Document:

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                                                                     Exhibit 4.4

                         FORM OF SUBORDINATED INDENTURE

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

                           ENCORE ACQUISITION COMPANY
                                    as Issuer

                                       and

                            -------------------------
                                   as Trustee

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

                                    Indenture

                        Dated as of ______________, ____

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

                          Subordinated Debt Securities

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

<PAGE>

                           ENCORE ACQUISITION COMPANY

           RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939
                   AND INDENTURE, DATED AS OF _______________

<TABLE>
<CAPTION>
    Section of
  Trust Indenture                                                                         Section(s) of
    Act of 1939                                                                             Indenture
    -----------                                                                             ---------
<S>                                                                                       <C>
Section 310 (a)(1)...................................................................     7.10
            (a)(2)...................................................................     7.10
            (a)(3)...................................................................     Not Applicable
            (a)(4)...................................................................     Not Applicable
            (a)(5)...................................................................     7.10
            (b)......................................................................     7.08, 7.10
Section 311 (a)......................................................................     7.11
            (b)......................................................................     7.11
            (c)......................................................................     Not Applicable
Section 312 (a)......................................................................     2.07
            (b)......................................................................     12.03
            (c)......................................................................     12.03
Section 313 (a)......................................................................     7.06
            (b)......................................................................     7.06
            (c)......................................................................     7.06
            (d)......................................................................     7.06
Section 314 (a)......................................................................     4.03, 4.04
            (b)......................................................................     Not Applicable
            (c)(1)...................................................................     12.04
            (c)(2)...................................................................     12.04
            (c)(3)...................................................................     Not Applicable
            (d)......................................................................     Not Applicable
            (e)......................................................................     12.05
Section 315 (a)......................................................................     7.01(b)
            (b)......................................................................     7.05
            (c)......................................................................     7.01(a)
            (d)......................................................................     7.01(c)
            (d)(1)...................................................................     7.01(c)(1)
            (d)(2)...................................................................     7.01(c)(2)
            (d)(3)...................................................................     7.01(c)(3)
            (e)......................................................................     6.11
Section 316 (a)(1)(A)................................................................     6.05
            (a)(1)(B)................................................................     6.04
            (a)(2)...................................................................     Not Applicable
            (a)(last sentence).......................................................     2.11
            (b)......................................................................     6.07
Section 317 (a)(1)...................................................................     6.08
            (a)(2)...................................................................     6.09
            (b)......................................................................     2.06
Section 318 (a)......................................................................     12.01
</TABLE>

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

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

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                              Page
                                                                                                              ----
<S>                                                                                                           <C>
ARTICLE I           DEFINITIONS AND INCORPORATION BY REFERENCE............................................      1
   SECTION 1.01     Definitions...........................................................................      1
   SECTION 1.02     Other Definitions.....................................................................      6
   SECTION 1.03     Incorporation by Reference of Trust Indenture Act.....................................      7
   SECTION 1.04     Rules of Construction.................................................................      7

ARTICLE II          THE SECURITIES........................................................................      8
   SECTION 2.01     Amount Unlimited; Issuable in Series..................................................      8
   SECTION 2.02     Denominations.........................................................................     11
   SECTION 2.03     Forms Generally.......................................................................     11
   SECTION 2.04     Execution, Authentication, Delivery and Dating........................................     11
   SECTION 2.05     Registrar and Paying Agent............................................................     13
   SECTION 2.06     Paying Agent to Hold Money in Trust...................................................     14
   SECTION 2.07     Holder Lists..........................................................................     14
   SECTION 2.08     Transfer and Exchange.................................................................     14
   SECTION 2.09     Replacement Securities................................................................     15
   SECTION 2.10     Outstanding Securities................................................................     15
   SECTION 2.11     Original Issue Discount, Foreign-Currency Denominated and Treasury Securities.........     16
   SECTION 2.12     Temporary Securities..................................................................     16
   SECTION 2.13     Cancellation..........................................................................     16
   SECTION 2.14     Payments; Defaulted Interest..........................................................     16
   SECTION 2.15     Persons Deemed Owners.................................................................     17
   SECTION 2.16     Computation of Interest...............................................................     17
   SECTION 2.17     Global Securities; Book-Entry Provisions..............................................     17

ARTICLE III         REDEMPTION............................................................................     19
   SECTION 3.01     Applicability of Article..............................................................     19
   SECTION 3.02     Notice to the Trustee.................................................................     20
   SECTION 3.03     Selection of Securities To Be Redeemed................................................     20
   SECTION 3.04     Notice of Redemption..................................................................     20
   SECTION 3.05     Effect of Notice of Redemption........................................................     21
   SECTION 3.06     Deposit of Redemption Price...........................................................     21
   SECTION 3.07     Securities Redeemed or Purchased in Part..............................................     22
   SECTION 3.08     Purchase of Securities................................................................     22
   SECTION 3.09     Mandatory and Optional Sinking Funds..................................................     22
   SECTION 3.10     Satisfaction of Sinking Fund Payments with Securities.................................     22
   SECTION 3.11     Redemption of Securities for Sinking Fund.............................................     23

ARTICLE IV          COVENANTS.............................................................................     23
   SECTION 4.01     Payment of Securities.................................................................     23
   SECTION 4.02     Maintenance of Office or Agency.......................................................     24
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                                                            <C>
   SECTION 4.03     SEC Reports; Financial Statements.....................................................     24
   SECTION 4.04     Compliance Certificate................................................................     25
   SECTION 4.05     Existence.............................................................................     25
   SECTION 4.06     Waiver of Stay, Extension or Usury Laws...............................................     25
   SECTION 4.07     Additional Amounts....................................................................     26

ARTICLE V           SUCCESSORS............................................................................     26
   SECTION 5.01     Limitations on Mergers, Consolidations and Other Transactions.........................     26
   SECTION 5.02     Successor Person Substituted..........................................................     27

ARTICLE VI          DEFAULTS AND REMEDIES.................................................................     27
   SECTION 6.01     Events of Default.....................................................................     27
   SECTION 6.02     Acceleration..........................................................................     29
   SECTION 6.03     Other Remedies........................................................................     30
   SECTION 6.04     Waiver of Defaults....................................................................     30
   SECTION 6.05     Control by Majority...................................................................     30
   SECTION 6.06     Limitations on Suits..................................................................     31
   SECTION 6.07     Rights of Holders to Receive Payment..................................................     31
   SECTION 6.08     Collection Suit by Trustee............................................................     31
   SECTION 6.09     Trustee May File Proofs of Claim......................................................     32
   SECTION 6.10     Priorities............................................................................     32
   SECTION 6.11     Undertaking for Costs.................................................................     33

ARTICLE VII         TRUSTEE...............................................................................     33
   SECTION 7.01     Duties of Trustee.....................................................................     33
   SECTION 7.02     Rights of Trustee.....................................................................     34
   SECTION 7.03     May Hold Securities...................................................................     35
   SECTION 7.04     Trustee's Disclaimer..................................................................     35
   SECTION 7.05     Notice of Defaults....................................................................     35
   SECTION 7.06     Reports by Trustee to Holders.........................................................     35
   SECTION 7.07     Compensation and Indemnity............................................................     36
   SECTION 7.08     Replacement of Trustee................................................................     36
   SECTION 7.09     Successor Trustee by Merger, etc......................................................     38
   SECTION 7.10     Eligibility; Disqualification.........................................................     38
   SECTION 7.11     Preferential Collection of Claims Against Company.....................................     39

ARTICLE VIII        DISCHARGE OF INDENTURE................................................................     39
   SECTION 8.01     Termination of Company's Obligations..................................................     39
   SECTION 8.02     Application of Trust Money............................................................     42
   SECTION 8.03     Repayment to Company..................................................................     43
   SECTION 8.04     Reinstatement.........................................................................     43

ARTICLE IX          SUPPLEMENTAL INDENTURES AND AMENDMENTS................................................     43
   SECTION 9.01     Without Consent of Holders............................................................     43
   SECTION 9.02     With Consent of Holders...............................................................     45
   SECTION 9.03     Compliance with Trust Indenture Act...................................................     46
   SECTION 9.04     Revocation and Effect of Consents.....................................................     47
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                            <C>
   SECTION 9.05     Notation on or Exchange of Securities.................................................     47
   SECTION 9.06     Trustee to Sign Amendments, etc.......................................................     47

ARTICLE X           SUBORDINATION.........................................................................     48
   SECTION 10.01    Securities Subordinated to Senior Indebtedness........................................     48
   SECTION 10.02    No Payment on Securities in Certain Circumstances.....................................     48
   SECTION 10.03    Securities Subordinated to Prior Payment of All Senior Indebtedness on
                    Dissolution, Liquidation or Reorganization............................................     49
   SECTION 10.04    Subrogation to Rights of Holders of Senior Indebtedness...............................     50
   SECTION 10.05    Obligations of the Company Unconditional..............................................     51
   SECTION 10.06    Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice...............     52
   SECTION 10.07    Application by Trustee of Amounts Deposited with It...................................     52
   SECTION 10.08    Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders
                    of Senior Indebtedness................................................................     52
   SECTION 10.09    Trustee to Effectuate Subordination of Securities.....................................     53
   SECTION 10.10    Right of Trustee to Hold Senior Indebtedness..........................................     53
   SECTION 10.11    Article X Not to Prevent Events of Default............................................     53
   SECTION 10.12    No Fiduciary Duty of Trustee to Holders of Senior Indebtedness........................     53
   SECTION 10.13    Article Applicable to Paying Agent....................................................     54

ARTICLE XI          GUARANTEES............................................................................     54

ARTICLE XII         MISCELLANEOUS.........................................................................     54
   SECTION 12.01    Trust Indenture Act Controls..........................................................     54
   SECTION 12.02    Notices...............................................................................     54
   SECTION 12.03    Communication by Holders with Other Holders...........................................     55
   SECTION 12.04    Certificate and Opinion as to Conditions Precedent....................................     55
   SECTION 12.05    Statements Required in Certificate or Opinion.........................................     56
   SECTION 12.06    Rules by Trustee and Agents...........................................................     56
   SECTION 12.07    Legal Holidays........................................................................     56
   SECTION 12.08    No Recourse Against Others............................................................     56
   SECTION 12.09    Governing Law.........................................................................     56
   SECTION 12.10    No Adverse Interpretation of Other Agreements.........................................     57
   SECTION 12.11    Successors............................................................................     57
   SECTION 12.12    Severability..........................................................................     57
   SECTION 12.13    Counterpart Originals.................................................................     57
   SECTION 12.14    Table of Contents, Headings, etc......................................................     57
</TABLE>

                                       iii

<PAGE>

            INDENTURE dated as of _______________ between Encore Acquisition
Company, a corporation duly organized and existing under the laws of the State
of Delaware (herein called the "Company"), and ____________________, as trustee
(herein called the "Trustee").

            The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its subordinated
debentures, notes or other evidences (herein called 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
Company, in accordance with its terms, have been done.

            NOW, THEREFORE, THIS INDENTURE WITNESSETH:

            For and in consideration of the premises and 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 series thereof, as
follows:

                                    ARTICLE I
                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01 Definitions.

            "Additional Amounts" means any additional amounts required by the
express terms of a Security or by or pursuant to a Board Resolution, under
circumstances specified therein or pursuant thereto, to be paid by the Company
with respect to certain taxes, assessments or other governmental charges imposed
on certain Holders and that are owing to those Holders.

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

            "Agent" means any Registrar or Paying Agent.

            "Bankruptcy Law" means Title 11 of the United States Code or any
similar federal, state or foreign law for the relief of debtors.

            "Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized, with respect to any particular matter, to
act by or on behalf of the Board of Directors of the Company.

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

                                       1

<PAGE>

            "Business Day" means any day that is not a Legal Holiday.

            "Capital Stock" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.

            "Capitalized Lease Obligation" of any Person means any obligation of
that Person to pay rent or other amounts under a lease of property, real or
personal, that is required to be capitalized for financial reporting purposes in
accordance with GAAP; and the amount of that obligation shall be the capitalized
amount thereof determined in accordance with GAAP.

            "Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean that successor corporation; provided, however, that for
purposes of any provision contained herein which is required by the TIA,
"Company" shall also mean each other obligor (if any) on the Securities of a
series.

            "Company Order" and "Company Request" mean, respectively, a written
order or request signed in the name of the Company by two Officers of the
Company, and delivered to the Trustee.

            "Corporate Trust Office" of the Trustee means the office of the
Trustee located at ____________________, and as may be located at such other
address as the Trustee may give notice to the Company.

            "Default" means any event, act or condition that is, or after notice
or the passage of time or both would be, an Event of Default.

            "Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in global form, the Person specified
pursuant to Section 2.01 hereof as the initial Depositary with respect to the
Securities of that series, until a successor shall have been appointed and
become such pursuant to the applicable provision of this Indenture, and
thereafter "Depositary" shall mean or include that successor.

            "Designated Senior Indebtedness," unless otherwise provided with
respect to the Securities of a series as contemplated by Section 2.01, means any
Senior Indebtedness of the Company that (i) in the instrument evidencing the
same or the assumption or guarantee thereof (or related documents to which the
Company is a party) is expressly designated as "Designated Senior Indebtedness"
for purposes of this Indenture and (ii) satisfies such other conditions as may
be provided with respect to the Securities of that series; provided that those
instruments or documents may place limitations and conditions on the right of
that Senior Indebtedness to exercise the rights of Designated Senior
Indebtedness.

            "Disqualified Capital Stock" means, when used with respect to the
Securities of any series, (i) except as set forth in (ii), with respect to any
Person, Capital Stock of that Person that, by its terms or by the terms of any
security into which it is convertible, exercisable or exchangeable, is, or on
the happening of an event or the passage of time would be, required to be

                                       2

<PAGE>

redeemed or repurchased (including at the option of the holder thereof) by that
Person or any Subsidiary of that Person, in whole or in part, on or prior to the
last Stated Maturity of the Securities of that series, and (ii) with respect to
any Subsidiary of that Person (including with respect to any Subsidiary of the
Company), any Capital Stock other than any common stock with no preference,
privileges, or redemption or repayment provisions.

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

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

            "GAAP" means generally accepted accounting principles in the United
States set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, as in effect from time to time.

            "Global Security" of any series means a Security of that Series that
is issued in global form in the name of the Depositary with respect thereto or
its nominee.

            "Government Obligations" means, with respect to a series of
Securities, direct obligations of the government that issues the currency in
which the Securities of the series are payable for the payment of which the full
faith and credit of that government is pledged, or obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of that
government, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by that government.

            "Guarantee" means the guarantee by any guarantor of the obligations
under this Indenture.

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

            "Indebtedness" of any Person means, without duplication, (i) all
indebtedness of that Person for borrowed money (whether or not the recourse of
the lender is to the whole of the assets of that Person or only to a portion
thereof), (ii) all obligations of that Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of that Person in
respect of letters of credit or other similar instruments (or reimbursement
obligations with respect thereto), other than standby letters of credit, bid or
performance bonds and other similar obligations issued by or for the account of
that Person in the ordinary course of business, to the extent not drawn or, to
the extent drawn, if that drawing is reimbursed not later than 30 Business Days
following demand for reimbursement, (iv) all obligations of that Person to pay
the deferred and unpaid purchase price of property or services, except trade
payables, advances on contracts and accrued expenses arising in the ordinary
course of business, (v) all Capitalized Lease Obligations of that Person, (vi)
all Indebtedness of others secured by a Lien on any asset of that Person,
whether or not that Indebtedness is assumed by that Person (provided that if the
obligations so secured have not been assumed in full by that Person or are not
otherwise that

                                       3

<PAGE>

Person's legal liability in full, then those obligations shall be deemed to be
in an amount equal to the greater of (a) the lesser of (1) the full amount of
those obligations and (2) the fair market value of those assets, as determined
in good faith by the board of directors or other managing body of that Person
and (b) the amount of obligations as have been assumed by that Person or which
are otherwise that Person's legal liability), and (vii) all guarantees by that
Person of or with respect to Indebtedness of others (other than endorsements in
the ordinary course of business), in each case to the extent of the Indebtedness
guaranteed.

            "Indenture" means this Indenture as amended or supplemented from
time to time pursuant to the provisions hereof, and includes the terms of a
particular series of Securities established as contemplated by Section 2.01.

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

            "Interest Payment Date," when used with respect to any Security,
shall have the meaning assigned to that term in the Security as contemplated by
Section 2.01.

            "Issue Date" means, with respect to Securities of a series, the date
on which the Securities of that series are originally issued under this
Indenture.

            "Junior security" of a Person means, when used with respect to the
Securities of any series, any Qualified Capital Stock of that Person or any
Indebtedness of that Person that is subordinated in right of payment to Senior
Indebtedness of the Company to substantially the same extent as, or to a greater
extent than, the Securities of that series and has no scheduled installment of
principal due, by redemption, sinking fund payment or otherwise, on or prior to
the last Stated Maturity of the Securities of that series.

            "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in any of The City of New York, New York, _______________, Fort
Worth, Texas or a Place of Payment are authorized or obligated by law,
regulation or executive order to remain closed.

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

            "Officer" means the Chairman of the Board, the President, any Vice
Chairman of the Board, any Vice President, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Assistant Secretary of a Person.

            "Officers' Certificate" means a certificate signed by two Officers
of a Person.

            "Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee. That counsel may be an employee of or
counsel to the Company or the Trustee.

                                       4

<PAGE>

            "Original Issue Discount Security" means any Security that provides
for an amount less than the principal amount thereof to be due and payable on a
declaration of acceleration of the Maturity thereof pursuant to Section 6.02.

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

            "Place of Payment" means, with respect to the Securities of any
series, the place or places where, subject to the provisions of Section 4.02,
the principal of, premium (if any) on and interest on the Securities of that
series are payable as specified in accordance with Section 2.01.

            "principal" of a Security means the principal of the Security plus,
when appropriate, the premium, if any, on the Security.

            "Qualified Capital Stock" means any Capital Stock of the Company
that is not Disqualified Capital Stock.

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

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

            "Rule 144A Securities" means Securities of a series designated
pursuant to Section 2.01 as entitled to the benefits of Section 4.03(b).

            "SEC" means the Securities and Exchange Commission.

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

            "Security Custodian" means, with respect to Securities of a series
issued in global form, the Trustee for Securities of that series, as custodian
with respect to the Securities of that series, or any successor entity thereto.

            "Senior Indebtedness" of the Company, unless otherwise provided with
respect to the Securities of a series as contemplated by Section 2.01, means (i)
the principal of and premium, if any, and interest on (including interest
accruing or becoming owing prior to or subsequent to the commencement of any
proceeding against or with respect to the Company under any bankruptcy law) and
other amounts due on or in connection with any Indebtedness of the Company,
whether currently outstanding or hereafter incurred, issued or assumed, unless,
by the terms of the instrument creating or evidencing that Indebtedness, it is
provided that such Indebtedness is not superior in right of payment to the
Securities or to other Indebtedness which is pari passu with or subordinated to
the Securities, and (ii) any modifications, refunding, deferrals, renewals or
extensions of any such Indebtedness or securities, notes or other evidences

                                       5

<PAGE>

of Indebtedness issued in exchange for that Indebtedness; provided that in no
event shall "Senior Indebtedness" of the Company include Indebtedness of the
Company for borrowed money owed or owing to any Subsidiary of the Company or any
executive officer or director of the Company.

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

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

            "TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C.
Sections 77aaa-77bbbb), as in effect on the date hereof.

            "Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.

            "Trustee" means the Person named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture, and
thereafter "Trustee" means 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 means the Trustee with respect to Securities of
that series.

            "United States" means the United States of America (including the
States and the District of Columbia) and its territories and possessions
(including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake
Island and the Northern Mariana Islands).

            "United States Alien" means any Person who, for United States
federal income tax purposes, is a foreign corporation, a nonresident alien
individual, a nonresident alien or foreign fiduciary of an estate or trust, or a
foreign partnership.

            "U.S. Government Obligations" means Government Obligations with
respect to Securities payable in Dollars.

SECTION 1.02 Other Definitions.

<TABLE>
<CAPTION>
                                                                                                  DEFINED
         DEFINED TERM                                                                            IN SECTION
         ------------                                                                            ----------
<S>                                                                                              <C>
"Bankruptcy Custodian"..............................................................                 6.01
"Conversion Event"..................................................................                 6.01
"covenant defeasance"...............................................................                 8.01
"Event of Default"..................................................................                 6.01
</TABLE>

                                       6
<PAGE>

<TABLE>
<S>                                                                                                 <C>
"Exchange Rate".....................................................................                 2.11
"Judgment Currency".................................................................                 6.10
"legal defeasance"..................................................................                 8.01
"mandatory sinking fund payment"....................................................                 3.09
"optional sinking fund payment".....................................................                 3.09
"Paying Agent"......................................................................                 2.05
"Payment Default"...................................................................                10.02
"Payment Blocking Notice"...........................................................                10.02
"Registrar".........................................................................                 2.05
"Required Currency".................................................................                 6.10
"Successor".........................................................................                 5.01
</TABLE>

SECTION 1.03 Incorporation by Reference of Trust Indenture Act.

            Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:

            "Commission" means the SEC.

            "indenture securities" means the Securities.

            "indenture security holder" means a Holder.

            "indenture to be qualified" means this Indenture.

            "indenture trustee" or "institutional trustee" means the Trustee.

            "obligor" on the indenture securities means the Company or any other
      obligor on the Securities.

            All terms used in this Indenture that are defined by the TIA,
defined by a TIA reference to another statute or defined by an SEC rule under
the TIA have the meanings so assigned to them.

SECTION 1.04 Rules of Construction.

            Unless the context otherwise requires:

            (1)   a term has the meaning assigned to it;

            (2)   an accounting term not otherwise defined has the meaning
      assigned to it in accordance with GAAP;

            (3)   "or" is not exclusive;

            (4)   words in the singular include the plural, and in the plural
      include the singular;

                                       7

<PAGE>

            (5)   provisions apply to successive events and transactions; and

            (6)   all references in this instrument to Articles and Sections are
      references to the corresponding Articles and Sections in and of this
      instrument.

                                   ARTICLE II
                                 THE SECURITIES

SECTION 2.01 Amount Unlimited; Issuable in Series.

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

            The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth, or determined
in a manner provided, in an Officers' Certificate or in a Company Order, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series:

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

            (2)   if there is to be a limit, the limit on the aggregate
      principal amount of the Securities of the series that may be authenticated
      and delivered under this Indenture (except for Securities authenticated
      and delivered on registration of transfer of, or in exchange for, or in
      lieu of, other Securities of the series pursuant to Section 2.08, 2.09,
      2.12, 2.17, 3.07 or 9.05 and except for any Securities that, pursuant to
      Section 2.04 or 2.17, are deemed never to have been authenticated and
      delivered hereunder); provided, however, that unless otherwise provided in
      the terms of the series, the authorized aggregate principal amount of that
      series may be increased before or after the issuance of any Securities of
      the series by a Board Resolution (or action pursuant to a Board
      Resolution) to that effect;

            (3)   whether any Securities of the series are to be issuable
      initially in temporary global form and whether any Securities of the
      series are to be issuable in permanent global form, as Global Securities
      or otherwise, and, if so, whether beneficial owners of interests in any
      such Global Security may exchange those interests for Securities of that
      series and of like tenor of any authorized form and denomination and the
      circumstances under which those exchanges may occur, if other than in the
      manner provided in Section 2.17, and the initial Depositary and Security
      Custodian, if any, for any Global Security or Securities of that series;

            (4)   (i) if other than provided herein, the Person to whom any
      interest on Securities of the series shall be payable, and (ii) the manner
      in which any interest payable on a temporary Global Security on any
      Interest Payment Date will be paid if other than in the manner provided in
      Section 2.14;

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

                                       8

<PAGE>

            (6)   the rate or rates, or the method of determination thereof, at
      which the Securities of the series shall bear interest, if any, whether
      and under what circumstances Additional Amounts with respect to those
      Securities shall be payable, the date or dates from which that interest
      shall accrue, the Interest Payment Dates on which that interest shall be
      payable and the record date for the interest payable on any Securities on
      any Interest Payment Date;

            (7)   the place or places where, subject to the provisions of
      Section 4.02, the principal of, premium (if any) and interest on and any
      Additional Amounts with respect to the Securities of the series shall be
      payable;

            (8)   the period or periods within which, the price or prices
      (whether denominated in cash, securities or otherwise) at which and the
      terms and conditions on which Securities of the series may be redeemed, in
      whole or in part, at the option of the Company, if the Company is to have
      that option, and the manner in which the Company may exercise any such
      option, if different from those set forth herein;

            (9)   the obligation, if any, of the Company to redeem, purchase or
      repay Securities of the series pursuant to any sinking fund or analogous
      provisions or at the option of a Holder thereof and the period or periods
      within which, the price or prices (whether denominated in cash, securities
      or otherwise) at which and the terms and conditions on which Securities of
      the series shall be redeemed, purchased or repaid in whole or in part
      pursuant to that obligation;

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

            (11)  if other than Dollars, the currency or currencies (including
      composite currencies) or the form, including equity securities, other debt
      securities (including Securities), warrants or any other securities or
      property of the Company or any other Person, in which payment of the
      principal of, premium (if any) and interest on and any Additional Amounts
      with respect to the Securities of the series shall be payable;

            (12)  if the principal of, premium (if any) or interest on or any
      Additional Amounts with respect to the Securities of the series are to be
      payable, at the election of the Company or a Holder thereof, in a currency
      or currencies (including composite currencies) other than that in which
      the Securities are stated to be payable, the currency or currencies
      (including composite currencies) in which payment of the principal,
      premium (if any), interest and any Additional Amounts with respect to
      Securities of that series as to which that election is made shall be
      payable, and the periods within which and the terms and conditions on
      which that election is to be made;

            (13)  if the amount of payments of principal, premium (if any),
      interest and any Additional Amounts with respect to the Securities of the
      series may be determined with reference to any commodities, currencies or
      indices, values, rates or prices or any other index or formula, the manner
      in which those amounts shall be determined;

                                       9

<PAGE>

            (14)  if other than the entire principal amount thereof, the portion
      of the principal amount of Securities of the series that shall be payable
      on declaration of acceleration of the Maturity thereof pursuant to Section
      6.02;

            (15)  any additional means of satisfaction and discharge of this
      Indenture and any additional conditions or limitations to discharge with
      respect to Securities of the series pursuant to Article VIII or any
      modifications of or deletions from those conditions or limitations;

            (16)  any deletions or modifications of or additions to the Events
      of Default set forth in Section 6.01 or covenants of the Company set forth
      in Article IV pertaining to the Securities of the series;

            (17)  any restrictions or other provisions with respect to the
      transfer or exchange of Securities of the series, which may amend,
      supplement, modify or supersede those contained in this Article II;

            (18)  if the Securities of the series are to be convertible into or
      exchangeable for Capital Stock, other debt securities (including
      Securities), warrants, other equity securities or any other securities or
      property of the Company or any other Person, at the option of the Company
      or the Holder or on the occurrence of any condition or event, the terms
      and conditions for that conversion or exchange;

            (19)  if the Securities of the series shall have the benefits of any
      Guarantee and, if so, the identity of the guarantor or guarantors and the
      terms and provisions applicable to any such Guarantee;

            (20)  if the Securities of the series are to be entitled to the
      benefit of Section 4.03(b) (and accordingly constitute Rule 144A
      Securities);

            (21)  any modifications to, or qualifications contemplated by, the
      definition of "Designated Senior Indebtedness," any modifications to the
      definition of "Senior Indebtedness" of the Company or any modifications to
      Article X or the other provisions regarding subordination with respect to
      the Securities of that series; and

            (22)  any other terms of the series (which terms shall not be
      prohibited by the provisions of this Indenture).

            All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to the Board Resolution referred to above and (subject to Section 2.03) set
forth, or determined in the manner provided, in the Officers' Certificate or
Company Order referred to above or in any such indenture supplemental hereto.

            If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of that action
together with that Board Resolution shall be set forth in an Officers'
Certificate or certified by the Secretary or an

                                       10

<PAGE>

Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Officers' Certificate or Company Order setting forth the
terms of the series.

            The Securities shall be subordinated in right of payment to Senior
Indebtedness of the Company as provided in Article X.

SECTION 2.02 Denominations.

            The Securities of each series shall be issuable in such
denominations as shall be specified as contemplated by Section 2.01. In the
absence of any such provisions with respect to the Securities of any series, the
Securities of that series denominated in Dollars shall be issuable in
denominations of $1,000 and any integral multiples thereof.

SECTION 2.03 Forms Generally.

            The Securities of each series shall be in fully registered form and
in substantially the form or forms (including temporary or permanent global
form) established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto. The Securities may have notations, legends or
endorsements required by law, securities exchange rule, the Company's
certificate of incorporation, bylaws or other similar governing documents,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company). A
copy of the Board Resolution establishing the form or forms of Securities of any
series shall be delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 2.04 for the authentication and delivery
of those Securities.

            The definitive Securities of each series 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 those Securities, as
evidenced by their execution thereof.

            The Trustee's certificate 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.

                                       _________________________, as Trustee

                                       By: _____________________________________
                                           Authorized Officer".

SECTION 2.04 Execution, Authentication, Delivery and Dating.

            Two Officers of the Company shall sign the Securities of each series
on behalf of the Company by manual or facsimile signature. The Company's seal,
if any, shall be impressed, affixed, imprinted or reproduced on the Securities
and may be in facsimile form.

                                       11

<PAGE>

            If an Officer of the Company whose signature is on a Security no
longer holds that office at the time the Security is authenticated, the Security
shall be valid nevertheless.

            A Security shall not be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose until authenticated by the manual
signature of an authorized signatory of the Trustee, which signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture. Notwithstanding the foregoing, if any Security has been authenticated
and delivered hereunder but never issued and sold by the Company, and the
Company delivers that Security to the Trustee for cancellation as provided in
Section 2.13 together with a written statement (which need not comply with
Section 12.05 and need not be accompanied by an Opinion of Counsel) stating that
such Security has never been issued and sold by the Company, for all purposes of
this Indenture that Security shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits of this
Indenture.

            At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities of any series executed by
the Company to the Trustee for authentication, and the Trustee shall
authenticate and deliver those Securities for original issue on a Company Order
for the authentication and delivery of those Securities or pursuant to such
procedures reasonably acceptable to the Trustee as may be specified from time to
time by Company Order. That order shall specify the amount of the Securities to
be authenticated, the date on which the original issue of Securities is to be
authenticated, the name or names of the initial Holder or Holders and any other
terms of the Securities of that series not otherwise determined. If provided for
in those procedures, that Company Order may authorize (1) authentication and
delivery of Securities of that series for original issue from time to time, with
certain terms (including, without limitation, the Maturity date or dates,
original issue date or dates and interest rate or rates) that differ from
Security to Security and (2) may authorize authentication and delivery pursuant
to oral or electronic instructions from the Company or its duly authorized
agent, which instructions shall be promptly confirmed in writing.

