
tenth day following the date of such determination by the Board of Directors.

         Section  32.  Governing  Law.  This  Agreement  and each Right and each
Rights  Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes  shall be governed by and
construed in accordance  with the laws of such State  applicable to contracts to
be made and performed entirely within such State.

         Section 33. Counterparts.  This Agreement may be executed in any number
of counterparts and each of such  counterparts  shall for all purposes be deemed
to be an original,  and all such counterparts shall together  constitute but one
and the same instrument.

         Section 34. Descriptive  Headings.  Descriptive headings of the several
Sections of this  Agreement  are  inserted  for  convenience  only and shall not
control or affect the meaning or construction of any of the provisions hereof.

                                      -38-

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

"COMPANY"                            Spectrian Corporation

                                     By: /s/ Michael D. Angel
                                         --------------------------------

                                     Name: Michael D. Angel
                                           ------------------------------

                                     Title:  Executive Vice President and
                                             ----------------------------
                                           Administrator, Chief Financial
                                           Officer and Secretary

"RIGHTS AGENT"                       MELLON INVESTOR SERVICES LLC

                                     By: /s/ William A. Dougherty
                                         --------------------------------

                                     Name: William A. Dougherty
                                           ------------------------------

                                     Title: Assistant Vice President
                                            -----------------------------

                                      -39-

<PAGE>

                                    EXHIBIT A

                          CERTIFICATE OF INCORPORATION

                                       OF

                              SPECTRIAN CORPORATION

         FIRST:  The  name of the  Corporation  is  Spectrian  Corporation  (the
"Corporation").

         SECOND: The address of the Corporation's registered office in the State
of Delaware is  Corporation  Trust Center,  1209 Orange  Street,  in the City of
Wilmington,  County of New Castle,  zip code 19801.  The name of its  registered
agent at such address is The Corporation Trust Company.

         THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which  corporations may be organized under the General  Corporation
Law of Delaware.

         FOURTH:  The Corporation is authorized to issue two classes of stock to
be designated respectively Common Stock and Preferred Stock. The total number of
shares of all classes of stock which the  Corporation  has authority to issue is
Twenty-five  Million  (25,000,000),  consisting of Twenty  Million  (20,000,000)
shares of Common Stock, $0.001 par value (the "Common Stock"),  and Five Million
(5,000,000) shares of Preferred Stock, $0.001 par value (the "Preferred Stock").
Of the authorized  shares of Preferred  Stock,  Twenty Thousand  (20,000) shares
shall be designated "Series A Participating Preferred Stock" (sometimes referred
to herein as "Series A Preferred").

         The  Preferred  Stock  may be  issued  from time to time in one or more
series.  The Board of  Directors  is hereby  authorized  subject to  limitations
prescribed by law, to fix by resolution or resolutions the designations, powers,
preferences  and rights,  and the  qualifications,  limitations or  restrictions
thereof,  of each such series of Preferred Stock,  including without  limitation
authority to fix by resolution or  resolutions,  the dividend  rights,  dividend
rate,   conversion  rights,  voting  rights,  rights  and  terms  of  redemption
(including sinking fund provisions), redemption price or prices, and liquidation
preferences of any wholly unissued series of Preferred  Stock, and the number of
shares  constituting any such series and the designation  thereof, or any of the
foregoing.

         The Board of Directors is further authorized to increase (but not above
the total number of  authorized  shares of the class) or decrease (but not below
the number of shares of any such series then  outstanding)  the number of shares
of any series,  the number of which was fixed by it,  subsequent to the issue of
shares of such series then outstanding,  subject to the powers,  preferences and
rights, and the qualifications,  limitations and restrictions  thereof stated in
the resolution of the Board of Directors  originally fixing the number of shares
of such series. If the number of shares of any series is so decreased,  then the
shares  constituting  such decrease shall resume the status which they had prior
to the adoption of the resolution originally fixing the number of shares of such
series.

<PAGE>

         The relative rights, preferences,  privileges, and restrictions granted
to or imposed  upon the Common  Stock,  the Series A  Preferred  and the holders
thereof (collectively, the "Stockholders") are as follows:

         Section 1. Dividends and Distributions.

                  (a) Subject to the prior and superior  right of the holders of
any shares of any series of Preferred  Stock  ranking  prior and superior to the
shares of Series A Participating Preferred Stock with respect to dividends,  the
holders of shares of Series A Participating Preferred Stock shall be entitled to
receive  when, as and if declared by the Board of Directors out of funds legally
available for the purpose,  quarterly  dividends payable in cash on the last day
of January,  April, July and October in each year (each such date being referred
to herein as a  "Quarterly  Dividend  Payment  Date"),  commencing  on the first
Quarterly  Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A  Participating  Preferred  Stock,  in an amount per share
(rounded to the nearest cent) equal to,  subject to the provision for adjustment
hereinafter  set forth,  1,000 times the  aggregate per share amount of all cash
dividends,  and 1,000 times the aggregate per share amount  (payable in kind) of
all non-cash dividends or other  distributions  other than a dividend payable in
shares of Common  Stock or a  subdivision  of the  outstanding  shares of Common
Stock (by  reclassification  or otherwise),  declared on the Common Stock of the
Corporation  (the "Common  Stock")  since the  immediately  preceding  Quarterly
Dividend Payment Date, or, with respect to the first Quarterly  Dividend Payment
Date,  since the first  issuance of any share or fraction of a share of Series A
Participating  Preferred  Stock. In the event the Corporation  shall at any time
after October 23, 1996 (the "Rights Dividend  Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock,  (ii)  subdivide the
outstanding  Common Stock, or (iii) combine the outstanding  Common Stock into a
smaller number of shares,  then in each such case the amount to which holders of
shares of Series A Participating Preferred Stock were entitled immediately prior
to such event under the preceding sentence shall be adjusted by multiplying such
amount by a fraction,  the  numerator of which is the number of shares of Common
Stock  outstanding  immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding  immediately prior to
such event.

                  (b) The  Corporation  shall declare a dividend or distribution
on the Series A Participating Preferred Stock as provided in paragraph (a) above
immediately  after it declares a dividend or  distribution  on the Common  Stock
(other than a dividend payable in shares of Common Stock).

                  (c) Dividends  shall begin to accrue on outstanding  shares of
Series A Participating  Preferred Stock from the Quarterly Dividend Payment Date
next  preceding  the date of  issue of such  shares  of  Series A  Participating
Preferred Stock,  unless the date of issue of such shares is prior to the record
date for the first Quarterly  Dividend  Payment Date, in which case dividends on
such  shares  shall begin to accrue  from the date of issue of such  shares,  or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the  record  date  for the  determination  of  holders  of  shares  of  Series A
Participating  Preferred  Stock  entitled  to receive a quarterly  dividend  and
before such  Quarterly  Dividend  Payment  Date,  in either of which events such
dividends  shall  begin to accrue

                                      -2-

<PAGE>

from such Quarterly  Dividend  Payment Date.  Accrued but unpaid dividends shall
not bear  interest.  Dividends  paid on the  shares  of  Series A  Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time  accrued  and  payable  on such  shares  shall be  allocated  pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors  may fix a record date for the  determination  of holders of shares of
Series A Participating Preferred Stock entitled to receive payment of a dividend
or  distribution  declared  thereon,  which record date shall be no more than 30
days prior to the date fixed for the payment thereof.

         Section  2.  Voting   Rights.   The  holders  of  shares  of  Series  A
Participating Preferred Stock shall have the following voting rights:

                  (a) Subject to the provision for  adjustment  hereinafter  set
forth,  each share of Series A  Participating  Preferred Stock shall entitle the
holder  thereof  to  1,000  votes  on all  matters  submitted  to a vote  of the
shareholders of the Corporation.  In the event the Corporation shall at any time
after the Rights  Dividend  Declaration  Date (i) declare any dividend on Common
Stock payable in shares of Common Stock,  (ii) subdivide the outstanding  Common
Stock,  or (iii) combine the  outstanding  Common Stock into a smaller number of
shares, then in each such case the number of votes per share to which holders of
shares of Series A Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by  multiplying  such number by a fraction,  the
numerator  of  which  is the  number  of  shares  of  Common  Stock  outstanding
immediately  after  such  event and the  denominator  of which is the  number of
shares of Common Stock that were outstanding immediately prior to such event.

                  (b) Except as otherwise provided herein or by law, the holders
of shares of Series A Participating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.

                  (c)  Except  as   required   by  law,   holders  of  Series  A
Participating  Preferred  Stock  shall have no special  voting  rights and their
consent  shall not be required  (except to the extent they are  entitled to vote
with  holders of Common  Stock as set forth  herein)  for  taking any  corporate
action.

         Section 3. Certain Restrictions.

                  (a) The  Corporation  shall not declare any  dividend on, make
any   distribution   on,  or  redeem  or  purchase  or  otherwise   acquire  for
consideration  any shares of Common Stock after the first issuance of a share or
fraction  of  a  share  of  Series  A   Participating   Preferred  Stock  unless
concurrently therewith it shall declare a dividend on the Series A Participating
Preferred Stock as required by Section 1 hereof.

                  (b)  Whenever  quarterly   dividends  or  other  dividends  or
distributions payable on the Series A Participating  Preferred Stock as provided
in  Section  1 are in  arrears,  thereafter  and until all  accrued  and  unpaid
dividends  and  distributions,  whether or not  declared,  on shares of Series A
Participating  Preferred  Stock  outstanding  shall have been paid in full,  the
Corporation shall not

                                      -3-
<PAGE>

                           (i)  declare  or pay  dividends  on,  make any  other
distributions  on, or redeem or purchase or otherwise  acquire for consideration
any shares of stock ranking junior (either as to dividends or upon  liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock;

                           (ii) declare or pay  dividends  on, or make any other
distributions  on,  any  shares  of  stock  ranking  on a parity  (either  as to
dividends  or upon  liquidation,  dissolution  or  winding  up)  with  Series  A
Participating  Preferred  Stock,  except  dividends paid ratably on the Series A
Participating  Preferred  Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;

                           (iii)  redeem or  purchase or  otherwise  acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon  liquidation,  dissolution  or winding up) with the Series A  Participating
Preferred Stock, provided that the Corporation may at any time redeem,  purchase
or otherwise  acquire  shares of any such parity stock in exchange for shares of
any stock of the  Corporation  ranking  junior  (either as to  dividends or upon
dissolution,  liquidation or winding up) to the Series A Participating Preferred
Stock;

                           (iv) purchase or otherwise  acquire for consideration
any shares of Series A  Participating  Preferred  Stock,  or any shares of stock
ranking on a parity with the Series A Participating  Preferred Stock,  except in
accordance  with  a  purchase  offer  made  in  writing  or by  publication  (as
determined  by the Board of  Directors)  to all holders of such shares upon such
terms as the Board of Directors,  after  consideration of the respective  annual
dividend  rates and other  relative  rights and  preferences  of the  respective
series and  classes,  shall  determine  in good  faith  will  result in fair and
equitable treatment among the respective series or classes.

                  (c) The  Corporation  shall not permit any  subsidiary  of the
Corporation  to purchase or otherwise  acquire for  consideration  any shares of
stock of the Corporation  unless the Corporation  could,  under paragraph (a) of
this Section 3,  purchase or  otherwise  acquire such shares at such time and in
such manner.

         Section 4.  Reacquired  Shares.  Any  shares of Series A  Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their  cancellation  become  authorized  but unissued
shares  of  Preferred  Stock  and may be  reissued  as part of a new  series  of
Preferred  Stock to be  created by  resolution  or  resolutions  of the Board of
Directors,  subject to the  conditions  and  restrictions  on issuance set forth
herein.

         Section 5. Liquidation, Dissolution or Winding Up.

                  (a) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation,  no distribution  shall be made to the holders
of shares of stock ranking junior  (either as to dividends or upon  liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock unless,
prior thereto,  the holders of shares of Series A Participating  Preferred Stock
shall have received one hundred  twenty-six  thousand  dollars  ($126,  000) per
share,  plus an amount equal to

                                      -4-

<PAGE>

accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Series A Liquidation  Preference").  Following
the  payment  of the full  amount of the  Series A  Liquidation  Preference,  no
additional  distributions  shall be made to the  holders  of  shares of Series A
Participating  Preferred Stock unless,  prior thereto,  the holders of shares of
Common Stock shall have  received an amount per share (the "Common  Adjustment")
equal  to the  quotient  obtained  by  dividing  (i) the  Series  A  Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph
(c)  below  to  reflect  such  events  as  stock  splits,  stock  dividends  and
recapitalization  with respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Participating Preferred Stock and Common Stock, respectively,
holders  of Series A  Participating  Preferred  Stock and  holders  of shares of
Common  Stock  shall  receive  their  ratable  and  proportionate  share  of the
remaining  assets to be distributed  in the ratio of the Adjustment  Number to 1
with respect to such  Preferred  Stock and Common  Stock,  on a per share basis,
respectively.

                  (b) In the  event,  however,  that  there  are not  sufficient
assets  available  to  permit  payment  in  full  to the  Series  A  Liquidation
Preference  and the  liquidation  preferences  of all other  series of Preferred
Stock, if any, which rank on a parity with the Series A Participating  Preferred
Stock, then such remaining assets shall be distributed ratably to the holders of
such parity shares in proportion to their respective liquidation preferences. In
the event,  however,  that there are not sufficient  assets  available to permit
payment in full of the Common  Adjustment,  then such remaining  assets shall be
distributed ratably to the holders of Common Stock.

                  (c) In the event the  Corporation  shall at any time after the
Rights  Dividend  Declaration  Date (i)  declare any  dividend  on Common  Stock
payable in shares of Common Stock, (ii) subdivide the outstanding  Common Stock,
or (iii) combine the  outstanding  Common Stock into a smaller number of shares,
then in each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment  Number by a fraction the
numerator  of  which  is the  number  of  shares  of  Common  Stock  outstanding
immediately  after  such  event and the  denominator  of which is the  number of
shares of Common Stock that were outstanding immediately prior to such event.

                  (d) Consolidation,  Merger, etc. In case the Corporation shall
enter into any consolidation,  merger, combination or other transaction in which
the shares of Common  Stock are  exchanged  for or changed  into other  stock or
securities,  cash and/or any other property, then in any such case the shares of
Series A  Participating  Preferred  Stock  shall at the same  time be  similarly
exchanged  or changed  in an amount  per share  (subject  to the  provision  for
adjustment  hereinafter set forth) equal to 1,000 times the aggregate  amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be,  into  which or for which  each  share of  Common  Stock is  changed  or
exchanged.  In the  event the  Corporation  shall at any time  after the  Rights
Dividend  Declaration  Date (i) declare any dividend on Common Stock  payable in
shares of Common Stock,  (ii) subdivide the  outstanding  Common Stock, or (iii)
combine the  outstanding  Common Stock into a smaller number of shares,  then in
each such case the amount set forth in the  preceding  sentence  with respect to
the exchange or change of shares of Series A Participating Preferred Stock shall
be

                                      -5-

<PAGE>

adjusted by multiplying  such amount by a fraction the numerator of which is the
number of shares of Common Stock  outstanding  immediately  after such event and
the  denominator  of which is the  number of shares  of Common  Stock  that were
outstanding immediately prior to such event.

         Section  6.  No  Redemption.  The  shares  of  Series  A  Participating
Preferred Stock shall not be redeemable.

         Section 7. Ranking.  The Series A  Participating  Preferred Stock shall
rank junior to all other series of the  Corporation's  Preferred Stock as to the
payment of dividends  and the  distribution  of assets,  unless the terms of any
such series shall provide otherwise.

         Section  8.  Amendment.   This  Certificate  of  Incorporation  of  the
Corporation  shall not be further  amended in any manner which would  materially
alter or change  the  powers,  preference  or  special  rights  of the  Series A
Participating  Preferred  Stock  so as to  affect  them  adversely  without  the
affirmative vote of the holders of a majority or more of the outstanding  shares
of Series A Participating Preferred Stock, voting separately as a class.

         Section 9. Fractional  Shares.  Series A Participating  Preferred Stock
may be issued in  fractions  of a share  which  shall  entitle  the  holder,  in
proportion  to such  holder's  fractional  shares,  to exercise  voting  rights,
receive  dividends,  participate in distributions and to have the benefit of all
other rights of holders of Series A Participating Preferred Stock.

         FIFTH: The name and mailing address of the incorporator are as follows:

                       Bruce R. Wright
                       Spectrian Corporation
                       350 W. Java Drive
                       Sunnyvale, CA 94089

         SIXTH: The Corporation is to have perpetual existence.

         SEVENTH: The election of directors need not be by written ballot unless
a stockholder  demands  election by written ballot at a meeting of  stockholders
and  before  voting  begins or unless  the  Bylaws of the  Corporation  shall so
provide.

         EIGHTH:  The number of directors  which  constitute  the whole Board of
Directors  of  the  Corporation  shall  be  designated  in  the  Bylaws  of  the
Corporation.

         NINTH: In furtherance and not in limitation of the powers  conferred by
the  laws of the  State  of  Delaware,  the  Board  of  Directors  is  expressly
authorized to adopt, alter, amend or repeal the Bylaws of the Corporation.

         TENTH:  To  the  fullest  extent  permitted  by  the  Delaware  General
Corporation  Law as the same exists or may hereafter be amended,  no director of
the  Corporation   shall  be  personally

                                      -6-

<PAGE>

liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.

         Neither any amendment  nor repeal of this Article,  nor the adoption of
any  provision  of this  Certificate  of  Incorporation  inconsistent  with this
Article,  shall eliminate or reduce the effect of this Article in respect of any
matter  occurring,  or any cause of  action,  suit or claim  that,  but for this
Article,  would accrue or arise, prior to such amendment,  repeal or adoption of
an inconsistent provision.

         ELEVENTH: At the election of directors of the Corporation,  each holder
of stock or of any class or series of stock  shall be  entitled to as many votes
as shall equal the number of votes which such  stockholder  would be entitled to
cast for the  election of  directors  with respect to his or her shares of stock
multiplied  by the number of directors to be elected and may cast all such votes
for any director or for any two or more of them as such stockholder may see fit.

         TWELFTH:  Meetings  of  stockholders  may be held within or without the
State of Delaware,  as the Bylaws may provide.  The books of the Corporation may
be  kept  (subject  to any  provision  contained  in the  laws of the  State  of
Delaware)  outside  of the State of  Delaware  at such place or places as may be
designated  from time to time by the Board of  Directors or in the Bylaws of the
Corporation.

         THIRTEENTH:  The Corporation reserves the right to amend, alter, change
or repeal any provision  contained in this Certificate of Incorporation,  in the
manner now or hereafter prescribed by the laws of the State of Delaware, and all
rights conferred herein are granted subject to this reservation.

         The undersigned  incorporator  hereby  acknowledges  that the foregoing
Certificate  of  Incorporation  is his act and deed and  that the  facts  stated
herein are true.