            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
Section 2.01, in authenticating those Securities, and accepting the additional
responsibilities under this Indenture in relation to those Securities, the
Trustee shall be entitled to receive (in addition to the Company Order referred
to above and the other documents required by Section 12.04), and (subject to
Section 7.01) shall be fully protected in relying on,

            (a)   an Officers' Certificate setting forth the Board Resolution
      and, if applicable, an appropriate record of any action taken pursuant
      thereto, as contemplated by the second to last paragraph of Section 2.01;
      and

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

                  (i)   if the form of those Securities has been established by
            or pursuant to Board Resolution, as is permitted by Section 2.01,
            that such form has been established in conformity with the
            provisions of this Indenture;

                                       12

<PAGE>

                  (ii)  if the terms of those Securities have been established
            by or pursuant to Board Resolution, as is permitted by Section 2.01,
            that such terms have been established in conformity with the
            provisions of this Indenture; and

                  (iii) those Securities, when authenticated and delivered by
            the Trustee and issued by the Company in the manner and subject to
            any conditions specified in that Opinion of Counsel, will constitute
            valid and binding obligations of the Company, enforceable against
            the Company in accordance with their terms, except as the
            enforceability thereof may be limited by applicable bankruptcy,
            insolvency, reorganization, moratorium, fraudulent conveyance or
            other similar laws in effect from time to time affecting the rights
            of creditors generally, and the application of general principles of
            equity (regardless of whether that enforceability is considered in a
            proceeding in equity or at law).

            If all the Securities of any series are not to be issued at one
time, it shall not be necessary to deliver an Officers' Certificate and Opinion
of Counsel at the time of issuance of each such Security, but that Officers'
Certificate and Opinion of Counsel shall be delivered at or before the time of
issuance of the first Security of the series to be issued.

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

            The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless limited by the terms of that
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by that agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the Company.

            Each Security shall be dated the date of its authentication.

SECTION 2.05 Registrar and Paying Agent.

            The Company shall maintain an office or agency for each series of
Securities where Securities of that series may be presented for registration of
transfer or exchange ("Registrar") and an office or agency where Securities of
that series may be presented for payment ("Paying Agent"). The Registrar shall
keep a register of the Securities of that series and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar, and
the term "Paying Agent" includes any additional paying agent.

            The Company shall enter into an appropriate agency agreement with
any Registrar or Paying Agent not a party to this Indenture. The agreement shall
implement the provisions of this Indenture that relate to that Agent. The
Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture. The Company may change any Paying Agent or Registrar
without notice to any Holder. If the Company fails to appoint or

                                       13

<PAGE>

maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such. The Company or any of its Subsidiaries may act as Paying Agent or
Registrar.

            The Company initially appoints the Trustee as Registrar and Paying
Agent.

SECTION 2.06 Paying Agent to Hold Money in Trust.

            With respect to each series of Securities, the Company shall require
each Paying Agent other than the Trustee to agree in writing that the Paying
Agent will hold in trust for the benefit of Holders of Securities of that series
or the Trustee all money held by the Paying Agent for the payment of principal
of, premium, if any, or interest on or any Additional Amounts with respect to
Securities of that series and will notify the Trustee of any default by the
Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee
and to account for any funds disbursed. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee and to account for any
funds disbursed. Upon payment over to the Trustee and upon accounting for any
funds disbursed, the Paying Agent (if other than the Company or a Subsidiary of
the Company) shall have no further liability for the money. If the Company or a
Subsidiary of the Company acts as Paying Agent with respect to a series of
Securities, it shall segregate and hold in a separate trust fund for the benefit
of the Holders of Securities of that series all money held by it as Paying
Agent. Each Paying Agent shall otherwise comply with TIA Section 317(b).

SECTION 2.07 Holder Lists.

            The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders of each series of Securities and shall otherwise comply with TIA Section
312(a). If the Trustee is not the Registrar with respect to a series of
Securities, the Company shall furnish to the Trustee at least five Business Days
before each Interest Payment Date with respect to that series of Securities, and
at such other times as the Trustee may request in writing, a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of Holders of the Securities of that series, and the Company shall
otherwise comply with TIA Section 312(a).

SECTION 2.08 Transfer and Exchange.

            Except as set forth in Section 2.17 or as may be provided pursuant
to Section 2.01, when Securities of any series are presented to the Registrar
with the request to register the transfer of those Securities or to exchange
those Securities for an equal principal amount of Securities of the same series
of like tenor and of other authorized denominations, the Registrar shall
register the transfer or make the exchange as requested if its requirements and
the requirements of this Indenture for those transactions are met; provided,
however, that the Securities presented or surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by a written
instruction of transfer in form reasonably satisfactory to the Registrar duly
executed by the Holder thereof or by his attorney, duly authorized in writing,
on which instruction the Registrar can rely.

            To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Securities at the Registrar's
written request and submission of

                                       14

<PAGE>

the Securities (other than Global Securities). No service charge shall be made
to a Holder for any registration of transfer or exchange (except as otherwise
expressly permitted herein), but the Company may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith (other than such transfer tax or similar governmental
charge payable on exchanges pursuant to Section 2.12, 3.07 or 9.05). The Trustee
shall authenticate Securities in accordance with the provisions of Section 2.04.
Notwithstanding any other provisions of this Indenture to the contrary, the
Company shall not be required to register the transfer or exchange of (a) any
Security selected for redemption in whole or in part pursuant to Article III,
except the unredeemed portion of any Security being redeemed in part or (b) any
Security during the period beginning 15 Business Days before the mailing of
notice of any offer to repurchase Securities of the series required pursuant to
the terms thereof or of redemption of Securities of a series to be redeemed and
ending at the close of business on the date of mailing.

SECTION 2.09 Replacement Securities.

            If any mutilated Security is surrendered to the Trustee, or if the
Holder of a Security claims that the Security has been destroyed, lost or stolen
and the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of that Security, the Company shall issue and the
Trustee shall authenticate a replacement Security of the same series if the
Trustee's requirements are met. If any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay that Security. If
required by the Trustee or the Company, the Holder must furnish an indemnity
bond that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent or any authenticating agent from any
loss that any of them may suffer if a Security is replaced. The Company and the
Trustee may charge the Holder for their expenses in replacing a Security.

            Every replacement Security is an additional obligation of the
Company.

SECTION 2.10 Outstanding Securities.

            The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Security
effected by the Trustee hereunder and those described in this Section 2.10 as
not outstanding.

            If a Security is replaced pursuant to Section 2.09, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.

            If the principal amount of any Security is considered paid under
Section 4.01, it ceases to be outstanding and interest on it ceases to accrue.

            A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security.

                                       15

<PAGE>

SECTION 2.11 Original Issue Discount, Foreign-Currency Denominated and Treasury
      Securities.

            In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, amendment, supplement, waiver or
consent, (a) the principal amount of an Original Issue Discount Security shall
be the principal amount thereof that would be due and payable as of the date of
that determination upon acceleration of the Maturity thereof pursuant to Section
6.02, (b) the principal amount of a Security denominated in a foreign currency
shall be the Dollar equivalent, as determined by the Company by reference to the
noon buying rate in The City of New York for cable transfers for that currency,
as that rate is certified for customs purposes by the Federal Reserve Bank of
New York (the "Exchange Rate") on the date of original issuance of that
Security, of the principal amount (or, in the case of an Original Issue Discount
Security, the Dollar equivalent, as determined by the Company by reference to
the Exchange Rate on the date of original issuance of that Security, of the
amount determined as provided in (a) above), of that Security and (c) Securities
owned by the Company or any other obligor on the Securities or any Affiliate of
the Company or of that other obligor shall be disregarded, except that, for the
purpose of determining whether the Trustee shall be protected in relying on any
such direction, amendment, supplement, waiver or consent, only Securities that
the Trustee actually knows are so owned shall be so disregarded.

SECTION 2.12 Temporary Securities.

            Until definitive Securities of any series are ready for delivery,
the Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive
Securities, but may have variations that the Company considers appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare and
the Trustee shall authenticate definitive Securities in exchange for temporary
Securities. Until so exchanged, the temporary Securities shall in all respects
be entitled to the same benefits under this Indenture as definitive Securities.

SECTION 2.13 Cancellation.

            The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange,
payment or redemption or for credit against any sinking fund payment. The
Trustee shall cancel all Securities surrendered for registration of transfer,
exchange, payment, redemption, replacement or cancellation or for credit against
any sinking fund. Unless the Company shall direct in writing that canceled
Securities be returned to it, after written notice to the Company all canceled
Securities held by the Trustee shall be disposed of in accordance with the usual
disposal procedures of the Trustee, and the Trustee shall maintain a record of
their disposal. The Company may not issue new Securities to replace Securities
that have been paid or that have been delivered to the Trustee for cancellation.

SECTION 2.14 Payments; Defaulted Interest.

            Unless otherwise provided as contemplated by Section 2.01 with
respect to the Securities of any series, interest (except defaulted interest) on
any Security that is payable, and is

                                       16

<PAGE>

punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Persons who are registered Holders of that Security at the close of
business on the record date next preceding that Interest Payment Date, even if
those Securities are canceled after that record date and on or before that
Interest Payment Date. Unless otherwise provided with respect to the Securities
of any series, the Company will pay the principal of, premium (if any) and
interest on and any Additional Amounts with respect to the Securities in
Dollars. Those amounts shall be payable at the offices of the Trustee, provided
that at the option of the Company, the Company may pay those amounts (1) by wire
transfer with respect to Global Securities or (2) by check payable in that money
mailed to a Holder's registered address with respect to any Securities.

            If the Company defaults in a payment of interest on the Securities
of any series, it shall pay the defaulted interest in any lawful manner plus, to
the extent lawful, interest on the defaulted interest, in each case at the rate
provided in the Securities of that series and in Section 4.01. The Company may
pay the defaulted interest to the Persons who are Holders on a subsequent
special record date. At least 15 days before any special record date selected by
the Company, the Company (or the Trustee, in the name of and at the expense of
the Company upon 20 days' prior written notice from the Company setting forth
that record date and the interest amount to be paid) shall mail to Holders of
any such series of Securities a notice that states the special record date, the
related payment date and the amount of that interest to be paid.

SECTION 2.15 Persons Deemed Owners.

            The Company, the Trustee, any Agent and any authenticating agent may
treat the Person in whose name any Security is registered as the owner of that
Security for the purpose of receiving payments of principal of, premium (if any)
or interest on, or any Additional Amounts with respect to that Security and for
all other purposes. None of the Company, the Trustee, any Agent or any
authenticating agent shall be affected by any notice to the contrary.

SECTION 2.16 Computation of Interest.

            Except as otherwise specified as contemplated by Section 2.01 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a year comprising twelve 30-day months.

SECTION 2.17 Global Securities; Book-Entry Provisions.

            If Securities of a series are issuable in global form as a Global
Security, as contemplated by Section 2.01, then, notwithstanding clause (10) of
Section 2.01 and the provisions of Section 2.02, any such Global Security shall
represent those of the outstanding Securities of that 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 appropriate, to reflect exchanges or
redemptions. Any endorsement of a Global Security to reflect the amount, or any
increase or decrease in the amount, of outstanding Securities represented
thereby shall be made by the Trustee (i) in such manner and upon instructions
given by such Person or Persons as shall be specified in that Security or in a
Company Order to be delivered to the Trustee pursuant to Section 2.04 or (ii)
otherwise in

                                       17

<PAGE>

accordance with written instructions or such other written form of instructions
as is customary for the Depositary for that Security, from that Depositary or
its nominee on behalf of any Person having a beneficial interest in that Global
Security. Subject to the provisions of Section 2.04 and, if applicable, Section
2.12, the Trustee shall deliver and redeliver any Security in permanent global
form in the manner and upon instructions given by the Person or Persons
specified in that Security or in the applicable Company Order. With respect to
the Securities of any series that are represented by a Global Security, the
Company authorizes the execution and delivery by the Trustee of a letter of
representations or other similar agreement or instrument in the form customarily
provided for by the Depositary appointed with respect to that Global Security.
Any Global Security may be deposited with the Depositary or its nominee, or may
remain in the custody of the Trustee or the Security Custodian therefor pursuant
to a FAST Balance Certificate Agreement or similar agreement between the Trustee
and the Depositary. If a Company Order has been, or simultaneously is,
delivered, any instructions by the Company with respect to endorsement or
delivery or redelivery of a Security in global form shall be in writing but need
not comply with Section 12.05 and need not be accompanied by an Opinion of
Counsel.

            Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depositary, or the Trustee or the Security Custodian
as its custodian, or under that Global Security, and the Depositary may be
treated by the Company, the Trustee or the Security Custodian and any agent of
the Company, the Trustee or the Security Custodian as the absolute owner of that
Global Security for all purposes whatsoever. Notwithstanding the foregoing, (i)
the registered holder of a Global Security of any series may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action that a Holder of
Securities of that series is entitled to take under this Indenture or the
Securities of that series and (ii) nothing herein shall prevent the Company, the
Trustee or the Security Custodian or any agent of the Company, the Trustee, or
the Security Custodian from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or shall impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a beneficial owner of any Security.

            Notwithstanding Section 2.08, and except as otherwise provided
pursuant to Section 2.01, transfers of a Global Security shall be limited to
transfers of that Global Security in whole, but not in part, to the Depositary,
its successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and procedures
of the Depositary. Securities of any series shall be transferred to all
beneficial owners of a Global Security of that series in exchange for their
beneficial interests in that Global Security if, and only if, either (1) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for that Global Security and a successor Depositary is not appointed
by the Company within 90 days of that notice, (2) an Event of Default has
occurred with respect to that series and is continuing and the Registrar has
received a request from the Depositary to issue Securities of that series in
lieu of all or a portion of that Global Security (in which case the Company
shall deliver Securities of that series within 30 days of that request) or (3)
the Company determines not to have the Securities of that series represented by
a Global Security.

                                       18

<PAGE>

            In connection with any transfer of a portion of the beneficial
interests in a Global Security to beneficial owners pursuant to this Section
2.17, the Registrar shall reflect on its books and records the date and a
decrease in the principal amount of the Global Security in an amount equal to
the principal amount of the beneficial interest in the Global Security to be
transferred, and the Company shall execute, and the Trustee on receipt of a
Company Order for the authentication and delivery of Securities shall
authenticate and deliver, one or more Securities of the same series of like
tenor and amount.

            In connection with the transfer of all the beneficial interests in a
Global Security of any series to beneficial owners pursuant to this Section
2.17, the Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in the Global Security, an equal aggregate principal
amount of Securities of that series of authorized denominations.

            Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to, or payments made on account
of, Securities by the Depositary, or for maintaining, supervising or reviewing
any records of the Depositary relating to those Securities. Neither the Company
nor the Trustee shall be liable for any delay by the related Global Security
Holder or the Depositary in identifying the beneficial owners, and each such
Person may conclusively rely on, and shall be protected in relying on,
instructions from that Global Security Holder or the Depositary for all purposes
(including with respect to the registration and delivery, and the respective
principal amounts, of the Securities to be issued).

            The provisions of the last sentence of the third paragraph of
Section 2.04 shall apply to any Global Security if that Global Security was
never issued and sold by the Company and the Company delivers to the Trustee the
Global Security together with written instructions (which need not comply with
Section 12.05 and need not be accompanied by an Opinion of Counsel) with regard
to the cancellation or reduction in the principal amount of Securities
represented thereby, together with the written statement contemplated by the
last sentence of the third paragraph of Section 2.04.

            Notwithstanding the provisions of Sections 2.03 and 2.14, unless
otherwise specified as contemplated by Section 2.01 with respect to Securities
of any series, payment of principal of and premium (if any) and interest on and
any Additional Amounts with respect to any Global Security shall be made to the
Person or Persons specified therein.

                                   ARTICLE III
                                   REDEMPTION

SECTION 3.01 Applicability of Article.

            Securities of any series that are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 2.01 for Securities of any
series) in accordance with this Article III.

                                       19

<PAGE>

SECTION 3.02 Notice to the Trustee.

            If the Company elects to redeem Securities of any series pursuant to
this Indenture, it shall notify the Trustee of the Redemption Date and principal
amount of Securities of that series to be redeemed. The Company shall so notify
the Trustee at least 45 days before the Redemption Date (unless a shorter notice
shall be satisfactory to the Trustee) by delivering to the Trustee an Officers'
Certificate stating that the redemption will comply with the provisions of this
Indenture and of the Securities of that series. Any such notice may be canceled
at any time prior to the mailing of that notice of redemption to any Holder of
the Securities of that series and shall thereupon be void and of no effect.

SECTION 3.03 Selection of Securities To Be Redeemed.

            If less than all the Securities of any series are to be redeemed
(unless all of the Securities of that series of a specified tenor are to be
redeemed), the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the outstanding
Securities of that series (and tenor) not previously called for redemption,
either pro rata, by lot or by such other method as the Trustee shall deem fair
and appropriate. That redemption may provide for the selection 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 that series of a denomination larger than the minimum authorized denomination
for Securities of that series or of the principal amount of Global Securities of
that series.

            The Trustee shall promptly notify the Company and the Registrar 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 purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities of any series
shall relate, in the case of any of the Securities redeemed or to be redeemed
only in part, to the portion of the principal amount thereof which has been or
is to be redeemed.

SECTION 3.04 Notice of Redemption.

            Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities of a series to be redeemed, at the address of
that Holder appearing in the register of Securities for that series maintained
by the Registrar.

            All notices of redemption shall identify the Securities to be
redeemed and shall state:

            (1)   the Redemption Date;

            (2)   the Redemption Price;

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<PAGE>

            (3)   that, unless the Company defaults in making the redemption
      payment, interest on Securities called for redemption ceases to accrue on
      and after the Redemption Date, and the only remaining right of the Holders
      of those Securities is to receive payment of the Redemption Price on
      surrender to the Paying Agent of the Securities redeemed;

            (4)   if any Security is to be redeemed in part, the portion of the
      principal amount thereof to be redeemed and that on and after the
      Redemption Date, on surrender for cancellation of that Security to the
      Paying Agent, a new Security or Securities in the aggregate principal
      amount equal to the unredeemed portion thereof will be issued without
      charge to the Holder;

            (5)   that Securities called for redemption must be surrendered to
      the Paying Agent to collect the Redemption Price and the name and address
      of the Paying Agent;

            (6)   that the redemption is for a sinking or analogous fund, if
      that is the case; and

            (7)   the CUSIP number, if any, relating to those Securities.

            Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's written request,
by the Trustee in the name and at the expense of the Company.

SECTION 3.05 Effect of Notice of Redemption.

            Once notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the Redemption
Price. Upon surrender to the Paying Agent, those Securities called for
redemption shall be paid at the Redemption Price, but interest installments
whose maturity is on or prior to that Redemption Date will be payable on the
relevant Interest Payment Dates to the Holders of record at the close of
business on the relevant record dates specified pursuant to Section 2.01.

SECTION 3.06 Deposit of Redemption Price.

            On or prior to any Redemption Date, the Company shall deposit with
the Trustee or the Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 2.06) an amount of
money in same day funds sufficient to pay the Redemption Price of, and (except
if the Redemption Date shall be an Interest Payment Date) accrued interest on
and any Additional Amounts with respect to, the Securities or portions thereof
which are to be redeemed on that date, other than Securities or portions thereof
called for redemption on that date which have been delivered by the Company to
the Trustee for cancellation.

            If the Company complies with the preceding paragraph, then, unless
the Company defaults in the payment of that Redemption Price, interest on the
Securities to be redeemed will cease to accrue on and after the applicable
Redemption Date, whether or not those Securities are presented for payment, and
the Holders of those Securities shall have no further rights with

                                       21

<PAGE>

respect to those Securities except for the right to receive the Redemption Price
on surrender of those Securities. If any Security called for redemption shall
not be so paid on surrender thereof for redemption, the principal of and
premium, if any, any Additional Amounts, and, to the extent lawful, accrued
interest thereon shall, until paid, bear interest from the Redemption Date at
the rate specified pursuant to Section 2.01 or provided in the Securities or, in
the case of Original Issue Discount Securities, their initial yield to maturity.

SECTION 3.07 Securities Redeemed or Purchased in Part.

            Upon surrender to the Paying Agent of a Security to be redeemed in
part, the Company shall execute and the Trustee shall authenticate and deliver
to the Holder of that Security without service charge a new Security or
Securities, of the same series and of any authorized denomination as requested
by that Holder in aggregate principal amount equal to, and in exchange for, the
unredeemed portion of the principal of the Security so surrendered that is not
redeemed.

SECTION 3.08 Purchase of Securities.

            Unless otherwise specified as contemplated by Section 2.01, the
Company and any Affiliate of the Company may at any time purchase or otherwise
acquire Securities in the open market or by private agreement. Any such
acquisition shall not operate as or be deemed for any purpose to be a redemption
of the indebtedness represented by those Securities. Any Securities purchased or
acquired by the Company may be delivered to the Trustee for cancellation and, on
that cancellation, the indebtedness represented thereby shall be deemed to be
satisfied. Section 2.13 shall apply to all Securities so delivered.

SECTION 3.09 Mandatory and Optional Sinking Funds.

            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 the minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment." Unless otherwise provided 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 3.10. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of that series and by this Article III.

SECTION 3.10 Satisfaction of Sinking Fund Payments with Securities.

            The Company may deliver outstanding Securities of a series (other
than any previously called for redemption) and may apply as a credit Securities
of a series that have been redeemed either at the election of the Company
pursuant to the terms of those Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of those
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of that series required to be made
pursuant to the terms of that series of Securities; provided that those
Securities have not been previously so credited. Those Securities shall be
received and credited for that purpose by the Trustee at the Redemption Price
specified

                                       22

<PAGE>

in those Securities for redemption through operation of the sinking fund, and
the amount of that sinking fund payment shall be reduced accordingly.

SECTION 3.11 Redemption of Securities for Sinking Fund.

            Not less than 45 days prior (unless a shorter period shall be
satisfactory to the Trustee) to each sinking fund payment date for any series of
Securities, the Company will deliver to the Trustee an Officers' Certificate of
the Company 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,
that is to be satisfied by payment of cash and the portion thereof, if any, that
is to be satisfied by delivery of or by crediting Securities of that series
pursuant to Section 3.10 and will also deliver to the Trustee any Securities to
be so delivered. Failure of the Company to timely deliver that Officers'
Certificate and Securities specified in this paragraph, if any, shall not
constitute a default but shall constitute the election of the Company (i) that
the mandatory sinking fund payment for that series due on the next succeeding
sinking fund payment date shall be paid entirely in cash without the option to
deliver or credit Securities of that series in respect thereof and (ii) that the
Company will make no optional sinking fund payment with respect to that series
as provided in this Section.

            If the sinking fund payment or payments (mandatory or optional or
both) to be made in cash on the next succeeding sinking fund payment date plus
any unused balance of any preceding sinking fund payments made in cash shall
exceed $100,000 (or the Dollar equivalent thereof based on the applicable
Exchange Rate on the date of original issue of the applicable Securities) or a
lesser sum if the Company shall so request with respect to the Securities of any
particular series, that cash shall be applied on the next succeeding sinking
fund payment date to the redemption of Securities of that series at the sinking
fund redemption price together with accrued interest to the date fixed for
redemption. If that amount shall be $100,000 (or the Dollar equivalent thereof
as aforesaid) or less and the Company makes no such request, then it shall be
carried over until a sum in excess of $100,000 (or the Dollar equivalent thereof
as aforesaid) is available. Not less than 30 days before each such sinking fund
payment date, the Trustee shall select the Securities to be redeemed on that
sinking fund payment date in the manner specified in Section 3.03 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Company in the manner provided in Section 3.04. That notice having been
duly given, the redemption of those Securities shall be made on the terms and in
the manner stated in Sections 3.05, 3.06 and 3.07.

                                   ARTICLE IV
                                    COVENANTS

SECTION 4.01 Payment of Securities.

            The Company shall pay the principal of, premium (if any) and
interest on and any Additional Amounts with respect to the Securities of each
series on the dates and in the manner provided in the Securities of that series
and in this Indenture. Principal, premium, interest and any Additional Amounts
shall be considered paid on the date due if the Paying Agent, other than the
Company or a Subsidiary of the Company, holds on that date money deposited by
the

                                       23

<PAGE>

Company designated for and sufficient to pay all principal, premium (if any),
interest and any Additional Amounts then due.

            The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal of and premium (if
any) on Securities of any series, at a rate equal to the then applicable
interest rate on the Securities of that series to the extent lawful; and it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest on and any overdue payments
of Additional Amounts with respect to Securities of that series (without regard
to any applicable grace period) at the same rate to the extent lawful.

SECTION 4.02 Maintenance of Office or Agency.

            The Company will maintain in each Place of Payment for any series of
Securities an office or agency (which may be an office of the Trustee, the
Registrar or the Paying Agent) where Securities of that series may be presented
for registration of transfer or exchange, where Securities of that series may be
presented for payment and where notices and demands to or on the Company in
respect of the Securities of that series and this Indenture may be served.
Unless otherwise designated by the Company by written notice to the Trustee,
that office or agency shall be the office of the Trustee in The City of New
York, which on the date hereof is located at ____________________. The Company
will give prompt written notice to the Trustee of the location, and any change
in the location, of that office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, those presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.

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

SECTION 4.03 SEC Reports; Financial Statements.

            (a)   The Company shall file with the Trustee, within 15 days after
      it files the same with the SEC, copies of the annual reports and the
      information, documents and other reports (or copies of those portions of
      any of the foregoing as the SEC may by rules and regulations prescribe)
      that the Company is required to file with the SEC pursuant to Section 13
      or 15(d) of the Exchange Act. The Company shall also comply with the
      provisions of TIA Section 314(a).

            (b)   If the Company is not subject to the requirements of Section
      13 or 15(d) of the Exchange Act, the Company shall furnish to all Holders
      of Rule 144A Securities and prospective purchasers of Rule 144A Securities
      designated by the Holders of Rule 144A

                                       24

<PAGE>

      Securities, promptly on their request, the information required to be
      delivered pursuant to Rule 144A(d)(4) promulgated under the Securities Act
      of 1933, as amended.

SECTION 4.04 Compliance Certificate.

            (a)   The Company shall deliver to the Trustee, within 120 days
      after the end of each fiscal year of the Company, a statement signed by an
      Officer of the Company, which need not constitute an Officers'
      Certificate, complying with TIA Section 314(a)(4) and stating that, in the
      course of performance by the signing Officer of the Company of his or her
      duties as such Officer of the Company, he or she would normally obtain
      knowledge of the keeping, observing, performing and fulfilling by the
      Company of its obligations under this Indenture, and further stating that,
      to the best of his or her knowledge, the Company has kept, observed,
      performed and fulfilled each and every covenant contained in this
      Indenture and is not in default in the performance or observance of any of
      the terms, provisions and conditions hereof (or, if a Default or Event of
      Default shall have occurred, describing all such Defaults or Events of
      Default of which that Officer may have knowledge and what action the
      Company is taking or proposes to take with respect thereto).

            (b)   The Company shall, so long as Securities of any series are
      outstanding, deliver to the Trustee, promptly on any Officer of the
      Company becoming aware of any Default or Event of Default under this
      Indenture, an Officers' Certificate specifying that Default or Event of
      Default and what action the Company is taking or proposes to take with
      respect thereto.

SECTION 4.05 Existence.

            Subject to Article V hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence and the existence of each of its Subsidiaries and all rights (charter
and statutory) of the Company and its Subsidiaries, provided that the Company
shall not be required to preserve the existence of any Subsidiary of the Company
or any such right if the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company and its
Subsidiaries taken as a whole and that the loss thereof would not have a
material adverse effect on the business, operations, assets or financial
condition of the Company and its Subsidiaries taken as a whole and would not
have any material adverse effect on the payment and performance of the
obligations of the Company under the Securities and this Indenture.

SECTION 4.06 Waiver of Stay, Extension or Usury Laws.

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

                                       25

<PAGE>

law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

SECTION 4.07 Additional Amounts.

            If the Securities of a series expressly provide for the payment of
Additional Amounts, the Company will pay to the Holder of any Security of that
series Additional Amounts as expressly provided therein. Whenever in this
Indenture there is mentioned, in any context, the payment of the principal of or
any premium or interest on, or in respect of, any Security of any series or the
net proceeds received from the sale or exchange of any Security of any series,
that mention shall be deemed to include mention of the payment of Additional
Amounts provided for in this Section 4.07 to the extent that, in that context,
Additional Amounts are, were or would be payable in respect thereof pursuant to
the provisions of this Section 4.07, and express mention of the payment of
Additional Amounts (if applicable) in any provisions hereof shall not be
construed as excluding Additional Amounts in those provisions hereof where that
express mention is not made.

            Unless otherwise provided pursuant to Section 2.01 with respect to
Securities of any series, if the Securities of a series provide for the payment
of Additional Amounts, at least ten days prior to the first Interest Payment
Date with respect to that series of Securities (or if the Securities of that
series will not bear interest prior to Maturity, the first day on which a
payment of principal and any premium is made), and at least ten days prior to
each date of payment of principal and any premium or interest if there has been
any change with respect to the matters set forth in the below-mentioned
Officers' Certificate, the Company shall furnish the Trustee and the Company's
principal Paying Agent or Paying Agents, if other than the Trustee, with an
Officers' Certificate instructing the Trustee and such Paying Agent or Paying
Agents whether that payment of principal of and any premium or interest on the
Securities of that series shall be made to Holders of Securities of that series
who are United States Aliens without withholding for or on account of any tax,
assessment or other governmental charge described in the Securities of that
series. If any such withholding shall be required, then that Officers'
Certificate shall specify by country the amount, if any, required to be withheld
on those payments to those Holders of Securities, and the Company will pay to
that Paying Agent the Additional Amounts required by this Section. The Company
covenants to indemnify the Trustee and any Paying Agent for and to hold them
harmless against any loss, liability or expense reasonably incurred without
negligence or bad faith on their part arising out of or in connection with
actions taken or omitted by any of them in reliance on any Officers' Certificate
furnished pursuant to this Section 4.07.

                                    ARTICLE V
                                   SUCCESSORS

SECTION 5.01 Limitations on Mergers, Consolidations and Other Transactions.

            The Company shall not, in any transaction or series of related
transactions, consolidate with any other Person into, or merge into, any other
Person, or sell, lease, convey, transfer or otherwise dispose of its assets
substantially as an entirety to any Person, unless:

                                       26

<PAGE>

            (1)   the Person formed by that consolidation or into which the
      Company is merged, or to which that sale, lease, conveyance, transfer or
      other disposition shall be made (collectively, the "Successor"), expressly
      assumes by supplemental indenture the due and punctual payment of the
      principal of (and premium, if any) and interest on and Additional Amounts
      with respect to all the Securities and the performance of the Company's
      covenants and obligations under this Indenture and the Securities;

            (2)   immediately after giving effect to that transaction or series
      of related transactions, no Default or Event of Default shall have
      occurred and be continuing; and

            (3)   the Company delivers to the Trustee an Officers' Certificate
      and an Opinion of Counsel, each stating that the transaction and that
      supplemental indenture comply with this Indenture.

SECTION 5.02 Successor Person Substituted.

            Upon any consolidation or merger of the Company or any sale, lease,
conveyance, transfer or other disposition of the assets of the Company
substantially as an entirety in accordance with Section 5.01, any Successor
formed by that consolidation or into or with which the Company is merged or to
which that sale, lease, conveyance, transfer or other disposition is made shall
succeed to, and be substituted for, and may exercise every right and power of
the Company under this Indenture and the Securities with the same effect as if
that Successor had been named as the Company herein and the predecessor Company,
in the case of a sale, conveyance, transfer or other disposition, shall be
released from all obligations under this Indenture and the Securities.

                                   ARTICLE VI
                              DEFAULTS AND REMEDIES

SECTION 6.01 Events of Default.

            Unless either inapplicable to a particular series or specifically
deleted or modified in or pursuant to the supplemental indenture or Board
Resolution establishing that series of Securities or in the form of Security for
that series, an "Event of Default," wherever used herein with respect to
Securities of any series, occurs if:

            (1)   the Company defaults in the payment of interest on or any
      Additional Amounts with respect to any Security of that series when the
      same becomes due and payable and that default continues for a period of 30
      days;

            (2)   the Company defaults in the payment of (A) the principal of
      any Security of that series at its Maturity or (B) premium (if any) on any
      Security of that series when the same becomes due and payable;

            (3)   the Company defaults in the deposit of any sinking fund
      payment, when and as due by the terms of a Security of that series, and
      that default continues for a period of 30 days;

                                       27

<PAGE>

            (4)   the Company fails to comply with any of its other covenants or
      agreements in, or provisions of, the Securities of that series or this
      Indenture (other than an agreement, covenant or provision that has
      expressly been included in this Indenture solely for the benefit of one or
      more series of Securities other than that series) which shall not have
      been remedied within the specified period after written notice, as
      specified in the last paragraph of this Section 6.01;

            (5)   the Company pursuant to or within the meaning of any
      Bankruptcy Law:

                  (A)   commences a voluntary case,

                  (B)   consents to the entry of an order for relief against it
            in an involuntary case,

                  (C)   consents to the appointment of a Bankruptcy Custodian of
            it or for all or substantially all of its property, or

                  (D)   makes a general assignment for the benefit of its
            creditors;

            (6)   a court of competent jurisdiction enters an order or decree
      under any Bankruptcy Law that remains unstayed and in effect for 90 days
      and that:

                  (A)   is for relief against the Company as debtor in an
            involuntary case,

                  (B)   appoints a Bankruptcy Custodian of the Company or a
            Bankruptcy Custodian for all or substantially all of the property of
            the Company, or

                  (C)   orders the liquidation of the Company; or

            (7)   any other Event of Default provided with respect to Securities
      of that series occurs.

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

            The Trustee shall not be deemed to know or have notice of a Default
unless a Trust Officer at the Corporate Trust Office of the Trustee receives
written notice at the Corporate Trust Office of the Trustee of that Default with
specific reference to that Default.

            When a Default is cured, it ceases.

            Notwithstanding the foregoing provisions of this Section 6.01, if
the principal of, premium (if any) or interest on or Additional Amounts with
respect to any Security is payable in a currency or currencies (including a
composite currency) other than Dollars and such currency or currencies are not
available to the Company for making payment thereof due to the imposition of
exchange controls or other circumstances beyond the control of the Company (a
"Conversion Event"), the Company will be entitled to satisfy its obligations to
Holders of the Securities by making that payment in Dollars in an amount equal
to the Dollar equivalent of the amount

                                       28

<PAGE>

payable in such other currency, as determined by the Company by reference to the
Exchange Rate on the date of that payment, or, if that rate is not then
available, on the basis of the most recently available Exchange Rate.
Notwithstanding the foregoing provisions of this Section 6.01, any payment made
under such circumstances in Dollars where the required payment is in a currency
other than Dollars will not constitute an Event of Default under this Indenture.

            Promptly after the occurrence of a Conversion Event, the Company
shall give written notice thereof to the Trustee; and the Trustee, promptly
after receipt of that notice, shall give notice thereof in the manner provided
in Section 12.02 to the Holders. Promptly after the making of any payment in
Dollars as a result of a Conversion Event, the Company shall give notice in the
manner provided in Section 12.02 to the Holders, setting forth the applicable
Exchange Rate and describing the calculation of those payments.

            A Default under clause (4) or (7) of this Section 6.01 is not an
Event of Default until the Trustee notifies the Company, or the Holders of at
least 25% in principal amount of the then outstanding Securities of the series
affected by that Default (or, in the case of a Default under clause (4) of this
Section 6.01, if outstanding Securities of other series are affected by that
Default, then at least 25% in principal amount of the then outstanding
Securities so affected) notify the Company and the Trustee, of the Default, and
the Company fails to cure the Default within 90 days after receipt of the
notice. The notice must specify the Default, demand that it be remedied and
state that the notice is a "Notice of Default."

SECTION 6.02 Acceleration.

            If an Event of Default with respect to any Securities of any series
at the time outstanding (other than an Event of Default specified in clause (5)
or (6) of Section 6.01 hereof) occurs and is continuing, the Trustee by notice
to the Company, or the Holders of at least 25% in principal amount of the then
outstanding Securities of the series affected by that default (or, in the case
of an Event of Default described in clause (4) of Section 6.01, if outstanding
Securities of other series are affected by that Default, then at least 25% in
principal amount of the then outstanding Securities so affected) by notice to
the Company and the Trustee, may declare the principal of (or, if any of those
Securities are Original Issue Discount Securities, that portion of the principal
amount as may be specified in the terms of that series) and all accrued and
unpaid interest on all then outstanding Securities of that series or of all
series, as the case may be, to be due and payable. Upon any such declaration,
the amounts due and payable on those Securities shall be due and payable
immediately. If an Event of Default specified in clause (5) or (6) of Section
6.01 hereof occurs, those amounts shall ipso facto become and be immediately due
and payable without any declaration, notice or other act on the part of the
Trustee or any Holder. The Holders of a majority in principal amount of the then
outstanding Securities of the series affected by that default or all series, as
the case may be, by written notice to the Trustee may rescind an acceleration
and its consequences (other than nonpayment of principal of or premium or
interest on or any Additional Amounts with respect to the Securities) if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default with respect to Securities of that series (or of all series,
as the case may be) have been cured or waived, except nonpayment of principal,
premium, interest or any Additional Amounts that has become due solely because
of the acceleration.

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SECTION 6.03 Other Remedies.

            If an Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may pursue any available remedy to collect
the payment of principal of, or premium, if any, or interest on the Securities
of that series or to enforce the performance of any provision of the Securities
of that series or this Indenture.

            The Trustee may maintain a proceeding with respect to Securities of
any series even if it does not possess any of the Securities of that series or
does not produce any of them in the proceeding. A delay or omission by the
Trustee or any Holder in exercising any right or remedy accruing on an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. All remedies are cumulative to the extent
permitted by law.

SECTION 6.04 Waiver of Defaults.

            Subject to Sections 6.07 and 9.02, the Holders of a majority in
principal amount of the then outstanding Securities of any series or of all
series (acting as one class) by notice to the Trustee may waive an existing or
past Default or Event of Default with respect to that series or all series, as
the case may be, and its consequences (including waivers obtained in connection
with a tender offer or exchange offer for Securities of that series or all
series or a solicitation of consents in respect of Securities of that series or
all series, provided that in each case that offer or solicitation is made to all
Holders of then outstanding Securities of that series or all series (but the
terms of that offer or solicitation may vary from series to series)), except (1)
a continuing Default or Event of Default in the payment of the principal of, or
premium, if any, or interest on or any Additional Amounts with respect to any
Security or (2) a continued Default in respect of a provision that under Section
9.02 cannot be amended or supplemented without the consent of each Holder
affected. Upon any such waiver, that 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 6.05 Control by Majority.

            With respect to Securities of any series, the Holders of a majority
in principal amount of the then outstanding Securities of that series may direct
in writing the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on it
relating to or arising under an Event of Default described in clause (1), (2),
(3) or (7) of Section 6.01, and with respect to all Securities, the Holders of a
majority in principal amount of all the then outstanding Securities affected may
direct in writing the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
on it not relating to or arising under such an Event of Default. However, the
Trustee may refuse to follow any direction that conflicts with applicable law or
this Indenture, that the Trustee determines may be unduly prejudicial to the
rights of other Holders, or that may involve the Trustee in personal liability;
provided, however, that the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with that direction. Prior to taking any
action hereunder, the Trustee shall be entitled to indemnification

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<PAGE>

satisfactory to it in its sole discretion from Holders directing the Trustee
against all losses and expenses caused by taking or not taking that action.

SECTION 6.06 Limitations on Suits.

            Subject to Section 6.07 hereof, a Holder of a Security of any series
may pursue a remedy with respect to this Indenture or the Securities of that
series only if:

            (1)   the Holder gives to the Trustee written notice of a continuing
      Event of Default with respect to that series;

            (2)   the Holders of at least 25% in principal amount of the then
      outstanding Securities of that series make a written request to the
      Trustee to pursue the remedy;

            (3)   such Holder or Holders offer to the Trustee indemnity
      reasonably satisfactory to the Trustee against any loss, liability or
      expense;

            (4)   the Trustee does not comply with the request within 60 days
      after receipt of the request and the offer of indemnity; and

            (5)   during that 60-day period, the Holders of a majority in
      principal amount of the Securities of that series do not give the Trustee
      a direction inconsistent with the request.

            A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.

SECTION 6.07 Rights of Holders to Receive Payment.

            Notwithstanding any other provision of this Indenture, the right of
any Holder of a Security to receive payment of principal of and premium, if any,
and interest on and any Additional Amounts with respect to that Security, on or
after the respective due dates expressed in that Security, or to bring suit for
the enforcement of any such payment on or after those respective dates, is
absolute and unconditional and shall not be impaired or affected without the
consent of the Holder.

SECTION 6.08 Collection Suit by Trustee.

            If an Event of Default specified in clause (1) or (2) of Section
6.01 hereof occurs and is continuing with respect to Securities of any series,
the Trustee is authorized to recover judgment in its own name and as trustee of
an express trust against the Company for the amount of principal, premium (if
any), interest and any Additional Amounts remaining unpaid on the Securities of
that series, and interest on overdue principal and premium, if any, and, to the
extent lawful, interest on overdue interest, and 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.

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<PAGE>

SECTION 6.09 Trustee May File Proofs of Claim.

            The Trustee is authorized to file such proofs of claim and other
papers or documents and to take such actions, including participating as a
member, voting or otherwise, of any committee of creditors, as may be necessary
or advisable to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel) and the Holders allowed in any judicial proceeding
relative to the Company or its creditors or properties and shall be entitled and
empowered to collect, receive and distribute any money or other property payable
or deliverable on any such claims and any Bankruptcy Custodian in any such
judicial proceeding is hereby authorized by each Holder to make those payments
to the Trustee, and in the event that the Trustee shall consent to the making of
those payments directly to the Holders, to pay to the Trustee any amount due to
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 7.07. To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 out of the estate in any such
proceeding, shall be denied for any reason, payment of the same shall be secured
by a lien on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties which the Holders of the Securities may
be entitled to receive in that proceeding whether in liquidation or under any
plan of reorganization or arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.

SECTION 6.10 Priorities.

            If the Trustee collects any money pursuant to this Article VI,
subject to Article X, it shall pay out the money in the following order:

            First: to the Trustee for amounts due under Section 7.07;

            Second: to Holders for amounts due and unpaid on the Securities in
      respect of which or for the benefit of which that money has been
      collected, for principal, premium (if any), interest and any Additional
      Amounts ratably, without preference or priority of any kind, according to
      the amounts due and payable on those Securities for principal, premium (if
      any), interest and any Additional Amounts, respectively; and

            Third: to the Company.

            The Trustee, on prior written notice to the Company, may fix record
dates and payment dates for any payment to Holders pursuant to this Article VI.

            To the fullest extent allowed under applicable law, if for the
purpose of obtaining a judgment against the Company in any court it is necessary
to convert the sum due in respect of the principal of, premium (if any) or
interest on or Additional Amounts with respect to the Securities of any series
(the "Required Currency") into a currency in which a judgment will be rendered
(the "Judgment Currency"), the rate of exchange used shall be the rate at which
in

                                       32

<PAGE>

accordance with normal banking procedures the Trustee could purchase in The City
of New York the Required Currency with the Judgment Currency on the New York
Business Day next preceding that on which final judgment is given. Neither the
Company nor the Trustee shall be liable for any shortfall nor shall it benefit
from any windfall in payments to Holders of Securities under this Section 6.10
caused by a change in exchange rates between the time the amount of a judgment
against it is calculated as above and the time the Trustee converts the Judgment
Currency into the Required Currency to make payments under this Section to
Holders of Securities, but payment of that judgment shall discharge all amounts
owed by the Company on the claim or claims underlying that judgment.

SECTION 6.11 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 or omitted by
it as a trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in
principal amount of the then outstanding Securities of any series.

                                   ARTICLE VII
                                     TRUSTEE

SECTION 7.01 Duties of Trustee.

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

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

            (1)   the Trustee need perform only those duties that are
      specifically set forth in this Indenture and no others, and no implied
      covenants or obligations shall be read into this Indenture against the
      Trustee; and

            (2)   in the absence of bad faith on its part, the Trustee may
      conclusively rely, as to the truth of the statements and the correctness
      of the opinions expressed therein, on certificates or opinions furnished
      to the Trustee and conforming to the requirements of this Indenture.
      However, the Trustee shall examine those certificates and opinions to
      determine whether, on their face, they appear to conform to the
      requirements of this Indenture.

            (c)   The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:

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<PAGE>

            (1)   this paragraph does not limit the effect of Section 7.01(b);

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

            (3)   the Trustee shall not be liable with respect to any action it
      takes or omits to take in good faith in accordance with a direction
      received by it pursuant to Section 6.05 hereof.

            (d)   Whether or not therein expressly so provided, every provision
of this Indenture that in any way relates to the Trustee is subject to the
provisions of this Section 7.01.

            (e)   No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee may refuse to
perform any duty or exercise any right or power unless it receives indemnity
reasonably satisfactory to it against any loss, liability or expense.

            (f)   The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law. All money received by the Trustee with
respect to Securities of any series shall, until applied as herein provided, be
held in trust for the payment of the principal of, premium (if any) and interest
on and Additional Amounts with respect to the Securities of that series.

SECTION 7.02 Rights of Trustee.

            (a)   The Trustee may rely on any document believed by it to be
      genuine and to have been signed or presented by the proper Person. The
      Trustee need not investigate any fact or matter stated in the document.

            (b)   Before the Trustee acts or refrains from acting, it may
      require instruction, an Officers' Certificate or an Opinion of Counsel or
      both to be provided. The Trustee shall not be liable for any action it
      takes or omits to take in good faith in reliance on that instruction,
      Officers' Certificate or Opinion of Counsel. The Trustee may consult with
      counsel, and the written advice of that 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.

            (c)   The Trustee may act through agents and shall not be
      responsible for the misconduct or negligence of any agent appointed with
      due care.

            (d)   The Trustee shall not be liable for any action it takes or
      omits to take in good faith which it believes to be authorized or within
      its rights or powers conferred on it by this Indenture.

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<PAGE>

            (e)   Unless otherwise specifically provided in this Indenture, any
      demand, request, direction or notice from the Company shall be sufficient
      if signed by an Officer of the Company.

SECTION 7.03 May Hold Securities.

            The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or any of
its Affiliates with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights and duties. However, the Trustee is
subject to Sections 7.10 and 7.11.

SECTION 7.04 Trustee's Disclaimer.

            The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Securities; it shall not be accountable for the
Company's use of the proceeds from the Securities or any money paid to the
Company or upon the Company's direction under any provision hereof; it shall not
be responsible for the use or application of any money received by any Paying
Agent other than the Trustee; and it shall not be responsible for any statement
or recital herein or any statement in the Securities other than its certificate
of authentication.

SECTION 7.05 Notice of Defaults.

            If a Default or Event of Default with respect to the Securities of
any series occurs and is continuing and it is known to the Trustee, the Trustee
shall mail to Holders of Securities of that series a notice of the Default or
Event of Default within 90 days after it occurs. Except in the case of a Default
or Event of Default in payment of principal of, premium (if any) and interest on
and Additional Amounts or any sinking fund installment with respect to the
Securities of that series, the Trustee may withhold the notice if and so long as
a committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Holders of Securities of that series.

SECTION 7.06 Reports by Trustee to Holders.

            Within 60 days after each May 15 of each year after the execution of
this Indenture, the Trustee shall mail to Holders of a series and the Company a
brief report dated as of that reporting date that complies with TIA Section
313(a); provided, however, that if no event described in TIA Section 313(a) has
occurred within the twelve months preceding the reporting date with respect to a
series, no report need be transmitted to Holders of that series. The Trustee
also shall comply with TIA Section 313(b). The Trustee shall also transmit by
mail all reports if and as required by TIA Sections 313(c) and 313(d).

            A copy of each report at the time of its mailing to Holders of a
series of Securities shall be filed by the Company with the SEC and each
securities exchange, if any, on which the Securities of that series are listed.
The Company shall notify the Trustee if and when any series of Securities is
listed on any stock exchange.

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<PAGE>

SECTION 7.07 Compensation and Indemnity.

            The Company agrees to pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company agrees to reimburse
the Trustee on request for all reasonable disbursements, advances and expenses
incurred by it. Those expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.

            The Company hereby indemnifies the Trustee against any loss,
liability or expense incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, except as set
forth in the next paragraph. The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel, and the Company shall pay the reasonable fees and expenses of that
counsel. The Company need not pay for any settlement made without its consent.

            The Company shall not be obligated to reimburse any expense or
indemnify against any loss or liability incurred by the Trustee through
negligence or bad faith.

            To secure the payment obligations of the Company in this Section
7.07, the Trustee shall have a lien prior to the Securities on all money or
property held or collected by the Trustee, except that held in trust to pay
principal of, premium (if any) and interest on and any Additional Amounts with
respect to the Securities of any series. That lien shall survive the
satisfaction and discharge of this Indenture.

            When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.

SECTION 7.08 Replacement of Trustee.

            A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only on the successor Trustee's
acceptance of appointment as provided in this Section 7.08.

            The Trustee may resign and be discharged at any time with respect to
the Securities of one or more series by so notifying the Company. The Holders of
a majority in principal amount of the then outstanding Securities of any series
may remove the Trustee with respect to the Securities of that series by so
notifying the Trustee and the Company. The Company may remove the Trustee if:

            (1)   the Trustee fails to comply with Section 7.10;

            (2)   the Trustee is adjudged a bankrupt or an insolvent or an order
      for relief is entered with respect to the Trustee under any Bankruptcy
      Law;

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<PAGE>

            (3)   a Bankruptcy Custodian or public officer takes charge of the
      Trustee or its property; or

            (4)   the Trustee otherwise becomes incapable of acting.

            If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, with respect to the Securities of one or more
series, the Company 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 those series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series). Within one year after
the successor Trustee with respect to the Securities of any series takes office,
the Holders of a majority in principal amount of the Securities of that series
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.

            If a successor Trustee with respect to the Securities of any series
does not take office within 60 days after the retiring Trustee resigns or is
removed, the retiring Trustee, the Company or the Holders of at least 10% in
principal amount of the then outstanding Securities of that series may petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of that series.

            If the Trustee with respect to the Securities of a series fails to
comply with Section 7.10, any Holder of Securities of that series may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee with respect to the Securities of that
series.

            In case of the appointment of a successor Trustee with respect to
all Securities, each such successor Trustee shall deliver a written acceptance
of its appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the retiring
Trustee under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, subject to the lien provided for
in Section 7.07.

            In case of the appointment of a successor Trustee with respect to
the Securities of one or more (but not all) series, the Company, the retiring
Trustee and each successor Trustee with respect to the Securities of one or more
(but not all) series shall execute and deliver an indenture supplemental hereto
in which each successor Trustee shall accept that appointment and that (1) shall
confer to each successor Trustee all the rights, powers and duties of the
retiring Trustee with respect to the Securities of that or those series to which
the appointment of that successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall confirm that all the
rights, powers and duties of the retiring Trustee with respect to the Securities
of that or those series as to which the retiring Trustee is not retiring shall
continue to be vested in the retiring Trustee and (3) shall add to or change any
of the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one Trustee.
Nothing herein or in that supplemental indenture shall constitute those Trustees
co-trustees of the same trust, and each such Trustee shall be trustee of a

                                       37

<PAGE>

trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee. Upon the execution and delivery of that
supplemental indenture, the resignation or removal of the retiring Trustee shall
become effective to the extent provided therein, and each such successor Trustee
shall have all the rights, powers and duties of the retiring Trustee with
respect to the Securities of that or those series to which the appointment of
that successor Trustee relates. On the request of the Company or any successor
Trustee, that retiring Trustee shall transfer to that successor Trustee all
property held by that retiring Trustee as Trustee with respect to the Securities
of that or those series to which the appointment of that successor Trustee
relates.

            Notwithstanding replacement of the Trustee or Trustees pursuant to
this Section 7.08, the obligations of the Company under Section 7.07 shall
continue for the benefit of the retiring Trustee or Trustees.

SECTION 7.09 Successor Trustee by Merger, etc.

            Subject to Section 7.10, if the Trustee consolidates, merges or
converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act shall be the successor Trustee; provided, however, that in the case of a
transfer of all or substantially all of its corporate trust business to another
corporation, the transferee corporation expressly assumes all of the Trustee's
liabilities hereunder.

            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 that authenticating Trustee may adopt that authentication and
deliver the Securities so authenticated; and in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee may
authenticate those Securities either in the name of any predecessor hereunder or
in the name of the successor to the Trustee; and in all those cases those
certificates shall have the full force which it is anywhere in the Securities or
in this Indenture provided that the certificate of the Trustee shall have.

SECTION 7.10 Eligibility; Disqualification.

            There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States,
any State thereof or the District of Columbia and authorized under those laws to
exercise corporate trust power, shall be subject to supervision or examination
by Federal or State (or the District of Columbia) authority and shall have, or
be a Subsidiary of a bank or bank holding company having, a combined capital and
surplus of at least $50 million as set forth in its most recent published annual
report of condition.

            The Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee is
subject to and shall comply with the provisions of TIA Section 310(b) during the
period of time required by this Indenture. Nothing in this Indenture shall
prevent the Trustee from filing with the SEC the application referred to in the
penultimate paragraph of TIA Section 310(b).

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<PAGE>

SECTION 7.11 Preferential Collection of Claims Against Company.

            The Trustee is subject to and shall comply with the provisions of
TIA Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated therein.

                                  ARTICLE VIII
                             DISCHARGE OF INDENTURE

SECTION 8.01 Termination of Company's Obligations.

            (a)   This Indenture shall cease to be of further effect with
respect to the Securities of a series (except as to any surviving rights of
conversion or of registration of transfer or exchange of Securities expressly
provided for herein and except that the Company's obligations under Section
7.07, the Trustee's and Paying Agent's obligations under Section 8.03 and the
rights, powers, protections and privileges accorded the Trustee under Article
VII shall survive), and the Trustee, on demand of the Company, shall execute
proper instruments acknowledging the satisfaction and discharge of this
Indenture with respect to the Securities of that series, when:

            (1)   either

                  (A)   all outstanding Securities of that series theretofore
            authenticated and issued (other than destroyed, lost or stolen
            Securities that have been replaced or paid) have been delivered to
            the Trustee for cancellation; or

                  (B)   all outstanding Securities of that series not
            theretofore delivered to the Trustee for cancellation:

                  (i)   have become due and payable, or

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

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

            and, in the case of clause (i), (ii) or (iii) above, the Company has
            irrevocably deposited or caused to be deposited with the Trustee as
            funds (immediately available to the Holders in the case of clause
            (i)) in trust for that purpose (x) cash in an amount, or (y)
            Government Obligations, maturing as to principal and interest at
            such times and in such amounts as will ensure the availability of
            cash in an amount or (z) a combination thereof, which will be
            sufficient, in the opinion (in the case of clauses (y) and (z)) of a
            nationally recognized firm of independent public accountants
            expressed in a written certification thereof delivered to the
            Trustee, to pay and discharge the entire indebtedness on the
            Securities of that series for principal and any interest and any
            Additional Amounts to the date of

                                       39

<PAGE>

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

                  (C)   the Company has properly fulfilled such other means of
            satisfaction and discharge as is specified, as contemplated by
            Section 2.01, to be applicable to the Securities of that series;

            (2)   the Company has paid or caused to be paid all other sums
      payable by it hereunder with respect to the Securities of that series; and

            (3)   the Company has delivered to the Trustee an Officers'
      Certificate stating that all conditions precedent to satisfaction and
      discharge of this Indenture with respect to the Securities of that series
      have been complied with, together with an Opinion of Counsel to the same
      effect.

            (b)   Unless this Section 8.01(b) is specified as not being
applicable to Securities of a series as contemplated by Section 2.01, the
Company may terminate certain of its obligations under this Indenture ("covenant
defeasance") with respect to the Securities of a series if:

            (1)   the Company has irrevocably deposited or caused to be
      irrevocably 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 the Holders of Securities of
      that series, (i) money in the currency in which payment of the Securities
      of that series is to be made in an amount, or (ii) Government Obligations
      with respect to that series, maturing as to principal and interest at such
      times and in such amounts as will ensure the availability of money in the
      currency in which payment of the Securities of that series is to be made
      in an amount or (iii) a combination thereof, that is sufficient, in the
      opinion (in the case of clauses (ii) and (iii)) of a nationally recognized
      firm of independent public accountants expressed in a written
      certification thereof delivered to the Trustee, to pay, without
      consideration of the reinvestment of any such amounts and after payment of
      all taxes or other charges or assessments in respect thereof payable by
      the Trustee, the principal of and premium (if any) and interest on and any
      Additional Amounts with respect to all Securities of that series on each
      date that such principal, premium (if any), interest or Additional Amounts
      are due and payable and (at the Stated Maturity thereof or on redemption
      as provided in Section 8.01(e)) to pay all other sums payable by it
      hereunder; provided that the Trustee shall have been irrevocably
      instructed to apply that money and/or the proceeds of those Government
      Obligations to the payment of said principal, premium (if any), interest
      and Additional Amounts with respect to the Securities of that series as
      the same shall become due;

            (2)   the Company has delivered to the Trustee an Officers'
      Certificate stating that all conditions precedent to satisfaction and
      discharge of this Indenture with respect to the Securities of that series
      have been complied with, and an Opinion of Counsel to the same effect;

                                       40

<PAGE>

            (3)   no Default or Event of Default with respect to the Securities
      of that series shall have occurred and be continuing on the date of that
      deposit;

            (4)   the Company shall have delivered to the Trustee an Opinion of
      Counsel from counsel reasonably acceptable to the Trustee or a tax ruling
      to the effect that the Holders of Securities of that series will not
      recognize income, gain or loss for Federal income tax purposes as a result
      of the Company's exercise of its option under this Section 8.01(b) 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 that option
      had not been exercised;

            (5)   the Company has complied with any additional conditions
      specified pursuant to Section 2.01 to be applicable to the discharge of
      Securities of that series pursuant to this Section 8.01; and

            (6)   that deposit and discharge shall not cause the Trustee to have
      a conflicting interest as defined in TIA Section 310(b).

            In that event, this Indenture shall cease to be of further effect
(except as set forth in this paragraph), and the Trustee, on demand of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge under this Indenture. However, the Company's obligations in Sections
2.05, 2.06, 2.07, 2.08, 2.09, 4.01, 4.02, 5.01, 7.07, 7.08 and 8.04, the
Trustee's and Paying Agent's obligations in Section 8.03 and the rights, powers,
protections and privileges accorded the Trustee under Article VII shall survive
until all Securities of that series are no longer outstanding. Thereafter, only
the Company's obligations in Section 7.07 and the Trustee's and Paying Agent's
obligations in Section 8.03 shall survive with respect to Securities of that
series.

            After making the irrevocable deposit pursuant to this Section
8.01(b) and following satisfaction of the other conditions set forth herein, the
Trustee on request shall acknowledge in writing the discharge of the Company's
obligations under this Indenture with respect to the Securities of that series,
except for those surviving obligations specified above.

            In order to have money available on a payment date to pay principal
of or premium (if any) or interest on or any Additional Amounts with respect to
the Securities, the Government Obligations shall be payable as to principal or
interest on or before that payment date in such amounts as will provide the
necessary money. Any such Government Obligations shall not be callable at the
issuer's option.

            (c)   If the Company has previously complied or is concurrently
complying with Section 8.01(b) (other than any additional conditions specified
pursuant to Section 2.01 that are expressly applicable only to covenant
defeasance) with respect to Securities of a series, then, unless this Section
8.01(c) is specified as not being applicable to Securities of that series as
contemplated by Section 2.01, the Company may elect to be discharged ("legal
defeasance") from its obligations to make payments with respect to Securities of
that series, if:

            (1)   no Default or Event of Default under clauses (5) and (6) of
      Section 6.01 hereof shall have occurred at any time during the period
      ending on the 91st day after the

                                       41

<PAGE>

      date of deposit contemplated by Section 8.01(b) (it being understood that
      this condition shall not be deemed satisfied until the expiration of that
      period);

            (2)   unless otherwise specified with respect to Securities of that
      series as contemplated by Section 2.01, the Company has delivered to the
      Trustee an Opinion of Counsel from counsel reasonably acceptable to the
      Trustee to the effect referred to in Section 8.01(b)(4) with respect to
      that legal defeasance, which opinion is based on (i) a private ruling of
      the Internal Revenue Service addressed to the Company, (ii) a published
      ruling of the Internal Revenue Service or (iii) a change in the applicable
      federal income tax law (including regulations) after the date of this
      Indenture;

            (3)   the Company has complied with any other conditions specified
      pursuant to Section 2.01 to be applicable to the legal defeasance of
      Securities of that series pursuant to this Section 8.01(c); and

            (4)   the Company has delivered to the Trustee a Company Request
      requesting legal defeasance of the Securities of that series and an
      Officers' Certificate stating that all conditions precedent with respect
      to legal defeasance of the Securities of that series have been complied
      with, together with an Opinion of Counsel to the same effect.

            In that event, the Company will be discharged from its obligations
under this Indenture and the Securities of that series to pay principal of,
premium (if any) and interest on, and any Additional Amounts with respect to,
Securities of that series, the Company's obligations under Sections 4.01, 4.02
and 5.01 shall terminate with respect to those Securities, and the entire
indebtedness of the Company evidenced by those Securities shall be deemed paid
and discharged.