Dated:  May 21, 1997                       /s/ Bruce R. Wright
                                           -------------------------------------
                                                  Bruce R. Wright
                                                  Incorporator

                                      -7-

<PAGE>

                                    EXHIBIT B

                           FORM OF RIGHTS CERTIFICATE

Certificate No. R-                                              _________ Rights

         NOT  EXERCISABLE  AFTER THE EARLIER OF (i) JANUARY 18,  2011,  (ii) THE
         DATE TERMINATED BY THE COMPANY OR (iii) THE DATE THE COMPANY  EXCHANGES
         THE RIGHTS PURSUANT TO THE THIRD AMENDED AND RESTATED RIGHTS AGREEMENT.
         THE RIGHTS ARE SUBJECT TO REDEMPTION,  AT THE OPTION OF THE COMPANY, AT
         $0.001  PER  RIGHT ON THE TERMS  SET  FORTH IN THE  THIRD  AMENDED  AND
         RESTATED  RIGHTS  AGREEMENT.   UNDER  CERTAIN   CIRCUMSTANCES,   RIGHTS
         BENEFICIALLY  OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
         OF AN ACQUIRING  PERSON (AS SUCH TERMS ARE DEFINED IN THE THIRD AMENDED
         AND RESTATED RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
         MAY  BECOME  NULL AND VOID.  [THE  RIGHTS  REPRESENTED  BY THIS  RIGHTS
         CERTIFICATE  ARE OR WERE  BENEFICIALLY  OWNED  BY A  PERSON  WHO WAS OR
         BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
         PERSON (AS SUCH TERMS ARE  DEFINED IN THE THIRD  AMENDED  AND  RESTATED
         RIGHTS AGREEMENT).  ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
         REPRESENTED  HEREBY  MAY  BECOME  NULL  AND  VOID IN THE  CIRCUMSTANCES
         SPECIFIED  IN SECTION 7(e) OF SUCH THIRD  AMENDED AND  RESTATED  RIGHTS
         AGREEMENT.]1

                               RIGHTS CERTIFICATE

                              Spectrian Corporation

         This  certifies  that  ______________________________,   or  registered
assigns,  is the registered owner of the number of Rights set forth above,  each
of which  entitles  the owner  thereof,  subject  to the terms,  provisions  and
conditions  of the Third  Amended  and  Restated  Rights  Agreement  dated as of
January 18, 2001, (the "Rights  Agreement"),  between Spectrian  Corporation,  a
Delaware corporation (the "Company"),  and Mellon Investor Services,  LLC, ( the
"Rights Agent"), to purchase from the Company at any time after the Distribution
Date (as such term is

1 The portion of the legend in bracket shall be inserted only if applicable  and
shall replace the preceding sentence.

                                      -8-

<PAGE>

defined  in the Rights  Agreement)  and prior to 5:00  P.M.,  New York time,  on
January 18, 2011 at the office of the Rights Agent  designated for such purpose,
or at the office of its successor as Rights Agent, one one-thousandth  (1/1,000)
of a fully paid and  non-assessable  share of Series A  Participating  Preferred
Stock, par value $0.001 per share (the "Preferred  Shares"),  of the Company, at
an Exercise Price of One Hundred Twenty Six Dollars ($126.00) per one-thousandth
of a Preferred Share (the "Exercise Price"),  upon presentation and surrender of
this  Rights  Certificate  with the Form of  Election  to  Purchase  and related
Certificate  duly  executed.  The  number of  Rights  evidenced  by this  Rights
Certificate (and the number of one-thousandths of a Preferred Share which may be
purchased  upon  exercise  hereof) set forth  above are the number and  Exercise
Price as of _____,  2001 based on the Preferred  Shares as  constituted  at such
date. As provided in the Rights Agreement, the Exercise Price and the number and
kind of Preferred  Shares or other  securities  which may be purchased  upon the
exercise  of the Rights  evidenced  by this  Rights  Certificate  are subject to
modification and adjustment upon the happening of certain events.

         This Rights Certificate is subject to all of the terms,  provisions and
conditions of the Rights Agreement,  which terms,  provisions and conditions are
hereby  incorporated  herein by  reference  and made a part  hereof and to which
Rights Agreement  reference is hereby made for a full description of the rights,
limitations  of rights,  obligations,  duties and  immunities  hereunder  of the
Rights  Agent,  the Company and the  holders of the Rights  Certificates,  which
limitations of rights include the temporary  suspension of the exercisability of
such Rights under the specific  circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above-mentioned office of the Rights Agent.

         Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Rights Certificate (i) may be redeemed by the Company, at its option, at
a  redemption  price of $0.001 per Right or (ii) may be exchanged by the Company
in whole or in part for Common Shares,  substantially equivalent rights or other
consideration as determined by the Company.

         This Rights  Certificate,  with or without  other Rights  Certificates,
upon  surrender at the office of the Rights Agent  designated  for such purpose,
may be exchanged for another Rights  Certificate or Rights  Certificates of like
tenor  and date  evidencing  Rights  entitling  the  holder to  purchase  a like
aggregate amount of securities as the Rights evidenced by the Rights Certificate
or Rights Certificates  surrendered shall have entitled such holder to purchase.
If this Rights  Certificate  shall be  exercised  in part,  the holder  shall be
entitled to receive upon surrender  hereof another Rights  Certificate or Rights
Certificates for the number of whole Rights not exercised.

         No fractional  portion of less than one  one-thousandth  of a Preferred
Share will be issued upon the exercise of any Right or Rights  evidenced  hereby
but in lieu  thereof a cash  payment  will be made,  as  provided  in the Rights
Agreement.

         No holder of this  Rights  Certificate,  as such,  shall be entitled to
vote or  receive  dividends  or be  deemed  for any  purpose  the  holder of the
Preferred Shares or of any other securities of the Company which may at any time
be issuable on the exercise hereof,  nor shall anything  contained in the Rights
Agreement or herein be construed to confer upon the holder hereof,  as such, any
of the  rights  of a  stockholder  of the  Company  or any right to vote for the
election  of  directors  or

                                      -9-

<PAGE>

upon any matter submitted to stockholders at any meeting thereof,  or to give or
withhold  consent to any corporate  action,  or to receive notice of meetings or
other  actions  affecting   stockholders  (except  as  provided  in  the  Rights
Agreement), or to receive dividends or subscription rights, or otherwise,  until
the  Right or  Rights  evidenced  by this  Rights  Certificate  shall  have been
exercised as provided in the Rights Agreement.

         This  Rights  Certificate  shall  not be  valid or  obligatory  for any
purpose until it shall have been countersigned by the Rights Agent.

         WITNESS the facsimile  signature of the proper  officers of the Company
and its corporate seal. Dated as of _______________, 2001.

ATTEST:                                   Spectrian Corporation

--------------------------------          By:
Secretary                                    -----------------------------------

                                          Its:
                                              ----------------------------------
Countersigned:

Mellon Investor Services, LLC
as Rights Agent

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

Its:
    ----------------------------

                                      -10-

<PAGE>

                   Form of Reverse Side of Rights Certificate

                               FORM OF ASSIGNMENT

                (To be executed by the registered holder if such
               holder desires to transfer the Rights Certificate)

         FOR VALUE RECEIVED  _______________ hereby sells, assigns and transfers
unto
--------------------------------------------------------------------------------
                  (Please print name and address of transferee)

this Rights  Certificate,  together with all right,  title and interest therein,
and does hereby  irrevocably  constitute and appoint  __________________________
Attorney,  to  transfer  the  within  Rights  Certificate  on the  books  of the
within-named Company, with full power of substitution.

Dated: _______________, ____

                                               ---------------------------------
                                               Signature

Signature Guaranteed:

         Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.

<PAGE>

                                   CERTIFICATE

         The  undersigned  hereby  certifies by checking the  appropriate  boxes
that:

                  (1) this  Rights  Certificate  [ ] is [ ] is not  being  sold,
assigned and  transferred by or on behalf of a Person who is or was an Acquiring
Person,  or an  Affiliate  or  Associate  of any such  Person (as such terms are
defined in the Rights Agreement);

                  (2)  after  due  inquiry  and to  the  best  knowledge  of the
undersigned,  it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate  from any  Person who is, was or  subsequently  became an  Acquiring
Person or an Affiliate or Associate of any such Person.

Dated: _______________, ____

                                               ---------------------------------
                                               Signature

Signature Guaranteed:

         Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.

<PAGE>

             Form of Reverse Side of Rights Certificate -- continued

                          FORM OF ELECTION TO PURCHASE

                      (To be executed if holder desires to
                        exercise the Rights Certificate)

To:___________________________

                  The  undersigned   hereby   irrevocably   elects  to  exercise
_________________________  Rights  represented  by this  Rights  Certificate  to
purchase the number of  one-thousandths  of a Preferred  Share issuable upon the
exercise  of such  Rights and  requests  that  certificates  for such  number of
one-thousandths of a Preferred Share issued in the name of:

Please insert social security
or other identifying number

--------------------------------------------------------------------------------
                         (Please print name and address)

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

If such number of Rights  shall not be all the Rights  evidenced  by this Rights
Certificate,  a new Rights  Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:

Please insert social security
or other identifying number

--------------------------------------------------------------------------------
                         (Please print name and address)

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

Dated: _______________, ____

                                               ---------------------------------
                                               Signature

Signature Guaranteed:

         Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.

<PAGE>

                                   CERTIFICATE

         The  undersigned  hereby  certifies by checking the  appropriate  boxes
that:

         (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an  Affiliate  or Associate of any such Person (as such terms are defined in the
Rights Agreement);

         (2) after due inquiry and to the best knowledge of the undersigned,  it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any  Person  who is,  was or  subsequently  became  an  Acquiring  Person  or an
Affiliate or Associate of any such Person.

Dated: _______________, ____

                                               ---------------------------------
                                               Signature

Signature Guaranteed:

         Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.

<PAGE>

             Form of Reverse Side of Rights Certificate -- continued

                                     NOTICE

                  The  signature  in  the  foregoing  Forms  of  Assignment  and
Election  must  conform  to the name as  written  upon  the face of this  Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.

<PAGE>

                                    EXHIBIT C

   SUMMARY OF THE THIRD AMENDED AND RESTATED PREFERRED SHARES RIGHTS AGREEMENT
                              SPECTRIAN CORPORATION

         On December 30, 1996, The Board of Directors declared a dividend of one
Right for each share of Common Stock of Spectrian  Corporation  (the  "Company")
outstanding as of March 21, 1997 (the "Record Date") and further  authorized the
issuance  of one Right for each  Common  Share  that  shall  become  outstanding
between  the  Record  Date  and the  earlier  of the  Distribution  Date and the
Expiration Date. On January 18, 2001, the Board of Directors  determined that it
is in the best interest of the Company to amend and restate the Preferred Shares
Rights Agreement to provide as follows:

                                Summary of Rights

Distribution and           Prior to the Distribution Date referred to below, the
Transfer of Rights;        Rights  will  continue to be  evidenced  by and trade
Rights Certificate:        with the certificates for the Common Stock. After the
                           Distribution  Date,  the  Company  will  mail  Rights
                           certificates  to the Company's  stockholders  and the
                           Rights will become transferable apart from the Common
                           Stock.

Distribution Date:         Rights will separate from the Common Stock and become
                           exercisable  following  (a) the  tenth  day (or  such
                           later  date  as may be  determined  by the  Company's
                           Board of Directors)  after a person or group acquires
                           beneficial  ownership of 15% or more of the Company's
                           Common  Stock or (b) the tenth  business day (or such
                           later  date  as may be  determined  by the  Company's
                           Board of Directors) after a person or group announces
                           a tender or exchange offer, the consummation of which
                           would result in ownership by a person or group of 15%
                           or more of the Company's Common Stock.  However, with
                           respect to shares of the Company's  Common Stock held
                           or  acquired  by  Kopp  Investment   Advisors,   Inc.
                           ("Kopp") and the State of Wisconsin  Investment Board
                           ("SWIB"),  no Distribution Date will occur until such
                           time as Kopp or SWIB  acquires  more than 30% or 20%,
                           respectively,   of  the  Company's  Common  Stock  or
                           announces a tender  offer to acquire more than 30% or
                           20%, respectively,  of the Company's Common Stock, or
                           until such time as Kopp or SWIB shall be  required to
                           file a report of beneficial ownership on Schedule 13D
                           with the  Securities  and  Exchange  Commission  with
                           respect to its holdings of the Company's Common Stock
                           (collectively the "Limitations").

<PAGE>

Preferred Stock            After the Distribution  Date, each Right will entitle
Purchasable Upon           the  holder  to  purchase  for  $126  (the  "Exercise
Exercise of Rights:        Price"),  a  fraction  of a  share  of the  Company's
                           Preferred  Stock with economic  terms similar to that
                           of one share of the Company's Common Stock.

Flip-In:                   If an acquiror  obtains 15% or more of the  Company's
                           Common Stock (or with respect to Kopp and SWIB,  Kopp
                           or SWIB is not in compliance  with the  Limitations),
                           thereby  becoming an  "Acquiring  Person",  then each
                           Right (other than Rights owned by an Acquiring Person
                           or its affiliates) will entitle the holder thereof to
                           purchase,  for the exercise price, a number of shares
                           of the  Company's  Common Stock having a then current
                           market value of twice the exercise price.

Flip-Over:                 If,  after  an  acquiror  obtains  15% or more of the
                           Company's  Common  Stock (or with respect to Kopp and
                           SWIB,  Kopp  or SWIB is not in  compliance  with  the
                           Limitations),  (a) the Company  merges  into  another
                           entity,  (b) an  acquiring  entity  mergers  into the
                           Company or (c) the Company sells more than 50% of the
                           Company's  assets or earning  power,  then each Right
                           (other than Rights  owned by an  Acquiring  Person or
                           its  affiliates)  will entitle the holder  thereof to
                           purchase,  for the exercise price, a number of shares
                           of  Common  Stock  of  the  person  engaging  in  the
                           transaction  having a then  current  market  value of
                           twice the exercise price.

Exchange Provision:

                           At any time  after  the  date on  which an  Acquiring
                           Person  obtains 15% or more of the  Company's  Common
                           Stock and prior to the  acquisition  by the Acquiring
                           Person  of 50% of the  outstanding  Common  Stock,  a
                           majority of the Board of  Directors  and the Board of
                           Directors  of the  Company  may  exchange  the Rights
                           (other than Rights owned by the  Acquiring  Person or
                           its  affiliates),  in whole or in part, for shares of
                           Common  Stock of the Company at an exchange  ratio of
                           one share of  Common  Stock  per  Right  (subject  to
                           adjustment).

Redemption of the          Rights will be redeemable at the Company's option for
Rights:                    $0.001 per Right at any time on or prior to the fifth
                           day (or such later date as may be  determined  by the
                           Company's   Board   of   Directors)    after   public
                           announcement  that a Person has  acquired  beneficial
                           ownership  of 15% or  more  of the  Company's  Common
                           Stock (or in the case of Kopp and SWIB,  Kopp or SWIB
                           is not  in  compliance  with  the  Limitations)  (the
                           "Shares Acquisition Date").

                                      -2-

<PAGE>

Expiration of the          The Rights  expire on the earliest of (a) January 18,
Rights:                    2011 or (b) exchange or  redemption  of the Rights as
                           described above.

Amendment of Terms of      The terms of the  Rights  and the Third  Amended  and
Rights:                    Restated  Preferred  Shares  Rights  Agreement may be
                           amended in any  respect  without  the  consent of the
                           Rights holders on or prior to the Distribution  Date;
                           thereafter,  the  terms of the  Rights  and the Third
                           Amended  and   Restated   Preferred   Shares   Rights
                           Agreement  may be amended  without the consent of the
                           Rights holders in order to cure any ambiguities or to
                           make  changes  which  do  not  adversely  affect  the
                           interests of Rights holders (other than the Acquiring
                           Person).

Voting Rights:             Rights will not have any voting rights.

Anti-Dilution              Rights  will have the  benefit of  certain  customary
Provisions:                anti-dilution provisions.

Taxes:                     The Rights  distribution  should  not be taxable  for
                           federal  income tax purposes.  However,  following an
                           event which  renders the Rights  exercisable  or upon
                           redemption of the Rights,  stockholders may recognize
                           taxable income.

The foregoing is a summary of certain  principal  terms of the Third Amended and
Restated Preferred Shares Rights Agreement. It may be amended from time to time.
A copy of the Third Amended and Restated  Preferred Share Rights  Agreement will
be filed  with  the  Securities  and  Exchange  Commission  as an  Exhibit  to a
Registration Statement on Form 8-A/A dated January 30, 2001. A copy of the Third
Amended and Restated  Preferred  Shares  Rights  Agreement is available  free of
charge from the Company.

                                      -3-<PAGE>   1
                                                                     EXHIBIT 4.2

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

                                  KINDER MORGAN
                              ENERGY PARTNERS, L.P.

                                     ISSUER

                                       AND

                            FIRST UNION NATIONAL BANK

                                     TRUSTEE

                                    ---------

                                    INDENTURE

                           DATED AS OF JANUARY 2, 2001

                                    ---------

                             SENIOR DEBT SECURITIES

                                    ---------

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

<PAGE>   2

                       KINDER MORGAN ENERGY PARTNERS, L.P.