            (d)   If and to the extent additional or alternative means of
satisfaction, discharge or defeasance of Securities of a series are specified to
be applicable to that series as contemplated by Section 2.01, the Company may
terminate any or all of its obligations under this Indenture with respect to
Securities of a series and any or all of its obligations under the Securities of
that series if it fulfills such other means of satisfaction and discharge as may
be so specified, as contemplated by Section 2.01, to be applicable to the
Securities of that series.

            (e)   If Securities of any series subject to subsections (a), (b),
(c) or (d) of this Section 8.01 are to be redeemed prior to their Stated
Maturity, whether pursuant to any optional redemption provisions or in
accordance with any mandatory or optional sinking fund provisions, the terms of
the applicable trust arrangement shall provide for that redemption, and the
Company shall make such arrangements as are reasonably satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company.

SECTION 8.02 Application of Trust Money.

            The Trustee or a trustee reasonably satisfactory to the Trustee and
the Company shall hold in trust money or Government Obligations deposited with
it pursuant to Section 8.01 hereof. It shall apply the deposited money and the
money from Government Obligations through the Paying Agent and in accordance
with this Indenture to the payment of principal of, premium (if any) and
interest on and any Additional Amounts with respect to the Securities of the
series

                                       42

<PAGE>

with respect to which the deposit was made. Money and securities held in trust
are not subject to Article X.

SECTION 8.03 Repayment to Company.

            The Trustee and the Paying Agent shall promptly pay to the Company
at any time on the written request of the Company any excess money or Government
Obligations (or proceeds therefrom) held by them.

            Subject to the requirements of any applicable abandoned property
laws, the Trustee and the Paying Agent shall pay to the Company on written
request any money held by them for the payment of principal, premium (if any),
interest or any Additional Amounts that remain unclaimed for two years after the
date on which that payment shall have become due. After payment to the Company,
Holders entitled to the money must look to the Company for payment as general
creditors unless an applicable abandoned property law designates another Person,
and all liability of the Trustee and the Paying Agent with respect to that money
shall cease.

SECTION 8.04 Reinstatement.

            If the Trustee or the Paying Agent is unable to apply any money or
Government Obligations deposited with respect to Securities of any series in
accordance with Section 8.01 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 that application, the obligations of the
Company under this Indenture with respect to the Securities of that series and
under the Securities of that series shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.01 until such time as the Trustee or
the Paying Agent is permitted to apply all such money or Government Obligations
in accordance with Section 8.01; provided, however, that if the Company has made
any payment of principal of, premium (if any) or interest on or any Additional
Amounts with respect to any Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
those Securities to receive such payment from the money or Government
Obligations held by the Trustee or the Paying Agent.

                                   ARTICLE IX
                     SUPPLEMENTAL INDENTURES AND AMENDMENTS

SECTION 9.01 Without Consent of Holders.

            The Company and the Trustee may amend or supplement this Indenture
or the Securities or waive any provision hereof or thereof without the consent
of any Holder:

            (1)   to cure any ambiguity, omission, defect or inconsistency;

            (2)   to comply with Section 5.01;

                                       43

<PAGE>

            (3)   to provide for uncertificated Securities in addition to or in
      place of certificated Securities, or to provide for the issuance of bearer
      Securities (with or without coupons);

            (4)   to provide any security for any series of Securities or to add
      Guarantees of any series of Securities;

            (5)   to comply with any requirement in order to effect or maintain
      the qualification of this Indenture under the TIA;

            (6)   to add to the covenants of the Company for the benefit of the
      Holders of all or any series of Securities (and if those covenants are to
      be for the benefit of less than all series of Securities, stating that
      those covenants are expressly being included solely for the benefit of
      that series), or to surrender any right or power herein conferred on the
      Company;

            (7)   to add any additional Events of Default with respect to all or
      any series of the Securities (and, if any such Event of Default is
      applicable to less than all series of Securities, specifying the series to
      which that Event of Default is applicable);

            (8)   to change or eliminate any of the provisions of this
      Indenture; provided that any such change or elimination shall become
      effective only when there is no outstanding Security of any series created
      prior to the execution of that amendment or supplemental indenture that is
      adversely affected in any material respect by that change in or
      elimination of that provision;

            (9)   to establish the form or terms of Securities of any series as
      permitted by Section 2.01;

            (10)  to supplement any of the provisions of this Indenture to such
      extent as shall be necessary to permit or facilitate the defeasance and
      discharge of any series of Securities pursuant to Section 8.01; provided,
      however, that any such action shall not adversely affect the interest of
      the Holders of Securities of that series or any other series of Securities
      in any material respect; or

            (11)  to evidence and provide for the acceptance of appointment
      hereunder by a successor Trustee with respect to the Securities of one or
      more series and to add to or change any of the provisions of this
      Indenture as shall be necessary to provide for or facilitate the
      administration of the trusts hereunder by more than one Trustee, pursuant
      to the requirements of Section 7.08.

            Upon the request of the Company, accompanied by a Board Resolution,
and upon receipt by the Trustee of the documents described in Section 9.06, the
Trustee shall, subject to Section 9.06, join with the Company in the execution
of any supplemental indenture authorized or permitted by the terms of this
Indenture and make any further appropriate agreements and stipulations that may
be therein contained.

                                       44

<PAGE>

SECTION 9.02 With Consent of Holders.

            Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture with the written consent
(including consents obtained in connection with a tender offer or exchange offer
for Securities of any one or more series or all series or a solicitation of
consents in respect of Securities of any one or more series or all series,
provided that in each case that offer or solicitation is made to all Holders of
then outstanding Securities of each such series (but the terms of that offer or
solicitation may vary from series to series)) of the Holders of at least a
majority in principal amount of the then outstanding Securities of all series
affected by that amendment or supplement (acting as one class).

            Upon the request of the Company, accompanied by a Board Resolution,
and upon the filing with the Trustee of evidence of the consent of the Holders
as aforesaid, and upon receipt by the Trustee of the documents described in
Section 9.06, the Trustee shall, subject to Section 9.06, join with the Company
in the execution of that amendment or supplemental indenture.

            It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if that consent approves the
substance thereof.

            The Holders of a majority in principal amount of the then
outstanding Securities of one or more series or of all series may waive
compliance in a particular instance by the Company with any provision of this
Indenture with respect to Securities of that series (including waivers obtained
in connection with a tender offer or exchange offer for Securities of that
series or a solicitation of consents in respect of Securities of that series,
provided that in each case that offer or solicitation is made to all Holders of
then outstanding Securities of that series (but the terms of that offer or
solicitation may vary from series to series)).

            However, without the consent of each Holder affected, an amendment,
supplement or waiver under this Section 9.02 may not:

            (1)   reduce the amount of Securities whose Holders must consent to
      an amendment, supplement or waiver;

            (2)   reduce the rate of or change the time for payment of interest,
      including default interest, on any Security;

            (3)   reduce the principal of, premium on or any mandatory sinking
      fund payment with respect to, or change the Stated Maturity of, any
      Security or reduce the amount of the principal of an Original Issue
      Discount Security that would be due and payable on a declaration of
      acceleration of the Maturity thereof pursuant to Section 6.02;

            (4)   reduce the premium, if any, payable on the redemption of any
      Security or change the time at which any Security may or shall be
      redeemed;

            (5)   change any obligation of the Company to pay Additional Amounts
      with respect to any Security;

                                       45

<PAGE>

            (6)   change the coin or currency or currencies (including composite
      currencies) in which any Security or any premium, interest or Additional
      Amounts with respect thereto are payable;

            (7)   impair the right to institute suit for the enforcement of any
      payment of principal of, premium (if any) or interest on or any Additional
      Amounts with respect to any Security pursuant to Sections 6.07 and 6.08,
      except as limited by Section 6.06;

            (8)   make any change in the percentage of principal amount of
      Securities necessary to waive compliance with certain provisions of this
      Indenture pursuant to Section 6.04 or 6.07 or make any change in this
      sentence of Section 9.02;

            (9)   modify the provisions of this Indenture with respect to the
      subordination of any Security in a manner adverse to the Holder thereof;
      or

            (10)  waive a continuing Default or Event of Default in the payment
      of principal of, premium (if any) or interest on or Additional Amounts
      with respect to the Securities.

            An amendment under this Section may not make any change that
adversely affects the rights under Article X of any holder of an issue of Senior
Indebtedness of the Company unless the holders of the issue pursuant to its
terms consent to the change.

            A supplemental indenture that 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 that series with respect to that
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

            The right of any Holder to participate in any consent required or
sought pursuant to any provision of this Indenture (and the obligation of the
Company to obtain any such consent otherwise required from that Holder) may be
subject to the requirement that such Holder shall have been the Holder of record
of any Securities with respect to which that consent is required or sought as of
a date identified by the Company in a notice furnished to Holders in accordance
with the terms of this Indenture.

            After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of each Security
affected thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Company to mail that notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
amendment, supplement or waiver.

SECTION 9.03 Compliance with Trust Indenture Act.

            Every amendment or supplement to this Indenture or the Securities
shall comply in form and substance with the TIA as then in effect.

                                       46

<PAGE>

SECTION 9.04 Revocation and Effect of Consents.

            Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his or her Security or portion of a Security if the Trustee
receives written notice of revocation before the date the amendment, supplement
or waiver becomes effective. An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.

            The Company may, but shall not be obligated to, fix a record date
(which need not comply with Section 316(c) of the TIA) for the purpose of
determining the Holders entitled to consent to any amendment, supplement or
waiver or to take any other action under this Indenture. If a record date is
fixed, then notwithstanding the provisions of the immediately preceding
paragraph, those Persons who were Holders at that record date (or their duly
designated proxies), and only those Persons, shall be entitled to consent to
that amendment, supplement or waiver or to revoke any consent previously given,
whether or not those Persons continue to be Holders after that record date. No
consent shall be valid or effective for more than 90 days after that record date
unless consents from Holders of the principal amount of Securities required
hereunder for that amendment or waiver to be effective shall have also been
given and not revoked within that 90-day period.

            After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it is of the type described in any of clauses (1)
through (9) of Section 9.02 hereof. In that case, the amendment, supplement or
waiver shall bind each Holder who has consented to it and every subsequent
Holder that evidences the same debt as the consenting Holder's Security.

SECTION 9.05 Notation on or Exchange of Securities.

            If an amendment or supplement changes the terms of an outstanding
Security, the Company may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security at
the request of the Company regarding the changed terms and return it to the
Holder. Alternatively, if the Company so determines, the Company in exchange for
the Security shall issue and the Trustee shall authenticate a new Security that
reflects the changed terms. Failure to make the appropriate notation or to issue
a new Security shall not affect the validity of that amendment or supplement.

            Securities of any series authenticated and delivered after the
execution of any amendment or supplement may, and shall if required by the
Company, bear a notation in form approved by the Company as to any matter
provided for in that amendment or supplement.

SECTION 9.06 Trustee to Sign Amendments, etc.

            The Trustee shall sign any amendment or supplement authorized
pursuant to this Article if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing or refusing to sign that
amendment or supplement, the Trustee shall be entitled to receive, and,

                                       47

<PAGE>

subject to Section 7.01 hereof, shall be fully protected in relying on, an
Opinion of Counsel provided at the expense of the Company as conclusive evidence
that such amendment or supplement is authorized or permitted by this Indenture,
that it is not inconsistent herewith, and that it will be valid and binding on
the Company in accordance with its terms.

                                    ARTICLE X
                                  SUBORDINATION

SECTION 10.01 Securities Subordinated to Senior Indebtedness.

            The Company and each Holder of a Security, by his or her acceptance
thereof, agree that (a) the payment of the principal of, premium (if any) and
interest on and any Additional Amounts with respect to each and all the
Securities and (b) any other payment in respect of the Securities, including on
account of the acquisition or redemption of Securities by the Company, is
subordinated, to the extent and in the manner provided in this Article X, to the
prior payment in full of all Senior Indebtedness of the Company, whether
outstanding at the date of this Indenture or thereafter created, incurred,
assumed or guaranteed, and that these subordination provisions are for the
benefit of the holders of Senior Indebtedness of the Company.

            Each Holder of a Security, by his or her acceptance thereof,
acknowledges and agrees that the provisions of this Article X are, and are
intended to be, an inducement and a consideration to all Persons who, in
reliance on such provisions, become holders of, or continue to hold, Senior
Indebtedness of the Company, and such provisions are made for the benefit of the
holders of Senior Indebtedness of the Company, and those holders are made
obligees hereunder, and any one or more of them may enforce such provisions.

SECTION 10.02 No Payment on Securities in Certain Circumstances.

            (a)   Unless otherwise specified with respect to Securities of a
      series as contemplated by Section 2.01, no payment shall be made by or on
      behalf of the Company on account of the principal of, premium (if any) or
      interest on or any Additional Amounts with respect to the Securities of
      any series or to acquire any of those Securities (including any
      repurchases of those Securities pursuant to the provisions thereof at the
      option of the Holder of those Securities) for cash or property (other than
      Junior securities of the Company), or on account of any redemption
      provisions of those Securities, in the event of default in payment of any
      principal of, premium (if any) or interest on any Senior Indebtedness of
      the Company when the same becomes due and payable, whether at maturity or
      at a date fixed for prepayment or by declaration of acceleration or
      otherwise (a "Payment Default"), unless and until that Payment Default has
      been cured or waived or otherwise has ceased to exist.

            (b)   Unless otherwise specified with respect to Securities of a
      series as contemplated by Section 2.01, no payment shall be made by or on
      behalf of the Company on account of the principal of, premium (if any) or
      interest on or any Additional Amounts with respect to the Securities of
      any series or to acquire any of those Securities (including any
      repurchases of those Securities pursuant to the provisions thereof at the
      option of the

                                       48

<PAGE>

      Holder of those Securities) for cash or property (other than Junior
      securities of the Company), or on account of the redemption provisions of
      those Securities, in the event of any event of default (other than a
      Payment Default) with respect to any Designated Senior Indebtedness
      permitting the holders of that Designated Senior Indebtedness (or a
      trustee or other representative on behalf of the holders thereof) to
      declare that Designated Senior Indebtedness due and payable prior to the
      date on which it would otherwise have become due and payable, on written
      notice thereof to the Company and the Trustee by any holders of Designated
      Senior Indebtedness (or a trustee or other representative on behalf of the
      holders thereof) (the "Payment Blocking Notice"), unless and until that
      event of default shall have been cured or waived or otherwise has ceased
      to exist; provided, that such payments may not be prevented pursuant to
      this Section 10.02(b) for more than 179 days after an applicable Payment
      Blocking Notice has been received by the Trustee unless the Designated
      Senior Indebtedness in respect of which that event of default exists has
      been declared due and payable in its entirety, in which case no such
      payment may be made until that acceleration has been rescinded or annulled
      or that Designated Senior Indebtedness has been paid in full. Unless
      otherwise specified with respect to Securities of a series as contemplated
      by Section 2.01, no event of default that existed or was continuing on the
      date of any Payment Blocking Notice (whether or not that event of default
      is on the same issue of Designated Senior Indebtedness) may be made the
      basis for the giving of a second Payment Blocking Notice, and only one
      such Payment Blocking Notice may be given in any period of 365 consecutive
      days.

            (c)   In furtherance of the provisions of Section 10.01, in the
      event that, notwithstanding the foregoing provisions of this Section
      10.02, any payment or distribution of assets of the Company (other than
      Junior securities of the Company) shall be received by the Trustee or the
      Holders of the Securities of any series or any Paying Agent with respect
      thereto at a time when that payment or distribution was prohibited by the
      provisions of this Section 10.02, then, unless that payment or
      distribution is no longer prohibited by this Section 10.02, that payment
      or distribution (subject to the provisions of Section 10.07) shall be
      received and held in trust by the Trustee or such Holders or Paying Agent
      for the benefit of the holders of Senior Indebtedness of the Company, and
      shall be paid or delivered by the Trustee or such Holders or Paying Agent,
      as the case may be, to the holders of Senior Indebtedness of the Company
      remaining unpaid or unprovided for or their representative or
      representatives, or to the trustee or trustees under any indenture
      pursuant to which any instruments evidencing that Senior Indebtedness of
      the Company may have been issued, ratably, according to the aggregate
      amounts remaining unpaid on account of that Senior Indebtedness of the
      Company held or represented by each, for application to the payment of all
      Senior Indebtedness of the Company in full after giving effect to all
      concurrent payments and distributions to or for the holders of that Senior
      Indebtedness.

SECTION 10.03 Securities Subordinated to Prior Payment of All Senior
      Indebtedness on Dissolution, Liquidation or Reorganization.

            Upon any distribution of assets of the Company or upon any
dissolution, winding up, total or partial liquidation or reorganization of the
Company, whether voluntary or

                                       49

<PAGE>

involuntary, in bankruptcy, insolvency, receivership or similar proceeding or
upon assignment for the benefit of creditors:

            (a)   the holders of all Senior Indebtedness of the Company shall
      first be entitled to receive payments in full before the Holders of
      Securities of any series are entitled to receive any payment (other than
      in the form of Junior securities of the Company) on account of the
      principal of, premium (if any) or interest on or any Additional Amounts
      with respect to those Securities;

            (b)   any payment or distribution of assets of the Company of any
      kind or character, whether in cash, property or securities (other than
      Junior securities of the Company), to which the Holders of Securities of
      any series or the Trustee on behalf of those Holders would be entitled,
      except for the provisions of this Article X, shall be paid by the
      liquidating trustee or agent or other Person making such a payment or
      distribution directly to the holders of that Senior Indebtedness or their
      representative, ratably according to the respective amounts of Senior
      Indebtedness held or represented by each, to the extent necessary to make
      payment in full of all that Senior Indebtedness remaining unpaid after
      giving effect to all concurrent payments and distributions to the holders
      of that Senior Indebtedness; and

            (c)   in the event that, notwithstanding the foregoing, any payment
      or distribution of assets of the Company of any kind or character, whether
      in cash, property or securities (other than Junior securities of the
      Company), shall be received by the Trustee or the Holders of Securities of
      any series or any Paying Agent with respect thereto (or, if the Company or
      any Affiliate of the Company is acting as its own Paying Agent, money for
      any such payment or distribution shall be segregated or held in trust) on
      account of the principal of, premium (if any) or interest on or any
      Additional Amounts with respect to the Securities of that series before
      all Senior Indebtedness of the Company is paid in full, that payment or
      distribution (subject to the provisions of Section 10.07) shall be
      received and held in trust by the Trustee or such Holder or Paying Agent
      for the benefit of the holders of that Senior Indebtedness, or their
      respective representatives, ratably according to the respective amounts of
      that Senior Indebtedness held or represented by each, to the extent
      necessary to make payment as provided herein of all that Senior
      Indebtedness remaining unpaid after giving effect to all concurrent
      payments and distributions and all provisions therefor to or for the
      holders of that Senior Indebtedness, but only to the extent that as to any
      holder of that Senior Indebtedness, as promptly as practical following
      notice from the Trustee to the holders of that Senior Indebtedness that
      such prohibited payment has been received by the Trustee, Holder(s) or
      Paying Agent (or has been segregated as provided above), that holder (or a
      representative therefor) notifies the Trustee of the amounts then due and
      owing on that Senior Indebtedness, if any, held by that holder, and only
      the amounts specified in those notices to the Trustee shall be paid to the
      holders of that Senior Indebtedness.

SECTION 10.04 Subrogation to Rights of Holders of Senior Indebtedness.

            Subject to the payment in full of all Senior Indebtedness of the
Company as provided herein, the Holders of the Securities shall be subrogated
(to the extent of the payments

                                       50

<PAGE>

or distributions made to the holders of that Senior Indebtedness pursuant to the
provisions of this Article X) to the rights of the holders of that Senior
Indebtedness to receive payments or distributions of assets of the Company
applicable to that Senior Indebtedness until all amounts owing on the Securities
shall be paid in full. For the purpose of that subrogation, no such payments or
distributions to the holders of that Senior Indebtedness by the Company, or by
or on behalf of the Holders of the Securities by virtue of this Article X, which
otherwise would have been made to those Holders shall, as among the Company, its
creditors other than the holders of Senior Indebtedness of the Company and those
Holders, be deemed to be payment by the Company or on account of that Senior
Indebtedness, it being understood that the provisions of this Article X are and
are intended solely for the purpose of defining the relative rights of the
Holders of the Securities, on the one hand, and the holders of that Senior
Indebtedness, on the other hand.

            If any payment or distribution to which the Holders of the
Securities would otherwise have been entitled but for the provisions of this
Article X shall have been applied, pursuant to the provisions of this Article X,
to the payment of amounts payable under Senior Indebtedness of the Company, then
those Holders shall be entitled to receive from the holders of that Senior
Indebtedness any payments or distributions received by those holders of Senior
Indebtedness of the Company in excess of the amount sufficient to pay all
amounts payable under or in respect of that Senior Indebtedness in full.

SECTION 10.05 Obligations of the Company Unconditional.

            Nothing contained in this Article X or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as between the Company and
the Holders of the Securities of any series, the obligation of the Company,
which is absolute and unconditional, to pay to those Holders the principal of,
premium (if any) and interest on and any Additional Amounts with respect to the
Securities of that series as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of those Holders and creditors of the Company other than the holders of
Senior Indebtedness of the Company, nor shall anything herein or therein prevent
the Trustee or any Holder from exercising all remedies otherwise permitted by
applicable law on default under this Indenture, subject to the rights, if any,
under this Article X, of the holders of Senior Indebtedness of the Company in
respect of cash, property or securities of the Company received on the exercise
of any such remedy. Notwithstanding anything to the contrary in this Article X
or elsewhere in this Indenture or in the Securities, on any distribution of
assets of the Company referred to in this Article X, the Trustee, subject to the
provisions of Sections 7.01 and 7.02, and the Holders of the Securities shall be
entitled to rely on any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other Person making any distribution to the Trustee or to
those Holders for the purpose of ascertaining the Persons entitled to
participate in that distribution, the holders of Senior Indebtedness of the
Company and other Indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article X so long as that court has been apprised
of the provisions of, or the order, decree or certificate makes reference to,
the provisions of this Article X.

                                       51

<PAGE>

SECTION 10.06 Trustee Entitled to Assume Payments Not Prohibited in Absence of
      Notice.

            The Trustee shall not at any time be charged with knowledge of the
existence of any facts that would prohibit the making of any payment to or by
the Trustee unless and until a Responsible Officer of the Trustee or any Paying
Agent shall have received, no later than two Business Days prior to that
payment, written notice thereof from the Company or from one or more holders of
Senior Indebtedness of the Company or from any representative therefor and,
prior to the receipt of any such written notice, the Trustee, subject to the
provisions of Sections 7.01 and 7.02, shall be entitled in all respects
conclusively to assume that no such fact exists.

SECTION 10.07 Application by Trustee of Amounts Deposited with It.

            Amounts deposited in trust with the Trustee pursuant to and in
accordance with Article VIII shall be for the sole benefit of Holders of the
Securities of the series for the benefit of which those amounts were deposited,
and, to the extent allocated for the payment of Securities of that series, shall
not be subject to the subordination provisions of this Article X. Otherwise, any
deposit of assets with the Trustee or the Paying Agent (whether or not in trust)
for the payment of principal of, premium (if any) or interest on or any
Additional Amounts with respect to any Securities shall be subject to the
provisions of Sections 10.01, 10.02, 10.03 and 10.04; provided that if prior to
two Business Days preceding the date on which by the terms of this Indenture any
such assets may become distributable for any purpose (including, without
limitation, the payment of either principal of, premium (if any) or interest on
or any Additional Amounts with respect to any Security), the Trustee or such
Paying Agent shall not have received with respect to those assets the written
notice provided for in Section 10.06, then the Trustee or such Paying Agent
shall have full power and authority to receive those assets and to apply the
same to the purpose for which they were received, and shall not be affected by
any notice to the contrary that may be received by it on or after that date; and
provided further that nothing contained in this Article X shall prevent the
Company from making, or the Trustee from receiving or applying, any payment in
connection with the redemption of Securities if the first publication of notice
of that redemption (whether by mail or otherwise in accordance with this
Indenture) has been made, and the Trustee has received that payment from the
Company, prior to the occurrence of any of the contingencies specified in
Section 10.02 or 10.03.

SECTION 10.08 Subordination Rights Not Impaired by Acts or Omissions of the
      Company or Holders of Senior Indebtedness.

            No right of any present or future holders of any Senior Indebtedness
of the Company to enforce the subordination provisions contained in this Article
X shall at any time in any way be prejudiced or impaired by any act or failure
to act on the part of the Company or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by the Company with the terms
of this Indenture, regardless of any knowledge thereof that any such holder may
have or be otherwise charged with. The holders of Senior Indebtedness of the
Company may extend, renew, modify or amend the terms of the Senior Indebtedness
or any security therefor and release, sell or exchange that security and
otherwise deal freely with the Company, all without affecting the liabilities
and obligations of the parties to this Indenture or the Holders of the
Securities.

                                       52

<PAGE>

SECTION 10.09 Trustee to Effectuate Subordination of Securities.

            Each Holder of a Security by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained in
this Article X and to protect the rights of the Holders of the Securities
pursuant to this Indenture, and appoints the Trustee his attorney-in-fact for
that purpose, including, in the event of any dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
of the Company), the filing of a claim for the unpaid balance of his Securities
in the form required in said proceedings and cause said claim to be approved. If
the Trustee does not file a proper claim or proof of debt in the form required
in that proceeding prior to 30 days before the expiration of the time to file
such claim or claims, then the holders of Senior Indebtedness of the Company or
their representative is hereby authorized to have the right to file and is
hereby authorized to file an appropriate claim for and on behalf of the Holders
of said Securities. Nothing herein contained shall be deemed to authorize the
Trustee or the holders of Senior Indebtedness of the Company or their
representative to authorize or consent to or accept or adopt on behalf of any
Holder of Securities any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Senior Indebtedness of the Company or
their representative to vote in respect of the claim of any Holder of the
Securities in any such proceeding.

SECTION 10.10 Right of Trustee to Hold Senior Indebtedness.

            The Trustee in its individual capacity shall be entitled to all of
the rights set forth in this Article X in respect of any Senior Indebtedness of
the Company at any time held by it to the same extent as any other holder of
Senior Indebtedness of the Company, and nothing in this Indenture shall be
construed to deprive the Trustee of any of its rights as such holder.

SECTION 10.11 Article X Not to Prevent Events of Default.

            The failure to make a payment on account of principal of or premium
(if any) or interest on or any Additional Amounts with respect to the Securities
by reason of any provision of this Article X shall not be construed as
preventing the occurrence of a Default or an Event of Default under Section 6.01
or in any way prevent the Holders of the Securities from exercising any right
hereunder other than the right to receive payment on the Securities.

SECTION 10.12 No Fiduciary Duty of Trustee to Holders of Senior Indebtedness.

            The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of the Company, and shall not be liable to any of
those holders (other than for its willful misconduct or gross negligence) if it
shall in good faith mistakenly pay over or distribute to the Holders of the
Securities or the Company or any other Person, cash, property or securities to
which any holders of Senior Indebtedness of the Company shall be entitled by
virtue of this Article X or otherwise. Nothing in this Section 10.12 shall
affect the obligation of any other such Person to hold that payment for the
benefit of, and to pay that payment over to, the holders of Senior Indebtedness
of the Company or their representative.

                                       53

<PAGE>

SECTION 10.13 Article Applicable to Paying Agent.

            In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article X shall in that case (unless the context shall
otherwise require) be construed as extending to and including that Paying Agent
within its meaning as fully for all intents and purposes as if that Paying Agent
were named in this Article in addition to or in place of the Trustee; provided,
however, that this Section 10.13 shall not apply to the Company or any Affiliate
of the Company if it or that Affiliate acts as Paying Agent.

                                   ARTICLE XI
                                   GUARANTEES

            Any series of Securities may be guaranteed by one or more of the
guarantors. The terms and the form of any such Guarantee will be established in
the manner contemplated by Section 2.01 for that particular series of
Securities.

                                   ARTICLE XII
                                  MISCELLANEOUS

SECTION 12.01 Trust Indenture Act Controls.

            If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by operation of TIA Section 318(c), the imposed duties
shall control.

SECTION 12.02 Notices.

            Any notice or communication by the Company or the Trustee to the
other is duly given if in writing and delivered in person or mailed by
first-class mail (registered or certified, return receipt requested), telex,
facsimile or overnight air courier guaranteeing next day delivery, to the
other's address:

            If to the Company:

            Encore Acquisition Company
            777 Main Street, Suite 1400
            Fort Worth, Texas 76102
            Attention: General Counsel

            If to the Trustee:

            ___________________________________

            ___________________________________

            ___________________________________

            ___________________________________

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

                                       54

<PAGE>

            All notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if by facsimile; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.

            Any notice or communication to a Holder shall be mailed by
first-class mail, postage prepaid, to the Holder's address shown on the register
kept by the Registrar. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.

            If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it, except in the case of notice to the Trustee, it is duly given only
when received.

            If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.

            All notices or communications, including without limitation notices
to the Trustee or the Company by Holders, shall be in writing, except as
otherwise set forth herein.

            In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice required by
this Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of that notice.

SECTION 12.03 Communication by Holders with Other Holders.

            Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Securities. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).

SECTION 12.04 Certificate and Opinion as to Conditions Precedent.

            Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall, if requested by the
Trustee, furnish to the Trustee at the expense of the Company:

            (1)   an Officers' Certificate (which shall include the statements
      set forth in Section 11.05) 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

            (2)   an Opinion of Counsel (which shall include the statements set
      forth in Section 11.05 hereof) stating that, in the opinion of that
      counsel, all those conditions precedent and covenants have been complied
      with.

                                       55

<PAGE>

SECTION 12.05 Statements Required in Certificate or Opinion.

            Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:

            (1)   a statement that the Person making that certificate or opinion
      has read that covenant or condition;

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

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

            (4)   a statement as to whether or not, in the opinion of that
      Person, that condition or covenant has been complied with.

SECTION 12.06 Rules by Trustee and Agents.

            The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or the Paying Agent may make reasonable rules and set
reasonable requirements for its functions.

SECTION 12.07 Legal Holidays.

            If a payment date is a Legal Holiday at a Place of Payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.

SECTION 12.08 No Recourse Against Others.

            A director, officer, employee, stockholder, partner or other owner
of the Company, any guarantor or the Trustee (other than a stockholder, partner
or other owner which itself is the Company or a guarantor of the Securities), as
such, shall not have any liability for any obligations of the Company under the
Securities or for any obligations of the Company, any guarantor or the Trustee
under this Indenture or for any claim based on, in respect of or by reason of
those obligations or their creation. Each Holder by accepting a Security waives
and releases all that liability. The waiver and release shall be part of the
consideration for the issue of Securities.

SECTION 12.09 Governing Law.

            THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
ANY PRINCIPLES OF CONFLICTS OF

                                       56

<PAGE>

LAWS THEREUNDER TO THE EXTENT THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.

SECTION 12.10 No Adverse Interpretation of Other Agreements.

            This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or any Subsidiary. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.

SECTION 12.11 Successors.

            All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.

SECTION 12.12 Severability.

            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, to the fullest extent permitted by applicable
law, not in any way be affected or impaired thereby.

SECTION 12.13 Counterpart Originals.

            The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.

SECTION 12.14 Table of Contents, Headings, etc.

            The table of contents, cross-reference table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.

                                       57

<PAGE>

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

                                       ENCORE ACQUISITION COMPANY

                                       By: _____________________________________
                                           Name:
                                           Title:

                                       _________________________________________
                                       as Trustee

                                       By: _____________________________________
                                           Name:
                                           Title:

                                       58<PAGE>
                                                                     EXHIBIT 4.2

                           ARIAD PHARMACEUTICALS, INC.

                    CERTIFICATE OF INCORPORATION, AS AMENDED

                                    DELAWARE

                    ----------------------------------------
                                 THE FIRST STATE

      I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED ARE TRUE AND CORRECT COPIES OF ALL DOCUMENTS ON FILE
OF "ARIAD PHARMACEUTICALS, INC." AS RECEIVED AND FILED IN THIS OFFICE.

      THE FOLLOWING DOCUMENTS HAVE BEEN CERTIFIED:

      CERTIFICATE OF INCORPORATION, FILED THE TWELFTH DAY OF APRIL, A.D. 1991,
AT 12:30 O'CLOCK P.M.

      CERTIFICATE OF AMENDMENT, FILED THE SIXTEENTH DAY OF APRIL, A.D. 1991, AT
4:30 O'CLOCK P.M.

      CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "ARIAD CORPORATION" TO
"ARIAD PHARMACEUTICALS, INC.", FILED THE THIRD DAY OF MAY, A.D. 1991, AT 9:01
O'CLOCK A.M.

      CERTIFICATE OF AMENDMENT, FILED THE FIFTEENTH DAY OF JANUARY, A.D. 1992,
AT 2:30 O'CLOCK P.M.

      CERTIFICATE OF AMENDMENT, FILED THE EIGHTH DAY OF APRIL, A.D. 1994, AT 9
O'CLOCK A.M.

      CERTIFICATE OF AMENDMENT, FILED THE SEVENTH DAY OF OCTOBER, A.D. 1994, AT
3 O'CLOCK P.M.

      CERTIFICATE OF DESIGNATION, FILED THE SIXTEENTH DAY OF DECEMBER, A.D.
1994, AT 3 O'CLOCK P.M.

      CERTIFICATE OF DESIGNATION, FILED THE EIGHTEENTH DAY OF MARCH, A.D. 1997,
AT 9 O'CLOCK A.M.
<PAGE>
      CERTIFICATE OF DESIGNATION, FILED THE NINTH DAY OF NOVEMBER, A.D. 1998, AT
9 O'CLOCK A.M.

      CERTIFICATE OF DESIGNATION, FILED THE NINETEENTH DAY OF JUNE, A.D. 2000,
AT 11 O'CLOCK A.M.

      CERTIFICATE OF AMENDMENT, FILED THE TWENTY-FIFTH DAY OF JUNE, A.D. 2004,
AT 2:30 O'CLOCK P.M.

      AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CERTIFICATES ARE THE
ONLY CERTIFICATES ON RECORD ON THE AFORESAID CORPORATION.

                                    /s/  Harriet Smith Windsor

                                    ------------------------------------------
                                    Harriett Smith Windsor, Secretary of State

                                                            DATE:  06-25-04

                                       2
<PAGE>
                         CERTIFICATE OF INCORPORATION

                                      of

                              ARIAD Corporation

      The undersigned incorporator, in order to form a corporation under the
General Corporation Law of the State of Delaware, certifies as follows:

      1. Name. The name of the corporation is ARIAD Corporation.

      2. Address: Registered Agent. The address of the Corporation's registered
office is 32 Loockerman Square, Suite L-100, City of Dover, County of Kent,
State of Delaware; and its registered agent at such address is The Prentice-Hall
Corporation System, Inc.

      3. Purposes. The nature of the business and purposes to be conducted or
promoted by the Corporation are to engage in, carry on and conduct any lawful
act or activity for which corporations may be organized under the Delaware
General Corporation Law.

      4. Number of Shares. The total number of shares of stock which the
Corporation shall have authority to issue is: forty million (40,000,000), all of
which shall be shares of Common Stock of the par value of one cent ($0.01) each.

      5. Name and Address of Incorporator. The name and mailing address of the
incorporator are: James T. Janover, 1285 Avenue of the Americas, New York, New
York 10019-6064.

      6. Election of Directors. Members of the Board of Directors may be elected
either by written ballot or by voice vote.

      7. Limitation of Liability. No director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a directory, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
director derived any improper personal benefits.

      Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.

      8. Indemnification.

            8.1 The Corporation shall, to the extent not prohibited by law,
indemnify any person who is or was made, or threatened to be made, a party to
any threatened, pending or completed, action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation to procure a judgment in its favor (hereinafter a
"Proceeding"), by reason of the fact that such person, or a person of whom such

                                       3
<PAGE>
person is the legal representative, is or was a director or officer of the
Corporation, or is or was serving in any capacity at the request of the
Corporation for any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against judgments, fines, penalties,
excise taxes, amounts paid in settlement and costs, charges and expenses
(including attorneys' fees and disbursements). Persons who are not directors or
officers of the Corporation may be similarly indemnified in respect of service
to the Corporation or to another such entity at the request of the Corporation
to the extent the Board of Directors at any time denominates such persons
entitled to the benefits of this Section 8.

            8.2 The Corporation shall, from time to time, reimburse or advance
to any director or officer or other person entitled to indemnification hereunder
the funds necessary for payment of expenses, including attorneys' fees and
disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding, provided, however, that, if required by
the Delaware General Corporation Law, such expenses incurred by or on behalf of
any director of officer or other person may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Corporation of an
undertaking, by or on behalf of such director or officer (or other person
indemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal that such director, officer or other person is not
entitled to be indemnified for such expenses.

            8.3 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall not be deemed
exclusive of any other rights to which those seeking indemnification or
reimbursement or advancement of expenses may have or hereafter be entitled under
any law, by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office.

            8.4 The right to indemnification and reimbursement or advancement of
expenses provide by, or granted pursuant to, this Section 8 shall continue as to
a person who has ceased to be a director or officer (or other person indemnified
hereunder) and shall inure to the benefit of the heirs, executors and
administrators of such person.

            8.5 The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this Section 8, the By-laws of the Corporation or under
Section 145 of the Delaware General Corporation Law or any other provision of
law.

            8.6 The provisions of this Section 8 shall be a contract between the
Corporation, on the one hand, and each director and officer who serves in such
capacity at any time while this Section 8 is in effect and any other person
indemnified hereunder, on the hand, pursuant to which the Corporation and each
such director, officer, or other person intend to be legally bound. No repeal or
modification of this Section 8 shall affect any rights or obligations then
existing or thereafter arising with respect to any state of facts then or
theretofore existing or

                                       4
<PAGE>
thereafter arising or any proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts.

            8.7 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall be
enforceable by any person entitled to such indemnification or reimbursement or
advancement of expenses of any court of competent jurisdiction. The burden of
providing that such indemnification or reimbursement or advancement of expenses
are not appropriate shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that such indemnification or reimbursement or advancement of expenses is
proper in circumstances nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that such person is not entitled to such indemnification or
reimbursement or advancement of expenses, shall constitute a defense to the
action or create a presumption that such person is not so entitled. Such a
person shall also be indemnified for any expenses incurred in connection with
successfully establishing his or her right to such indemnification or
reimbursement or advancement of expenses, in whole or in part, in any such
proceeding.

            8.8 Any director or officer of the Corporation serving (1) another
corporation of which a majority of the shares entitled to vote in the election
of its directors is held by the Corporation, or (2) any employee benefit plan of
the Corporation or any corporation referred to in clause (1), in any capacity,
shall be deemed to be doing so at the request of the Corporation.

            8.9 Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Section 8 may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted in the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made, by a notice in writing to the Corporation,
at the time indemnification or reimbursement or advancement of expenses is
sought; provided that if no such notice is given, the right to indemnification
or reimbursement or advancement of expenses shall be determined by the law in
effect at the time indemnification or reimbursement or advancement of expenses
is sought.

            9. Adoption, Amendment and/or Repeal of By-Laws. The Board of
Directors may from time to time (after adoption by the undersigned of the
original by-laws of the Corporation) make, alter or repeal the by-laws of the
Corporation; provided, that any by-laws made, amended or repealed by the Board
of Directors may be amended or repealed, and any by-laws may by made, by the
stockholders of the Corporation.

            IN WITNESS WHEREOF, this Certificate has been signed on this 12th of
April, 1991.

                                          /s/ James T. Janover

                                          ------------------------------------
                                          James T. Janover
                                          Incorporator

                                       5
<PAGE>
                     CERTIFICATE OF AMENDMENT OF CERTIFICATE
                       OF INCORPORATION BEFORE PAYMENT OF
                             ANY PART OF THE CAPITAL

                                       OF

                                ARIAD Corporation

      It is hereby certificated that:

      1. The name of the Corporation (hereinafter called the "Corporation") is
ARIAD Corporation.

      2. The Corporation has not received any payment for any of its stock.

      3. The Certificate of Incorporation of the Corporation is hereby amended
by striking out Article 4 thereof and by substituting in lieu of said Article
the following new Article 4:

                   "4. Number of Shares: The total number of shares of stock
                   which the Corporation shall have authority to issue is forty
                   million (40,000,000), all of which shall be shares of Common
                   Stock of the Par Value of one tenth of one cent ($0.001) per
                   share.

      4. The amendment of the Certificate of Incorporation of the Corporation
herein certified was duly adopted, pursuant to the provisions of Section 241 of
the General Corporation Law of the State of Delaware, by the sole incorporator,
no directors having been named in the Certificate of Incorporation and no
directors having been elected.

Dated April 16, 1991.

                                                /s/ James T. Janover

                                          -------------------------------
                                                James T. Janover,
                                                Sole Incorporator

                                       6
<PAGE>
            Certificate of Amendment of Certificate of Incorporation

                                       of

                                ARIAD Corporation

      It is hereby certified that:

      1. The name of the corporation (hereinafter called the "Corporation") is
ARIAD Corporation.

      2. The certificate of incorporation of the Corporation is hereby amended
by striking out Article 1 thereof and by substituting in lieu of said Article
the following new article:

        "1: The name of the Corporation is ARIAD Pharmaceuticals, Inc."

      3. The amendment of the certificate of incorporation herein certified has
been duly adopted in accordance with the provisions of Sections 228 and 242 of
the General Corporation Law of the State of Delaware.

Signed and attested to on April 30, 1991.

                                          /s/ Harvey J. Berger

                                          -------------------------------
                                          Harvey J. Berger - President

Attest:

/s/ Harvey J. Berger

-------------------------------
Harvey J. Berger - Secretary

                                       7
<PAGE>
                            Certificate of Amendment

                                       of

                          Certificate of Incorporation

                                       of

                           ARIAD PHARMACEUTICALS, INC.

      1. The name of the corporation (hereinafter called the "Corporation") is
ARIAD Pharmaceuticals, Inc.

      2. The certificate of Incorporation of the Corporation is hereby amended
by striking out Article 4 thereof in its entirety and by substituting in lieu of
said Article 4 the following new Article:

            "4: Number of Shares. The total number of shares of stock which the
      Corporation shall have authority to issue is: eighty million (80,000,000)
      shares, all of which shares shall be shares of Common Stock, par value
      one-tenth of one cent ($.001) each."

      3. The amendment of the Certificate of Incorporation herein certified has
been duly adopted in accordance with the provisions of Sections 228 and 242 of
the General Corporation Law of the State of Delaware.

Signed and attested to on January 15, 1992.

                                          /s/ Harvey J. Berger

                                          -------------------------------
                                          Harvey J. Berger, M.D.
                                          Chief Executive Officer

Attest:

/s/ David T. Washburn

-------------------------------
David T. Washburn, Esq.
Secretary

                                       8
<PAGE>
                            Certificate of Amendment

                                       of

                          Certificate of Incorporation

                                       of

                   ARIAD PHARMACEUTICALS, INC.

    (Pursuant to Section 242 of the General Corporation Law of the State of
                                   Delaware)

      The undersigned, Harvey J. Berger and David T. Washburn, President
and Secretary, respectively, of ARIAD Pharmaceuticals, Inc., a corporation
organized and existing under the laws of the State of Delaware (the
"Corporation"), do hereby certify as follows:

      1. The name of the corporation is ARIAD Pharmaceuticals, Inc.

      2. This Certificate of Amendment of Certificate of Incorporation amends
the Certificate of Incorporation of the Corporation to, among other things,
effect a 1.0 for 2.8 reverse split of the common stock of the Corporation, par
value $0.001 per share, and to decrease the number of shares of the
Corporation's authorized capital stock.

      3. The Certificate of Incorporation of the Corporation is hereby amended
by striking out Article Four thereof in its entirety and by substituting in lieu
of said Article Four the following new Article:

            "4. Number of Shares. The total number or shares of stock which the
      Corporation shall have authority to issue is: sixty million (60,000,000),
      all of which shall be shares of Common Stock, par value one-tenth of one
      center ($0.001) each."

            Effective upon the filing of this Certificate of Amendment by the
      Secretary of State of the State of Delaware, every 2.8 shares of Common
      Stock issued and outstanding immediately prior thereto shall, without any
      action on the part of the holder thereof, be reclassified as one share of
      Common Stock. In lieu of the issuance of fractional shares arising from
      such reclassification, cash in an amount equal to the fair market value of
      each such fractional share as determined by the Board of Directors of the
      Corporation shall be paid to each stockholder entitled thereto upon
      surrender to the Corporation of certificates representing shares of Common
      Stock outstanding prior to the effectiveness of such reclassification.

                                       9
<PAGE>
      4. The Board of Directors of the Corporation duly adopted resolutions
pursuant to Section 242 of the General Corporation Law of the State of Delaware
(the "GCL") proposing that this Amendment of Certificate of Incorporation be
approved and declaring the adoption of this Amendment of Certificate of
Incorporation to be advisable, and the stockholders of the Corporation duly
approved this Amendment of Certificate of Incorporation in accordance with
Sections 211 and 242 of the GCL.

Dated and attested to as of April 8, 1994.

                                          ARIAD PHARMACEUTICALS, INC.

                                                /s/ Harvey J. Berger
                                          By:
                                              -------------------------------
                                              Name: Harvey J. Berger
                                              Title: President

Attest:

/s/ David T. Washburn

-------------------------------
Name: David T. Washburn
Title: Secretary

                                       10
<PAGE>
                           CERTIFICATE OF AMENDMENT OF

                         CERTIFICATE OF INCORPORATION OF

                           ARIAD PHARMACEUTICALS, INC.

      It is hereby certified that:

      1. The name of the corporation (hereinafter called the "Corporation") is
ARIAD Pharmaceuticals, Inc.

      2. The certificate of incorporation of the Corporation is hereby amended
as follows:

                  A. Section 4 of the certificate of incorporation is deleted in
its entirety and replaced by the following new Section 4:

            "4. Number of Shares. The total number of shares of stock that the
      Corporation shall have the authority to issue is: seventy million
      (70,000,000), consisting of sixty million (60,000,000) shares of common
      stock (the "Common Stock") of the par value of one-tenth of one cent
      ($.001) each and ten million (10,000,000) shares of preferred stock (the
      "Preferred Stock") of the par value of one cent ($.01) each.

            "Designation of Classes; Relative Rights, etc. The designation,
      relative rights, preferences and limitations of the shares of each class
      are as follows:

            "The shares of Preferred Stock may be issued from time to time in
      one or more series of any number of shares, provided that the aggregate
      number of shares issued and not cancelled of any and all such series shall
      not exceed the total number of shares of Preferred Stock hereinabove
      authorized, and with distinctive serial designations, all as shall
      hereafter be stated and expressed in the resolution or resolutions
      providing for the issue of such shares or Preferred Stock from time to
      time adopted by the Board of Directors pursuant to authority so to do
      which is hereby vested in the Board of Directors. Each series of shares of
      Preferred Stock (a) may have such voting powers, full or limited, or may
      be without voting powers; (b) may be subject to redemption at such time or
      times and at such prices; (c) may be entitled to receive dividends (which
      may be cumulative or non-cumulative) at such rate or rates, on such
      conditions and at such times, and payable in preference to, or in such
      relation to, the dividends payable on any other class or classes or series
      of stock; (d) may have such rights upon the dissolution of, or upon any
      distribution of the assets of, the corporation; (e) may be made
      convertible into or exchangeable for, shares of any other class or classes
      or of any other series of the same or any other class or classes of shares
      of the Corporation at such price or prices or at such rates of exchange
      and with such adjustments; (f) may be entitled to the benefit of a sinking
      fund to be applied to the purchase or redemption of shares of such series
      in such amount or amounts; (g) may be entitled to the benefit of
      conditions and restrictions upon the creation of indebtedness of the
      Corporation or any subsidiary, upon the issue of any additional shares
      (including additional shares of such series or of any other series) and
      upon the payment of dividends or the making of other distributions on, and
      the purchase, redemption of other distributions on, and the purchase,
      redemption or other acquisition by the Corporation or any subsidiary of,
      any outstanding shares of the Corporation; and

                                       11
<PAGE>
      (h) may have such other relative, participating, optional or other special
      rights, qualifications, limitations or restrictions thereof; all as shall
      be stated in said resolution or resolutions providing for the issue of
      such shares of Preferred Stock. Shares of Preferred Stock of any series
      that have been redeemed (whether through the operation of a sinking fund
      or otherwise) or that if convertible or exchangeable, have been converted
      into or exchanged shares of any other class or classes shall have the
      status of authorized and unissued shares of Preferred Stock of the same
      series and may be reissued as a part of the series of which they were
      originally a part or may be reclassified and reissued as part of a new
      series of shares of Preferred Stock to be created by resolution or
      resolutions of the Board of Directors or as part of any other series of
      shares of Preferred Stock, all subject to the conditions or restrictions
      on issuance set forth in the resolution or resolutions adopted by the
      Board of Directors providing for the issue of any series of shares of
      Preferred Stock.

            "Subject to the provisions of any applicable law or of the By-laws
      of the Corporation as from time to time amended, with respect to the
      closing of the transfer books or the fixing of a record date for the
      determination of stockholders entitled to vote and except as otherwise
      provided by law or by the resolution or resolutions providing for the
      issue of any series of shares of Preferred Stock, the holders of
      outstanding shares of Common Stock shall exclusively possess voting power
      for the election of directors and for all other purposes, each holder of
      record of shares of Common Stock being entitled to one vote for each share
      of Common Stock standing in his or her name on the books of the
      Corporation. Except as otherwise provided by the resolution or resolutions
      providing for the issue of any series of shares of Preferred Stock,
      entitled, to the exclusion of the holders of shares of Preferred Stock of
      any and all series, to receive such dividends as from time to time may be
      declared by the Board of Directors. In the event of any liquidation,
      dissolution or winding up of the Corporation, whether voluntary or
      involuntary, after payment shall have been made to the holders or shares
      of Preferred Stock of the full amount to which they shall be entitled
      pursuant to the resolution or resolutions providing for the issue of any
      series of shares of Preferred Stock, the holders of shares of Common Stock
      shall be entitled, to the exclusion of the holders of shares of Preferred
      Stock of any and all series, to share, ratably according to the number of
      shares of Common Stock held by them, in all remaining assets of the
      Corporation available for distribution to its stockholders.

                  B. Section 6 of the certificate of incorporation is deleted in
its entirety and replaced by the following new Section 6:

            "6. Election of Directors. Members of the Board of Directors may be
      elected either by written ballot or by voice vote. The Board shall consist
      of one or more members. The number of Directors may be changed from time
      to time by action of the Board of Directors. The Directors shall be
      classified with respect to the time for which they severally hold office,
      into three classes, as nearly equal in number as possible, as shall be
      provided in the manner specified in the By-laws of the Corporation. The
      first class shall be originally elected for a term expiring at the annual
      meeting of stockholders to be held in 1995, the second class shall be
      originally elected for a term expiring at the annual meeting of
      stockholders to be held in 1996, and the third class shall be originally
      elected for a term expiring at the annual meeting of stockholders to be
      held in 1997, with the Directors of each class to hold office until their
      successors are elected and qualified.

                                       12
<PAGE>
      At each annual meeting of the stockholders of the Corporation, the
      successors of the class of Directors whose term expires at the meeting
      shall be elected to hold office for a term expiring at the annual meeting
      of stockholders held in the third year following the year of their
      election. Newly created Directorships resulting from an increase in the
      number of Directors and vacancies occurring in the Board of Directors may
      be filled by the affirmative vote of a majority of the entire Board of
      Directors, although less a quorum, or by a sole remaining Director; any
      such vacancy may not be filled by the stockholders of the Corporation. A
      Director elected to fill a vacancy shall hold office until the next
      election of the class for which such Director shall have been chosen and
      until his successor shall have been elected and qualified.

            "Effective upon the filing of the Certificate of Amendment with the
      Secretary of State of the State of Delaware, the Board of Directors
      without any further action shall be classified into three classes."

      3. The amendment of the certificate of incorporation herein certified has
been duly adopted in accordance with the provisions of Sections 211 and 242 of
the General Corporation Law of the State of Delaware.

Dated and attested to as of October 4, 1994

                                          ARIAD PHARMACEUTICALS, INC.

                                                 /s/ Harvey J. Berger
                                          By:
                                              -------------------------------
                                              Name:  Harvey J. Berger
                                              Title: President and Chief
                                                     Executive Officer

Attest:

/s/ Jay R. LaMarche

-------------------------------
Name: Jay R. LaMarche
Title: Assistant Secretary

                                       13
<PAGE>
                           ARIAD PHARMACEUTICALS, INC.

                           CERTIFICATE OF DESIGNATIONS

                                  in respect of

                            SERIES A PREFERRED STOCK

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

             Pursuant to Section 151 of the General Corporation Law
                            of the State of Delaware

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

      The undersigned, being the Chairman of the Board, President and Chief
Executive Officer of ARIAD Pharmaceuticals, Inc. (the "Corporation"), a
corporation organised and existing under the General Corporation Law of the
State of Delaware, hereby certifies that, pursuant to the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Board of
Directors of the Corporation duly adopted the following resolution at a meeting
of said Board of Directors duly called and held on December 15, 1994, which
resolution remains in full force and effect as of the date hereof:

            RESOLVED, that the Board of Directors of the Corporation, pursuant
      to authority expressly vested in it by the provisions of the Corporation's
      Certificate of Incorporation, as amended (the "Charter"), hereby
      establishes a series of the Preferred Stock, par value $0.01 per share, of
      the Corporation and fixes the number of shares of such series and the
      powers, designations, preferences and relative, participating, optional or
      other rights of such series, and the qualifications, limitations or
      restrictions thereof, as follows:

            The first series of Preferred Stock, par value $0.01 per share, of
      the Corporation shall be, and hereby is, designated "Series A Preferred
      Stock" (the "Series A Shares"), and the number of shares constituting such
      series shall be five hundred thousand (500,000). The relative rights and
      preferences of the Series A Shares shall be as follows:

            Section a.  Dividends and Distributions.

            (1) Subject to the prior and superior rights of the holders of any
      shares of any series of stock ranking prior and superior to the Series A
      Shares with respect to dividends, the holders of Series A Shares, in
      preference to the holders of Common Stock, par value $0.001 per share, of
      the Corporation (the "Common Stock") and of any other junior stock, shall
      be entitled to receive, when and as declared by the Board of Directors,
      out of any funds lawfully available therefor, cash dividends thereon,
      payable quarterly, from the date of issuance thereof, upon the tenth days
      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
      Series A Share, in an amount per share (rounded to the nearest cent) equal
      to the greater of (a) $10.00 or (b) subject to the provisions for
      adjustment hereinafter set forth, 100 times the aggregate per share amount
      of all cash dividends, and 100 times the aggregate per share amount
      (payable in kind) of all non-cash dividends or other distributions, other
      than a dividend or distribution payable in shares of Common Stock or

                                       14
<PAGE>
      a subdivision of the outstanding shares of Common Stock (by
      reclassification or otherwise), declared on the Common Stock since the
      immediately preceding Quarterly Dividend Payment Date or, with respect to
      the first issuance of any Series A Share. In the event the Corporation
      shall at any time after December 30, 1994 (i) declare any dividend on the
      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 amounts to
      which holders of Series A Shares were entitled immediately prior to such
      event under clause (a) and clause (b) of the preceding sentence shall be
      adjusted by multiplying each 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.

            (2) The Corporation shall declare a dividend or distribution on the
      Series A Shares as provided in paragraph (1) of this Section immediately
      after it declares a dividend or distribution on the Common Stock (other
      than a dividend or distribution payable in shares of Common Stock);
      provided, however, that, in the event no dividend or distribution shall
      have been declared on the Common Stock during the period between any
      Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
      Payment Date, a dividend of $10.00 per share on the Series A Shares shall
      nevertheless be payable on such subsequent Quarterly Dividend Payment
      Date; and provided further, that nothing contained in this paragraph (2)
      shall be construed so as to conflict with any provision relating to the
      declaration of dividends contained in the Charter.

            (3) Dividends shall being to accrue and be cumulative on outstanding
      Series A Shares from the Quarterly Dividend Payment Date next preceding
      the date of issue of such Series A Shares, 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 Series A Shares entitled to receive a
      quarterly dividend and before such Quarterly Dividend Payment Date, in
      either of which events such dividends shall begin to accrue and be
      cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
      dividends shall not bear interest. Dividends paid on the Series A Shares
      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 Series A Shares entitled to receive payment of a dividend or
      distribution declared thereon.

                  Section b. Redemption. The Series A Shares are not redeemable.

                  Section c. Liquidation, Dissolution or Winding Up. In the
      event of the voluntary or involuntary liquidation of the Corporation the
      "preferential amount" that the holders of the Series A Shares shall be
      entitled to receive out of the assets of the Corporation shall be $100.00
      per share plus all accrued and unpaid dividends thereon.

                  (1) Upon any liquidation, dissolution or winding up of the
      Corporation, no distribution shall be made to the holders of shares of
      stock ranking junior

                                       15
<PAGE>
      (upon liquidation, dissolution or winding up) to the Series A Shares
      unless, prior thereto, the holders of Series A Shares shall have received
      $100.00 per share, plus an amount equal to 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 Series A Shares 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) 100
      (as appropriately adjusted as set forth in paragraph (3) of this Section c
      to reflect such events as stock splits, stock dividends and
      recapitalizations 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 Series A Shares and Common Stock, respectively,
      holders of Series A Shares 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 one with respect
      to the Series A Shares and Common Stock, on a per share basis,
      respectively.

                  (2) In the event, however, that there are not sufficient
      assets available to permit payment in full of the Series A Liquidation
      Preference and the liquidation preferences of all other series of
      preferred stock, if any, that rank on a parity with the Series A Shares,
      then all such available assets shall be distributed ratably to the holders
      of the Series A Shares and 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 any such remaining assets shall be distributed
      ratably to the holders of Common Stock.

            (3) In the event the Corporation shall at any time after December
      30, 1994 (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 there were outstanding immediately prior to such
      event.

                  Section d. Sinking Fund. The Preferred Shares shall not be
      entitled to the benefit of any sinking fund for the redemption or purchase
      of such shares.

                  Section e. Conversion.

                  (1) Subject to paragraph (2) of this Section e, the Preferred
      Shares shall not be convertible.

                  (2) 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
      Series A Shares shall at the same time be similarly exchanged or changed
      in an amount per share (subject to the provision for adjustment
      hereinafter set forth)

                                       16
<PAGE>
      equal to 100 times the aggregate number 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 declare or pay any dividend on the
      Common Stock payable in shares of Common Stock, or (by reclassification or
      otherwise) into a greater or lesser number of shares of Common Stock, then
      in each such case the amount set forth in the preceding sentence with
      respect to the exchange or change of Series A Shares 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.

                  Section f. Voting Rights.

                  (1) The holders of Series A Shares shall have no voting rights
      except as provided by Delaware statutes or by paragraph (2) of this
      Section f.

                  (2) So long as any Series A Shares shall be outstanding, and
      in addition to any other approvals or consents required by law, without
      the consent of the holders of 66-2/3% of the Series A Shares outstanding
      as of a record date fixed by the Board of Directors, given either by their
      affirmative vote at a special meeting called for that purpose, or, if
      permitted by law, in writing without a meeting:

                        (i) The Corporation shall not sell, transfer or lease
            all or substantially all the properties and assets of the
            Corporation; provided, however, that nothing herein shall require
            the consent of the holders of Series A Shares for or in respect of
            the creation of any mortgage, pledge, or other lien upon all or any
            part of the assets of the Corporation.

                        (ii) The Corporation shall not effect a merger or
            consolidation with any other corporation or corporations unless as a
            result of such merger or consolidation and after giving effect
            thereto holders of Series A Shares are entitled to receive a per
            share amount and type of consideration equal to 100 times the per
            share amount and type of consideration received by holders of shares
            of Common Stock, or (1) either (A) the Corporation shall be the
            surviving corporation or (B) if the Corporation is not the surviving
            corporation, the successor corporation shall be a corporation duly
            organized and existing under the laws of any state of the United
            States of America or the District of Columbia, and all obligations
            of the Corporation with respect to the Series A Shares shall be
            assumed by such successor corporation, (2) the Series A Shares then
            outstanding shall continue to be outstanding and (3) there shall be
            no alteration or change in the designation or the preferences,
            relative rights or limitations applicable to outstanding Series A
            Shares prejudicial to the holders thereof.

                        (iii) The Corporation shall not amend, alter or repeal
            any of the provisions of its Certificate of Incorporation in any
            manner that adversely affects the relative rights, preferences or
            limitations of the Series A Shares or the holders thereof.

                                       17
<PAGE>
            Section g. Certain Restrictions.

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

                  (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 (as to dividends) to the Series A
            Shares;

                  (ii) declares or pay dividends on or make any other
            distributions on any shares of stock ranking on a party (as to
            dividends) with the Series A Shares, except dividends paid ratably
            on the Series A Shares 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 junior (as to dividends)
            to the Series A Shares; provided, however, that the Corporation may
            at any time redeem, purchase or otherwise acquire shares of any such
            junior stock in exchanging for shares of any stock of the
            Corporation, ranking junior (as to dividends) to the Series A
            Shares; and

                  (iv) purchase or otherwise acquire for consideration any
            Series A Shares, or any shares of stock ranking on a parity (as to
            dividends) with the Series A Shares, 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 amount the
            respective series or classes.

            (2) 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
      (1) of this Section g, purchase or otherwise acquire such shares at such
      time and in such manner.