                 CERTAIN SECTIONS OF THIS INDENTURE RELATING TO
                   SECTIONS 310 THROUGH 318, INCLUSIVE, OF THE
                          TRUST INDENTURE ACT OF 1939:

<TABLE>
<CAPTION>
Trust Indenture
   Act Section                                                                              Indenture Section
----------------                                                                            -----------------
<S>                                                                                       <C>
 Section 310(a)(1)......................................................................                   609
            (a)(2)......................................................................                   609
            (a)(3)......................................................................        Not Applicable
            (a)(4)......................................................................        Not Applicable
            (b).........................................................................              608; 610
 Section 311(a).........................................................................                   613
            (b).........................................................................                   613
 Section 312(a).........................................................................              701; 702
            (b).........................................................................                   702
            (c).........................................................................                   702
 Section 313(a).........................................................................                   703
            (b).........................................................................                   703
            (c).........................................................................                   703
            (d).........................................................................                   703
 Section 314(a).........................................................................                   704
            (a)(4)......................................................................                  1004
            (b).........................................................................        Not Applicable
            (c)(1)......................................................................                   102
            (c)(2)......................................................................                   102
            (c)(3)......................................................................        Not Applicable
            (d).........................................................................        Not Applicable
            (e).........................................................................                   102
 Section 315(a).........................................................................              601, 603
            (b).........................................................................                   602
            (c).........................................................................                   601
            (d).........................................................................                   601
            (e).........................................................................                   514
 Section 316(a).........................................................................                   101
            (a)(1)(A)...................................................................              502; 512
            (a)(1)(B)...................................................................                   513
            (a)(2)......................................................................        Not Applicable
            (b).........................................................................                   508
            (c).........................................................................                   104
 Section 317(a)(1)......................................................................                   503
            (a)(2)......................................................................                   504
            (b).........................................................................                  1003
 Section 318(a).........................................................................                   107
</TABLE>

----------

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

                                        i
<PAGE>   3

                                TABLE OF CONTENTS

<TABLE>
<S>                 <C>                                                                                         <C>
                                    ARTICLE I

             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

   SECTION 101      DEFINITIONS...................................................................................1
   SECTION 102.     COMPLIANCE CERTIFICATES AND OPINIONS ........................................................10
   SECTION 103.     FORM OF DOCUMENTS DELIVERED TO TRUSTEE ......................................................11
   SECTION 104.     ACTS OF HOLDERS; RECORD DATES ...............................................................12
   SECTION 105.     NOTICES, ETC., TO TRUSTEE AND PARTNERSHIP....................................................13
   SECTION 106.     NOTICE TO HOLDERS; WAIVER....................................................................13
   SECTION 107.     CONFLICT WITH TRUST INDENTURE ACT............................................................14
   SECTION 108.     EFFECT OF HEADINGS AND TABLE OF CONTENTS.....................................................14
   SECTION 109.     SUCCESSORS AND ASSIGNS.......................................................................14
   SECTION 110.     SEPARABILITY CLAUSE..........................................................................14
   SECTION 111.     BENEFITS OF INDENTURE........................................................................14
   SECTION 112.     GOVERNING LAW................................................................................14
   SECTION 113.     LEGAL HOLIDAYS...............................................................................15
   SECTION 114.     LANGUAGE OF NOTICES, ETC.....................................................................15
   SECTION 115.     INTEREST LIMITATION..........................................................................15
   SECTION 116.     NON-RECOURSE TO THE GENERAL PARTNER; NO PERSONAL LIABILITY OF OFFICERS, DIRECTORS, EMPLOYEES
                    OR PARTNERS..................................................................................16

                                   ARTICLE II

                                 SECURITY FORMS

   SECTION 201.     FORMS GENERALLY..............................................................................16
   SECTION 202.     FORM OF FACE OF SECURITY.....................................................................17
   SECTION 203.     FORM OF REVERSE OF SECURITY..................................................................19
   SECTION 204.     GLOBAL SECURITIES............................................................................25
   SECTION 205.     FORM OF TRUSTEE'S CERTIFICATE AND AUTHORIZATION..............................................25

                                   ARTICLE III

                                 THE SECURITIES

   SECTION 301.     AMOUNT UNLIMITED; ISSUABLE IN SERIES.........................................................26
   SECTION 302.     DENOMINATIONS................................................................................29
   SECTION 303.     EXECUTION, AUTHENTICATION, DELIVERY AND DATING...............................................29
   SECTION 304.     TEMPORARY SECURITIES.........................................................................31
   SECTION 305.     REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE..........................................32
   SECTION 306.     MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.............................................33
   SECTION 307.     PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED...............................................34
   SECTION 308.     PERSONS DEEMED OWNERS........................................................................36
   SECTION 309.     CANCELLATION.................................................................................36
   SECTION 310.     COMPUTATION OF INTEREST......................................................................36
   SECTION 311.     CUSIP NUMBERS................................................................................37
</TABLE>

                                       ii
<PAGE>   4

<TABLE>
<S>                 <C>                                                                                         <C>
                                   ARTICLE IV

                           SATISFACTION AND DISCHARGE

   SECTION 401.     SATISFACTION AND DISCHARGE OF INDENTURE......................................................37
   SECTION 402.     APPLICATION OF TRUST MONEY...................................................................38

                                    ARTICLE V

                                    REMEDIES

   SECTION 501.     EVENTS OF DEFAULT............................................................................38
   SECTION 502.     ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT...........................................39
   SECTION 503.     COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE..............................40
   SECTION 504.     TRUSTEE MAY FILE PROOFS OF CLAIM.............................................................41
   SECTION 505.     TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES..................................41
   SECTION 506.     APPLICATION OF MONEY COLLECTED...............................................................41
   SECTION 507.     LIMITATION ON SUITS..........................................................................42
   SECTION 508.     UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST....................43
   SECTION 509.     RESTORATION OF RIGHTS AND REMEDIES...........................................................43
   SECTION 510.     RIGHTS AND REMEDIES CUMULATIVE...............................................................43
   SECTION 511.     DELAY OR OMISSION NOT WAIVER.................................................................43
   SECTION 512.     CONTROL BY HOLDERS...........................................................................43
   SECTION 513.     WAIVER OF PAST DEFAULTS......................................................................44
   SECTION 514.     UNDERTAKING FOR COSTS........................................................................44

                                   ARTICLE VI

                                   THE TRUSTEE

   SECTION 601.     CERTAIN DUTIES AND RESPONSIBILITIES..........................................................45
   SECTION 602.     NOTICE OF DEFAULTS...........................................................................46
   SECTION 603.     CERTAIN RIGHTS OF TRUSTEE....................................................................46
   SECTION 604.     NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.......................................47
   SECTION 605.     MAY HOLD SECURITIES..........................................................................47
   SECTION 606.     MONEY HELD IN TRUST..........................................................................48
   SECTION 607.     COMPENSATION AND REIMBURSEMENT...............................................................48
   SECTION 608.     DISQUALIFICATION; CONFLICTING INTERESTS......................................................48
   SECTION 609.     CORPORATE TRUSTEE REQUIRED; ELIGIBILITY......................................................49
   SECTION 610.     RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR............................................49
   SECTION 611.     ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.......................................................50
   SECTION 612.     MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS..................................51
   SECTION 613.     PREFERENTIAL COLLECTION OF CLAIMS AGAINST PARTNERSHIP........................................52
   SECTION 614.     APPOINTMENT OF AUTHENTICATING AGENT..........................................................52
</TABLE>

                                       iii
<PAGE>   5

<TABLE>
<S>                 <C>                                                                                         <C>
                                   ARTICLE VII

              HOLDERS' LISTS AND REPORTS BY TRUSTEE AND PARTNERSHIP

   SECTION 701.     PARTNERSHIP TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS................................53
   SECTION 702.     PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.......................................54
   SECTION 703.     REPORTS BY TRUSTEE...........................................................................54
   SECTION 704.     REPORTS BY PARTNERSHIP.......................................................................54

                                  ARTICLE VIII

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

   SECTION 801.     PARTNERSHIP AND GUARANTORS MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS......................55
   SECTION 802.     SUCCESSOR SUBSTITUTED........................................................................56

                                   ARTICLE IX

                             SUPPLEMENTAL INDENTURES

   SECTION 901.     SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS...........................................56
   SECTION 902.     SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS..............................................57
   SECTION 903.     EXECUTION OF SUPPLEMENTAL INDENTURES.........................................................58
   SECTION 904.     EFFECT OF SUPPLEMENTAL INDENTURES............................................................58
   SECTION 905.     CONFORMITY WITH TRUST INDENTURE ACT..........................................................58
   SECTION 906.     REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES...........................................58

                                    ARTICLE X

                                    COVENANTS

   SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST......................................................59
   SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.................................................................59
   SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST...............................................59
   SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT.............................................................60
   SECTION 1005. EXISTENCE.......................................................................................61
   SECTION 1006. LIMITATIONS ON LIENS............................................................................61
   SECTION 1007. RESTRICTION OF SALE-LEASEBACK TRANSACTION.......................................................62
   SECTION 1008. WAIVER OF CERTAIN COVENANTS.....................................................................63

                                   ARTICLE XI

                            REDEMPTION OF SECURITIES

   SECTION 1101. APPLICABILITY OF ARTICLE........................................................................64
   SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE...........................................................64
   SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED...............................................64
   SECTION 1104. NOTICE OF REDEMPTION............................................................................65
   SECTION 1105. DEPOSIT OF REDEMPTION PRICE.....................................................................65
   SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE...........................................................65
   SECTION 1107. SECURITIES REDEEMED IN PART.....................................................................66
</TABLE>

                                       iv
<PAGE>   6

<TABLE>
<S>                 <C>                                                                                         <C>
                                   ARTICLE XII

                                  SINKING FUNDS

   SECTION 1201. APPLICABILITY OF ARTICLE........................................................................66
   SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES...........................................66
   SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND.......................................................67

                                  ARTICLE XIII

                                   DEFEASANCE

   SECTION 1301. APPLICABILITY OF ARTICLE........................................................................67
   SECTION 1302. LEGAL DEFEASANCE................................................................................67
   SECTION 1303. COVENANT DEFEASANCE.............................................................................69
   SECTION 1304. APPLICATION BY TRUSTEE OF FUNDS DEPOSITED FOR PAYMENT OF SECURITIES.............................70
   SECTION 1305. REPAYMENT TO PARTNERSHIP........................................................................71
   SECTION 1306. REINSTATEMENT...................................................................................71

                                   ARTICLE XIV

                             GUARANTY OF SECURITIES

   SECTION 1401. RETIREMENT FOR GUARANTY.........................................................................71
   SECTION 1402. RELEASE OF GUARANTY.............................................................................72

         Annex A
</TABLE>

                                        v
<PAGE>   7

         INDENTURE dated as of January 2, 2001, between KINDER MORGAN ENERGY
PARTNERS, L.P., a Delaware limited partnership (the "Partnership"), having its
principal office at One Allen Center, Suite 1000, 500 Dallas Street, Houston
Texas, 77002, and FIRST UNION NATIONAL BANK, a national banking association, as
Trustee (the "Trustee").

                           RECITALS OF THE PARTNERSHIP

         The Partnership has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (the "Securities"), to be
issued in one or more series as in this Indenture provided.

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

         This Indenture is subject to the provisions of the Trust Indenture Act
that are required to be a part of this Indenture and, to the extent applicable,
shall be governed by such provisions.

         NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

                                    ARTICLE I

             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101. Definitions.

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

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

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

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

                                      -1-
<PAGE>   8
                  (4) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and

                  (5) the words "Article" and "Section" refer to an Article and
Section, respectively, of this Indenture, and the word "Annex" refers to an
Annex to this Indenture.

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

         "Adjusted Net Assets" has the meaning specified in Section 108 of Annex
A.

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

         "Attributable Indebtedness", when used with respect to any
Sale-Leaseback Transaction, means, as at the time of determination, the present
value (discounted at the rate set forth or implicit in the terms of the lease
included in such transaction) of the total obligations of the lessee for rental
payments (other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items that do not constitute payments for property rights)
during the remaining term of the lease included in such Sale-Leaseback
Transaction (including any period for which such lease has been extended). In
the case of any lease that is terminable by the lessee upon the payment of a
penalty or other termination payment, such amount shall be the lesser of the
amount determined assuming termination upon the first date such lease may be
terminated (in which case the amount shall also include the amount of the
penalty or termination payment, but no rent shall be considered as required to
be paid under such lease subsequent to the first date upon which it may be so
terminated) or the amount determined assuming no such termination.

         "Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.

         "Authorized Agent" has the meaning specified in Section 105 of Annex A.

         "Authorized Newspaper" means a newspaper, in the English language or in
an official language of the country of publication, customarily published on
each Business Day, whether or not published on Saturdays, Sundays or holidays,
and of general circulation in the place in connection with which the term is
used or in the financial community of such place.

         "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors or the protection of creditors.

                                      -2-
<PAGE>   9

         "Board of Directors" means the board of directors of the General
Partner, or the executive or any other committee of that board duly authorized
to act in respect thereof. If the Partnership shall change its form of entity to
other than a limited partnership, the references to officers or the Board of
Directors of the General Partner shall mean the officers or the Board of
Directors (or other comparable governing body) of the Partnership.

         "Board Resolution" means a copy of a resolution certified by the
Corporate Secretary of the General Partner, the principal financial officer of
the General Partner or any other authorized officer of the General Partner or a
Person duly authorized by any of them, to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification,
and delivered to the Trustee.

         "Business Day", when used with respect to any Place of Payment or other
location, means, except as otherwise provided as contemplated by Section 301
with respect to any series of Securities, each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in that
Place of Payment or other location are authorized or obligated by law, executive
order or regulation to close.

         "Capital Interests" means any and all shares, interests,
participations, rights or other equivalents (however designated) of capital
stock, including, without limitation, with respect to partnerships, partnership
interests (whether general or limited) and any other interest or participation
that confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, such partnership.

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

         "Consolidated Net Tangible Assets" means, at any date of determination,
the total amount of assets after deducting therefrom (i) all current liabilities
(excluding (A) any current liabilities that by their terms are extendable or
renewable at the option of the obligor thereon to a time more than 12 months
after the time as of which the amount thereof is being computed, and (B) current
maturities of long-term debt), and (ii) the value (net of any applicable
reserves) of all goodwill, trade names, trademarks, patents and other like
intangible assets, all as set forth, or on a pro forma basis would be set forth,
on the consolidated balance sheet of the Partnership and its consolidated
subsidiaries for the Partnership's most recently completed fiscal quarter,
prepared in accordance with generally accepted accounting principles.

         "Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which at the date hereof is 40 Broad Street, Suite 550, New York,
New York 10004.

         "corporation" includes corporations, associations, partnerships
(general or limited), limited liability companies, joint-stock companies and
business trusts.

                                      -3-
<PAGE>   10

         "covenant defeasance" has the meaning specified in Section 1303.

         "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.

         "Debt" means any obligation created or assumed by any Person for the
repayment of money borrowed, any purchase money obligation created or assumed by
such Person and any guarantee of the foregoing.

         "Default" means, with respect to a series of Securities, any event
which is, or after notice or lapse of time or both would become, an Event of
Default with respect to Securities of such series.

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

         "defeasance" has the meaning specified in Section 1302.

         "Definitive Security" means a Security other than a Global Security or
a temporary Security.

         "Depositary" means, with respect to Securities of any series issuable
in whole or in part in the form of one or more Global Securities, a clearing
agency registered under the Exchange Act that is designated to act as Depositary
for such Securities as contemplated by Section 301, until a successor Depositary
shall have become such pursuant to the applicable provisions of this Indenture,
and thereafter shall mean or include each Person which is then a Depositary
hereunder, and if at any time there is more than one such Person, shall be a
collective reference to such Persons.

         "Dollar" or "$" means the coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public and
private debts.

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

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

         "Funded Debt" means all Debt maturing one year or more from the date of
the creation thereof, all Debt directly or indirectly renewable or extendable,
at the option of the debtor, by its terms or by the terms of any instrument or
agreement relating thereto, to a date one year or more from the date of the
creation thereof, and all Debt under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more.

         "Funding Guarantor" has the meaning specified in Section 103 of Annex
A.

         "General Partner" means Kinder Morgan G.P., Inc., a Delaware
corporation.

                                      -4-
<PAGE>   11

         "Global Security" means a Security in global form that evidences all or
part of the Securities of any series and is registered in the name of, the
Depositary for such Securities or a nominee thereof.

         "Guarantor" means (i) each Subsidiary of the Partnership that becomes a
guarantor of the Securities of any series pursuant to Section 1401 and (ii) any
Subsidiary of the Partnership that is a successor corporation of any Subsidiary
of the Partnership referred to in clause (i). The term "Guarantor" shall not
include any Subsidiary of the Partnership referred to in clause (i) or (ii) that
shall have been released from its obligations under a Guaranty pursuant to
Section 1402.

         "Guaranty" means a guaranty of the Securities of any series containing
provisions substantially in the form specified in Annex A, and such other
provisions, not inconsistent herewith, as are customary in guaranties, executed
and delivered by one or more Subsidiaries of the Partnership as required by
Section 1401.

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

         "Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument, and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" also shall include the terms of particular
series of Securities established as contemplated by Section 301.

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

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

         "Issue Date"means with respect to any series of Debt Securities issued
under either Indenture the date on which Debt Securities of that series are
initially issued under that Indenture.

         "Judgment Currency" has the meaning specified in Section 107 of Annex
A.

         "Lien" means, as to any entity, any mortgage, lien, pledge, security
interest or other encumbrance in or on, or adverse interest or title of any
vendor, lessor, lender or other secured party to or of the entity under
conditional sale or other title retention agreement or capital lease with
respect to, any property or asset of the entity, but excluding agreements to
refrain from granting Liens.

         "Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or

                                      -5-
<PAGE>   12

herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.

         "Non-U.S. Guarantor" has the meaning specified in Section 105 of Annex
A.

         "Notice of Default" means a written notice of the kind specified in
Section 501(3).

         "Officers' Certificate" of a Person means a certificate signed by the
Chairman of the Board, the Vice Chairman, the President or a Vice President, and
by the Treasurer or the Secretary, of the Person, or if such Person is a
partnership, of its general partner, and delivered to the Trustee. One of the
officers or such other Persons (as applicable) signing an Officers' Certificate
given pursuant to Section 1004 shall be the principal executive, financial or
accounting officer of the Person, or if such Person is a partnership, of its
general partner.

         "Opinion of Counsel" means a written opinion of legal counsel, who may
be an employee of or counsel for the Partnership or a Guarantor, which opinion
shall comply with the provisions of Sections 102 and 103. Such counsel shall be
acceptable to the Trustee, whose acceptance shall not be unreasonably withheld.

         "Original Issue Discount Security" means any Security which provides
for an amount less than the stated principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502.

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

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

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

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

                  (iv) Securities, except to the extent provided in Sections
1302 and 1303, with respect to which the Partnership has effected defeasance or
covenant defeasance as provided in Article XIII;

                                      -6-
<PAGE>   13

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (A) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof on such date pursuant to Section 502, (B) the principal amount of a
Security denominated in one or more currencies or currency units other than U.S.
dollars shall be the U.S. dollar equivalent of such currencies or currency
units, determined in the manner provided as contemplated by Section 301 on the
date of original issuance of such Security, of the principal amount (or, in the
case of an Original Issue Discount Security, the U.S. dollar equivalent (as so
determined) on the date of original issuance of such Security, of the amount
determined as provided in Clause (A) above) of such Security, and (C) Securities
owned by the Partnership or any other obligor upon the Securities or any
Affiliate of the Partnership or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned as described in Clause
(C) above which have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Securities and that the pledgee is not the
Partnership or any other obligor upon the Securities or any Affiliate of the
Partnership or of such other obligor.

         "Pari Passu Debt" means any Debt of the Partnership, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Debt, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Debt shall be subordinated in right of payment to the
Securities.

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

         "Partnership Request" or "Partnership Order" means a written request or
order signed in the name of the Partnership by the Chairman of the Board, the
Vice Chairman, the President or a Vice President of the General Partner, and by
the Treasurer or Secretary of the General Partner, and delivered to the Trustee,
or if the Partnership shall change its form of entity to other than a limited
partnership, by Persons or officers, members, agents and the like positions
comparable to those of the foregoing nature, as applicable.

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

         "Periodic Offering" means an offering of Securities of a series from
time to time, the specific terms of which Securities, including, without
limitation, the rate or rates of interest or formula for determining the rate or
rates of interest thereon, if any, the Stated Maturity or Stated Maturities
thereof, the original issue date or dates thereof, the redemption provisions, if
any, with respect thereto, and any other terms specified as contemplated by
Section 301 with respect thereto, are to be determined by the Partnership upon
the issuance of such Securities.

                                      -7-
<PAGE>   14

         "Permitted Liens" means (i) Liens upon rights-of-way for pipeline
purposes; (ii) any statutory or governmental Lien or Lien arising by operation
of law, or any mechanics', repairmen's, materialmen's, suppliers', carriers',
landlords', warehousemen's or similar Lien incurred in the ordinary course of
business which is not yet due or which is being contested in good faith by
appropriate proceedings and any undetermined Lien which is incidental to
construction, development, improvement or repair; (iii) the right reserved to,
or vested in, any municipality or public authority by the terms of any right,
power, franchise, grant, license, permit or by any provision of law, to purchase
or recapture or to designate a purchaser of, any property; (iv) Liens of taxes
and assessments which are (A) for the then current year, (B) not at the time
delinquent, or (C) delinquent but the validity of which is being contested at
the time by the Partnership or any Subsidiary in good faith; (v) Liens of, or to
secure performance of, leases, other than capital leases; (vi) any Lien upon, or
deposits of, any assets in favor of any surety company or clerk of court for the
purpose of obtaining indemnity or stay of judicial proceedings; (vii) any Lien
upon property or assets acquired or sold by the Partnership or any Subsidiary
resulting from the exercise of any rights arising out of defaults on
receivables; (viii) any Lien incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance, temporary
disability, social security, retiree health or similar laws or regulations or to
secure obligations imposed by statute or governmental regulations; (ix) any Lien
in favor of the Partnership or any Subsidiary; (x) any Lien in favor of the
United States of America or any state thereof, or any department, agency or
instrumentality or political subdivision of the United States of America or any
state thereof, to secure partial, progress, advance, or other payments pursuant
to any contract or statute, or any Debt incurred by the Partnership or any
Subsidiary for the purpose of financing all or any part of the purchase price
of, or the cost of constructing, developing, repairing or improving, the
property or assets subject to such Lien; or (xi) any Lien securing industrial
development, pollution control or similar revenue bonds; (xii) any Lien securing
Debt of the Partnership or any Subsidiary, all or a portion of the net proceeds
of which are used, substantially concurrent with the funding thereof (and for
purposes of determining such "substantial concurrence," taking into
consideration, among other things, required notices to be given to Holders of
outstanding securities under this Indenture (including the Securities) in
connection with such refunding, refinancing or repurchase, and the required
corresponding durations thereof), to refinance, refund or repurchase all
outstanding securities under this Indenture (including the Securities),
including the amount of all accrued interest thereon and reasonable fees and
expenses and premium, if any, incurred by the Partnership or any Subsidiary in
connection therewith; (xiii) Liens in favor of any Person to secure obligations
under the provisions of any letters of credit, bank guarantees, bonds or surety
obligations required or requested by any governmental authority in connection
with any contract or statute; or (xiv) any Lien upon or deposits of any assets
to secure performance of bids, trade contracts, leases or statutory obligations.

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

         "Place of Payment", when used with respect to the Securities of any
series, means, unless otherwise specifically provided for with respect to such
series as contemplated by Section 301,

                                      -8-
<PAGE>   15

the office or agency of the Partnership in The City of New York and such other
place or places where, subject to the provisions of Section 1002, the principal
of and any premium and interest on the Securities of that series are payable as
specified as contemplated by Section 301.

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

         "Principal Property" means, whether owned or leased on the date of this
Indenture or thereafter acquired, (i) any pipeline assets of the Partnership or
any Subsidiary, including any related facilities employed in the transportation,
distribution, storage or marketing of refined petroleum products, natural gas
liquids and carbon dioxide, that are located in the United States of America or
any territory or political subdivision thereof, and (ii) any processing or
manufacturing plant or terminal owned or leased by the Partnership or any
Subsidiary that is located in the United States or any territory or political
subdivision thereof, except, in the case of either of the foregoing clauses (i)
or (ii), (A) any such assets consisting of inventories, furniture, office
fixtures and equipment (including data processing equipment), vehicles and
equipment used on, or useful with, vehicles, and (B) any such assets, plant or
terminal which, in the opinion of the Board of Directors, is not material in
relation to the activities of the Partnership or of the Partnership and its
Subsidiaries, taken as a whole.

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

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

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

         "Sale-Leaseback Transaction" means the sale or transfer by the
Partnership or any Subsidiary of any Principal Property to a Person (other than
the Partnership or a Subsidiary) and the taking back by the Partnership or any
Subsidiary, as the case may be, of a lease of such Principal Property.

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

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

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

                                      -9-
<PAGE>   16

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

         "Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of the Capital Interests of such Person entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof or, in the case of a partnership, more than 50% of the
partners' Capital Interests (considering all partners' Capital Interests as a
single class), is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of such Person or a
combination thereof.

         "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed, except as otherwise
provided in Section 905; provided, however, that if the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.

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

         "U.S. Government Obligations" means securities which are (i) direct
obligations of the United States for the payment of which its full faith and
credit is pledged, or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States, each of which are not callable or redeemable at the option of the
issuer thereof.

         "Vice President", when used with respect to the Partnership, means any
vice president of the General Partner, or when used with respect to the Trustee,
means any vice president of the Trustee.

SECTION 102. Compliance Certificates and Opinions.

         Upon any application or request by the Partnership or any Guarantor to
the Trustee to take or refrain from taking any action under any provision of
this Indenture, the Partnership shall furnish to the Trustee an Officers'
Certificate in form and substance reasonably satisfactory to the Trustee stating
that, in the opinion of the signers, all conditions precedent and covenants, if
any, provided for in this Indenture relating to the proposed action have been
complied with, and an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel, all
such conditions precedent have been complied with. Each

                                      -10-
<PAGE>   17

such certificate or opinion shall be given in the form of an Officers'
Certificate, if to be given by officers of the General Partner or any Guarantor,
or an Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.

         Every Officers' Certificate or Opinion of Counsel (except for
certificates provided for in Section 1004) shall include:

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

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

                  (3) a statement that, in the opinion of each such individual,
he 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, in the opinion of each such
individual, such condition or covenant has been complied with.

SECTION 103. Form of Documents Delivered to Trustee.

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

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

         Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

                                      -11-
<PAGE>   18

SECTION 104. Acts of Holders; Record Dates.

         Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed (either physically or by means of a facsimile
or an electronic transmission, provided that such electronic transmission is
transmitted through the facilities of a Depositary) by such Holders in person or
by an agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered (either physically or by means of a facsimile or an electronic
transmission, provided that such electronic transmission is transmitted through
the facilities of a Depositary) to the Trustee and, where it is hereby expressly
required, to the Partnership. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 315 of the
Trust Indenture Act) conclusive in favor of the Trustee and the Partnership, if
made in the manner provided in this Section.

         Without limiting the generality of the foregoing, a Holder, including a
Depositary that is a Holder of a Global Security, may make, give or take, by a
proxy or proxies, duly appointed in writing, any request, demand, authorization,
direction, notice, consent, waiver or other action provided in this Indenture to
be made, given or taken by Holders, and a Depositary that is a Holder of a
Global Security may provide its proxy or proxies to the beneficial owners of
interests in any such Global Security.

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

         The ownership, principal amount and serial numbers of Securities held
by any Person, and the date of commencement of such Person's holding the same,
shall be proved by the Security Register.

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

                                      -12-
<PAGE>   19

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

         The Partnership may set any day as the record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to give
or take any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders of Securities of such series, but the Partnership shall have no
obligation to do so. With regard to any record date set pursuant to this
paragraph, the Holders of Outstanding Securities of the relevant series on such
record date (or their duly appointed agents), and only such Persons, shall be
entitled to give or take the relevant action, whether or not such Holders remain
Holders after such record date.

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

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

                  (1) the Trustee by any Holder or by the Partnership or any
Guarantor shall be sufficient for every purpose hereunder if made in writing and
actually received by the Trustee at its office at 5847 San Felipe, Suite 1050,
Houston, Texas 77057, or at any other address previously furnished in writing by
the Trustee, or

                  (2) the Partnership or any Guarantor by the Trustee or by any
Holder shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
the Partnership or a Guarantor, if any, addressed to it at One Allen Center,
Suite 1000, 500 Dallas, Houston Texas, 77002, to the attention of the Corporate
Secretary, or at any other address previously furnished in writing to the
Trustee by the Partnership.

SECTION 106. Notice to Holders; Waiver.

         Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid (if international mail, by
air mail), to each Holder affected by such event, at his address as it appears
in the Security Register, not later than the latest date (if any), and not
earlier than the earliest date (if any), prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed to a Holder in the manner herein prescribed
shall be conclusively deemed to have been received by such Holder, whether or
not such Holder actually receives such notice.

                                      -13-
<PAGE>   20

         Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.

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

SECTION 107. Conflict with Trust Indenture Act.

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

SECTION 108. Effect of Headings and Table of Contents.

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

SECTION 109. Successors and Assigns.

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

SECTION 110. Separability Clause.

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

SECTION 111. Benefits of Indenture.

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

SECTION 112. Governing Law.

         This Indenture and the Securities shall be governed by and construed in
accordance with the law of the State of New York.

                                      -14-
<PAGE>   21

SECTION 113. Legal Holidays.

         In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Securities
(other than a provision of the Securities of any series which specifically
states that such provision shall apply in lieu of this Section)) payment of
interest or principal (and premium, if any) need not be made at such Place of
Payment on such date, but may be made on the next succeeding Business Day at
such Place of Payment with the same force and effect as if made on the Interest
Payment Date or Redemption Date, or at the Stated Maturity, provided that no
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be.

SECTION 114. Language of Notices, Etc.

         Any request, demand, authorization, direction, notice, consent, waiver
or Act required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.

SECTION 115. Interest Limitation.

         It is the intention of the Partnership to conform strictly to all
applicable usury laws and any subsequent revisions, repeals or judicial
interpretations thereof. Accordingly, if the transactions contemplated hereby
would be usurious under any applicable law then, in that event, notwithstanding
anything to the contrary in the Securities or this Indenture, it is agreed as
follows: (i) the aggregate of all consideration which constitutes interest under
applicable law with respect to a Security shall under no circumstances exceed
the maximum amount allowed by applicable law, and any excess shall be credited
to the principal amount of such Security (or, if the principal amount of such
Security shall have been paid in full, refunded to the Partnership), to the
extent permitted by applicable law; and (ii) in the event that the maturity of
any Security is accelerated or in the event of any redemption of such Security,
then such consideration that constitutes interest under applicable law may never
include more than the maximum amount allowed by applicable law, and any excess
shall be credited to the principal amount of such Security (or, if the principal
amount of such Security shall be paid in full, refunded to the Partnership), to
the extent permitted by applicable law. All calculations made to compute the
rate of interest with respect to a Security for the purpose of determining
whether such rate exceeds the maximum amount allowed by applicable law shall be
made, to the extent permitted by such applicable law, by allocating and
spreading during the period of the full stated term of such Security all
interest any time contracted for, taken, reserved, charged or received by such
Holder or by the Trustee on behalf of any such Holder in connection therewith so
that the amount or rate of interest charged for any and all periods of time
during the term of the Security does not exceed the maximum amount or rate of
interest allowed to be charged by law during the relevant period of time.
Notwithstanding any of the foregoing, if at any time applicable laws shall be
changed so as to permit a higher rate or amount of interest to be charged than
that permitted prior to such change, then unless prohibited by law, references
in this Indenture or any Security to "applicable law" when used in the context
of determining the maximum interest or

                                      -15-
<PAGE>   22

rate of interest that can be charged shall be deemed to refer to such applicable
law as so amended to allow the greater amount or rate of interest.

         The right to accelerate maturity of any Security does not include the
right to accelerate any interest which has not otherwise accrued to the date of
such acceleration, provided, however, that the foregoing shall not prohibit the
continuing accrual after acceleration of interest in accordance with the terms
of the Indenture and such Security.

SECTION 116. Non-Recourse to the General Partner; No Personal Liability of
Officers, Directors, Employees or Partners.

         Obligations of the Partnership, or any Guarantor, as such, under this
Indenture and the Securities hereunder are non-recourse to the General Partner,
and its respective Affiliates (other than the Partnership and the Guarantors),
and payable only out of cash flow and assets of the Partnership and the
Guarantors. The Trustee, and each Holder of a Security by its acceptance
thereof, will be deemed to have agreed in this Indenture that (1) neither the
General Partner nor its assets (nor any of its respective Affiliates other than
the Partnership or the Guarantors, nor their respective assets) shall be liable
for any of the obligations of the Partnership or the Guarantors under this
Indenture or such Securities, and (2) no director, officer, employee,
stockholder or unitholder, as such, of the Partnership, the Guarantors, the
Trustee, the General Partner or any Affiliate of any of the foregoing entities
shall have any personal liability in respect of the obligations of the
Partnership or the Guarantors under this Indenture or such Securities by reason
of his, her or its status.

                                   ARTICLE II

                                 SECURITY FORMS

SECTION 201. Forms Generally.

         The Securities of each series shall be in substantially the form set
forth in this Article, or in such other form as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental hereto,
in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with applicable tax
laws or the rules of any securities exchange or automated quotation system on
which the Securities of such series may be listed or traded or Depositary
therefor or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of the Securities. If
the form of Securities of any series is established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action shall be
certified by an authorized officer or other authorized Person on behalf of the
Partnership and delivered to the Trustee at or prior to the delivery of the
Partnership Order contemplated by Section 303 for the authentication and
delivery of such Securities. Any form of Security approved by or pursuant to a
Board Resolution

                                      -16-
<PAGE>   23

must be acceptable as to form by the Trustee, such acceptance to be evidenced by
the Trustee's authentication of Securities in that form. The Definitive
Securities shall be printed, lithographed or engraved on steel engraved borders
or may be produced in any other manner, all as determined by the officers
executing such Securities, as evidenced by their execution of such Securities.

SECTION 202. Form of Face of Security.

         [Insert any legend required by the United States Internal Revenue Code
and the regulations thereunder.]

         [If a Global Security,--insert legend required by Section 204 of the
Indenture] [If applicable, insert--UNLESS THIS SECURITY IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION, TO THE PARTNERSHIP OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.]

                      KINDER MORGAN ENERGY PARTNERS, L. P.

                               [TITLE OF SECURITY]

NO.                                                                        U.S.$

[CUSIP No.                   ]

         KINDER MORGAN ENERGY PARTNERS, L. P., a Delaware limited partnership

(herein called the "Partnership", which term includes any successor Person under
the Indenture hereinafter referred to), for value received, hereby promises to
pay to                           , or registered assigns, the principal sum of
                        United States Dollars on [if the Security is to bear
interest prior to Maturity, insert--, and to pay interest thereon from       ,
or from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semi-annually on                and             in each year,
commencing               , at the rate of      % per annum, until the principal
hereof is paid or made available for payment [if applicable, insert--, and at
the rate of % per annum on any overdue principal and premium and on any overdue
installment of interest]. [If applicable, insert -- The amount of interest
payable for any period shall be computed on the basis of twelve 30-day months
and a 360-day year. The amount of interest payable for any partial period shall
be computed on the

                                      -17-
<PAGE>   24
basis of a 360-day year of twelve 30-day months and the days elapsed in any
partial month. In the event that any date on which interest is payable on this
Security is not a Business Day, then a payment of the interest payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay) with the
same force and effect as if made on the date the payment was originally payable.
A "Business Day" shall mean, when used with respect to any Place of Payment,
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by
law, executive order or regulation to close.] The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the              or
            (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice of which shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange or automated quotation system on which the Securities of
this series may be listed or traded, and upon such notice as may be required by
such exchange or automated quotation system, all as more fully provided in such
Indenture].

         [If the Security is not to bear interest prior to Maturity, insert--The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of         % per annum, which shall accrue from the date of
such default in payment to the date payment of such principal has been made or
duly provided for. Interest on any overdue principal shall be payable on demand.
Any such interest on any overdue principal that is not so paid on demand shall
bear interest at the rate of         % per annum, which shall accrue from the
date of such demand for payment to the date payment of such interest has been
made or duly provided for, and such interest shall also be payable on demand.]

         [If a Global Security, insert--Payment of the principal of [(and
premium, if any)] and [if applicable, insert--any such] interest on this
Security will be made by transfer of immediately available funds to a bank
account in                   designated by the Holder in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts [state other currency].]

         [If a Definitive Security, insert--Payment of the principal of [(and
premium, if any)] and [if applicable, insert--any such] interest on this
Security will be made at the office or agency of the Partnership maintained for
that purpose in                      , [in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts] [state other currency] [or subject to any laws or
regulations applicable thereto and to the right of the Partnership (as provided
in the Indenture) to rescind the designation of any

                                      -18-
<PAGE>   25

such Paying Agent, at the [main] offices of                          in
                    and                    in                   , or at such
other offices or agencies as the Partnership may designate, by [United States
Dollar] [state other currency] check drawn on, or transfer to a [United States
Dollar] account maintained by the payee with, a bank in The City of New York
[      ] (so long as the applicable Paying Agent has received proper transfer
instructions in writing at least [      ] days prior to the payment date)] [if
applicable, insert--; provided, however, that payment of interest may be made at
the option of the Partnership by [United States Dollar] [state other currency]
check mailed to the addresses of the Persons entitled thereto as such addresses
shall appear in the Security Register] [or by transfer to a [United States
Dollar] [state other currency] account maintained by the payee with a bank in
The City of New York [state other Place of Payment] (so long as the applicable
Paying Agent has received proper transfer instructions in writing by the Record
Date prior to the applicable Interest Payment Date)].]

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

         Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

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

Dated:
                                       KINDER MORGAN ENERGY PARTNERS, L. P.,

                                       By: Kinder Morgan G.P., Inc.,
                                           Its General Partner

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

SECTION 203. Form of Reverse of Security.

         This Security is one of a duly authorized issue of securities of the
Partnership (the "Securities"), issued and to be issued in one or more series
under an Indenture dated as of January 2, 2001 (the "Indenture"), between the
Partnership and First Union National Bank, as Trustee (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, obligations, duties and immunities
thereunder of the Partnership, the Guarantors, the Trustee and the Holders of
the Securities and of the terms upon

                                      -19-
<PAGE>   26

which the Securities are, and are to be, authenticated and delivered. As
provided in the Indenture, the Securities may be issued in one or more series,
which different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest, if any, at different rates, may be
subject to different redemption provisions, if any, may be subject to different
sinking, purchase or analogous funds, if any, may be subject to different
covenants and Events of Default and may otherwise vary as in the Indenture
provided or permitted. This Security is one of the series designated on the face
hereof [if applicable, insert--, limited in aggregate principal amount to
U.S.$     ].

         [If applicable, insert--The Securities of this series are subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, [if
applicable, insert--(1)            on in any year commencing with the year
and ending with the year       through operation of the sinking fund for this
series at a Redemption Price equal to 100% of the principal amount, and (2)] at
any time [if applicable, insert--on or after            ,        ], as a whole
or in part, at the election of the Partnership, at the following Redemption
Prices (expressed as percentages of the principal amount): If redeemed [if
applicable, insert--on or before               ,           %, and if redeemed]
during the 12-month period beginning                          of the years
indicated,

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

</TABLE>

and thereafter at a Redemption Price equal to         % of the principal amount,
together in the case of any such redemption [if applicable, insert--(whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]

         [If applicable, insert--The Securities of this series are subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, (1) on
           in any year commencing with the year      and ending with the year
     through operation of the sinking fund for this series at the Redemption
Prices for redemption through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table below, and (2) at
any time [if applicable, insert--on or after        ], as a whole or in part, at
the election of the Partnership, at the Redemption Prices for redemption
otherwise than through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below: If redeemed during the
12-month period beginning                 of the years indicated,

                                      -20-
<PAGE>   27

<TABLE>
<CAPTION>

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

</TABLE>

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

         [If applicable, insert--The sinking fund for this series provides for
the redemption on            in each year beginning with the year       and
ending with the year         of [if applicable,--not less than $
("mandatory sinking fund") and not more than] $       aggregate principal amount
of Securities of this series. Securities of this series acquired or redeemed by
the Partnership otherwise than through [if applicable,--mandatory] sinking fund
payments may be credited against subsequent [if applicable,--mandatory] sinking
fund payments otherwise required to be made [if applicable,--in the inverse
order in which they become due].]

         [If the Security is subject to redemption in part of any kind,
insert--In the event of redemption of this Security in part only, a new Security
or Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.]

         [If applicable, insert--The Securities of this series are not
redeemable prior to Stated Maturity.]

         [If the Security is not an Original Issue Discount Security, insert--If
an Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]

         [If the Security is an Original Issue Discount Security, insert--If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to--insert formula for determining the
amount. Upon payment (1) of the amount of principal so declared due and payable,
and (2) of interest on any overdue principal and overdue interest, all of the
Partnership's and the Guarantors' obligations in respect of the payment of the
principal of and interest, if any, on the Securities of this series shall
terminate.]