            Section h. Fractional Shares. The Corporation may issue fractions
      and certificates representing fractions of Series A Shares in integral
      multiples of 1/100th of a Series A Share, or in lieu thereof, at the
      election of the Board of Directors of the Corporation at the time of the
      first issue of any Series A Shares, evidence such fractions by depositary
      receipts, pursuant to an appropriate agreement between the Corporation and
      a depository selected by it, provided that such agreement shall provide
      that the holders of such depositary receipts shall have all rights,
      privileges and preferences to which they would be entitled as beneficial
      owners of Series A Shares. In the event that fractional Series A Shares
      are issued, the holders thereof shall have all the rights provided herein
      for holders of full Series A Shares in the proportion that such fraction
      bears to a full share.

                                       18
<PAGE>
            IN TESTIMONY WHEREOF, ARIAD Pharmaceuticals, Inc. has caused this
      Statement to be signed under its corporate seal by its Chairman of the
      Board, President and Chief Executive Officer and attested by its Secretary
      as of the 15th day of December, 1994.

                                          ARIAD PHARMACEUTICALS, INC.

                                                /s/ Harvey J. Berger

                                          By
                                            ----------------------------------
                                            Harvey J. Berger, M.D.
                                            Chairman of the Board,
                                            President and Chief
                                            Chief Executive Officer

ATTEST:

/s/ David T. Washburn

--------------------------------
David T. Washburn
Secretary

                                       19
<PAGE>
                           ARIAD PHARMACEUTICALS, INC.

                           CERTIFICATE OF DESIGNATIONS

                                  in respect of

                            SERIES B PREFERRED STOCK

             PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
                            of the State of Delaware

      The undersigned, being the Chairman of the Board, President and Chief
Executive Officer of ARIAD Pharmaceuticals, Inc. (the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, hereby certifies that, pursuant to the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Board of
Directors of the Corporation duly adopted the following resolution, which
resolution remains in full force and effect as of the date hereof:

RESOLVED:   That the Board of Directors of the Corporation, pursuant to
            authority expressly vested in it by the provisions of the
            Corporation's Certificate of Incorporation, as amended, hereby
            establishes a series of Preferred Stock, $.01 par value, to be known
            as Series B Convertible Preferred Stock of the Corporation,
            consisting of Five Million (5,000,000) shares and having the voting
            and other powers, designations, preferences and relative,
            participating, optional or other special rights, and qualifications,
            limitations or restrictions thereof as set forth in Exhibit A
            attached hereto.

      IN WITNESS WHEREOF, ARIAD Pharmaceuticals, Inc. has caused this
certificate to be signed by its Chairman of the Board, President and Chief
Executive Officer the 18th day of March, 1997.

                                        ARIAD PHARMACEUTICALS, INC.

                                        By:   /s/ Harvey J. Berger
                                           -------------------------------------
                                              Harvey J. Berger, M.D.
                                              Chairman of the Board, President
                                              and Chief Executive Officer

                                       20
<PAGE>

                                    EXHIBIT A

                      SERIES B CONVERTIBLE PREFERRED STOCK

      1. Liquidation Rights.

      (a) Treatment at Liquidation, Dissolution or Winding Up.

            (i) Except as otherwise provided in Section 1(b) below, in the event
of any liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or involuntary, after payment of all amounts owing to holders
of capital stock ranking senior to the Series B Convertible Preferred Stock, the
holders of Series B Convertible Preferred Stock shall be entitled to be paid out
of the assets of the Corporation available for distribution to holders of the
Corporation's capital stock, on a parity with holders of any other class or
series of the Corporation's capital stock designated to be on a parity with the
Series B Convertible Preferred Stock but before payment or distribution of any
of such assets to the holders of Common Stock or of any other class or series of
the Corporation's capital stock designated to be junior to the Series B
Convertible Preferred Stock, an amount equal to the price paid to the
Corporation upon issuance thereof (the "Issue Price") per share of Series B
Convertible Preferred Stock (which amount shall be subject to equitable
adjustment whenever there shall occur a stock dividend, distribution,
combination of shares, reclassification or other similar event with respect to
Series B Convertible Preferred Stock) plus all dividends thereon declared but
unpaid, to and including the date full payment shall be tendered to the holders
of Series B Convertible Preferred Stock with respect to such liquidation,
dissolution or winding up.

            (ii) Following payment in full to the holders of capital stock of
the Corporation ranking senior to the Series B Convertible Preferred Stock, and
to the holders of Series B Convertible Preferred Stock and the holders of any
other class or series of the Corporation's capital stock designated to be on a
parity with the Series B Convertible Preferred Stock of all amounts
distributable to them under Section 1(a)(i) hereof, the remaining assets of the
Corporation available for distribution to holders of the Corporation's capital
stock shall be distributed to the respective holders of Common Stock ratably in
proportion to the number of shares of Common Stock they then hold.

            (iii) If the assets of the Corporation shall be insufficient to
permit the payment in full to the holders of Series B Convertible Preferred
Stock of all amounts distributable to them under Section 1(a)(i) hereof, then
the entire assets of the Corporation available for such distribution, after
distribution to capital stock ranking senior to the Series B Preferred, shall be
distributed ratably among the holders of Series B Convertible Preferred Stock
and the holders of any other class or series of the Corporation's capital stock
designated to be on a parity with the Series B Convertible Preferred Stock.

      (b) Treatment of Consolidations, Mergers and Sales of Assets. A
consolidation or merger of the Corporation, or a sale of all or substantially
all of the assets of the Corporation, other than a merger, consolidation or sale
of all or substantially all of the assets of the Corporation in a transaction in
which the shareholders of the Corporation immediately prior to the transaction
own equity securities of the surviving or successor entity (or parent, if any)
having fifty percent (50%) or more of the voting power of all outstanding equity
securities of such entity immediately after the transaction, shall be regarded
as a liquidation, dissolution or

                                       21
<PAGE>

winding up of the affairs of the Corporation within the meaning of this Section
1; provided, however, that the Corporation shall provide no less than ten (10)
business days notice to the holders of Series B Convertible Preferred Stock
prior to such transaction and, at any time up to immediately before such
transaction, the holders of the Series B Convertible Preferred Stock may convert
their shares of Series B Convertible Preferred Stock in accordance with Section
2 below.

      (c) Distributions other than Cash. Whenever the distribution provided for
in this Section 1 shall be payable in property other than cash, the value of
such distribution shall be the fair market value of such property as determined
in good faith by the Board of Directors of the Corporation.

      2. Conversion.

      2.1 Conversion of Series B Convertible Preferred Stock. The holders of
Series B Convertible Preferred Stock shall have conversion rights as follows
(the "Conversion Rights"):

      (a) Right to Convert; Conversion Ratio.

            (i) Each share of Series B Convertible Preferred Stock shall be
convertible, without the payment of any additional consideration by the holder
thereof and at the option of the holder thereof, at the office of the
Corporation or any transfer agent for the Series B Convertible Preferred Stock,
into one (1) fully paid and non-assessable share of Common Stock, subject to
adjustment as set forth in Section 2.1(d), at any time upon the earliest to
occur of: (1) a Change of Control or Acquisition of the Corporation (as such
terms are defined in Section 2.1(a)(ii)); (2) in the event the Joint Venture (as
such term is defined in the Joint Venture Master Agreement dated March 4, 1997
(the "JV Master Agreement") between the Corporation and Hoechst Marion Roussel,
Inc. ("HMRI")) is terminated pursuant to Section 9.3.1 or 9.3.3 of the JV Master
Agreement and (A) any Supplemental Capital Loan (as such term is defined in the
JV Master Agreement) remains outstanding as of the date of termination, three
(3) months after the date on which such Supplemental Capital Loan is due to be
repaid by the Corporation to HMRI or (B) no Supplemental Capital Loan remains
outstanding as of the date of termination, six (6) months following the
effective date of such termination; or (3) September 30, 2003, in the event the
Corporation and HMRI have agreed on additional funding arrangements for the
Joint Venture pursuant to Section 9.3.2 of the JV Master Agreement. The ratio of
the number of shares of Common Stock to be issued in conversion to the number of
shares of Series B Convertible Preferred Stock to be converted is referred to
herein as the "Conversion Ratio."

            (ii) For purposes hereof, an "Acquisition" shall be deemed to have
occurred if the Corporation shall consolidate or merge with another entity, or
convey, sell or lease to another entity all or substantially all of the stock,
assets or business of the Corporation and its subsidiaries taken as a whole,
unless the stockholders of the Corporation immediately prior to the transaction
own a majority of the voting equity securities of the merged, consolidated or
acquiring entity after the transaction. For purposes hereof, a "Change of
Control" shall be deemed to have occurred upon consummation of any transaction
or event as a result of which any other entity acquires or controls and is able
to vote without restriction (directly or through nominees or beneficial
ownership or by proxy) more than fifty percent (50%) of the capital stock of the
Corporation outstanding at the time having the power ordinarily to vote for
directors of the Corporation.

                                       22
<PAGE>

      (b) Mechanics of Conversion. Before any holder of Series B Convertible
Preferred Stock shall be entitled to convert the same into full shares of Common
Stock, such holder shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the Corporation or of any transfer agent for the
Series B Convertible Preferred Stock, and shall give written notice to the
Corporation at such office that such holder elects to convert the same and shall
state therein the name of such holder or the name or names of the nominees of
such holder in which such holder wishes the certificate or certificates for
shares of Common Stock to be issued. No fractional shares of Common Stock shall
be issued upon conversion of any shares of Series B Convertible Preferred Stock
and the number of shares of Common Stock to be issued upon conversion shall be
rounded up to the next highest whole share. The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Series B Convertible Preferred Stock, or to such holder's nominee or nominees, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of the certificate or certificates for the shares of Series B
Convertible Preferred Stock to be converted, and the person or persons entitled
to receive the shares of Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such shares of Common Stock
on such date.

      (c) Automatic Conversion.

            (i) Each share of Series B Convertible Preferred Stock issued and
outstanding on December 31, 2006 (the "Automatic Conversion Date") shall
automatically be converted into shares of the Corporation's Common Stock on such
date at the then effective Conversion Ratio in accordance with the provisions of
this Section 2 (the "Automatic Conversion").

            (ii) Upon such Automatic Conversion of the Series B Convertible
Preferred Stock pursuant to Section 2(c)(i) hereof, all shares of Series B
Convertible Preferred Stock shall be converted automatically without any further
action by any holder of such shares and whether or not the certificate or
certificates representing such shares are surrendered to the Corporation or the
transfer agent for the Series B Convertible Preferred Stock; provided, however,
that the Corporation shall not be obligated to issue a certificate or
certificates evidencing such shares of Common Stock into which the Series B
Convertible Preferred Stock is being converted until such certificates are
either delivered to the Corporation or the transfer agent of the Series B
Convertible Preferred Stock, or the holder notifies the Corporation or such
transfer agent that such certificate or certificates have been lost, stolen, or
destroyed and executes an agreement satisfactory to the Corporation to indemnify
the Corporation from any loss incurred by it in connection therewith and, if the
Corporation so elects, provides an appropriate indemnity.

            (iii) Upon such Automatic Conversion of the Series B Convertible
Preferred Stock pursuant to Section 2(c)(i) hereof, each holder of Series B
Convertible Preferred Stock shall surrender the certificate or certificates
representing such holder's shares of Series B Convertible Preferred Stock at the
office of the Corporation or of the transfer agent for the Series B Convertible
Preferred Stock. Thereupon, there shall be issued and delivered to such holder,
promptly at such office and in such holder's name as shown on such surrendered
certificate or certificates, a certificate or certificates for the number of
shares of Common Stock into which the shares of Series B Convertible Preferred
Stock surrendered were convertible on the Automatic Conversion Date. No
fractional shares of Common Stock shall be issued upon the Automatic

                                       23
<PAGE>

Conversion of Series B Convertible Preferred Stock, and the number of shares of
Common Stock to be issued upon conversion shall be rounded up to the next
highest whole share.

      (d) Adjustments to Conversion Ratio.

            (i) Special Definitions. For purposes of this Section 2.1(d), the
following definitions shall apply:

                  (A) "Original Issue Date" shall mean the date on which shares
of Series B Convertible Preferred Stock were first issued.

                  (B) "Additional Shares of Common Stock" shall mean all shares
of Common Stock issued (or, pursuant to Section 2.1(d)(ii), deemed to be issued)
by the Corporation after the Original Issue Date.

            (ii) Issue of Securities Deemed Issue of Additional Shares of Common
Stock.

                  (A) Stock Dividends, Stock Distributions and Subdivisions. In
the event the Corporation at any time or from time to time after the Original
Issue Date shall declare or pay any dividend or make any other distribution on
the Common Stock payable in Common Stock or effect a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in Common Stock), then and in any such event, Additional
Shares of Common Stock shall be deemed to have been issued:

                        (I) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of any class of securities entitled to receive such dividend or
distribution, or

                        (II) in the case of any such subdivision, at the close
of business on the date immediately prior to the date upon which such corporate
action becomes effective.

      If such record date shall have been fixed and such dividend shall not have
been fully paid on the date fixed therefor, the adjustment previously made in
the Conversion Ratio which became effective on such record date shall be
cancelled as of the close of business on such record date, and thereafter the
Conversion Ratio shall be adjusted pursuant to this Section 2.1(d)(ii) as of the
time of actual payment of such dividend.

      (iii) Adjustment for Dividends, Distributions, Subdivisions, Combinations
or Consolidations of Common Stock.

            (A) Stock Dividends, Distributions or Subdivisions. In the event the
Corporation shall issue Additional Shares of Common Stock pursuant to Section
2.1(d)(ii)(A) in a stock dividend, stock distribution or subdivision, the
Conversion Ratio in effect immediately prior to such stock dividend, stock
distribution or subdivision shall, concurrently with the effectiveness of such
stock dividend, stock distribution or subdivision, be proportionately increased.

            (B) Combinations or Consolidations. In the event the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser

                                       24
<PAGE>

number of shares of Common Stock, the Conversion Ratio in effect immediately
prior to such combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be proportionately
decreased.

      (e) Adjustments for Other Distributions. In the event the Corporation
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by the Corporation or other persons or assets (excluding
cash dividends), in each such case for purposes of this subsection 2(e), the
holders of the Series B Convertible Preferred Stock shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of shares of Common Stock of the Corporation into which their shares
of Series B Convertible Preferred Stock are convertible as of the record date
fixed for the determination of the holders of Common Stock of the Corporation
entitled to receive such distribution.

      (f) Adjustments for Recapitalizations. If at any time or from time to time
there shall be a recapitalization of the Common Stock (other than a subdivision,
combination, stock dividend, reclassification or other transaction provided for
elsewhere in this Section 2), provision shall be made so that the holders of the
Series B Convertible Preferred Stock shall thereafter be entitled to receive
upon the conversion of the Series B Convertible Preferred Stock the number of
shares of stock or other securities of the Corporation or otherwise, to which a
holder of the number of shares of Common Stock deliverable upon conversion
thereof immediately prior to such recapitalization would have been entitled upon
such recapitalization. In any such case, appropriate adjustment shall be made in
the application of this Section 2 with respect to the rights of the holders of
the Series B Convertible Preferred Stock after the recapitalization to the end
that the provisions of this Section 2 (including adjustment of the Conversion
Ratio then in effect and the number of shares issuable upon conversion of the
Series B Convertible Preferred Stock) shall be applicable after that event in a
manner as equivalent as may be practicable.

            2.3 No Impairment. The Corporation shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation but shall at
all times in good faith assist in the carrying out of all the provisions of this
Section 2 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of Series B
Convertible Preferred Stock against impairment.

            2.4 Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Ratio pursuant to this Section 2,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each affected
holder of Series B Convertible Preferred Stock, a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based.

            2.5 Common Stock Reserved. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series B Convertible Preferred Stock.

                                       25
<PAGE>

            2.6 Certain Taxes. The Corporation shall pay any issue or transfer
taxes payable in connection with the conversion of any shares of Series B
Convertible Preferred Stock; provided, however, that the Corporation shall not
be required to pay any tax which may be payable in respect of any transfer to a
name other than that of the holder of such Series B Convertible Preferred Stock.

            2.7 Closing of Books. The corporation shall at no time close its
transfer books against the transfer of any Series B Convertible Preferred Stock,
or of any shares of Common Stock issued or issuable upon the conversion of any
shares of Series B Convertible Preferred Stock, in any manner which interferes
with the timely conversion or transfer of such Series B Convertible Preferred
Stock.

      3. Voting Rights. Except as otherwise required by law or by the provisions
establishing any other series of Preferred Stock, the holders of Series B
Convertible Preferred Stock and the holders of Common Stock and of all classes
and series of Preferred Stock shall be entitled to notice of any stockholders'
meeting and to vote as one class upon any matter submitted to the stockholders
for a vote, on the following basis:

            (i) Holders of Common Stock shall have one vote per share of Common
Stock held by them; and

            (ii) Holders of Series B Convertible Preferred Stock shall have that
number of votes per share of Series B Convertible Preferred Stock as is equal to
the number of shares of Common Stock into which each such share of Series B
Convertible Preferred Stock held by such holder could be converted on the date
for determination of stockholders entitled to vote at the meeting (regardless of
whether such shares of Series B Convertible Preferred Stock are then
convertible).

      4. Dividend Rights. In the event the Board of Directors of the Corporation
shall declare a dividend payable upon the then outstanding shares of the Common
Stock (other than a dividend payable entirely in shares of the Common Stock of
the Corporation), the Board of Directors shall declare at the same time a
dividend upon the then outstanding shares of the Series B Convertible Preferred
Stock, payable at the same time as the dividend paid on the Common Stock, in an
amount equal to the amount of dividends per share of Series B Convertible
Preferred Stock, as would have been payable on the largest number of shares
(including fractions of shares) of Common Stock which each share of Series B
Convertible Preferred Stock held by each holder thereof would have received if
such Series B Convertible Preferred Stock had been converted to Common Stock
pursuant to the provisions of Section 2 hereof as of the record date for the
determination of holders of Common Stock entitled to receive such dividends.

      5. Covenants. So long as shares of Series B Convertible Preferred Stock
are outstanding, the Corporation shall not without first obtaining the approval
(by vote or written consent, as provided by law) of the holders of at least a
majority of the then outstanding shares of Series B Convertible Preferred Stock,
voting together as a single class:

            (i) alter or change the rights, preferences or privileges of the
shares of Series B Convertible Preferred Stock so as to affect adversely such
shares;

                                       26
<PAGE>

            (ii) increase the authorized number of shares of Series B
Convertible Preferred Stock; or

            (iii) issue additional shares of Series B Convertible Preferred
Stock except pursuant to the JV Master Agreement or the other Joint Venture
Agreements (as such term is defined in the JV Master Agreement).

      6. No Reissuance of Series B Convertible Preferred Stock. No share or
shares of Series B Convertible Preferred Stock acquired by the Corporation by
reason of redemption, purchase, conversion or otherwise shall be reissued, and
all such shares shall be cancelled, retired and eliminated from the shares which
the Corporation shall be authorized to issue.

      7. Register. The Corporation shall maintain a register in which it shall
record the price paid to the Corporation upon issuance of each share of Series B
Convertible Preferred Stock. In the event any holder of Series B Convertible
Preferred Stock holding Series B Convertible Preferred Stock with more than one
Issue Price shall transfer any of such stock, such holder shall notify the
Corporation of the Issue Price of the shares to be transferred.

      8. Residual Rights. All rights accruing to the outstanding shares of the
Corporation not expressly provided for in the terms of the Series B Convertible
Preferred Stock shall be vested in the Common Stock or the other series or
classes of the Corporation's stock.

                                       27
<PAGE>

                    CERTIFICATE OF DESIGNATIONS, PREFERENCES
               AND RIGHTS OF SERIES C CONVERTIBLE PREFERRED STOCK
                                       OF
                           ARIAD PHARMACEUTICALS, INC.

      ARIAD Pharmaceuticals, Inc. (the "COMPANY"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred upon the Board of Directors of the
Company by the Certificate of Incorporation, as amended, of the Company, and
pursuant to Section 151 of the General Corporation Law of the State of Delaware,
the Board of Directors of the Company at a meeting duly held, adopted
resolutions (i) authorizing a series of the Company's previously authorized
preferred stock, par value $.01 per share, and (ii) providing for the
designations, preferences and relative, participating, optional or other rights,
and the qualifications, limitations or restrictions thereof, of Twenty Five
Thousand (25,000) shares of Series C Convertible Preferred Stock of the Company,
as follows:

            RESOLVED, that the Company is authorized to issue 25,000 shares of
      Series C Convertible Preferred Stock (the "PREFERRED SHARES"), par value
      $.01 per share, which shall have the following powers, designations,
      preferences and other special rights:

      (1) Dividends. The Preferred Shares shall not bear any dividends.

      (2) Holder's Conversion of Preferred Shares. A holder of Preferred Shares
shall have the right, at such holder's option, to convert the Preferred Shares
into shares of the Company's common stock, $.001 par value per share (the
"COMMON STOCK"), on the following terms and conditions:

                                       28
<PAGE>

            (a) Conversion Right. Subject to the provisions of Section 2(j), at
any time or times on or after the Issuance Date (as defined below), any holder
of Preferred Shares shall be entitled to convert any whole number of Preferred
Shares into fully paid and nonassessable shares (rounded to the nearest whole
share in accordance with Section 2(h)) of Common Stock, at the Conversion Rate
(as defined below); provided, however, that in no event shall any holder be
entitled to convert Preferred Shares in excess of that number of Preferred
Shares which, upon giving effect to such conversion, would cause the aggregate
number of shares of Common Stock beneficially owned by the holder and its
affiliates to exceed 4.99% of the outstanding shares of the Common Stock
following such conversion. For purposes of the foregoing proviso, the aggregate
number of shares of Common Stock beneficially owned by the holder and its
affiliates shall include the number of shares of Common Stock issuable upon
conversion of the Preferred Shares with respect to which the determination of
such proviso is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (i) conversion of the remaining, nonconverted
Preferred Shares beneficially owned by the holder and its affiliates and (ii)
exercise or conversion of the unexercised or unconverted portion of any other
securities of the Company (including, without limitation, any warrants or
convertible preferred stock) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the holder
and its affiliates. Except as set forth in the preceding sentence, for purposes
of this Section 2(a), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended. Section
13 sets forth additional limitations on the Company' obligation to issue shares
of Common Stock upon conversion of the Preferred Shares.

            (b) Conversion Rate and Other Definitions. The number of shares of
Common Stock issuable upon conversion of each of the Preferred Shares pursuant
to Sections (2)(a) and 2(g) shall be determined according to the following
formula (the "CONVERSION RATE"):

                                Conversion Amount
                                -----------------
                                Conversion Price

      For purposes of this Certificate of Designations, the following terms
shall have the following meanings:

            (i) "CONVERSION PRICE" means, as of any Conversion Date (as defined
      below) or other date of determination, the lower of the Fixed Conversion
      Price (as defined below) and the Floating Conversion Price (as defined
      below), each in effect as of such date and subject to adjustment as
      provided herein.

            (ii) "FIXED CONVERSION PRICE" means (A) with respect to any
      Preferred Shares issued on the Initial Issuance Date (I) on any Conversion
      Date prior to the Fixed Conversion Price Trigger Date, $5.00 and (II) on
      any Conversion Date on and after the Fixed Conversion Price Trigger Date,
      120% of the Market Price of the Common Stock on the Fixed Conversion Price
      Trigger Date and (B) with respect to any Preferred Shares issued after the
      Initial Issuance Date, 120% of the Market Price on the Issuance Date of
      the applicable Preferred Shares, each subject to adjustment as provided
      herein.

                                       29
<PAGE>

            (iii) "FLOATING CONVERSION PRICE" means, as of any date of
      determination, the amount obtained by multiplying the Conversion
      Percentage in effect as of such date by the Market Price as of such date,
      subject to adjustment as provided herein.

            (iv) "CONVERSION PERCENTAGE" means (A) with respect to any
      Conversion Date prior to February 15, 1999, 100% and (B) with respect to
      any Conversion Date on or after February 15, 1999 (I) if the Company
      consummates one or more corporate collaborations or strategic partnerships
      during the period beginning on October 18, 1998 and ending on and
      including February 14, 1999 which provides the Company during such period
      with an aggregate of more than $7,000,000 of revenue and/or net proceeds
      from equity investments or the issuance of Qualified Subordinated Debt (as
      defined below) (including, without limitation, amounts received by the
      Company from Hoechst Marion Roussel ("HMR") pursuant to any agreement
      entered into prior to the Initial Issuance Date and any amendments
      thereto) (collectively, a "QUALIFYING FINANCING"), 100% and (II) if the
      Company fails to consummate a Qualifying Financing during the period
      beginning on the Initial Issuance Date and ending on and including
      February 14, 1999, 90%, each subject to adjustment as provided herein.

            (v) "MARKET PRICE" means, with respect to any security for any date
      of determination, the price which shall be computed as the arithmetic
      average of the four lowest Closing Bid Prices for such security during the
      22 consecutive trading days immediately preceding such date.

            (vi) "CONVERSION AMOUNT" means the sum of (A) the Additional Amount
      (as defined below), provided that the Company has not elected to pay the
      Additional Amount in cash as described in Section 2(c), and (B) $1,000.

            (vii) "ADDITIONAL AMOUNT" means the result of the following formula:
      (0.05)(N/365)($1,000).

            (viii) "CLOSING BID PRICE" means, for any security as of any date,
      the last closing bid price for such security on the Nasdaq National Market
      as reported by Bloomberg Financial Markets ("BLOOMBERG"), or, if the
      Nasdaq National Market is not the principal trading market for such
      security, the last closing bid price of such security on the principal
      securities exchange or trading market where such security is listed or
      traded as reported by Bloomberg, or if the foregoing do not apply, the
      last closing bid price of such security in the over-the-counter market on
      the electronic bulletin board for such security as reported by Bloomberg,
      or, if no closing bid price is reported for such security by Bloomberg,
      the last closing trade price of such security as reported by Bloomberg,
      or, if no last closing trade price is reported for such security by
      Bloomberg, the average of the bid prices of any market makers for such
      security as reported in the "pink sheets" by the National Quotation
      Bureau, Inc. If the Closing Bid Price cannot be calculated for such
      security on such date on any of the foregoing bases, the Closing Bid Price
      of such security on such date shall be the fair market value as mutually
      determined by the Company and the holders of a majority of the outstanding
      Preferred Shares

                                       30
<PAGE>

      including for purposes of this determination any Preferred Shares with
      respect to which the Closing Bid Price is being determined. If the Company
      and the holders of Preferred Shares are unable to agree upon the fair
      market value of the Common Stock, then such dispute shall be resolved
      pursuant to Section 2(f)(iii) with the term "Closing Bid Price" being
      substituted for the term "Market Price." (All such determinations to be
      appropriately adjusted for any stock dividend, stock split or other
      similar transaction during such period).

            (ix) "N" means the number of days from, but excluding, the Issuance
      Date through and including the Conversion Date for the Preferred Shares
      for which conversion is being elected.

            (x) "ISSUANCE DATE" means, with respect to each Preferred Share, the
      date of issuance of the applicable Preferred Share.

            (xi) "INITIAL ISSUANCE DATE" means the first date on which any
      Preferred Shares are issued by the Company.

            (xii) "FIXED CONVERSION PRICE TRIGGER DATE" means the earlier of (A)
      February 15, 1999 and (B) the date of receipt by each holder of Preferred
      Shares of written notice from the Company of the Company's election to
      reset the Fixed Conversion Price prior to February 15, 1999.

            (xiii) "SECURITIES PURCHASE AGREEMENT" means that certain securities
      purchase agreement between the Company and the initial holders of the
      Preferred Shares concerning the purchase of Preferred Shares.

            (xiv) "REGISTRATION RIGHTS AGREEMENT" means that certain
      registration rights agreement between the Company and the initial holders
      of the Preferred Shares concerning the registration of the resale of the
      shares of Common Stock issuable upon conversion of the Preferred Shares.

            (xv) "QUALIFIED SUBORDINATED DEBT" means any debt issued by the
      Company which has all of the following terms (A) such debt is issued to a
      strategic partner of the Company, (B) such debt has a maturity date not
      sooner than March 31, 2003, (C) such debt is convertible into Common Stock
      at any time only at the Company's option without any conditions to the
      Company's ability to exercise such option and only at a conversion price
      which is greater than the market price of the Common Stock at such time of
      conversion, (D) such debt is redeemable by the holder of such debt only
      upon the occurrence of an event which constitutes a Major Transaction (as
      defined in Section 3(c)), (E) the maturity date of such debt may not be
      accelerated at any time prior to March 31, 2003 and then only if the joint
      venture in connection with which such debt was issued is terminated, (F)
      such debt is not convertible at the option of the holder of such debt and
      (G) the Company does not issue any warrants or other securities to the
      holder of such debt in connection with the issuance of such debt.

                                       31
<PAGE>

            (c) Company's Option to Pay Additional Amount in Cash. Upon
conversion pursuant to Sections 2(a) or 2(g), the Company shall have the right
to elect to pay the Additional Amount in cash, in lieu of conversion to Common
Stock. If the Company elects to pay the Additional Amount in cash, such cash
shall be paid simultaneously with the delivery to the holder of the certificates
representing the Common Stock issuable upon conversion in accordance with
Section 2(f). In order to exercise its right to pay any Additional Amount in
cash, the Company must advise each holder of Preferred Shares in writing (the
"CASH DIVIDEND NOTICE") that the Additional Amount shall be paid in cash until
such time as the Company shall terminate the Cash Dividend Notice by providing
at least five business days prior written notice of such termination (the
"TERMINATION NOTICE"). The Cash Dividend Notice shall set forth the effective
date of the Cash Dividend Notice, which date shall be at least five business
days after the date the Cash Dividend Notice is deemed to have been delivered
pursuant to Section 19. The Termination Notice shall be effective on the fifth
business day after the date the Termination Notice is deemed to have been
delivered pursuant to Section 19 unless a later date shall be specified in the
Termination Notice.

            (d) Adjustment to Conversion Price -- Dilution and Other Events. In
order to prevent dilution of the rights granted under this Certificate of
Designations, the Conversion Price will be subject to adjustment from time to
time as provided in this Section 2(d).