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Partnership or the Guarantors and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Partnership,
the Guarantors and the Trustee with the consent of not less than the Holders of
a majority in aggregate principal amount of the Outstanding Securities of all
series to

                                      -21-
<PAGE>   28

be affected (voting as one class). The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount of the
Outstanding Securities of all affected series (voting as one class), on behalf
of the Holders of all Securities of such series, to waive compliance by the
Partnership and the Guarantors with certain provisions of the Indenture. The
Indenture permits, with certain exceptions as therein provided, the Holders of a
majority in principal amount of Securities of any series then Outstanding to
waive past defaults under the Indenture with respect to such series and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.

         As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or [any premium or] interest
hereon on or after the respective due dates expressed herein.

         No reference herein to the Indenture and no provision of this Security
or of the Indenture shall, without the consent of the Holder, alter or impair
the obligation of the Partnership, which is absolute and unconditional, to pay
the principal of and [any premium and] interest on this Security at the times,
place(s) and rate, and in the coin or currency, herein prescribed, except for
Section 115 of the Indenture (which limits interest to the maximum amount
permissible by law), the provisions of which are incorporated herein by
reference.

         [If a Global Security, insert--This Global Security or portion hereof
may not be exchanged for Definitive Securities of this series except in the
limited circumstances provided in the Indenture.

         The holders of beneficial interests in this Global Security will not be
entitled to receive physical delivery of Definitive Securities except as
described in the Indenture and will not be considered the Holders thereof for
any purpose under the Indenture.]

         [If a Definitive Security, insert--As provided in the Indenture and
subject to certain limitations therein set forth, the transfer of this Security
is registerable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Partnership in [if
applicable, insert -- any place where the principal of and any premium and
interest on this Security are payable] [if applicable, insert-- The City of New
York [, or, subject

                                      -22-
<PAGE>   29

to any laws or regulations applicable thereto and to the right of the
Partnership (limited as provided in the Indenture) to rescind the designation of
any such transfer agent, at the [main] offices of              in            and
in            or at such other offices or agencies as the Partnership may
designate]], duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Partnership and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series and of like tenor, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.]

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

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

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

         Obligations of the Partnership and the Guarantors under the Indenture
and the Securities thereunder, including this Security, are non-recourse to
Kinder Morgan G.P., Inc. (the "General Partner") and its Affiliates (other than
the Partnership and the Guarantors), and payable only out of cash flow and
assets of the Partnership and the Guarantors. The Trustee, and each Holder of a
Security by its acceptance hereof, will be deemed to have agreed in the
Indenture that (1) neither the General Partner nor its assets (nor any of its
Affiliates other than the Partnership or the Guarantors, nor their respective
assets) shall be liable for any of the obligations of the Partnership or the
Guarantors under the Indenture or such Securities, including this Security, and
(2) no director, officer, employee, stockholder or unitholder, as such, of the
Partnership, the Guarantors, the Trustee, the General Partner or any Affiliate
of any of the foregoing entities shall have any personal liability in respect of
the obligations of the Partnership or the Guarantors under the Indenture or such
Securities by reason of his, her or its status.

         The Indenture contains provisions that relieve the Partnership and the
Guarantors from the obligation to comply with certain restrictive covenants in
the Indenture and for satisfaction and discharge at any time of the entire
indebtedness upon compliance by the Partnership and the Guarantors with certain
conditions set forth in the Indenture.

                                      -23-
<PAGE>   30

         [The obligations of the Partnership pursuant to the Indenture and the
Securities, including the repurchase obligations under the Indenture, will be
unconditionally guaranteed, on a senior unsecured basis, by each Guarantor.]

         This Security shall be governed by and construed in accordance with the
laws of the State of New York.

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

         [If a Definitive Security, insert as a separate page--

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________ (Please Print or
Typewrite Name and Address of Assignee) the within instrument of KINDER MORGAN
ENERGY PARTNERS, L. P. and does hereby irrevocably constitute and appoint
________________________ Attorney to transfer said instrument on the books of
the within-named Partnership, with full power of substitution in the premises.

Please Insert Social Security or
Other Identifying Number of Assignee:

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

Dated:
      ----------------------------          ------------------------------------
                                                        (Signature)
Signature Guarantee:
                    ------------------------------------------------------------
                                (Participant in a Recognized Signature
                                     Guaranty Medallion Program)

         NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.]

SECTION 204. Global Securities.

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

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

                                      -24-
<PAGE>   31

                  BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
                  IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED
                  UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN
                  LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO
                  THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.

         If Securities of a series are issuable in whole or in part in the form
of one or more Global Securities, as contemplated by Section 301, then,
notwithstanding Clause (9) of Section 301 and the provisions of Section 302, any
Global Security shall represent such of the Outstanding Securities of such
series as shall be specified therein and may provide that it shall represent the
aggregate amount of Outstanding Securities from time to time endorsed thereon
and that the aggregate amount of Outstanding Securities represented thereby may
from time to time be reduced or increased, as the case may be, to reflect
exchanges. Any endorsement of a Global Security to reflect the amount, or any
reduction or increase in the amount, of Outstanding Securities represented
thereby shall be made in such manner and upon instructions given by such Person
or Persons as shall be specified therein or in a Partnership Order. Subject to
the provisions of Sections 303, 304 and 305, the Trustee shall deliver and
redeliver any Global Security in the manner and upon instructions given by the
Person or Persons specified therein or in the applicable Partnership Order. Any
instructions by the Partnership with respect to endorsement or delivery or
redelivery of a Global Security shall be in a Partnership Order (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel).

         The provisions of the last sentence of Section 303 shall apply to any
Security represented by a Global Security if such Security was never issued and
sold by the Partnership and the Partnership delivers to the Trustee the Global
Security together with a Partnership Order (which need not comply with Section
102 and need not be accompanied by an Opinion of Counsel) with regard to the
reduction or increase, as the case may be, in the principal amount of Securities
represented thereby, together with the written statement contemplated by the
last sentence of Section 303.

SECTION 205. Form of Trustee's Certificate and Authorization.

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

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

                                       FIRST UNION NATIONAL BANK,
                                       As Trustee

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

                                      -25-
<PAGE>   32

                                   ARTICLE III

                                 THE SECURITIES

SECTION 301. Amount Unlimited; Issuable in Series.

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

         The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution (and, subject to Section 303,
to the extent established pursuant to rather than set forth in a Board
Resolution, in an Officers' Certificate or Partnership Order setting forth, or
determining the manner of, such establishment) or established in one or more
indentures supplemental hereto, prior to the issuance of Securities of any
series,

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

                  (2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 906 or 1107 and except for any
Securities which, pursuant to Section 303, are deemed never to have been
authenticated and delivered hereunder);

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

                  (4) the date or dates on which the Securities will be issued
and on which the principal of, and premium, if any, on the Securities of the
series is payable or the method of determination thereof;

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

                  (6) the place or places where, subject to the provisions of
Section 1002, the principal of and any premium and interest on Securities of the
series shall be payable, Securities of the series may be surrendered for
registration of transfer, Securities of the series may be surrendered for
exchange and notices, and demands to or upon the Partnership in respect of the
Securities of the series and this Indenture may be served;

                                      -26-
<PAGE>   33

                  (7) the period or periods, if any, within which, the price or
prices at which and the terms and conditions upon which Securities of the series
may be redeemed, in whole or in part, at the option of the Partnership or
otherwise, if the Partnership is to have that option;

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

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

                  (10) whether payment of principal of and premium, if any, and
interest, if any, on the Securities of the series shall be without deduction for
taxes, assessments or governmental charges paid by Holders of the series;

                  (11) the currency, currencies or currency units in which
payment of the principal of and any premium and interest on any Securities of
the series shall be denominated, payable, redeemable or purchasable if other
than the currency of the United States of America and the manner of determining
the equivalent thereof in the currency of the United States of America for
purposes of the definition of "Outstanding" in Section 101;

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

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

                  (14) the right, if any, of the Partnership to defer payments
of interest by extending the interest payment periods and specify the duration
of such extension, the Interest Payment Dates on which such interest shall be
payable and whether and under what circumstances additional interest on amounts
deferred shall be payable;

                  (15) if other than the principal amount thereof, the portion
of the principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502 or
provable in bankruptcy pursuant to Section 504 or the method of determination
thereof;

                                      -27-
<PAGE>   34

                  (16) if and as applicable, that the Securities of the series
shall be issuable in whole or in part in the form of one or more Global
Securities (and whether in temporary or permanent global form) and, in such
case, the Depositary or Depositaries for such Global Security or Global
Securities and any circumstances other than those set forth in Section 305 in
which any such Global Security may be transferred to, and registered and
exchanged for Securities registered in the name of, a Person other than the
Depositary for such Global Security or a nominee thereof and in which any such
transfer may be registered;

                  (17) any deletions from, modifications of or additions to the
Events of Default set forth in Section 501 or the covenants of the Partnership
set forth in Article X pertaining to the Securities of the series;

                  (18) if and the terms and conditions upon which any Securities
of the series may be converted into or exchanged for securities, which may
include, without limitation, capital stock, of any class or series of the
Partnership or any other issuer;

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

                  (20) if other than as provided in Sections 1302 and 1303, the
terms and conditions upon which and the manner in which such series of
Securities may be defeased or discharged;

                  (21) if other than the Trustee, the identity of any other
trustee, the Security Registrar and any Paying Agent;

                  (22) any restrictions or other provisions with respect to the
transfer or exchange of the Securities; and

                  (23) any other terms of the Securities of the series (which
terms shall not be inconsistent with the provisions of this Indenture, except as
permitted by Section 901(5)).

         All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to the Board Resolution or Officers' Certificate referred to above or in any
such indenture supplemental hereto.

         Any such Board Resolution or Officers' Certificate referred to above
with respect to Securities of any series filed with the Trustee on or before the
initial issuance of the Securities of such series shall be incorporated herein
by reference with respect to Securities of such series and shall thereafter be
deemed to be a part of the Indenture for all purposes relating to Securities of
such series as fully as if such Board Resolution or Officers' Certificate were
set forth herein in full.

                                      -28-
<PAGE>   35

         All Securities of any one series need not be issued at the same time
and, unless otherwise provided, a series may be reopened, without the consent of
the Holders, for increases in the aggregate principal amount of such series of
Securities and issuances of additional Securities of such series or for the
establishment of additional terms with respect to the Securities of such series.

         If any of the terms of the series are established by action taken by or
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by an authorized officer or other authorized person of the
General Partner on behalf of the Partnership and delivered to the Trustee at or
prior to the delivery of the Officers' Certificate setting forth, or providing
the manner for determining, the terms of the series.

         With respect to Securities of a series subject to a Periodic Offering,
such Board Resolution or Officers' Certificate may provide general terms for
Securities of such series and provide either that the specific terms of
particular Securities of such series shall be specified in a Partnership Order,
or that such terms shall be determined by the Partnership, or one or more of the
Partnership's agents designated in an Officers' Certificate, in accordance with
a Partnership Order.

SECTION 302. Denominations.

         The Securities of each series shall be issuable only in registered form
without coupons in such denominations as shall be specified as contemplated by
Section 301. In the absence of any such specified denomination with respect to
the Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.

SECTION 303. Execution, Authentication, Delivery and Dating.

         The Securities shall be executed on behalf of the Partnership by the
Chairman of the Board, Vice Chairman, Chief Executive Officer, Chief Financial
Officer, President or any Vice President of the General Partner and need not be
attested. The signature of any of these officers on the Securities may be manual
or facsimile.

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

         At any time and from time to time after the execution and delivery of
this Indenture, the Partnership may deliver Securities of any series executed by
the Partnership to the Trustee for authentication, together with a Partnership
Order for the authentication and delivery of such Securities, and the Trustee in
accordance with the Partnership Order shall authenticate and deliver such
Securities; provided, however, that in the case of Securities offered in a
Periodic Offering, the Trustee shall authenticate and deliver such Securities
from time to time in accordance with such other procedures (including, without
limitation, the receipt by the Trustee

                                      -29-
<PAGE>   36

of oral or electronic instructions from the Partnership or its duly authorized
agents, thereafter promptly confirmed in writing) acceptable to the Trustee as
may be specified by or pursuant to a Partnership Order delivered to the Trustee
prior to the time of the first authentication of Securities of such series. If
the form or terms of the Securities of the series have been established in or
pursuant to one or more Board Resolutions as permitted by Sections 201 and 301,
in authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, in addition to any Officers' Certificate and Opinion of
Counsel required to be furnished to the Trustee pursuant to Section 102, and
(subject to Section 601) shall be fully protected in relying upon, an Opinion of
Counsel stating,

                  (1) The form and terms (or the manner of determining the
terms) of such Securities have been established by or pursuant to Board
Resolution as permitted by Section 201, that such form or forms have been
established in conformity with the provisions of this Indenture;

                  (2) if the terms of such Securities have been, or in the case
of Securities of a series offered in a Periodic Offering, will be, established
by or pursuant to a Board Resolution as permitted by Section 301, that such
terms have been, or in the case of Securities of a series offered in a Periodic
Offering, will be, established in conformity with the provisions of this
Indenture, subject, in the case of Securities of a series offered in a Periodic
Offering, to any conditions specified in such Opinion of Counsel (which
conditions are reasonably acceptable to the Trustee); and

                  (3) that such Securities, when authenticated and delivered by
the Trustee and issued by the Partnership in the manner and subject to any
conditions specified in such Opinion of Counsel, which conditions are reasonably
acceptable to the Trustee, will constitute valid and legally binding obligations
of the Partnership enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles and entitled to the benefits of this Indenture,
equally and ratably with all other Securities, if any, of such Series
Outstanding; and

                  (4) such other matters as the Trustee may reasonably request;

and, if the authentication and delivery relates to a new series of Securities
created by an indenture supplemental hereto, also stating that all conditions
precedent to the execution of the supplemental indenture with respect to that
series of Securities have been complied with, the Partnership has the power to
execute and deliver any such supplemental indenture and has taken all necessary
action for those purposes and any such supplemental indenture has been executed
and delivered and constitutes the legal, valid and binding obligation of the
Partnership enforceable in accordance with its terms (subject, as to enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency, fraudulent
conveyance, moratorium or other laws and legal principles affecting creditors'
rights generally from time to time in effect and to general equitable
principles, whether applied in an action at law or in equity).

                                      -30-
<PAGE>   37

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

         Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Partnership Order and Opinion of Counsel
or Board Resolution or supplemental indenture otherwise required pursuant to
such preceding paragraph at or prior to the time of authentication of each
Security of such series if such documents are delivered at or prior to the
authentication upon original issuance of the first Security of such series to be
issued.

         With respect to Securities of a series not to be originally issued at
one time, the Trustee may rely upon the Opinion of Counsel and the other
documents delivered pursuant to Sections 201 and 301 and this Section, as
applicable, in connection with the first authentication of Securities of such
series and any subsequent request by the Partnership to the Trustee to
authenticate Securities of such series upon original issuance shall constitute a
representation and warranty by the Partnership that as of the date of such
request, the statements made in the Officers' Certificate shall be true and
correct as if made on such date.

         Each Security shall be dated the date of its authentication.

         No Security shall be entitled to any benefit under this Indenture or
any Guaranty or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form provided
for herein executed by the Trustee by manual signature of an authorized
signatory, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Security shall have been authenticated and
delivered hereunder but never issued and sold by the Partnership, and the
Partnership shall deliver such Security to the Trustee for cancellation as
provided in Section 309 for all purposes of this Indenture, such Security shall
be deemed never to have been authenticated and delivered hereunder and shall
never be entitled to the benefits of this Indenture.

SECTION 304. Temporary Securities.

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

                                      -31-
<PAGE>   38

         If temporary Securities of any series are issued, the Partnership will
cause Definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of Definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for Definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Partnership maintained pursuant to Section
1002 for the purpose of exchanges of Securities of such series, without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Securities of any series the Partnership shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more Definitive Securities
of the same series, of any authorized denominations and of a like aggregate
principal amount and tenor. Until so exchanged the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as Definitive Securities of such series and tenor.

SECTION 305. Registration, Registration of Transfer and Exchange.

         The Partnership shall cause to be kept at an office or agency of the
Security Registrar in The City of New York a register (the register maintained
in such office or in any other office or agency of the Partnership in a Place of
Payment being herein sometimes referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Partnership
shall provide for the registration of Securities and of transfers of Securities.
The Partnership shall, prior to the issuance of any Securities hereunder,
appoint the Trustee as the initial "Security Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided and its
Corporate Trust Office which, at the date hereof, is located at 40 Broad Street,
Suite 550, New York, New York, 10004, as the initial office or agency in The
City of New York where the Security Register will be maintained. The Partnership
may at any time replace such Security Registrar, change such office or agency or
act as its own Security Registrar. The Partnership will give prompt written
notice to the Trustee of any change of the Security Registrar or of the location
of such office or agency. At all reasonable times the Security Register shall be
available for inspection by the Trustee.

         Upon surrender for registration of transfer of any Security of any
series at the office or agency of the Partnership maintained pursuant to Section
1002 for such purpose, the Partnership shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor.

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

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

                                      -32-
<PAGE>   39

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

         No service charge shall be made for any registration of transfer or
exchange of Securities, but the Partnership may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304 or 1107 not involving any transfer.

         Neither the Trustee nor the Partnership shall be required (1) to issue,
register the transfer of or exchange Securities of any series (or of any series
and specified tenor, as the case may be) during a period beginning at the
opening of business 15 days before the day of mailing of a notice of redemption
of Securities of that series selected for redemption under Section 1103 and
ending at the close of business on the day of such mailing, or (2) to register
the transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.

         Notwithstanding any other provision in this Indenture and except as
otherwise specified as contemplated by Section 301, no Global Security may be
transferred to, or registered or exchanged for Securities registered in the name
of, any Person other than the Depositary for such Global Security or any nominee
thereof, and no such transfer may be registered, except as provided in this
paragraph. Every Security authenticated and delivered upon registration or
transfer of, or in exchange for or in lieu of, a Global Security shall be a
Global Security, except as provided in this paragraph. If (1) (A) the Depositary
for a Global Security notifies the Partnership that it is unwilling or unable to
continue as Depositary for such Global Security or ceases to be a clearing
agency registered under the Exchange Act, and (B) a successor Depositary is not
appointed by the Partnership within 90 days, (2) an Event of Default has
occurred and is continuing with respect to the Securities of such series and the
Security Registrar has received a request from the Depositary to issue
certificated securities in lieu of all or a portion of the Global Securities of
such series (in which case the Partnership shall deliver certificated securities
within 30 days of such request) or (3) the Partnership determines in its sole
discretion that Securities of a series issued in global form shall no longer be
represented by a Global Security, then such Global Security may be exchanged by
such Depositary for Definitive Securities of the same series, of any authorized
denomination and of a like aggregate principal amount and tenor, registered in
the names of, and the transfer of such Global Security or portion thereof may be
registered to, such Persons as such Depositary shall direct.

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

         If any mutilated Security is surrendered to the Trustee, together with
such security or indemnity as may be required by the Partnership or the Trustee
to save each of them and any

                                      -33-
<PAGE>   40

agent of either of them harmless, the Partnership shall execute and upon its
request the Trustee shall authenticate and deliver in exchange therefor a new
Security of the same series and of like tenor and principal amount and bearing a
number not contemporaneously Outstanding.