            (i) Adjustment of Fixed Conversion Price upon Issuance of Common
      Stock. If and whenever on or after the Issuance Date of the Preferred
      Shares with respect to which this determination is being made, the Company
      issues or sells, or is deemed to have issued or sold, any shares of Common
      Stock (other than the Conversion Shares (as defined in the Securities
      Purchase Agreement) and shares of Common Stock deemed to have been issued
      by the Company in connection with an Approved Stock Plan (as defined
      below)) for a consideration per share (as determined below) less than the
      Fixed Conversion Price, in effect immediately prior to such issuance or
      sale, of the Preferred Shares with respect to which this determination is
      being made (the "APPLICABLE PRICE"), then immediately after such issue or
      sale, (a) in the event such issuance or sale is of a Convertible Security
      (as defined below) convertible at a Fixed Price (as defined below), the
      Fixed Conversion Price (of the Preferred Shares with respect to which this
      determination is being made) then in effect shall be reduced to an amount
      equal to the consideration per share which the Company issued or sold, or
      was deemed to have issued or sold, one share of Common Stock pursuant to
      such issuance or sale or (b) in the event such issuance is other than as
      described in (a) above, the Fixed Conversion Price (of the Preferred
      Shares with respect to which this determination is being made) then in
      effect shall be reduced to an amount equal to the product of (x) the Fixed
      Conversion Price (of the Preferred Shares with respect to which this
      determination is being made) in effect immediately prior to such issue or
      sale and (y) the quotient determined by dividing (1) the sum of (I) the
      product of the Applicable Price and the number of shares of Common Stock
      Deemed Outstanding (as defined below) immediately prior to such issue or
      sale, and (II) the consideration, if any, received by the Company upon
      such issue or sale, by (2) the product of (I) the Applicable Price and
      (II) the number of shares of Common Stock Deemed Outstanding (as defined
      below) immediately after such issue or sale; provided, however, that the
      Fixed Conversion Price shall not be reduced at any time that

                                       32
<PAGE>

      the amount of such reduction would be an amount less than 2% of the Fixed
      Conversion Price immediately preceding such reduction, but any such amount
      shall be carried forward and reduction with respect thereto shall be made
      when such amount, together with any amounts carried forward, shall
      aggregate 2% or more of the Fixed Conversion Price immediately preceding
      the last such reduction. For purposes of determining the adjusted Fixed
      Conversion Price (of the Preferred Shares with respect to which this
      determination is being made) under this Section 2(d)(i), the following
      shall be applicable:

                  (A) Issuance of Options.  If on or after the Issuance Date of
      the Preferred Shares for which an adjustment is being determined the
      Company in any manner grants any rights or options to subscribe for or to
      purchase Common Stock (other than pursuant to an Approved Stock Plan or
      upon conversion of the Preferred Shares) or any stock or other securities
      convertible into or exchangeable for Common Stock (such rights or options
      being herein called "OPTIONS" and such convertible or exchangeable stock
      or securities being herein called "CONVERTIBLE SECURITIES") and the price
      per share for which Common Stock is issuable upon the exercise of such
      Options or upon conversion or exchange of such Convertible Securities is
      less than the Applicable Price, then the total maximum number of shares of
      Common Stock issuable upon the exercise of such Options or upon conversion
      or exchange of the total maximum amount of such Convertible Securities
      issuable upon the exercise of such Options shall be deemed to be
      outstanding and to have been issued and sold by the Company for such price
      per share. For purposes of this Section 2(d)(i)(A), the "price per share
      for which Common Stock is issuable upon exercise of such Options or upon
      conversion or exchange of such Convertible Securities" is determined by
      dividing (I) the total amount, if any, received or receivable by the
      Company as consideration for the granting of such Options, plus the
      minimum aggregate amount of additional consideration payable to the
      Company upon the exercise of all such Options, plus in the case of such
      Options which relate to Convertible Securities, the minimum aggregate
      amount of additional consideration, if any, payable to the Company upon
      the issuance or sale of such Convertible Securities and the conversion or
      exchange thereof, by (II) the total maximum number of shares of Common
      Stock issuable upon exercise of such Options or upon the conversion or
      exchange of all such Convertible Securities issuable upon the exercise of
      such Options. No adjustment of the Fixed Conversion Price shall be made
      upon the actual issuance of such Common Stock or of such Convertible
      Securities upon the exercise of such Options or upon the actual issuance
      of such Common Stock upon conversion or exchange of such Convertible
      Securities.

                  (B) Issuance of Convertible Securities.  If on or after the
      Issuance Date of the Preferred Shares for which an adjustment is being
      determined the Company in any manner issues or sells any Convertible
      Securities and the price per share for which Common Stock is issuable upon
      conversion or exchange of such Convertible Securities is less than the
      Applicable Price, then the maximum number of shares of Common Stock
      issuable upon conversion or exchange of such Convertible Securities shall
      be deemed to be outstanding and to have been issued and sold by the
      Company for such price per share. For the purposes of this Section
      2(d)(i)(B), the "price per share for which Common Stock is issuable upon
      such conversion or exchange" is determined by

                                       33
<PAGE>

      dividing (I) the total amount received or receivable by the Company as
      consideration for the issue or sale of such Convertible Securities, plus
      the minimum aggregate amount of additional consideration, if any, payable
      to the Company upon the conversion or exchange thereof, by (II) the total
      maximum number of shares of Common Stock issuable upon the conversion or
      exchange of all such Convertible Securities. No adjustment of the Fixed
      Conversion Price shall be made upon the actual issue of such Common Stock
      upon conversion or exchange of such Convertible Securities, and if any
      such issue or sale of such Convertible Securities is made upon exercise of
      any Options for which adjustment of the Fixed Conversion Price had been or
      are to be made pursuant to other provisions of this Section 2(d)(i), no
      further adjustment of the Fixed Conversion Price shall be made by reason
      of such issue or sale.

                  (C) Change in Option Price or Rate of Conversion.  If the
      purchase price provided for in any Options, the additional consideration,
      if any, payable upon the issue, conversion or exchange of any Convertible
      Securities, or the rate at which any Convertible Securities are
      convertible into or exchangeable for Common Stock changes at any time, the
      Fixed Conversion Price (of the Preferred Shares with respect to which this
      determination is being made) in effect at the time of such change shall be
      readjusted to the Fixed Conversion Price which would have been in effect
      at such time had such Options or Convertible Securities still outstanding
      provided for such changed purchase price, additional consideration or
      changed conversion rate, as the case may be, at the time initially
      granted, issued or sold; provided that no adjustment shall be made if such
      adjustment would result in an increase of the Fixed Conversion Price then
      in effect.

                  (D) Certain Definitions.  For purposes of determining the
      adjusted Fixed Conversion Price under this Section 2(d)(i), the following
      terms have meanings set forth below:

                        (I) "APPROVED STOCK PLAN" shall mean any contract, plan
      or agreement which has been approved by the Board of Directors of the
      Company, pursuant to which the Company's securities may be issued to any
      employee, officer, director, consultant or other service provider.

                        (II) "COMMON STOCK DEEMED OUTSTANDING" means, at any
      given time, the number of shares of Common Stock actually outstanding at
      such time, plus the number of shares of Common Stock deemed to be
      outstanding pursuant to Sections 2(d)(i)(A) and 2(d)(i)(B) hereof
      regardless of whether the Options or Convertible Securities are actually
      exercisable at such time, but excluding any shares of Common Stock
      issuable upon conversion of the Preferred Shares.

                        (III) "FIXED PRICE" shall mean the conversion price for
      a Convertible Security that is convertible into or exchangeable or
      exercisable for Common Stock at a price which by its terms has the
      possibility of not varying with the market price of the Common Stock.

                  (E) Effect on Fixed Conversion Price of Certain Events.  For

                                       34
<PAGE>

      purposes of determining the adjusted Fixed Conversion Price under this
      Section 2(d)(i), the following shall be applicable:

                        (I) Calculation of Consideration Received.  If any
      Common Stock, Options or Convertible Securities are issued or sold or
      deemed to have been issued or sold for cash, the consideration received
      therefor will be deemed to be the net amount received by the Company
      therefor. In case any Common Stock, Options or Convertible Securities are
      issued or sold for a consideration other than cash, the amount of the
      consideration other than cash received by the Company will be the fair
      value of such consideration, except where such consideration consists of
      securities, in which case the amount of consideration received by the
      Company will be the arithmetic average of the Closing Bid Prices of such
      security for the five (5) consecutive trading days immediately preceding
      the date of receipt. In case any Common Stock, Options or Convertible
      Securities are issued to the owners of the non-surviving entity in
      connection with any merger in which the Company is the surviving entity
      the amount of consideration therefor will be deemed to be the fair value
      of such portion of the net assets and business of the non-surviving entity
      as is attributable to such Common Stock, Options or Convertible
      Securities, as the case may be. The fair value of any consideration other
      than cash or securities will be determined jointly by the Company and the
      holders of a majority of the Preferred Shares then outstanding. If such
      parties are unable to reach agreement within ten (10) days after the
      occurrence of an event requiring valuation (the "VALUATION EVENT"), the
      fair value of such consideration will be determined within forty-eight
      (48) hours of the tenth (10th) day following the Valuation Event by an
      independent, reputable appraiser selected by the Company. The
      determination of such appraiser shall be binding upon all parties absent
      manifest error.

                        (II) Integrated Transactions.  In case any Option is
      issued in connection with the issue or sale of other securities of the
      Company, together comprising one integrated transaction in which no
      specific consideration is allocated to such Options by the parties
      thereto, the Options will be deemed to have been issued for a
      consideration of $.01.

                        (III) Treasury Shares.  The number of shares of Common
      Stock outstanding at any given time does not include shares owned or held
      by or for the account of the Company, and the disposition of any shares so
      owned or held will be considered an issue or sale of Common Stock.

                        (IV) Record Date.  If the Company takes a record of the
      holders of Common Stock for the purpose of entitling them (1) to receive a
      dividend or other distribution payable in Common Stock, Options or in
      Convertible Securities or (2) to subscribe for or purchase Common Stock,
      Options or Convertible Securities, then such record date will be deemed to
      be the date of the issue or sale of the shares of Common Stock deemed to
      have been issued or sold upon the declaration of such dividend or the
      making of such other distribution or the date of the granting of such
      right of subscription or purchase, as the case may be.

                                       35
<PAGE>

            (ii) Adjustment of Fixed Conversion Price upon Subdivision or
      Combination of Common Stock. If the Company at any time subdivides (by any
      stock split, stock dividend, recapitalization or otherwise) one or more
      classes of its outstanding shares of Common Stock into a greater number of
      shares, the Fixed Conversion Price in effect immediately prior to such
      subdivision will be proportionately reduced. If the Company at any time
      combines (by combination, reverse stock split or otherwise) one or more
      classes of its outstanding shares of Common Stock into a smaller number of
      shares, the Fixed Conversion Price in effect immediately prior to such
      combination will be proportionately increased.

            (iii) Adjustment of Floating Conversion Price upon Issuance of
      Convertible Securities. If the Company in any manner issues or sells
      Convertible Securities that are convertible into or exchangeable for
      Common Stock at a price which varies with the market price of the Common
      Stock (the formulation for such variable price being herein referred to
      as, the "VARIABLE PRICE") and such Variable Price is not calculated using
      the same formula used to calculate the Floating Conversion Price in effect
      immediately prior to the time of such issue or sale, the Company shall
      provide written notice thereof via facsimile and overnight courier to each
      holder of the Preferred Shares ("VARIABLE NOTICE") within three (3)
      business days of the date of issuance of such Convertible Securities. If
      the holders of Preferred Shares representing at least a majority of the
      Preferred Shares then outstanding provide written notice via facsimile and
      overnight courier (the "VARIABLE PRICE ELECTION NOTICE") to the Company
      within five (5) business days of receiving a Variable Notice that such
      holders desire to replace the Floating Conversion Price then in effect
      with the Variable Price described in such Variable Notice, then from and
      after the date of the Company's receipt of the Variable Price Election
      Notice the Floating Conversion Price will automatically be replaced with
      the Variable Price (together with such modifications to this Certificate
      of Designations as may be required to give full effect to the substitution
      of the Variable Price for the Floating Conversion Price). A holder's
      delivery of a Variable Price Election Notice shall serve as the consent
      required to amend this Certificate of Designations pursuant to Section 14
      below. In the event that a holder delivers a Conversion Notice at any time
      after the Company's issuance of Convertible Securities with a Variable
      Price but before such holder's receipt of the Company's Variable Notice,
      then such holder shall have the option by written notice to the Company to
      rescind such Conversion Notice or to have the Conversion Price be equal to
      such Variable Price for the conversion effected by such Conversion Notice.

            (iv) Reorganization, Reclassification, Consolidation, Merger or
      Sale. Any recapitalization, reorganization, reclassification,
      consolidation, merger, sale of all or substantially all of the Company's
      assets to another Person (as defined below) or other transaction which is
      effected in such a way that holders of Common Stock are entitled to
      receive (either directly or upon subsequent liquidation) stock, securities
      or assets with respect to or in exchange for Common Stock is referred to
      herein as an "ORGANIC CHANGE." Prior to the consummation of any Organic
      Change, the Company will make appropriate provision (in form and substance
      reasonably satisfactory to the holders of a majority of the Preferred
      Shares then outstanding) to insure that each of the holders of the

                                       36
<PAGE>

      Preferred Shares will thereafter have the right to acquire and receive in
      lieu of or in addition to (as the case may be) the shares of Common Stock
      otherwise acquirable and receivable upon the conversion of such holder's
      Preferred Shares, such shares of stock, securities or assets as would have
      been issued or payable in such Organic Change with respect to or in
      exchange for the number of shares of Common Stock which would have been
      acquirable and receivable had all of such holder's Preferred Shares been
      converted into shares of Common Stock immediately prior to such Organic
      Change (without taking into account any limitations or restrictions on the
      timing or amount of conversions). In any such case, the Company will make
      appropriate provision (in form and substance reasonably satisfactory to
      the holders of a majority of the Preferred Shares then outstanding) with
      respect to such holders' rights and interests to insure that the
      provisions of this Section 2(d) and Section 2(e) will thereafter be
      applicable to the Preferred Shares (including, in the case of any such
      consolidation, merger or sale in which the successor entity or purchasing
      entity is other than the Company, an immediate adjustment of the Fixed
      Conversion Price to the value for the Common Stock reflected by the terms
      of such consolidation, merger or sale, if the value so reflected is less
      than the Fixed Conversion Price in effect immediately prior to such
      consolidation, merger or sale). The Company will not effect any such
      consolidation, merger or sale, unless prior to the consummation thereof,
      the successor entity (if other than the Company) resulting from
      consolidation or merger or the entity purchasing such assets assumes, by
      written instrument (in form and substance reasonably satisfactory to the
      holders of a majority of the Preferred Shares then outstanding), the
      obligation to deliver to each holder of Preferred Shares such shares of
      stock, securities or assets as, in accordance with the foregoing
      provisions, such holder may be entitled to acquire. "PERSON" shall mean an
      individual, a limited liability company, a partnership, a joint venture, a
      corporation, a trust, an unincorporated organization and a government or
      any department or agency thereof.

            (v) Certain Events. If any event occurs of the type contemplated by
      the provisions of this Section 2(d) but not expressly provided for by such
      provisions (including, without limitation, the granting of stock
      appreciation rights, phantom stock rights or other rights with equity
      features), then the Company's Board of Directors will make an appropriate
      adjustment in the Conversion Price so as to protect the rights of the
      holders of the Preferred Shares; provided, however, that no such
      adjustment will increase the Conversion Price as otherwise determined
      pursuant to this Section 2(d).

            (vi) Notices.

                  (A) As soon as practicable, but in no event later than three
      (3) business days, after any adjustment of the Conversion Price, the
      Company will give written notice thereof to each holder of the Preferred
      Shares, setting forth in reasonable detail and certifying the calculation
      of such adjustment.

                  (B) The Company will give written notice to each holder of the
      Preferred Shares at least ten (10) days prior to the date on which the
      Company closes its books or takes a record (I) with respect to any
      dividend or distribution upon the Common Stock, (II) with respect to any
      pro rata subscription offer to holders of Common Stock or

                                       37
<PAGE>

      (III) for determining rights to vote with respect to any Organic Change,
      dissolution or liquidation and in no event shall any notice pursuant to
      this Section 2(d)(vi)(B) be provided to such holder prior to such
      information being made known to the public.

                  (C) The Company will also give written notice to each holder
      of Preferred Shares at least ten (10) days prior to the date on which any
      Organic Change, dissolution or liquidation will take place and in no event
      shall any notice pursuant to this Section 2(d)(vi)(C) be provided to such
      holder prior to such information being made known to the public.

            (vii) Adjustment of Fixed Conversion Price upon an Underwriting
      Lock-Up Period. If and whenever on or after the Issuance Date of the
      Preferred Shares with respect to which this determination is being made,
      the Company delivers a Lock-Up Request Notice (as defined in Section 4(n)
      of the Securities Purchase Agreement), then immediately following the end
      of the Underwriting Lock-Up Period (as defined in Section 4(n) of the
      Securities Purchase Agreement) the Fixed Conversion Price of the
      applicable Preferred Share in effect immediately prior to such
      Underwriting Lock-Up Period shall be adjusted to the lesser of (A) the
      Fixed Conversion Price of such Preferred Share immediately prior to such
      Underwriting Lock-Up Period and (B) the offering price to the public of
      the Common Stock offered in the underwritten public offering with respect
      to which the Lock-Up Request was delivered.

      (e) Purchase Rights. In addition to any adjustments of the Conversion
Price pursuant to Section 2(d), if at any time after the Issuance Date the
Company grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the "PURCHASE RIGHTS"), then the holders
of the Preferred Shares will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights which such holder could
have acquired if such holder had held the number of shares of Common Stock
acquirable upon complete conversion of the outstanding Preferred Shares (without
taking into account any limitations or restrictions on the timing or amount of
conversions) immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such record is taken,
the date as of which the record holders of the Common Stock are to be determined
for the grant, issue or sale of such Purchase Rights.

      (f) Mechanics of Conversion. Subject to the Company's inability to fully
satisfy its obligations under a Conversion Notice (as defined below) as provided
for in Section 4:

            (i) Holder's Delivery Requirements. To convert Preferred Shares into
      full shares of Common Stock on any date (the "CONVERSION DATE"), the
      holder thereof shall (A) transmit by facsimile (or otherwise deliver), for
      receipt on or prior to 9:00 p.m., Eastern Time on such date, a copy of a
      fully executed notice of conversion in the form attached hereto as Exhibit
      I (the "CONVERSION NOTICE"), to the Company and (B) surrender to a common
      carrier for delivery to the Company, as soon as reasonably practicable
      following such date, the original certificate(s) representing the
      Preferred Shares being converted (or an indemnification undertaking with
      respect to such shares

                                       38
<PAGE>

      reasonably satisfactory to the Company in the case of their loss, theft or
      destruction) (the "PREFERRED STOCK CERTIFICATE(S)").

            (ii) Company's Response. Upon receipt by the Company of a facsimile
      copy of a Conversion Notice, the Company shall as soon as practicable, but
      in any event no later than the next business day, send, via facsimile, a
      confirmation of receipt of such Conversion Notice to such holder. Upon
      receipt by the Company or the Transfer Agent of the Preferred Stock
      Certificate(s) to be converted pursuant to a Conversion Notice, the
      Company or the Transfer Agent (as applicable) shall, on the next business
      day following the date of receipt, (I) issue and surrender to a common
      carrier for overnight delivery to the address specified in the Conversion
      Notice, a certificate, registered in the name of the holder or its
      designee, for the number of shares of Common Stock to which the holder
      shall be entitled, or (II) credit such aggregate number of shares of
      Common Stock to which the holder shall be entitled to the holder's or its
      designee's balance account with The Depository Trust Company. If the
      number of Preferred Shares represented by the Preferred Stock
      Certificate(s) submitted for conversion is greater than the number of
      Preferred Shares being converted, then the Company or Transfer Agent, as
      the case may be, shall, as soon as practicable and in no event later than
      three business days after receipt of the Preferred Stock Certificate(s)
      and at its own expense, issue and deliver to the holder a new Preferred
      Stock Certificate representing the number of Preferred Shares not
      converted.

            (iii) Dispute Resolution. In the case of a dispute as to the
      determination of the Market Price or the arithmetic calculation of the
      Conversion Rate, the Company shall promptly issue to the holder the number
      of shares of Common Stock that is not disputed and shall submit the
      disputed determinations or arithmetic calculations to the holder via
      facsimile within one (1) business day of receipt of such holder's
      Conversion Notice. If such holder and the Company are unable to agree upon
      the determination of the Market Price or arithmetic calculation of the
      Conversion Rate within one (1) business day of such disputed determination
      or arithmetic calculation being submitted to the holder, then the Company
      shall within one (1) business day following such date of delivery submit
      via facsimile (A) the disputed determination of the Market Price to an
      independent, reputable investment bank or (B) the disputed arithmetic
      calculation of the Conversion Rate to its independent, outside accountant.
      The Company shall cause the investment bank or the accountant, as the case
      may be, to perform the determinations or calculations and notify the
      Company and the holder of the results no later than forty-eight (48) hours
      from the time it receives the disputed determinations or calculations.
      Such investment bank's or accountant's determination or calculation, as
      the case may be, shall be binding upon all parties absent manifest error.

            (iv) Record Holder. The person or persons entitled to receive the
      shares of Common Stock issuable upon a conversion of Preferred Shares
      shall be treated for all purposes as the record holder or holders of such
      shares of Common Stock on the Conversion Date.

            (v) Company's Failure to Timely Convert. If after the Company's

                                       39
<PAGE>

      receipt of the Preferred Stock Certificates to be converted the Company
      shall fail (I) within three (3) business days to issue a certificate for
      the number of shares of Common Stock to which a holder is entitled or to
      credit the holder's balance account with The Depository Trust Company for
      such number of shares of Common Stock to which the holder is entitled upon
      such holder's conversion of Preferred Shares or (II) within seven (7)
      business days to issue a new Preferred Stock Certificate representing the
      number of Preferred Shares to which such holder is entitled pursuant to
      Section 2(f)(ii), in addition to all other available remedies which such
      holder may pursue hereunder and under the Securities Purchase Agreement
      (including indemnification pursuant to Section 8 thereof), the Company
      shall pay additional damages to such holder on each date after the third
      or seventh business day, as applicable, that such conversion or delivery
      of such Preferred Stock Certificates, as the case may be, is not timely
      effected in an amount equal to 0.5% of the product of (A) the sum of the
      number of shares of Common Stock not issued to the holder on a timely
      basis pursuant to Section 2(f)(ii) and to which such holder is entitled
      and, in the event the Company has failed to deliver a Preferred Stock
      Certificate to the holder on a timely basis pursuant to Section 2(f)(ii),
      the number of shares of Common Stock issuable upon conversion of the
      Preferred Shares represented by such Preferred Stock Certificate, as of
      the last possible date which the Company could have issued such Preferred
      Stock Certificate to such holder without violating Section 2(f)(ii) and
      (B) the Closing Bid Price of the Common Stock on the last possible date
      which the Company could have issued such Common Stock and the Preferred
      Stock Certificate, as the case may be, to such holder without violating
      Section 2(f)(ii).

            (g) Mandatory Conversion at Maturity. If any Preferred Shares remain
outstanding on the Maturity Date (as defined below), then all such Preferred
Shares shall be converted as of such date in accordance with this Section 2 as
if the holders of such Preferred Shares had given the Conversion Notice on the
Maturity Date; provided, however, that if a Triggering Event (other than a
Triggering Event resulting from Section 3(d)(vi) due to the Company's breach of
a representation or warranty set forth in Section 3 of the Securities Purchase
Agreement) has occurred and is continuing on the Maturity Date or any event that
with the passage of time would constitute a Triggering Event (assuming it was
not cured and other than a Triggering Event resulting from Section 3(d)(vi) due
to the Company's breach of a representation or warranty set forth in Section 3
of the Securities Purchase Agreement) exists on the Maturity Date, then the
Company shall, within five business days following the Maturity Date (unless
otherwise notified in writing by the holder of its request to have the Preferred
Shares converted into Common Stock), pay to each holder of Preferred Shares then
outstanding, in immediately available funds, an amount equal to the Triggering
Event Redemption Price (as defined below) as of the Maturity Date. All holders
of Preferred Shares shall thereupon surrender all Preferred Stock Certificates,
duly endorsed for cancellation, to the Company or the Transfer Agent, provided
that the Company has complied with its obligations under this Section 2(g).
"MATURITY DATE" means the date which is five years after the Initial Issuance
Date for such Preferred Shares, unless extended (i) pursuant to Section 3(u) of
the Registration Rights Agreement, which extension shall be equal to one and
one-half 1 1/2) times the aggregate number of days of all Grace Periods (as
defined in Section 3(u) of the Registration Rights Agreement) or (ii) pursuant
to Section 4(n) of the Securities Purchase Agreement, which extension shall be
equal to two (2) times the aggregate number of days of all Underwriting Lock-

                                       40
<PAGE>

Up Periods (as defined in Section 4(n) of the Securities Purchase Agreement).

            (h) Fractional Shares. The Company shall not issue any fraction of a
share of Common Stock upon any conversion. All shares of Common Stock (including
fractions thereof) issuable upon conversion of more than one Preferred Share by
a holder thereof shall be aggregated for purposes of determining whether the
conversion would result in the issuance of a fraction of a share of Common
Stock. If, after the aforementioned aggregation, the issuance would result in
the issuance of a fraction of a share of Common Stock, the Company shall round
such fraction of a share of Common Stock up or down to the nearest whole share.

            (i) Taxes. The Company shall pay any and all taxes that may be
payable with respect to the issuance and delivery of Common Stock upon the
conversion of Preferred Shares.

            (j) Conversion Restrictions. The right of a holder of Preferred
Shares to convert Preferred Shares pursuant to this Section 2 shall be limited
as set forth below. Without the prior written consent of the Company, a holder
of Preferred Shares shall not be entitled to convert any Preferred Shares prior
to the Fixed Conversion Price Triggering Date. Notwithstanding the foregoing,
the conversion restrictions set forth in this Section 2(j) shall not apply (w)
on and after any date on which the Common Stock is not listed on the Nasdaq
National Market, The New York Stock Exchange, Inc. ("NYSE") or The American
Stock Exchange, Inc. ("AMEX") or has been suspended from trading (excluding
suspensions of not more than one day resulting from business announcements), or
any such delisting or suspension is threatened or pending, (x) if there shall
have occurred an event constituting a Major Transaction (as defined in Section
3(c)) or the public announcement of a pending Major Transaction, (y) there shall
have occurred a Triggering Event (as defined in Section 3(d)) or (z) since the
Initial Issuance Date there shall have occurred any change, event, result or
happening involving, directly or indirectly, the Company or any of its
Subsidiaries (as defined in the Securities Purchase Agreement) resulting in a
material adverse effect on the business, financial condition or results of
operations or, insofar as can reasonably be foreseen, prospects of the Company
and its Subsidiaries, taken as a whole.

      (3) Redemption at Option of Holders.

            (a) Redemption Option Upon Major Transaction. In addition to all
other rights of the holders of Preferred Shares contained herein, simultaneous
with or after the occurrence of a Major Transaction (as defined below), each
holder of Preferred Shares shall have the right, at such holder's option, to
require the Company to redeem all or a portion of such holder's Preferred Shares
at a price per Preferred Share equal to the greater of (i) 120% of the
Liquidation Value (as defined in Section 10) and (ii) the product of (A) the
Conversion Rate on the date the Notice of Redemption at Option of Buyer Upon
Major Transaction (as defined in Section 3(e)) is given and (B) the Closing Bid
Price on the date of the public announcement of such Major Transaction or the
next date on which the exchange or market on which the Common Stock is traded is
open if such public announcement is made (X) after 12:00 p.m., Central Time, on
such date or (Y) on a date on which the exchange or market on which the Common
Stock is traded is closed ("MAJOR TRANSACTION REDEMPTION PRICE").

                                       41

<PAGE>
            (b) Redemption Option Upon Triggering Event. In addition to all
other rights of the holders of Preferred Shares contained herein, simultaneous
with or after the occurrence of a Triggering Event (as defined below), each
holder of Preferred Shares shall have the right, at such holder's option, to
require the Company to redeem all or a portion of such holder's Preferred Shares
at a price per Preferred Share equal to the greater of (i) (X) with respect to a
Triggering Event described in Section 4(d)(i), if a Notice of Redemption at
Option of Holder Upon Triggering Event (as defined in Section 4(f)) delivered
prior to the date which is 270 days after the Initial Issuance Date, 115% of the
Liquidation Value and (Z) with respect to Triggering Events other than the
instance described in the immediately preceding clause (X), 120% of the
Liquidation Value and (ii) the product of (A) the Conversion Rate on the date of
such holder's delivery of a Notice of Redemption at Option of Holder Upon
Triggering Event (as defined below) and (B) the greater of (I) the Closing Bid
Price on the trading day immediately preceding such Triggering Event or (II) the
Closing Bid Price on the date of the holder's delivery to the Company of a
Notice of Redemption at Option of Holder Upon Triggering Event or, if such date
of delivery is not a trading day, the next date on which the exchange or market
on which the Common Stock is traded is open ("TRIGGERING EVENT REDEMPTION PRICE"
and, collectively with "MAJOR TRANSACTION REDEMPTION PRICE," the "REDEMPTION
PRICE").

            (c) "Major Transaction". A "MAJOR TRANSACTION" shall be deemed to
have occurred at such time as any of the following events:

                  (i) the consolidation, merger or other business combination of
      the Company with or into another Person (other than (A) a consolidation,
      merger or other business combination in which holders of the Company's
      voting power immediately prior to the transaction continue after the
      transaction to hold, directly or indirectly, the voting power of the
      surviving entity or entities necessary to elect a majority of the members
      of the board of directors (or their equivalent if other than a
      corporation) of such entity or entities, or (B) pursuant to a migratory
      merger effected solely for the purpose of changing the jurisdiction of
      incorporation of the Company);

                  (ii)  the sale or transfer, in one or more transactions,
      of all or substantially all of the Company's assets; or

                  (iii) a purchase, tender or exchange offer made to and
      accepted by the holders of more than 50% of the outstanding shares of
      Common Stock.

            (d) "Triggering Event". A "TRIGGERING EVENT" shall be deemed to have
occurred at such time as any of the following events:

                  (i) the failure of the Registration Statement (as defined in
      the Registration Rights Agreement) to be declared effective by the SEC on
      or prior to the date that is 180 days after the Issuance Date to which
      such Registration Statement is related;

                  (ii) while the Registration Statement is required to be
      maintained effective pursuant to the terms of the Registration Rights
      Agreement, except for any

                                       42
<PAGE>
      Allowable Grace Periods (as defined in the Registration Rights Agreement),
      the effectiveness of the Registration Statement lapses for any reason
      (including, without limitation, the issuance of a stop order) or is
      unavailable to the holder of the Preferred Shares for sale of the
      Registrable Securities (as defined in the Registration Rights Agreement)
      in accordance with the terms of the Registration Rights Agreement, and
      such lapse or unavailability continues for a period of at least ten
      consecutive trading days or for an aggregate of at least fifteen trading
      days in any 365 day period;

                  (iii) the suspension or halting from trading or failure of the
      Common Stock to be listed on the Nasdaq National Market, NYSE or AMEX for
      a period of five consecutive days or for an aggregate of at least ten days
      in any 365 day period;

                  (iv) the Company's notice to any holder of Preferred Shares,
      including by way of public announcement, at any time, of its intention not
      to comply with proper requests for conversion of any Preferred Shares into
      shares of Common Stock, including due to any of the reasons set forth in
      Section 4(a), or the Company's failure to deliver Conversion Shares within
      ten days of the applicable Conversion Date;

                  (v) upon the Company's receipt of a Conversion Notice, the
      Company shall not be obligated to issue the Conversion Shares due to the
      provisions of Section 13; or

                  (vi) any representation or warranty by the Company was not
      true and correct at the time made (including the Issuance Date) or the
      Company breaches any covenant or other term or condition of the Securities
      Purchase Agreement, the Registration Rights Agreement, this Certificate of
      Designations, the Irrevocable Transfer Agent Instructions (as defined in
      the Securities Purchase Agreement), or any other agreement, document,
      certificate or other instrument delivered in connection with the
      transactions contemplated thereby or hereby, except (i) to the extent that
      such breach would not have a Material Adverse Effect (as defined in
      Section 3(a) of the Securities Purchase Agreement), and (ii) in the case
      of a breach of a covenant which is curable, such breach does not continue
      for a period of at least ten days.