         If there shall be delivered to the Partnership and the Trustee (1)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (2) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Partnership or the Trustee that such Security has been acquired by a bona
fide purchaser, the Partnership shall execute and upon its request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously Outstanding. If, after the
delivery of such new Security, a bona fide purchaser of the original Security in
lieu of which such new Security was issued presents for payment or registration
such original Security, the Trustee shall be entitled to recover such new
Security from the party to whom it was delivered or any party taking therefrom,
except a bona fide purchaser, and shall be entitled to recover upon the security
or indemnity provided therefor to the extent of any loss, damage, cost or
expense incurred by the Partnership and the Trustee in connection therewith.

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

         Upon the issuance of any new Security under this Section, the
Partnership may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in exchange for
any mutilated Security or in lieu of any destroyed, lost or stolen Security
shall constitute an original additional contractual obligation of the
Partnership, whether or not the mutilated, destroyed, lost or stolen Security
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Securities of that series duly issued hereunder.

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

SECTION 307. Payment of Interest; Interest Rights Preserved.

         Except as otherwise provided as contemplated by Section 301 with
respect to any series of Securities, interest on any Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.

                                      -34-
<PAGE>   41

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

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

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

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

         For each series of Securities, the Partnership shall, prior to 10:30
a.m. (New York City time) on each payment date for principal and premium, if
any, and interest, if any, deposit with the Trustee money in immediately
available funds sufficient to make cash payments due on the applicable payment
date.

                                      -35-
<PAGE>   42

SECTION 308. Persons Deemed Owners.

         Except as otherwise provided as contemplated by Section 301 with
respect to any series of Securities, prior to due presentment of a Security for
registration of transfer, the Partnership, the Trustee and any agent of the
Partnership or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of and any premium and (subject to Sections 305 and 307) any interest
on such Security and for all other purposes whatsoever, whether or not such
Security is overdue, and neither the Partnership, the Trustee nor any agent of
the Partnership or the Trustee shall be affected by notice to the contrary.

         No holder of any beneficial interest in any Global Security held on its
behalf by a Depositary shall have any rights under this Indenture with respect
to such Global Security, and such Depositary may be treated by the Partnership,
the Trustee and any agent of the Partnership or the Trustee as the owner of such
Global Security for all purposes whatsoever. None of the Partnership, the
Trustee nor any agent of the Partnership or the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.

SECTION 309. Cancellation.

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

SECTION 310. Computation of Interest.

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

                                      -36-
<PAGE>   43

SECTION 311. CUSIP Numbers.

         The Partnership in issuing the Securities may use "CUSIP" numbers (in
addition to the other identification numbers printed on the Securities), and, if
so, the Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness of such "CUSIP" numbers either
as printed on the Securities or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Securities, and any such redemption shall not be affected by any defect in
or omission of such "CUSIP" numbers. The Partnership will promptly notify the
Trustee of any change in the "CUSIP" numbers.

                                   ARTICLE IV

                           SATISFACTION AND DISCHARGE

SECTION 401. Satisfaction and Discharge of Indenture.

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

                  (1) either

                           (A) all such Securities theretofore authenticated and
delivered (other than (i) such Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 306, and (ii)
such Securities for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Partnership and thereafter repaid to the
Partnership or discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or

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

                                    (i) have become due and payable,

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

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

and the Partnership in the case of (i), (ii) or (iii) above, has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust for
this purpose an amount of money in the currency or currency units in which such
Securities are payable sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for

                                      -37-
<PAGE>   44

cancellation, for principal and any premium and interest to the date of such
deposit (in the case of Securities which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;

                  (2) the Partnership has paid or caused to be paid all other
sums payable hereunder by the Partnership with respect to such Securities; and

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

         Notwithstanding the satisfaction and discharge of this Indenture with
respect to Securities of any series, (i) the obligations of the Partnership and
any Guarantor to the Trustee under Section 607, the obligations of any Guarantor
under Section 101 of its Guaranty, the obligations of the Trustee to any
Authenticating Agent under Section 614 and the right of the Trustee to resign
under Section 610 shall survive, and (ii) if money shall have been deposited
with the Trustee pursuant to subclause (B) of Clause (1) of this Section, the
obligations of the Partnership and/or the Trustee under Sections 402, 606, 701
and 1002 and the last paragraph of Section 1003 shall survive.

SECTION 402. Application of Trust Money.

         Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Partnership acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.

                                    ARTICLE V

                                    REMEDIES

SECTION 501. Events of Default.

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

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

                                      -38-
<PAGE>   45

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

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

                  (4) the Partnership pursuant to or within the meaning of any
Bankruptcy Law (A) commences a voluntary case, (B) consents to the entry of any
order for relief against it in an involuntary case, (C) consents to the
appointment of a Custodian of it or for all or substantially all of its
property, or (D) makes a general assignment for the benefit of its creditors; or

                  (5) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (A) is for relief against the Partnership
in an involuntary case, (B) appoints a Custodian of the Partnership or for all
or substantially all of its property, or (C) orders the liquidation of the
Partnership; and the order or decree remains unstayed and in effect for 90 days;
or

                  (6) any other Event of Default provided as contemplated by
Section 301 with respect to Securities of that series.

SECTION 502. Acceleration of Maturity; Rescission and Annulment.

         If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee
or Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount of (or, if any of the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified in the terms
thereof), and accrued but unpaid interest, if any, on all of the Securities of
that series to be due and payable immediately, by a notice in writing to the
Partnership (and to the Trustee if given by Holders), and upon any such
declaration such principal amount (or specified amount) shall become immediately
due and payable.

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

                                      -39-
<PAGE>   46

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

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

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

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

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

                  (2) all Events of Default with respect to Securities of that
series, other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.

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

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

         The Partnership covenants that if

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

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

the Partnership will, upon demand of the Trustee, pay to it, for the benefit of
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.

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

                                      -40-
<PAGE>   47

provided by law out of the property of the Partnership, any Guarantor, or any
other obligor upon such Securities, wherever situated.

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

SECTION 504. Trustee May File Proofs of Claim.

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

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

SECTION 505. Trustee May Enforce Claims Without Possession of Securities.

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

SECTION 506. Application of Money Collected.

         Any money or property collected or to be applied by the Trustee
pursuant to this Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of

                                      -41-
<PAGE>   48

the distribution of such money or property on account of principal or any
premium or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:

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

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

         THIRD: The balance, if any, to the Partnership.

SECTION 507. Limitation on Suits.

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

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

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

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

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

                  (5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by Holders of a majority in
principal amount of the Outstanding Securities of that series;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.

                                      -42-
<PAGE>   49

SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.

         Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and any premium and (subject to Sections 305
and 307) interest on such Security on the respective Stated Maturities expressed
in such Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.

SECTION 509. Restoration of Rights and Remedies.

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

SECTION 510. Rights and Remedies Cumulative.

         Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the Trustee
or to Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

SECTION 511. Delay or Omission Not Waiver.

         No delay or omission of the Trustee or of any Holder of any Securities
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.

SECTION 512. Control by Holders.

         Subject to the provisions of Section 603, Holders of a majority in
aggregate principal amount of the Outstanding Securities of any series shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee, with respect to the Securities of such series;
provided, however, that

                                      -43-
<PAGE>   50

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

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

                  (3) subject to the provisions of Section 601, the Trustee
shall have the right to decline to follow any such direction if the Trustee in
good faith shall determine that the proceeding so directed would involve the
Trustee in personal liability or would otherwise be contrary to applicable law.

SECTION 513. Waiver of Past Defaults.

         Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series may on behalf of Holders of all the Securities of such
series waive any past default hereunder with respect to such series and its
consequences, except

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

                  (2) a default in respect of a covenant or provision hereof
which under Article IX cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.

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

SECTION 514. Undertaking for Costs.

         In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, however, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the Trustee,
in any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% in principal amount of the Outstanding Securities of any
series to which the suit relates, or in any suit instituted by any Holder for
the enforcement of the payment of the principal of (or premium, if any) or
interest on any Security on or after the respective Stated Maturities expressed
by such Security (or, in the case of redemption or repayment, on or after the
Redemption Date).

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<PAGE>   51

                                   ARTICLE VI

                                   THE TRUSTEE

SECTION 601. Certain Duties and Responsibilities.

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

                           (1) the Trustee undertakes to perform such duties and
         only such duties as are specifically set forth in this Indenture with
         respect to the Securities of such series, and no implied covenants or
         obligations shall read into this Indenture against the Trustee; and

                           (2) in the absence of bad faith on its part, the
         Trustee may, with respect to Securities of such series, conclusively
         rely, as to the truth of the statements and the correctness of the
         opinions expressed therein, upon certificates or opinions furnished to
         the Trustee conforming to the requirements of this Indenture; but in
         the case of any such certificates or opinions which by any provision
         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.

                  (b) In case an Event of Default with respect to any series of
Securities has occurred and is continuing, the Trustee shall exercise with
respect to the Securities of such series such 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.

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

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

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

                           (3) the Trustee shall not be liable with respect to
         any action taken or omitted to be taken by it in good faith in
         accordance with the direction of the Holders or a majority in principal
         amount of the Outstanding Securities of any series relating to the
         time, method and place of conducting any proceeding for any remedy
         available to the Trustee, or exercising any trust or power conferred
         upon the Trustee, under this Indenture with respect to the Securities
         of such series; and

                                      -45-
<PAGE>   52

                           (4) no provision of this Indenture shall require the
         Trustee to expend or risk its own funds or otherwise incur any
         financial liability in the performance of any of its duties hereunder,
         or in the exercise of any of its rights or powers, if it shall have
         reasonable grounds for believing that repayment of such funds or
         adequate indemnity against such risk or liability is not reasonably
         assured to it.

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

SECTION 602. Notice of Defaults.

         If a Default occurs and is continuing with respect to the Securities of
any series, the Trustee shall, within 90 days after it occurs, transmit, in the
manner and to the extent provided in Section 313(c) of the Trust Indenture Act,
notice of all uncured or unwaived Defaults known to it; provided, however, that,
except in the case of a Default in payment on the Securities of any series, the
Trustee shall be protected in withholding the notice if and so long as the board
of directors, the executive committee or a trust committee of directors or
responsible officers of the Trustee determine in good faith that withholding
such notice is in the interests of Holders of Securities of such series;
provided, further, however, that, in the case of any default or breach of the
character specified in Section 501(3) with respect to the Securities of such
series, no such notice to Holders shall be given until at least 60 days after
the occurrence thereof.

SECTION 603. Certain Rights of Trustee.

         Subject to the provisions of Section 601:

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

                  (2) any request, direction, order or demand of the Partnership
mentioned herein shall be sufficiently evidenced by a Partnership Request or
Partnership Order (or in the case of a Periodic Offering, as agreed in
procedures set forth in a Partnership Order pursuant to Section 303) and any
resolution of the Board of Directors shall be sufficiently evidenced by a Board
Resolution;

                  (3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;

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

                                      -46-
<PAGE>   53

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

                  (6) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may, without obligation to do so, 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 Partnership, personally or by agent or attorney;

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

                  (8) the Trustee may request that the Partnership deliver an
Officers' Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by any Person authorized to
sign an Officers' Certificate, including any Person specified as so authorized
in any such certificate previously delivered and not superseded.

SECTION 604. Not Responsible for Recitals or Issuance of Securities.

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

SECTION 605. May Hold Securities.

         The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Partnership, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Partnership with the same rights it
would have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.

                                      -47-
<PAGE>   54

SECTION 606. Money Held in Trust.

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

SECTION 607. Compensation and Reimbursement.

         The Partnership agrees:

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

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

                  (3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder.

         The obligations of the Partnership and the Guarantors under this
Section to compensate the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder.

         Without limiting any rights available to the Trustee under applicable
law, when the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 501(4) or Section 501(5), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for such services are intended to constitute expenses of
administration under any applicable Bankruptcy Law.

         The provisions of this Section shall survive the satisfaction and
discharge of this Indenture and the defeasance of the Securities.

SECTION 608. Disqualification; Conflicting Interests.

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

                                      -48-
<PAGE>   55

SECTION 609. Corporate Trustee Required; Eligibility.

         There shall at all times be one or more Trustees hereunder with respect
to the Securities of each series, at least one of 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 required by the Trust Indenture Act. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of a supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such Person shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.

SECTION 610. Resignation and Removal; Appointment of Successor.

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

         The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Partnership and the
Guarantors. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.

         The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Partnership. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such
notice of removal, the removed Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

         If at any time:

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

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

                  (3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case, (A) the Partnership, acting
pursuant to the authority of a Board Resolution, may remove the Trustee with
respect to

                                      -49-
<PAGE>   56

all Securities, or (B) subject to Section 514, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to all Securities and the appointment of
a successor Trustee or Trustees.

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

         The Partnership shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series to all
Holders of Securities of such series in the manner provided in Section 106. Each
notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.

SECTION 611. Acceptance of Appointment by Successor.

                  (1) In case of the appointment hereunder of a successor
Trustee with respect to all Securities, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Partnership and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Partnership or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.

                  (2) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all) series, the
Partnership, the retiring Trustee and each

                                      -50-
<PAGE>   57

successor Trustee with respect to the Securities of one or more series shall
execute and deliver an indenture supplemental hereto wherein each successor
Trustee shall accept such appointment and which (A) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates, (B) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (C) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees as co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates, but, on request of
the Partnership, or any successor Trustee, such retiring Trustee shall, upon
payment of its charges, duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.

                  (3) Upon request of any such successor Trustee, the
Partnership and the Guarantors shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts referred to in paragraph (1) or (2) of this Section,
as the case may be.

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

SECTION 612. Merger, Conversion, Consolidation or Succession to Business.

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

                                      -51-
<PAGE>   58

SECTION 613. Preferential Collection of Claims Against Partnership.

         If and when the Trustee shall be or become a creditor of the
Partnership, any Guarantor, or any other obligor upon the Securities, the
Trustee shall be subject to the provisions of the Trust Indenture Act regarding
the collection of claims against the Partnership, any such Guarantor, or any
such other obligor.

SECTION 614. Appointment of Authenticating Agent.

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

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

         An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee, to the Partnership, and to the Guarantors. The Trustee
may at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent, to the Partnership. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time such Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, the Trustee may appoint a successor

                                      -52-
<PAGE>   59

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

         Except with respect to an Authenticating Agent appointed at the request
of the Partnership, the Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section.

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

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

                                       FIRST UNION NATIONAL BANK,
                                       As Trustee

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

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

                                   ARTICLE VII

              HOLDERS' LISTS AND REPORTS BY TRUSTEE AND PARTNERSHIP

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

         The Partnership will furnish or cause to be furnished to the Trustee

                  (1) semi-annually, not later than each Interest Payment Date
in each year, a list for each series of Securities, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders of Securities
of such series as of the preceding Regular Record Date, and

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

                                      -53-
<PAGE>   60

provided, however, that if and so long as the Trustee shall be the Security
Registrar for Securities of a series, no such list need be furnished with
respect to such series of Securities.

SECTION 702. Preservation of Information; Communications to Holders.

         The Trustee shall comply with the obligations imposed upon it pursuant
to Section 312 of the Trust Indenture Act.

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

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

SECTION 703. Reports by Trustee.

         As promptly as practicable after each May 15 beginning with the May 15
following the date of this Indenture, and in any event prior to July 15 in each
year, the Trustee shall mail to each Holder a brief report dated as of May 15
that complies with TIA Section 313(a). The Trustee also shall comply with TIA
Section 313(b). Prior to delivery to the Holders, the Trustee shall deliver to
the Partnership a copy of any report it delivers to Holders pursuant to this
Section 703.

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

SECTION 704. Reports by Partnership.

         The Partnership shall:

                  (1) file with the Trustee, within 15 days after the
Partnership is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Partnership may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act;
or, if the Partnership is not required to file information, documents or reports
pursuant to either of said Sections, then it shall file with the Trustee and the
Commission (unless the Commission will not accept such a filing), in accordance
with rules and regulations prescribed from time to time by the Commission, such
of the supplementary and periodic information, documents and reports which may
be required pursuant to Section 13 of the Exchange Act in respect of a security
listed

                                      -54-
<PAGE>   61

and registered on a national securities exchange as may be prescribed from time
to time in such rules and regulations;

                  (2) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Partnership with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and

                  (3) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within 30 days after the filing
thereof with the Trustee, such summaries of any information, documents and
reports required to be filed by the Partnership pursuant to paragraphs (1) and
(2) of this Section as may be required by rules and regulations prescribed from
time to time by the Commission.

                                  ARTICLE VIII

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801. Partnership and Guarantors May Consolidate, Etc., Only on Certain
Terms.

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

                  (1) (A) in the case of a merger, the Partnership or such
Guarantor, as the case may be, is the surviving entity, or (B) the Person formed
by such consolidation or into which the Partnership or such Guarantor is merged
or the Person which acquires by sale or transfer, or which leases, the
properties and assets of the Partnership or such Guarantor as, or substantially
as, an entirety must expressly assume, by an indenture supplemental hereto, or a
supplement to the applicable Guaranty, as the case may be, executed and
delivered to the Trustee, in form reasonably satisfactory to the Trustee, all of
the obligations of the Partnership or such Guarantor, as the case may be, under
this Indenture and the Securities or the applicable Guaranty, as the case may
be;

                  (2) the surviving entity or successor Person is a Person
organized and existing under the laws of the United States, any State thereof or
the District of Columbia;

                  (3) immediately after giving effect to such transaction, no
Default or Event of Default exists; and

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

                                      -55-
<PAGE>   62

SECTION 802. Successor Substituted.

         Upon any consolidation of the Partnership or any Guarantor with, or
merger of the Partnership or any Guarantor into, any other Person or any sale,
transfer or lease of the properties and assets of the Partnership or any
Guarantor as, or substantially as, an entirety in accordance with Section 801,
the successor Person formed by such consolidation or into which the Partnership
or such Guarantor is merged or to which such sale, transfer or lease is made
shall (and, in the case of a Guarantor, its Guaranty will provide that it shall)
succeed to, and be substituted for, and may exercise every right and power of,
the Partnership or such Guarantor under this Indenture with the same effect as
if such successor Person had been named originally as the Partnership or such
Guarantor herein or therein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Securities, or such Guaranty, as the case may be.

                                   ARTICLE IX

                             SUPPLEMENTAL INDENTURES

SECTION 901. Supplemental Indentures Without Consent of Holders.

         Without the consent of any Holders of Securities, the Partnership and
the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:

                  (1) to secure any of such Securities;

                  (2) to evidence the succession of another Person to the
Partnership under this Indenture and the Securities and the assumption by such
successor Person of the obligations of the Partnership hereunder;

                  (3) to reflect the addition of any Subsidiary of the
Partnership as a Guarantor, or to reflect the release of any Guarantor from its
Guaranty, in either case in the manner provided by Article XIV of this
Indenture;

                  (4) to add covenants and Events of Default for the benefit of
the Holders of all or any series of such Securities or to surrender any right or
power conferred by this Indenture upon the Partnership;

                  (5) to add to, change or eliminate any of the provisions of
this Indenture, provided that any such addition, change or elimination shall
become effective only after there are no such Securities of any series entitled
to the benefit of such provision outstanding;

                  (6) to establish the forms or terms of the Securities of any
series issued hereunder;

                                      -56-
<PAGE>   63

                  (7) to cure any ambiguity or correct any inconsistency in this
Indenture;

                  (8) to evidence the acceptance of appointment by a successor
Trustee with respect to one or more series of Securities or otherwise;

                  (9) to qualify this Indenture under the Trust Indenture Act;

                  (10) to provide for uncertificated securities in addition to
certificated securities;

                  (11) to supplement any provisions of this Indenture necessary
to permit or facilitate the defeasance and discharge of any series of
Securities, provided that such action does not adversely affect the interests of
the Holders of Securities of such series or any other series; and

                  (12) to comply with the rules or regulations of any securities
exchange or automated quotation system on which any of the Securities may be
listed or traded.

SECTION 902. Supplemental Indentures with Consent of Holders.

         With the consent of the Holders of not less than a majority in
aggregate principal amount of all Outstanding Securities affected by such
supplemental indenture (voting as one class), the Partnership and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture, or modifying in any manner the rights of Holders
of Securities of such series under this Indenture; provided that the Partnership
and the Trustee may not, without the consent of the Holder of each Outstanding
Security affected thereby,

                  (1) change the Stated Maturity of the principal of, or any
installment of principal of or interest, if any, on, any Security, or reduce the
principal amount thereof or premium, if any, on or the rate of interest thereon
or alter the method of computation of interest;

                  (2) reduce the percentage in principal amount of Securities
required for any such supplemental indenture or for any waiver provided for in
this Indenture;

                  (3) change the Partnership's obligation to maintain an office
or agency for payment of Securities and the other matters specified herein;

                  (4) impair the right to institute suit for the enforcement of
any payment of principal of, premium, if any, or interest on, any Security; or

                  (5) modify any of the provisions of this Indenture relating to
the execution of supplemental indentures with the consent of Holders of
Securities which are discussed in this Section or modify any provisions relating
to the waiver by Holders of Securities of past defaults and covenants, except to
increase any required percentage or to provide that other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
Outstanding Security affected thereby.

                                      -57-
<PAGE>   64

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

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

SECTION 903. Execution of Supplemental Indentures.

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

SECTION 904. Effect of Supplemental Indentures.

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

SECTION 905. Conformity with Trust Indenture Act.

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

SECTION 906. Reference in Securities to Supplemental Indentures.

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

                                      -58-
<PAGE>   65

                                    ARTICLE X

                                    COVENANTS

SECTION 1001. Payment of Principal, Premium and Interest.

         The Partnership covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.

SECTION 1002. Maintenance of Office or Agency.

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

         The Partnership may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Partnership of its obligation to maintain an
office or agency in each Place of Payment for Securities of any series for such
purposes. The Partnership 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.

         Except as otherwise specified with respect to a series of Securities as
contemplated by Section 301, the Partnership hereby initially designates as the
Place of Payment for each series of Securities The City of New York, and
initially appoints the Trustee as Paying Agent at its Corporate Trust Office as
the Partnership's office or agency for each such purpose in such city.

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

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

                                      -59-
<PAGE>   66

         Whenever the Partnership shall have one or more Paying Agents for any
series of Securities, it will, on or prior to each due date of the principal of
or any premium or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Partnership will promptly notify the Trustee of its action or
failure so to act.

         The Partnership will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will (1) hold all sums
held by it for the payment of the principal of (and premium, if any) or
interest, if any, on Securities of that series in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided; (2) give the Trustee notice of any
default by the Partnership or any Guarantor (or any other obligor upon the
Securities of that series) in the making of any payment of principal (and
premium, if any) or interest, if any, on the Securities of that series; and (3)
during the continuance of any such default, upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent for payment in respect of the Securities of that series.

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

         Any money deposited with the Trustee or any Paying Agent in trust for
the payment of the principal of or any premium or interest on any Security of
any series and remaining unclaimed for two years after such principal, premium
or interest has become due and payable shall be paid to the state which escheat
laws control and the Trustee or any Paying Agent shall be discharged from such
trust; and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the state which escheat laws control for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Partnership as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such payment, may at the expense of the Partnership cause
to be published once, in an Authorized Newspaper, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be paid to the state whose escheat laws control.

SECTION 1004. Statement by Officers as to Default.

         The Partnership will deliver to the Trustee, within 150 days after the
end of each fiscal year of the Partnership ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signer or signers thereof the Partnership is in default in the performance and
observance of any of the terms, provisions and conditions of this Indenture

                                      -60-
<PAGE>   67

(without regard to any period of grace or requirement of notice provided
hereunder) and, if the Partnership shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.

SECTION 1005. Existence.

         Subject to Article VIII, the Partnership will do or cause to be done
all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided, however,
that the Partnership shall not be required to preserve any such right or
franchise if it shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Partnership.

SECTION 1006. Limitations on Liens.

         The Partnership will not, nor will it permit any Subsidiary to, create,
assume, incur or suffer to exist any Lien upon any Principal Property, or upon
any shares of capital stock of any Subsidiary owning or leasing any Principal
Property, whether owned or leased on the date of this Indenture or thereafter
acquired, to secure any Debt of the Partnership or any other Person (other than
the Securities issued hereunder), without in any such case making effective
provision whereby all of the Securities Outstanding hereunder shall be secured
equally and ratably with, or prior to, such Debt so long as such Debt shall be
so secured. This restriction shall not apply to:

                  (1) Permitted Liens;

                  (2) any Lien upon any property or assets created at the time
of acquisition of such property or assets by the Partnership or any Subsidiary
or within one year after such time to secure all or a portion of the purchase
price for such property or assets or Debt incurred to finance such purchase
price, whether such Debt was incurred prior to, at the time of or within one
year after the date of such acquisition;

                  (3) any Lien upon any property or assets to secure all or part
of the cost of construction, development, repair or improvements thereon or to
secure Debt incurred prior to, at the time of, or within one year after
completion of such construction, development, repair or improvements or the
commencement of full operations thereof (whichever is later), to provide funds
for any such purpose;

                  (4) any Lien upon any property or assets existing thereon at
the time of the acquisition thereof by the Partnership or any Subsidiary
(whether or not the obligations secured thereby are assumed by the Partnership
or any Subsidiary); provided, however, that such Lien only encumbers the
property or assets so acquired;

                  (5) any Lien upon any property or assets of a Person existing
thereon at the time such Person becomes a Subsidiary by acquisition, merger or
otherwise; provided, however, that such Lien only encumbers the property or
assets of such Person at the time such Person becomes a Subsidiary;

                                      -61-
<PAGE>   68

                  (6) any Lien upon any property or assets of the Partnership or
any Subsidiary in existence on the Issue Date or provided for pursuant to
agreements existing on the Issue Date;

                  (7) Liens imposed by law or order as a result of any
proceeding before any court or regulatory body that is being contested in good
faith, and Liens which secure a judgment or other court-ordered award or
settlement as to which the Partnership or the applicable Subsidiary, as the case
may be, has not exhausted its appellate rights;

                  (8) any extension, renewal, refinancing, refunding or
replacement (or successive extensions, renewals, refinancing, refunding or
replacements) of Liens, in whole or in part, referred to in Clauses (1) through
(7), inclusive, of this Section; provided, however, that any such extension,
renewal, refinancing, refunding or replacement Lien shall be limited to the
property or assets covered by the Lien extended, renewed, refinanced, refunded
or replaced and that the obligations secured by any such extension, renewal,
refinancing, refunding or replacement Lien shall be in an amount not greater
than the amount of the obligations secured by the Lien extended, renewed,
refinanced, refunded or replaced and any expenses of the Partnership and its
Subsidiaries (including any premium) incurred in connection with such extension,
renewal, refinancing, refunding or replacement; or

                  (9) any Lien resulting from the deposit of moneys or evidence
of indebtedness in trust for the purpose of defeasing Debt of the Partnership or
any Subsidiary.

         Notwithstanding the foregoing provisions of this Section, the
Partnership may, and may permit any Subsidiary to, create, assume, incur or
suffer to exist any Lien upon any Principal Property to secure Debt of the
Partnership or any Person (other than the Securities) that is not excepted by
Clauses (1) through (9), inclusive, of this Section without securing the
Securities issued hereunder, provided that the aggregate principal amount of all
Debt then outstanding secured by such Lien and all similar Liens, together with
all Attributable Indebtedness from Sale-Leaseback Transactions (excluding
Sale-Leaseback Transactions permitted by Clauses (1) through (4), inclusive, of
Section 1007), does not exceed 10% of Consolidated Net Tangible Assets.

SECTION 1007. Restriction of Sale-Leaseback Transaction.

         The Partnership will not, and will not permit any Subsidiary to, engage
in a Sale-Leaseback Transaction, unless:

                  (1) such Sale-Leaseback Transaction occurs within one year
from the date of completion of the acquisition of the Principal Property subject
thereto or the date of the completion of construction, development or
substantial repair or improvement, or commencement of full operations on such
Principal Property, whichever is later;

                  (2) the Sale-Leaseback Transaction involves a lease for a
period, including renewals, of not more than three years;

                                      -62-
<PAGE>   69

                  (3) the Partnership or such Subsidiary would be entitled to
incur Debt secured by a Lien on the Principal Property subject thereto in a
principal amount equal to or exceeding the Attributable Indebtedness from such
Sale-Leaseback Transaction without equally and ratably securing the Securities;
or

                  (4) the Partnership or such Subsidiary, within a one-year
period after such Sale-Leaseback Transaction, applies or causes to be applied an
amount not less than the Attributable Indebtedness from such Sale-Leaseback
Transaction to (A) the prepayment, repayment, redemption, reduction or
retirement of Pari Passu Debt of the Partnership or any Subsidiary, or (B) the
expenditure or expenditures for Principal Property used or to be used in the
ordinary course of business of the Partnership or its Subsidiaries.

         Notwithstanding the foregoing provisions of this Section, the
Partnership may, and may permit any Subsidiary to, effect any Sale-Leaseback
Transaction that is not excepted by Clauses (1) through (4), inclusive, of this
Section, provided that the Attributable Indebtedness from such Sale-Leaseback
Transaction, together with the aggregate principal amount of then outstanding
Debt (other than the Securities) secured by Liens upon Principal Properties not
excepted by Clauses (1) through (9), inclusive, of Section 1006, do not exceed
10% of Consolidated Net Tangible Assets.

SECTION 1008. Waiver of Certain Covenants.

         The Partnership may omit in any particular instance to comply with any
term, provision or condition set forth in Section 1005, 1006 or 1007 with
respect to the Securities of any series if before the time for such compliance
Holders of at least a majority in aggregate principal amount of the Outstanding
Securities of all affected series (voting as one class) shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Partnership and any Guarantors and the duties of the Trustee in respect
of any such term, provision or condition shall remain in full force and effect.

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

                                      -63-
<PAGE>   70

                                   ARTICLE XI

                            REDEMPTION OF SECURITIES

SECTION 1101. Applicability of Article.

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

SECTION 1102. Election to Redeem; Notice to Trustee.

         The election of the Partnership to redeem any Securities shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Partnership of less than all the Securities of any series, the Partnership
shall, not less than 35 nor more than 60 days prior to the Redemption Date fixed
by the Partnership (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date, of the principal amount of
Securities of such series to be redeemed and, if applicable, of the tenor of the
Securities to be redeemed. In the case of any redemption of Securities (1) prior
to the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, or (2) pursuant to an election
of the Partnership which is subject to a condition specified in the terms of
such Securities, the Partnership shall furnish the Trustee with an Officers'
Certificate evidencing compliance with such restriction or condition.

SECTION 1103. Selection by Trustee of Securities to be Redeemed.

         If less than all the Securities of any series are to be redeemed
(unless all the Securities of such series and of a specified tenor are to be
redeemed), the particular Securities to be redeemed shall be selected not more
than 45 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series not previously called for redemption, on a pro rata
basis or by any other method which the Trustee deems fair and appropriate and
which complies with any securities exchange or other applicable requirements for
redemption of portions (equal to the minimum authorized denomination for
Securities of that series or any integral multiple thereof) of the principal
amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series.

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

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

                                      -64-
<PAGE>   71

SECTION 1104. Notice of Redemption.

         Notice of redemption shall be given by first-class mail (if
international mail, by air mail), postage prepaid, mailed not less than 30 nor
more than 60 days prior to the Redemption Date, to each Holder of Securities to
be redeemed, at his address appearing in the Security Register.

         All notices of redemption shall state:

                  (1) the Redemption Date,

                  (2) the Redemption Price,

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

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

                  (5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, and

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

         Notice of redemption of Securities to be redeemed shall be given by the
Partnership or, at the Partnership's request, by the Trustee in the name and at
the expense of the Partnership.

SECTION 1105. Deposit of Redemption Price.

         On or prior to 10:30 a.m. New York City Time on any Redemption Date,
the Partnership shall deposit with the Trustee or with a Paying Agent (or, if
the Partnership is acting as its own Paying Agent, segregate and hold in trust
as provided in Section 1003) an amount of money sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are to be redeemed on that date.

SECTION 1106. Securities Payable on Redemption Date.

         Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Partnership shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Partnership at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that, unless otherwise
specified as contemplated by

                                      -65-
<PAGE>   72

Section 301, installments of interest whose Stated Maturity is on or prior to
the Redemption Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such at the close of business on
the relevant Record Dates according to their terms and the provisions of Section
307.

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

SECTION 1107. Securities Redeemed in Part.

Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Partnership or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Partnership and the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Partnership shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same series and of like
tenor, of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.

                                   ARTICLE XII

                                  SINKING FUNDS

SECTION 1201. Applicability of Article.

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

         The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment," and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment." If provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be subject to reduction as
provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.

SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.

         The Partnership (1) may deliver Outstanding Securities of a series
(other than any previously called for redemption), and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Partnership pursuant to the terms of such Securities or through the application
of permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such

                                      -66-
<PAGE>   73

Securities as provided for by the terms of such series; provided that such
Securities have not been previously so credited. Such Securities shall be
received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.

SECTION 1203. Redemption of Securities for Sinking Fund.

         Not less than 45 days prior to each sinking fund payment date for any
series of Securities (unless a shorter period shall be satisfactory to the
Trustee), the Partnership will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of that series pursuant to
Section 1202 and stating the basis for such credit and that such Securities have
not been previously so credited, and will also deliver to the Trustee any
Securities to be so delivered. Not less than 30 days before each such sinking
fund payment date the Trustee shall select the Securities to be redeemed upon
such sinking fund payment date in the manner specified in Section 1103 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Partnership in the manner provided in Section 1104. Such notice having
been duly given, the redemption of such Securities shall be made upon the terms
and in the manner stated in Sections 1106 and 1107.

                                  ARTICLE XIII

                                   DEFEASANCE

SECTION 1301. Applicability of Article.

         The provisions of this Article shall be applicable to each series of
Securities except as otherwise specified as contemplated by Section 301 for
Securities of such series.

SECTION 1302. Legal Defeasance.

         In addition to discharge of the Indenture pursuant to Section 401, the
Partnership shall be deemed to have paid and discharged the entire indebtedness
on all the Securities of such a series on the 91st day after the date of the
deposit referred to in Clause (1) below, and the provisions of this Indenture
with respect to the Securities of such series shall no longer be in effect
(except as to (i) rights of registration of transfer and exchange of Securities
of such series and the Partnership's right of optional redemption, if any, (ii)
substitution of mutilated, destroyed, lost or stolen Securities, (iii) rights of
Holders of Securities to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor or on the specified
redemption dates therefor (but not upon acceleration), and remaining rights of
the holders to receive mandatory sinking fund payments, if any, (iv) the rights,
obligations, duties and immunities of the Trustee hereunder, and the
Partnership's and any Guarantors' obligations in connection therewith
(including, but not limited to, Section 607), (v) the rights, if any, to convert
or exchange the Securities of such series, (vi) the rights of Holders of
Securities of such series as beneficiaries

                                      -67-
<PAGE>   74

hereof with respect to the property so deposited with the Trustee payable to all
or any of them, and (vii) the obligations of the Partnership under Section
1002), and the Trustee, at the expense of the Partnership, shall, upon a
Partnership Request, execute proper instruments acknowledging the same, if the
conditions set forth below are satisfied (hereinafter, "defeasance"):

                  (1) The Partnership has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust, for the purposes of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of Holders of the Securities of such series (A) cash in
an amount, or (B) in the case of any series of Securities the payments on which
may only be made in legal coin or currency of the United States, U.S. Government
Obligations, maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash, or (C) a combination thereof,
certified to be sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay (i) the principal and interest and premium, if
any, on all Securities of such series on each date that such principal, interest
or premium, if any, is due and payable or on any Redemption Date established
pursuant to Clause (3) below, and (ii) any mandatory sinking fund payments on
the dates on which such payments are due and payable in accordance with the
terms of the Indenture and the Securities of such series;

                  (2) The Partnership has delivered to the Trustee an Opinion of
Counsel based on the fact that (A) the Partnership has received from, or there
has been published by, the Internal Revenue Service a ruling, or (B) since the
date hereof, there has been a change in the applicable federal income tax law,
in either case to the effect that, and such opinion shall confirm that, Holders
of the Securities of such series will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount and in
the same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred;

                  (3) If the Securities are to be redeemed prior to Stated
Maturity (other than from mandatory sinking fund payments or analogous
payments), notice of such redemption shall have been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee shall have been
made;

                  (4) No Event of Default or event which with notice or lapse of
time or both would become an Event of Default shall have occurred and be
continuing on the date of such deposit;

                  (5) Such defeasance shall not cause the Trustee to have a
conflicting interest within the meaning of the Trust Indenture Act (assuming all
Securities are in default within the meaning of such Act);

                  (6) Such defeasance shall not result in a breach or violation
of, or constitute a default under, any other agreement or instrument to which
the Partnership is a party or by which it is bound;

                                      -68-
<PAGE>   75

                  (7) Such defeasance shall not result in the trust arising from
such deposit constituting an investment company within the meaning of the
Investment Company Act of 1940, as amended, unless such trust shall be
registered under such Act or exempt from registration thereunder; and

                  (8) The Partnership has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the defeasance contemplated by this provision
have been complied with.

         For this purpose, such defeasance means that the Partnership, any
Guarantors, and any other obligor upon the Securities of such series shall be
deemed to have paid and discharged the entire debt represented by the Securities
of such series, which shall thereafter be deemed to be "Outstanding" only for
the purposes of Section 1304 and the rights and obligations referred to in
Clauses (i) through (vii), inclusive, of the first paragraph of this Section,
and to have satisfied all its other obligations under the Securities of such
series and this Indenture insofar as the Securities of such series are
concerned.

SECTION 1303. Covenant Defeasance.

         The Partnership and any other obligor, including any Guarantors, shall
be released on the 91st day after the date of the deposit referred to in Clause
(1) below from its obligations under Sections 704, 801, 1005, 1006 and 1007 with
respect to the Securities of any series on and after the date the conditions set
forth below are satisfied (hereinafter, "covenant defeasance"), and the
Securities of such series shall thereafter be deemed to be not "Outstanding" for
the purposes of any request, demand, authorization, direction, notice, waiver,
consent or declaration or other action or Act of Holders (and the consequences
of any thereof) in connection with such covenants, but shall continue to be
deemed Outstanding for all other purposes hereunder. For this purpose, such
covenant defeasance means that, with respect to the Securities of such series,
the Partnership and any Guarantors may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Section, whether directly or indirectly by reason of any reference elsewhere
herein to such Section or by reason of any reference in such Section to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 501, but,
except as specified above, the remainder of this Indenture and the Securities of
such series shall be unaffected thereby. The following shall be the conditions
to application of this Section 1303:

                  (1) The Partnership has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of Holders of the Securities of such series, (A) cash in an
amount, or (B) in the case of any series of Securities the payments on which may
only be made in legal coin or currency of the United States, U.S. Government
Obligations, maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash, or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay (i) the principal and interest and premium, if any, on all
Securities of such series on each date that such principal, interest or premium,
if any, is due and

                                      -69-
<PAGE>   76

payable or on any Redemption Date established pursuant to Clause (2) below, and
(ii) any mandatory sinking fund payments on the day on which such payments are
due and payable in accordance with the terms of the Indenture and the Securities
of such series;

                  (2) If the Securities are to be redeemed prior to Stated
Maturity (other than from mandatory sinking fund payments or analogous
payments), notice of such redemption shall have been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee shall have been
made;

                  (3) No Event of Default or event which with notice or lapse of
time or both would become an Event of Default shall have occurred and be
continuing on the date of such deposit;

                  (4) The Partnership has delivered to the Trustee an Opinion of
Counsel which shall confirm that Holders of the Securities of such series will
not recognize income, gain or loss for federal income tax purposes as a result
of such deposit and covenant defeasance and will be subject to federal income
tax on the same amount and in the same manner and at the same time as would have
been the case if such deposit and covenant defeasance had not occurred;

                  (5) Such covenant defeasance shall not cause the Trustee to
have a conflicting interest within the meaning of the Trust Indenture Act
(assuming all Securities are in default within the meaning of such Act);

                  (6) Such covenant defeasance shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which the Partnership is a party or by which it is bound;

                  (7) Such covenant defeasance shall not result in the trust
arising from such deposit constituting an investment company within the meaning
of the Investment Company Act of 1940, as amended, unless such trust shall be
registered under such Act or exempt from registration thereunder; and

                  (8) The Partnership has delivered to the Trustee an Officers'
Certificate and Opinion of Counsel stating that all conditions precedent
provided for relating to the covenant defeasance contemplated by this provision
have been complied with.

SECTION 1304. Application by Trustee of Funds Deposited for Payment of
Securities.

         Subject to the provisions of the last paragraph of Section 1003, all
moneys or U.S. Government Obligations deposited with the Trustee pursuant to
Section 1302 or 1303 (and all funds earned on such moneys or U.S. Government
Obligations) shall be held in trust and applied by it to the payment, either
directly or through any Paying Agent (including the Partnership acting as its
own Paying Agent), to Holders of the particular Securities of such series for
the payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest;
but such money need not be segregated from other funds except to the extent
required by law. Subject to Sections 1302 and 1303, the

                                      -70-
<PAGE>   77

Trustee shall promptly pay to the Partnership upon Partnership Order any moneys
held by it at any time, which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification delivered to
the Trustee, are in excess of the amounts required to effect the defeasance with
respect to the Outstanding Securities in question.

SECTION 1305. Repayment to Partnership.

         The Trustee and any Paying Agent promptly shall pay or return to the
Partnership upon Partnership Request any money and U.S. Government Obligations
held by them at any time that are not required for the payment of the principal
of and any interest on the Securities of any series for which money or U.S.
Government Obligations have been deposited pursuant to Section 1302 or 1303,
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification delivered to the Trustee, are
in excess of the amounts required to effect the defeasance with respect to the
Outstanding Securities in question.

         The provisions of the last paragraph of Section 1003 shall apply to any
money held by the Trustee or any Paying Agent under this Article that remains
unclaimed for two years after the Maturity of any series of Securities for which
money or U.S. Government Obligations have been deposited pursuant to Section
1302 or 1303.

SECTION 1306. Reinstatement.

         If the Trustee or the Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Article by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
obligations of the Partnership and any Guarantor under this Indenture, the
applicable Guaranty and the Securities of the applicable series shall be revived
and reinstated as though no deposit had occurred pursuant to this Indenture
until such time as the Trustee or the Paying Agent is permitted to apply all
such money or U.S. Government Obligations in accordance with this Article;
provided, however, that if the Partnership or any Guarantor has made any payment
of principal of or interest on any Securities of such series because of the
reinstatement of its obligations, the Partnership or such Guarantor shall be
subrogated to the rights of Holders of such Securities to receive such payment
from the money or U.S. Government Obligations held by the Trustee or the Paying
Agent.

                                   ARTICLE XIV

                             GUARANTY OF SECURITIES

SECTION 1401. Retirement for Guaranty.

                  (1) If any Subsidiary of the Partnership guarantees or becomes
a co-obligor in respect of any Funded Debt of the Partnership other than the
Securities at any time subsequent to the Closing Date (including, without
limitation, following any release of such Subsidiary pursuant to Section 1402
from any Guaranty previously provided by it under this Article XIV), then the
Partnership shall (A) cause the Securities to be equally and ratably guaranteed
by such

                                      -71-
<PAGE>   78

Subsidiary, but only to the extent that the Securities are not already
guaranteed by such Subsidiary on reasonably comparable terms and (B) cause such
Subsidiary to execute and deliver a Guaranty in accordance with clause (2)
below.

                  (2) Any Person may become a Guarantor by executing and
delivering to the Trustee (A) a Guaranty in form and substance satisfactory to
the Trustee, which subjects such Person to the provisions (including the
representations and warranties) of this Indenture as a Guarantor and (B) an
Opinion of Counsel and Officers' Certificate to the effect that such Guaranty
has been duly authorized and executed by such Person and constitutes the legal,
valid, binding and enforceable obligation of such Person (subject to such
customary exceptions concerning creditors' rights and equitable principles as
may be acceptable to the Trustee in its discretion).

SECTION 1402. Release of Guaranty.

         Notwithstanding anything to the contrary in this Article XIV, in the
event that any Guarantor shall no longer be a guarantor of any Funded Debt of
the Partnership other than the Securities, and so long as no Default or Event of
Default shall have occurred or be continuing, such Guarantor, upon giving
written notice to the Trustee to the foregoing effect, shall be deemed to be
released from all of its obligations in respect of the Securities and this
Indenture without further act or deed and the Guaranty of such Guarantor shall
be of no further force or effect. Following the receipt by the Trustee of any
such notice, the Partnership shall cause this Indenture to be amended as
provided in Section 901; provided, however, that the failure to so amend this
Indenture shall not affect the validity of the termination of the Guaranty of
such Guarantor.

                                      -72-
<PAGE>   79

         IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed in multiple counterparts, each of which so executed shall be
deemed to be an original, but all of which shall together constitute but one and
the same instrument, all as of the day and year first above written.

                                       KINDER MORGAN ENERGY PARTNERS, L. P.

                                       By: Kinder Morgan G.P., Inc.,
                                           Its General Partner

                                       By: C. PARK SHAPER
                                           -------------------------------------
                                       Name:  C. Park Shaper
                                       Title: Vice President and Chief Financial
                                              Officer

                                       FIRST UNION NATIONAL BANK

                                       By: KEVIN M. DOBRAVA
                                          --------------------------------------
                                       Name:  Kevin M. Dobrava
                                       Title: Vice President

<PAGE>   80

                                     ANNEX A

                              "GUARANTY PROVISIONS"

SECTION 101. Unconditional Guaranties.

                  (1) For value received, the undersigned Guarantors, jointly
and severally, hereby fully, unconditionally and absolutely guarantee to Holders
and to the Trustee the due and punctual payment of the principal of, and
premium, if any, and interest on the Securities and all other amounts due and
payable under the Indenture and the Securities by the Partnership, when and as
such principal, premium, if any, and interest shall become due and payable,
whether at the stated maturity or by declaration of acceleration, call for
redemption or otherwise, according to the terms of the Securities and the
Indenture.

                  (2) Failing payment when due of any amount guaranteed pursuant
to the Guaranties, for whatever reason, each Guarantor will be obligated to pay
the same immediately. Each guaranty hereunder is intended to be a general,
unsecured, senior obligation of each undersigned Guarantor and will rank pari
passu in right of payment with all Debt of each such Guarantor that is not, by
its terms, expressly subordinated in right of payment to such guaranty of such
Guarantor. Each of the undersigned Guarantors hereby agrees that its obligations
hereunder shall be full, unconditional and absolute, irrespective of the
validity, regularity or enforceability of the Securities, this Guaranty or the
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Securities with respect to any provisions hereof or
thereof, any release of any other Guarantor, the recovery of any judgment
against the Partnership, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a Guarantor. Each of the undersigned Guarantors hereby agrees that in
the event of a default in payment of the principal of, or premium, if any, or
interest on the Securities, whether at the stated maturity or by declaration of
acceleration, call for redemption or otherwise, legal proceedings may be
instituted by the Trustee on behalf of Holders or, subject to Section 507 of the
Indenture, by Holders, on the terms and conditions set forth in the Indenture,
directly against each of the Guarantors to enforce this Guaranty without first
proceeding against the Partnership.

                  (3) The obligations of each undersigned Guarantor under this
Guaranty shall be as aforesaid full, unconditional and absolute and shall not be
impaired, modified, released or limited by any occurrence or condition
whatsoever, including, without limitation (A) any compromise, settlement,
release, waiver, renewal, extension, indulgence or modification of, or any
change in, any of the obligations and liabilities of the Partnership or any
Guarantor contained in the Securities, the Indenture or any other Guaranty, (B)
any impairment, modification, release or limitation of the liability of the
Partnership, any Guarantor or any of their estates in bankruptcy, or any remedy
for the enforcement thereof, resulting from the operation of any present or
future provision of any applicable Bankruptcy Law, as amended, or other statute
or from the decision of any court, (C) the assertion or exercise by the
Partnership, any Guarantor or the Trustee of any rights or remedies under the
Securities, the Indenture or any other Guaranty or their delay in or failure to
assert or exercise any such rights or remedies, (D) the assignment or the
purported assignment of any property as security for the Securities, including
all or any part of the rights of the Partnership or any Guarantor under the
Indenture or any other Guaranty, (E)

                                      A-1
<PAGE>   81

the extension of the time for payment by the Partnership or any Guarantor of any
payments or other sums or any part thereof owing or payable under any of the
terms and provisions of the Securities, the Indenture or any other Guaranty or
of the time for performance by the Partnership or any Guarantor of any other
obligations under or arising out of any such terms and provisions or the
extension or the renewal of any thereof, (F) the modification or amendment
(whether material or otherwise) of any duty, agreement or obligation of the
Partnership or any Guarantor set forth in the Indenture or any other Guaranty,
(G) the voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all of the assets, marshaling of assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of, or other
similar proceeding affecting, the Partnership or any of the Guarantors or any of
their respective assets, or the disaffirmance of the Securities, this Guaranty
or the Indenture or any other Guaranty in any such proceeding, (H) the release
or discharge of the Partnership or any Guarantor from the performance or
observance of any agreement, covenant, term or condition contained in any of
such instruments by operation of law, (I) the unenforceability of the
Securities, this Guaranty, any other Guaranty or the Indenture or (J) any other
circumstance which might otherwise constitute a legal or equitable discharge of
a surety or guarantor.

                  (4) Each of the undersigned Guarantors hereby (A) waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of the merger, insolvency or bankruptcy of the Partnership or a Guarantor,
and all demands whatsoever, (B) acknowledges that this Guaranty may be
transferred and that the benefit of its obligations hereunder shall extend to
each holder of any Securities without notice to them and (C) covenants that its
guaranty hereunder will not be discharged except by complete performance. Each
undersigned Guarantor further agrees that if at any time all or any part of any
payment hereunder theretofore applied by any Person is, or must be, rescinded or
returned for any reason whatsoever, including without limitation, the
insolvency, bankruptcy or reorganization of the Partnership or such Guarantor,
this Guaranty shall, to the extent that such payment is or must be rescinded or
returned, be deemed to have continued in existence notwithstanding such
application, and this Guaranty shall continue to be effective or be reinstated,
as the case may be, as though such application had not been made.

                  (5) Each undersigned Guarantor shall be subrogated to all
rights of Holders and the Trustee against the Partnership in respect of any
amounts paid by such Guarantor pursuant to the provisions of the Indenture or
this Guaranty, provided, however, that no Guarantor shall be entitled to enforce
or to receive any payments arising out of, or based upon, such right of
subrogation until all of the Securities and this Guaranty shall have been paid
in full or discharged.

                  (6) A director, officer, employee or stockholder, as such, of
any Guarantor shall not have any liability for any obligations of such Guarantor
under the Indenture or this Guaranty, or for any claim based on, in respect of
or by reason of such obligations or their creation.

                                      A-2
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SECTION 102. Limitation of Guarantor's Liability.

         Each undersigned Guarantor and by its acceptance hereof each Holder
hereby confirms that it is the intention of all such parties that the guarantee
by such Guarantor pursuant to this Guaranty not constitute a fraudulent transfer
or conveyance for purposes of any federal, state or foreign law. To effectuate
the foregoing intention, Holders and each Guarantor hereby irrevocably agree
that the obligations of each Guarantor under this Guaranty shall be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Guarantor and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Guaranty or pursuant to Section
103, result in the obligations of such Guarantor under this Guaranty not
constituting a fraudulent conveyance or fraudulent transfer under federal, state
or foreign law.

SECTION 103. Contribution.

         In order to provide for just and equitable contribution among all
Guarantors, the undersigned Guarantors agree, inter se, that in the event any
payment or distribution is made by any Guarantor (a "Funding Guarantor") under
its Guaranty, such Funding Guarantor shall be entitled to a contribution from
each other Guarantor in a pro rata amount based on the Adjusted Net Assets of
each Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by the Funding Guarantor in discharging the Partnership's
obligations with respect to the Securities or any other Guarantor's obligations
with respect to its Guaranty.

SECTION 104. Execution and Delivery of Guaranties.

         To further evidence the guaranty set forth in Section 101, each
undersigned Guarantor hereby agrees that a notation relating to such guaranty
(in substantially the form hereinbelow set forth) shall be endorsed on each
Security authenticated and delivered by the Trustee and executed by either
manual or facsimile signature of two officers of the Guarantor.

         Each of the undersigned Guarantors hereby agrees that its guaranty set
forth in Section 101 shall remain in full force and effect notwithstanding any
failure to endorse on each Security a notation relating to such guaranty.

         If an officer of a Guarantor whose signature is on this Guaranty or a
Security no longer holds that office at the time the Trustee authenticates such
Security or at any time thereafter, such Guarantor's Guaranty of such Security
shall be valid nevertheless.

         The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Guaranty on behalf of the Guarantor.

                                      A-3
<PAGE>   83

SECTION 105. Consent to Jurisdiction and Service of Process.

         Each undersigned Guarantor that is not organized under the laws of the
United States (including the States and the District of Columbia) (each a
"Non-U.S. Guarantor") hereby appoints the principal office of CT Corporation
System in The City of New York which, on the date hereof, is located at 1633
Broadway, New York, New York 10019, as the authorized agent thereof (the
"Authorized Agent") upon whom process may be served in any action, suit or
proceeding arising out of or based on the Indenture or this Guaranty or the
Securities which may be instituted in the Supreme Court of the State of New York
or the United States District Court for the Southern District of New York, in
either case in The Borough of Manhattan, The City of New York, by the Holder of
any Security, and each Non-United States Guarantor hereby waives any objection
which it may now or hereafter have to the laying of venue of any such proceeding
and expressly and irrevocably accepts and submits, for the benefit of Holders
from time to time of the Securities, to the nonexclusive jurisdiction of any
such court in respect of any such action, suit or proceeding, for itself and
with respect to its properties, revenues and assets. Such appointment shall be
irrevocable unless and until the appointment of a successor authorized agent for
such purpose, and such successor's acceptance of such appointment, shall have
occurred. Each Non-U.S. Guarantor agrees to take any and all actions, including
the filing of any and all documents and instruments, that may be necessary to
continue such appointment in full force and effect as aforesaid. Service of
process upon the Authorized Agent with respect to any such action shall be
deemed, in every respect, effective service of process upon any such Non-U.S.
Guarantor. Notwithstanding the foregoing, any action against any Non-U.S.
Guarantor arising out of or based on any Security may also be instituted by the
Holder of such Security in any court in the jurisdiction of organization of such
Non-U.S. Guarantor, and such Non-U.S. Guarantor expressly accepts the
jurisdiction of any such court in any such action. The Partnership shall require
the Authorized Agent to agree in writing to accept the foregoing appointment as
agent for service of process.

SECTION 106. Waiver of Immunity.

         To the extent that any Non-U.S. Guarantor or any of its properties,
assets or revenues may have or may hereafter become entitled to, or have
attributed to it, any right of immunity, on the grounds of sovereignty or
otherwise, from any legal action, suit or proceeding, from the giving of any
relief in any thereof, from set-off or counterclaim, from the jurisdiction of
any court, from service of process, from attachment upon or prior to judgment,
from attachment in aid of execution of judgment, or from execution of judgment,
or other legal process or proceeding for the giving of any relief or for the
enforcement of any judgment, in any jurisdiction in which proceedings may at any
time be commenced, with respect to its obligations, liabilities or any other
matter under or arising out of or in connection with the Indenture or this
Guaranty or the Securities, such Non-U.S. Guarantor, to the maximum extent
permitted by law, hereby irrevocably and unconditionally waives, and agrees not
to plead or claim, any such immunity and consents to such relief and
enforcement.

                                      A-4
<PAGE>   84

SECTION 107. Judgment Currency.

         Each Non-U.S. Guarantor agrees to indemnify the Trustee and each Holder
against any loss incurred by it as a result of any judgment or order being given
or made and expressed and paid in a currency (the "Judgment Currency") other
than Dollars and as a result of any variation as between (A) the rate of
exchange at which the Dollar amount is converted into the Judgment Currency for
the purpose of such judgment or order and (B) the spot rate of exchange in The
City of New York at which the Trustee or such Holder on the date of payment of
such judgment or order is able to purchase Dollars with the amount of the
Judgment Currency actually received by the Trustee or such Holder. The foregoing
indemnity shall constitute a separate and independent obligation of each
Non-U.S. Guarantor and shall continue in full force and effect notwithstanding
any such judgment or order as aforesaid. The term "spot rate of exchange" shall
include any premiums and costs of exchange payable in connection with the
purchase of, or conversion into, Dollars.

SECTION 108. Definitions.

         All capitalized terms used herein and not defined herein that are
defined in the Indenture are used herein as so defined.

         "Adjusted Net Assets" of a Guarantor at any date means the amount by
which the fair value of the property of such Guarantor at such date exceeds the
total amount of liabilities, including, without limitation, the probable amount
of contingent liabilities (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date) of such Guarantor at such date,
but excluding liabilities under the Guaranty of such Guarantor.

                                      A-5
<PAGE>   85

                          FORM OF GUARANTY ENDORSEMENT

         Each Guarantor (which term includes any successor Person under the
Guaranty, defined below), has fully, unconditionally and absolutely guaranteed,
to the extent set forth in the Indenture and in a certain Guaranty dated [     ]
(the "Guaranty"), and subject to the provisions in the Indenture and the
Guaranty, the due and punctual payment of the principal of, and premium, if any,
and interest on the Securities and all other amounts due and payable under the
Indenture and the Securities by the Partnership.

         The obligations of the Guarantors to Holders of Securities and to the
Trustee pursuant to the Guaranty and the Indenture are expressly set forth in
Article XIV of the Indenture and in the Guaranty, and reference is hereby made
to the Indenture and the Guaranty for the precise terms of such obligations.

                                       [SIGNATURES]

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