            (e) Mechanics of Redemption at Option of Holder Upon Major
Transaction. No sooner than 15 days nor later than 10 days prior to the
consummation of a Major Transaction, but not prior to the public announcement of
such Major Transaction, the Company shall deliver written notice thereof via
facsimile and overnight courier (a "NOTICE OF MAJOR TRANSACTION") to each holder
of Preferred Shares. At any time after receipt of a Notice of Major Transaction
(or, in the event a Notice of Major Transaction is not delivered at least 10
days prior to a Major Transaction, at any time on or after the date which is 10
days prior to a Major Transaction), any holder of the Preferred Shares then
outstanding may require the Company to redeem all or a portion of the holder's
Preferred Shares, which redemption shall be effective concurrent with the
consummation of the Major Transaction, then outstanding by delivering written
notice thereof via facsimile and overnight courier (a "NOTICE OF REDEMPTION AT
OPTION OF HOLDER UPON MAJOR TRANSACTION") to the Company, which Notice of
Redemption at Option of Holder Upon Major Transaction shall indicate (i) the
number of Preferred Shares that such holder is submitting

                                       43
<PAGE>
for redemption and (ii) the applicable Major Transaction Redemption Price, as
calculated pursuant to Section 3(a).

            (f) Mechanics of Redemption at Option of Holder Upon Triggering
Event. Within one business day after the occurrence of a Triggering Event, the
Company shall deliver written notice thereof via facsimile and overnight courier
(a "NOTICE OF TRIGGERING EVENT") to each holder of Preferred Shares. At any time
after the earlier of a holder's receipt of a Notice of Triggering Event and such
holder becoming aware of a Triggering Event, any holder of the Preferred Shares
then outstanding may require the Company to redeem all or a portion of the
holder's Preferred Shares then outstanding by delivering written notice thereof
via facsimile and overnight courier (a "NOTICE OF REDEMPTION AT OPTION OF HOLDER
UPON TRIGGERING EVENT") to the Company, which Notice of Redemption at Option of
Holder Upon Triggering Event shall indicate the number of Preferred Shares that
such holder is submitting for redemption.

            (g) Payment of Redemption Price. Upon the Company's receipt of a
Notice(s) of Redemption at Option of Holder Upon Triggering Event or a Notice(s)
of Redemption at Option of Holder Upon Major Transaction from any holder of
Preferred Shares, the Company shall within one (1) business day notify each
holder of Preferred Shares by facsimile of the Company's receipt of such
Notice(s) of Redemption at Option of Holder Upon Triggering Event or Notice(s)
of Redemption at Option of Holder Upon Major Transaction and each holder which
has sent such a notice shall promptly submit to the Company or its Transfer
Agent such holder's Preferred Stock Certificates which such holder has elected
to have redeemed. The Company shall deliver the applicable Triggering Event
Redemption Price, in the case of a redemption pursuant to Section 3(f), to such
holder within five business days after the Company's receipt of a Notice of
Redemption at Option of Holder Upon Triggering Event and, in the case of a
redemption pursuant to Section 3(e), the Company shall deliver the applicable
Major Transaction Redemption Price concurrent with the consummation of the Major
Transaction; provided that in either or both cases, as applicable, the redeeming
holder's Preferred Stock Certificates shall have been so delivered to the
Company or the Transfer Agent; and provided further that if the Company is
unable to redeem all of the Preferred Shares to be redeemed, the Company shall
redeem an amount from each holder of Preferred Shares being redeemed equal to
such holder's pro rata amount (based on the number of Preferred Shares held by
such holder relative to the number of Preferred Shares outstanding) of all
Preferred Shares being redeemed. If the Company shall fail to redeem all of the
Preferred Shares submitted for redemption in addition to any remedy such holder
of Preferred Shares may have under this Certificate of Designations, the
Securities Purchase Agreement and the Registration Rights Agreement, the
applicable Redemption Price payable in respect of such unredeemed Preferred
Shares shall bear interest at the rate of 2.0% per month (prorated for partial
months) until paid in full. Until the Company pays such unpaid applicable
Redemption Price in full to a holder of Preferred Shares submitted for
redemption, such holder shall have the option (the "VOID OPTIONAL REDEMPTION
OPTION") to, in lieu of redemption, require the Company to promptly return to
such holder(s) any or all of the Preferred Shares that were submitted for
redemption by such holder(s) under this Section 3 and for which the applicable
Redemption Price has not been paid, by sending written notice thereof to the
Company via facsimile (the "VOID OPTIONAL REDEMPTION Notice"). Upon the
Company's receipt of such Void Optional Redemption Notice(s) prior to payment of
the full applicable Redemption Price to such holder: (i) the

                                       44
<PAGE>
Notice(s) of Redemption at Option of Holder Upon Triggering Event or the
Notice(s) of Redemption at Option of Holder Upon Major Transaction, as the case
may be, shall be null and void with respect to those Preferred Shares submitted
for redemption and for which the applicable Redemption Price has not been paid;
(ii) the Company shall immediately return any Preferred Shares submitted to the
Company by each holder for redemption under this Section 3(g) and for which the
applicable Redemption Price has not been paid; and (iii) if the redemption was
caused by a Triggering Event involving the Company's inability to issue
Conversion Shares because of the Exchange Cap (as defined in Section 13) (an
"EXCHANGE CAP TRIGGERING EVENT"), the holders of at least a majority of the
Preferred Shares then outstanding, including Preferred Shares submitted for
redemption pursuant to this Section 3 with respect to which the applicable
Redemption Price has not been paid, may direct the Company to immediately delist
the Common Stock from the exchange or automated quotation system on which the
Common Stock is traded and have the Common Stock, at such holders' option,
traded in the electronic bulletin board or the "pink sheets", provided, however,
that if (A) there is scheduled to occur, within thirty (30) days of the date on
which the Exchange Cap Triggering Event occurred, a meeting of the Company's
stockholders at which meeting the stockholder shall be requested to approve the
issuance of the Conversion Shares in excess of the Exchange Cap and for which a
definitive proxy statement has been filed with the SEC, (B) there has not
already occurred prior to the date of such Exchange Cap Triggering Event a
meeting of the Company's stockholders at which the Company's stockholders were
asked to vote on a proposal to approve the issuance of the Conversion Shares in
excess of the Exchange Cap and at which the Company's stockholders did not
approve such proposal and (C) the Company is, or will be with the passing of
such 30 day period referred to in (A) above, in compliance with Section 4(k) of
the Securities Purchase Agreement, then the Investors' right in this Section
3(g) to direct the Company to delist the Common Stock (y) shall be suspended
until the earlier of (I) the first (1st) business day following the date on
which the meeting of the Company's stockholders is scheduled to occur,
regardless of any adjournment thereof and (II) the date on which such meeting of
the Company's stockholders is canceled, terminated, postponed or otherwise
delayed or (z) will be terminated if the Stockholders approve the issuance of
the Conversion Shares. Notwithstanding the foregoing, in the event of a dispute
as to the determination of the Closing Bid Price or the arithmetic calculation
of the Redemption Price, such dispute shall be resolved pursuant to Section
2(f)(iii) above with the term "Closing Bid Price" being substituted for the term
"Market Price" and the term "Redemption Price" being substituted for the term
"Conversion Rate". A holder's delivery of a Void Optional Redemption Notice and
exercise of its rights following such notice shall not effect the Company's
obligations to make any payments which have accrued prior to the date of such
notice, except for the applicable Redemption Price relating to such Void
Optional Redemption Notice which Redemption Price thereafter shall no longer be
due and payable. Payments provided for in this Section 3 shall have priority to
payments to other holders of the Company's capital stock of a class that is
junior to the Preferred Shares in connection with a Major Transaction.

      (4)   Inability to Fully Convert.

            (a) Holder's Option if Company Cannot Fully Convert. If, upon the
Company's receipt of a Conversion Notice or on the Maturity Date, the Company
cannot issue shares of Common Stock registered for resale under the Registration
Statement (or which are

                                       45
<PAGE>
exempt from the registration requirements under the 1933 Act pursuant to Rule
144(k) under the 1933 Act) for any reason, including, without limitation,
because the Company (x) does not have a sufficient number of shares of Common
Stock authorized and available, (y) is otherwise prohibited by applicable law or
by the rules or regulations of any stock exchange, interdealer quotation system
or other self-regulatory organization with jurisdiction over the Company or its
Securities, including without limitation the Exchange Cap (as defined below),
from issuing all of the Common Stock which is to be issued to a holder of
Preferred Shares pursuant to a Conversion Notice or (z) fails to have a
sufficient number of shares of Common Stock registered for resale under the
Registration Statement, then the Company shall issue as many shares of Common
Stock as it is able to issue in accordance with such holder's Conversion Notice
and pursuant to Section 2(f) and, with respect to the unconverted Preferred
Shares, the holder, solely at such holder's option, can elect to:

                  (i) require the Company to redeem from such holder those
      Preferred Shares for which the Company is unable to issue Common Stock in
      accordance with such holder's Conversion Notice ("MANDATORY REDEMPTION")
      at a price per Preferred Share (the "MANDATORY REDEMPTION PRICE") equal to
      the Triggering Event Redemption Price as of such Conversion Date;

                  (ii) if the Company's inability to fully convert Preferred
      Shares is pursuant to Section 4(a)(z), require the Company to issue
      restricted shares of Common Stock in accordance with such holder's
      Conversion Notice and pursuant to Section 2(f);

                  (iii) void its Conversion Notice and retain or have returned,
      as the case may be, the nonconverted Preferred Shares that were to be
      converted pursuant to such holder's Conversion Notice (provided that a
      holder's voiding its Conversion Notice shall not effect the Company's
      obligations to make any payments which have accrued prior to the date of
      such notice); or

                  (iv) if the Company's inability to fully convert Preferred
      Shares is pursuant to Section 4(a)(y), require the Company to issue shares
      of Common Stock in accordance with such holder's Conversion Notice and
      pursuant to Section 2(f) at a Conversion Price equal to the average of the
      Closing Bid Prices of the Common Stock for the five consecutive trading
      days preceding such holder's Notice in Response to Inability to Convert
      (as defined below) or such other market price that satisfies the
      applicable exchange or trading market.

            (b) Mechanics of Fulfilling Holder's Election. The Company shall
within one (1) business day send via facsimile to a holder of Preferred Shares,
upon receipt of a facsimile copy of a Conversion Notice from such holder which
cannot be fully satisfied as described in Section 4(a), a notice of the
Company's inability to fully satisfy such holder's Conversion Notice (the
"INABILITY TO FULLY CONVERT NOTICE"). Such Inability to Fully Convert Notice
shall indicate (i) the reason why the Company is unable to fully satisfy such
holder's Conversion Notice, (ii) the number of Preferred Shares which cannot be
converted and (iii) the applicable Mandatory Redemption Price. Such holder shall
notify the Company of its election pursuant to Section 4(a) above by delivering
written notice via facsimile to the Company ("NOTICE IN RESPONSE TO

                                       46
<PAGE>
INABILITY TO CONVERT").

            (c) Payment of Mandatory Redemption Price. If such holder shall
elect to have its shares redeemed pursuant to Section 4(a)(i), the Company shall
pay the Mandatory Redemption Price in cash by wire transfer to such holder
within five (5) days of the Company's receipt of the holder's Notice in Response
to Inability to Convert. If the Company shall fail to pay the applicable
Mandatory Redemption Price to such holder within five (5) days of the Company's
receipt of the Notice in Response to Inability to Convert (other than pursuant
to a dispute as to the determination of the arithmetic calculation of the
Redemption Price), in addition to any remedy such holder of Preferred Shares may
have under this Certificate of Designations, the Securities Purchase Agreement
and the Registration Rights Agreement, such unpaid amount shall bear interest at
the rate of 2.0% per month (prorated for partial months) until paid in full.
Until the full Mandatory Redemption Price is paid in full to such holder, such
holder may void the Mandatory Redemption with respect to those Preferred Shares
for which the full Mandatory Redemption Price has not been paid and receive back
such Preferred Shares. Notwithstanding the foregoing, if the Company fails to
pay the applicable Mandatory Redemption Price within such five (5) days time
period due to a dispute as to the determination of the Mandatory Redemption
Price, such dispute shall be resolved pursuant to Section 2(f)(iii) with the
term "MANDATORY REDEMPTION PRICE" being substituted for the term "Conversion
Rate".

            (d) Pro-rata Conversion and Redemption. In the event the Company
receives a Conversion Notice, Notice of Redemption at Option of Holder Upon
Major Transaction or Notice of Redemption at Option of Holder Upon Triggering
Event from more than one holder of Preferred Shares on the same day and the
Company can convert and/or redeem some, but not all, of the Preferred Shares
pursuant to this Section 4, the Company shall convert and/or redeem from each
holder of Preferred Shares electing to have Preferred Shares converted and
redeemed at such time an amount equal to such holder's pro-rata amount (based on
the number of Preferred Shares held by such holder relative to the number of
Preferred Shares outstanding) of all Preferred Shares being converted and
redeemed at such time.

      (5) Conversion at the Company's Election. At any time or times on or after
the date which is three years after the Issuance Date of the applicable
Preferred Shares, the Company shall have the right, in its sole discretion, to
require that any or all of the outstanding Preferred Shares be converted
("CONVERSION AT COMPANY'S ELECTION") at the Conversion Rate; provided that the
Conditions to Conversion at the Company's Election (as set forth below) are
satisfied. The Company shall exercise its right to Conversion at Company's
Election by providing each holder of Preferred Shares written notice ("NOTICE OF
CONVERSION AT COMPANY'S ELECTION") at least 30 days prior to the date selected
by the Company for conversion ("COMPANY'S ELECTION CONVERSION DATE"). If the
Company elects to require conversion of some, but not all, of the Preferred
Shares, the Company shall convert a pro rata amount from each holder of
Preferred Shares (based on the number of Preferred Shares held by such holder
relative to the number of Preferred Shares outstanding on the date of the
Company's delivery of the Notice of Conversion at Company's Election). The
Notice of Conversion at Company's Election shall indicate (x) the number of
Preferred Shares the Company has selected for conversion, (y) the Company's
Election Conversion Date, which date shall not be less than 30 or more than 40
days after each holder's receipt of such notice, and (z) each holder's pro rata
share of outstanding Preferred

                                       47
<PAGE>
Shares. All Preferred Shares selected for conversion in accordance with the
provisions of this Section 5 shall be converted as of the Company's Election
Conversion Date in accordance with Section 2 as if the holders of such Preferred
Shares selected by the Company to be converted had given the Conversion Notice
on the Company's Election Conversion Date. All holders of Preferred Shares shall
thereupon and within two business days after the Company's Election Conversion
Date surrender all Preferred Stock Certificates selected for conversion, duly
endorsed for cancellation, to the Transfer Agent. "CONDITIONS TO CONVERSION AT
THE COMPANY'S ELECTION" means the following conditions: (i) on each day during
the period beginning 20 days prior to the Notice of Conversion at the Company's
Election and ending on and including the Company's Election Conversion Date, the
Registration Statement shall be effective and available for the sale of no less
than 150% of the sum of (A) the number of Conversion Shares then issuable upon
the conversion of all outstanding Preferred Shares (without regard to any
limitations on conversion herein or elsewhere), including the Conversion Shares
to be issued pursuant to this Conversion at the Company's Election and (B) the
number of Conversion Shares that are then held by the holders of the Preferred
Shares, (ii) on each day during the period beginning 20 days prior to the date
of the Company's Notice of Conversion at Company's Election and ending on and
including the Company's Election Conversion Date, the Common Stock is designated
for quotation on the Nasdaq National Market or listed on NYSE or AMEX and is not
suspended from trading; (iii) on each day during the 20 consecutive trading days
immediately preceding the date of the Company's Notice of Conversion at the
Company's Election, the Closing Bid Price of the Common Stock is at least 250%
of the Fixed Conversion Price of the applicable Preferred Shares being
converted; (iv) on each day during the period beginning on the date of the
Notice of Conversion at the Company's Election and ending on and including the
Company's Election Conversion Date, the Closing Bid Price of the Common Stock is
at least 230% of the Fixed Conversion Price of the applicable Preferred Shares
being converted; (v) a Conversion at Company's Election previously shall not
have occurred; (vi) if the Company was required to seek stockholder approval
pursuant to Section 4(k) of the Securities Purchase Agreement, the Company's
stockholders shall have approved the issuance of the Securities (as defined in
the Securities Purchase Agreement) on or prior to the date of the Company's
Notice of Conversion at Company's Election; (vii) during the period beginning 20
trading days prior to the date of the Company's Notice of Conversion at
Company's Election and ending on and including the Company's Election Conversion
Date, no holder of Preferred Shares shall have been subject to a lock-up
pursuant to the terms of Section 4(n) of the Securities Purchase Agreement and
there shall not have been any Grace Period under Section 3(u) of the
Registration Rights Agreement; (viii) during the period beginning on the Initial
Issuance Date and ending on and including the Company's Election Conversion
Date, the Company shall have delivered Conversion Shares upon conversion of the
Preferred Shares to the Buyers within ten (10) business days of the applicable
Conversion Date; (ix) during the period beginning on and including the date
which is 20 trading days immediately preceding the date of the Company's Notice
of Conversion at the Company's Election and ending on and including the
Company's Election Conversion Date, the Company shall have delivered Conversion
Shares upon conversion of the Preferred Shares to the Buyers on a timely basis
as set forth in Section 2(f)(ii) of this Certificate of Designations; (x)
neither a Triggering Event nor any event that with the passage of time would
constitute a Triggering Event (assuming it was not cured) shall have occurred;
and (xi) the Company otherwise has satisfied its obligations and is not in
default under this Certificate of Designations, the Securities Purchase
Agreement and the Registration Rights

                                       48
<PAGE>
Agreement. Notwithstanding the above, any holder of Preferred Shares may convert
such shares (including Preferred Shares selected for conversion) into Common
Stock pursuant to Section 2(a) on or prior to the Company's Election Conversion
Date.

      (6) Company's Right to Redeem in Lieu of Conversion. Subject to the terms
and conditions of this Section 6 below, at any time after the Issuance Date, and
so long as the Company has provided appropriate notice as described below, the
Company may elect to redeem Preferred Shares submitted for conversion in lieu of
converting such Preferred Shares, provided that the Conversion Price for such
Preferred Shares on the Conversion Date is less than a price (the "REDEMPTION IN
LIEU OF CONVERSION TRIGGER PRICE") equal to 80% of the greater of (x) the Market
Price on the Initial Issuance Date and (y) the Market Price on the date of the
Mandatory Closing (as defined in the Securities Purchase Agreement), if any,
(appropriately adjusted for any stock split, stock dividend, combination or
other similar transaction) (a "COMPANY REDEMPTION IN LIEU OF CONVERSION").

            (a) Redemption Price of Company Redemption in Lieu of Conversion.
The "REDEMPTION PRICE OF COMPANY REDEMPTION IN LIEU OF CONVERSION" shall be an
amount per Preferred Share equal to the product of (A) the Conversion Rate of
the Preferred Shares on the date such Preferred Shares are submitted for
conversion and (B) the Closing Bid Price of the Common Stock on the date the
applicable Preferred Shares are submitted for conversion.

            (b) Mechanics of Company Redemption in Lieu of Conversion. The
Company shall exercise its right to redeem by delivering written notice by
facsimile and overnight courier ("NOTICE OF COMPANY REDEMPTION IN LIEU OF
CONVERSION") to (i) each holder of the Preferred Shares and (ii) the Transfer
Agent. Such Notice of Company Redemption in Lieu of Conversion shall indicate
(A) the maximum, if any, aggregate number of Preferred Shares which the Company
will redeem for Company Redemption in Lieu of Conversion and (B) confirm the
time period during which the Company may effect Company Redemption in Lieu of
Conversion, which period shall begin on and include the date which is five
business days after the date of receipt by all of the holders' of the Notice of
Redemption in Lieu of Conversion and shall end on and include the date which is
30 calendar days after the fifth business day following the date of receipt by
all of the holders of the Notice of Redemption in Lieu of Conversion (the
"REDEMPTION IN LIEU OF CONVERSION PERIOD"). If the Company elects to limit the
number of Preferred Shares which it will redeem during the Redemption in Lieu of
Conversion Period, the Company shall allocate for redemption from each holder of
Preferred Shares a number of Preferred Shares equal to such holder's pro-rata
amount (based on the number of Preferred Shares held by such holder on the date
of the Notice of Company Redemption in Lieu of Conversion relative to the total
number of Preferred Shares outstanding on such date). The Company may terminate
a Redemption in Lieu of Conversion Period at any time with respect to Preferred
Shares which have not been submitted for conversion by delivering written notice
of such termination to each holder of Preferred Shares by facsimile and
overnight courier at least three business days prior to the effective date of
such termination. Notwithstanding anything to the contrary in this Section 6,
the Company shall convert Preferred Shares pursuant to Section 2 if such
Preferred Shares are submitted for conversion (i) before the beginning, or after
the termination, of the Redemption in Lieu of Conversion Period, (ii) for a
Conversion Price greater than or equal to the Redemption in Lieu of Conversion
Trigger Price or

                                       49
<PAGE>
(iii) are in excess of such holder's pro rata allocation of the maximum number
of Preferred Shares the Company indicated that it would redeem in its Notice of
Company Redemption in Lieu of Conversion.

            (c) Payment of Redemption Price. The Company shall pay the
applicable Redemption Price of Company Redemption in Lieu of Conversion to the
holder of the Preferred Shares being redeemed in cash by wire transfer within
five business days after the applicable Conversion Date on which such Preferred
Shares are submitted for conversion. If the Company shall fail to pay the
applicable Redemption Price of Company Redemption in Lieu of Conversion to such
holder on a timely basis as described in this Section 6(c), in addition to any
remedy such holder of Preferred Shares may have under this Certificate of
Designations and the Securities Purchase Agreement, such unpaid amount shall
bear interest at the rate of 2.0% per month until paid in full. Until the
Company pays such unpaid applicable Redemption Price of Company Redemption in
Lieu of Conversion full to each holder, each holder of Preferred Shares
submitted for redemption pursuant to this Section 6 and for which the applicable
Redemption Price of Company Redemption in Lieu of Conversion has not been paid,
shall have the option to, in lieu of redemption, (A) to require the Company to
promptly return to each holder all of the Preferred Shares that were submitted
for redemption by such holder under this Section 6 and for which the applicable
Redemption Price of Company Redemption in Lieu of Conversion has not been paid
or (B) to convert those Preferred Shares for which the applicable Redemption
Price of the Company Redemption in Lieu of Conversion has not been paid at a
Conversion Price equal to the lesser of (I) the Conversion Price applicable to
such conversion on the date on which such Preferred Shares were originally
presented for conversion and (II) the Conversion Price which would have been in
effect if such Preferred Shares were presented for conversion on the business
day immediately following the last day on which the Company could have effected
a timely Company Redemption in Lieu of Conversion, by sending written notice
thereof to the Company via facsimile (the "VOID COMPANY REDEMPTION NOTICE").
Upon the Company's receipt of such Void Company Redemption Notice(s), requesting
the return of the Preferred Shares, prior to payment of the full applicable
redemption price to each holder, (i) the Company's Redemption in Lieu of
Conversion shall be null and void with respect to those Preferred Shares
submitted for redemption and for which the applicable redemption price has not
been paid and with respect to any Preferred Shares submitted in the future for
conversion in the same Redemption in Lieu of Conversion Period, (ii) the Company
shall immediately return any Preferred Shares submitted to the Company by each
holder for redemption under this Section 6 and for which the applicable
Redemption Price of Company Redemption in Lieu of Conversion has not been paid
and (iii) the Fixed Conversion Price of such returned Preferred Shares shall be
adjusted to the lesser of (I) the Conversion Price applicable to such conversion
on the date on which such Preferred Shares were originally presented for
conversion and (II) the lowest Conversion Price which would have been in effect
if such Preferred Shares were presented for conversion on any business day
during the period beginning on the business day immediately following the last
day on which the Company could have effected a timely Company Redemption in Lieu
of Conversion and ending on the date of the Company's receipt of the applicable
Void Company Redemption Notice. Notwithstanding the foregoing, if the Company
fails to pay the applicable Redemption Price of Company Redemption in Lieu of
Conversion to a holder within the time period described in this Section 6(d) due
to a dispute as to the arithmetic calculation of the Redemption Price of Company
Redemption in Lieu of Conversion, such dispute shall be resolved pursuant to
Section 2(f)(iii)

                                       50
<PAGE>
above with the term "Redemption Price of Company Redemption in Lieu of
Conversion" being substituted for the term "Conversion Rate." If the Company
fails to timely effect a Company Redemption in Lieu of Conversion in accordance
with this Section 6, the Company shall not be allowed to submit another Notice
of Company Redemption in Lieu of Conversion without the prior written consent of
the holders of at least a majority of the Preferred Shares then outstanding.

            (d) Company Must Have Immediately Available Funds or Credit
Facilities. The Company shall not be entitled to send any Notice of Company
Redemption in Lieu of Conversion pursuant to Section 6(a) and begin the
redemption procedure under this Section 6, unless it has:

                  (i) the full amount of the Redemption Price of Company
      Redemption in Lieu of Conversion in cash, available in a demand or other
      immediately available account in a bank or similar financial institution;

                  (ii) credit facilities, with a bank or similar financial
      institutions that are immediately available and unrestricted for use in
      redeeming the Preferred Shares, in the full amount of the Redemption Price
      of Company Redemption in Lieu of Conversion;

                  (iii) a written agreement with a standby underwriter or
      qualified buyer ready, willing and able to purchase from the Company a
      sufficient number of shares of stock to provide proceeds necessary to
      redeem any Preferred Share that has not been converted prior to a Company
      Redemption in Lieu of Conversion; or

                  (iv) a combination of the items set forth in the preceding
      clauses (i), (ii) and (iii), aggregating the full amount of the Redemption
      Price of Company Redemption in Lieu of Conversion.

      (7) Reissuance of Certificates. In the event of a conversion or redemption
pursuant to this Certificate of Designations of less than all of the Preferred
Shares represented by a particular Preferred Stock Certificate, the Company
shall promptly cause to be issued and delivered to the holder of such Preferred
Shares a preferred stock certificate representing the remaining Preferred Shares
which have not been so converted or redeemed.

      (8) Reservation of Shares. The Company shall, so long as any of the
Preferred Shares are outstanding, reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Preferred Shares, such number of shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all of the
Preferred Shares then outstanding (without regard to any limitations on
conversions); provided that the number of shares of Common Stock so reserved
shall at no time be less than 200% of the number of shares of Common Stock for
which the Preferred Shares are at any time convertible. The initial number of
shares of Common Stock reserved for conversions of the Preferred Shares and each
increase in the number of shares so reserved shall be allocated pro rata among
the holders of the Preferred Shares based on the number of Preferred Shares held
by each holder at the time of issuance of the Preferred Shares or increase in
the number of reserved shares, as the

                                       51
<PAGE>
case may be. In the event a holder shall sell or otherwise transfer any of such
holder's Preferred Shares, each transferee shall be allocated a pro rata portion
of the number of reserved shares of Common Stock reserved for such transferor.
Any shares of Common Stock reserved and which remain allocated to any person or
entity which does not hold any Preferred Shares or have the right to acquire any
Preferred Shares shall be allocated to the remaining holders of Preferred
Shares, pro rata based on the number of Preferred Shares then held by such
holders.

      (9) Voting Rights. Holders of Preferred Shares shall have no voting
rights, except as required by law, including but not limited to the General
Corporation Law of the State of Delaware, and as expressly provided in this
Certificate of Designations.

      (10) Liquidation, Dissolution, Winding-Up. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the Company, the
holders of the Preferred Shares shall be entitled to receive in cash out of the
assets of the Company, whether from capital or from earnings available for
distribution to its stockholders (the "PREFERRED FUNDS"), before any amount
shall be paid to the holders of any of the capital stock of the Company of any
class junior in rank to the Preferred Shares in respect of the preferences as to
the distributions and payments on the liquidation, dissolution and winding up of
the Company, an amount per Preferred Share equal to the sum of (i) $1,000 and
(ii) an amount equal to the product of (.05) (N/365) ($1,000) (such sum being
referred to as the "LIQUIDATION VALUE"); provided that, if the Preferred Funds
are insufficient to pay the full amount due to the holders of Preferred Shares
and holders of shares of other classes or series of preferred stock of the
Company that are of equal rank with the Preferred Shares as to payments of
Preferred Funds (the "PARI PASSU SHARES"), then each holder of Preferred Shares
and Pari Passu Shares shall receive a percentage of the Preferred Funds equal to
the full amount of Preferred Funds payable to such holder as a liquidation
preference, in accordance with their respective Certificate of Designations,
Preferences and Rights, as a percentage of the full amount of Preferred Funds
payable to all holders of Preferred Shares and Pari Passu Shares. The purchase
or redemption by the Company of stock of any class, in any manner permitted by
law, shall not, for the purposes hereof, be regarded as a liquidation,
dissolution or winding up of the Company. Neither the consolidation or merger of
the Company with or into any other Person, nor the sale or transfer by the
Company of less than substantially all of its assets, shall, for the purposes
hereof, be deemed to be a liquidation, dissolution or winding up of the Company.
No holder of Preferred Shares shall be entitled to receive any amounts with
respect thereto upon any liquidation, dissolution or winding up of the Company
other than the amounts provided for herein; provided that a holder of Preferred
Shares shall be entitled to all amounts previously accrued with respect to
amounts owed hereunder.

      (11)  Preferred Rank; Participation.

            (a) All shares of Common Stock shall be junior in rank to the
      Preferred Shares, and the Preferred Shares shall be pari passu in rank to
      (i) the Company's Series B Preferred Stock and (ii) any shares of the
      Company's preferred stock issued to HMR which shares of preferred stock,
      by their terms, are not transferable or assignable for a period of at
      least one year from the date of issuance of such shares of preferred
      stock, in respect to the preferences as to distributions and payments upon
      the liquidation,

                                       52
<PAGE>
      dissolution and winding up of the Company. The rights of the shares of
      Common Stock shall be subject to the preferences and relative rights of
      the Preferred Shares. Without the prior express written consent of the
      holders of not less than a majority of the then outstanding Preferred
      Shares, the Company shall not hereafter authorize or issue additional or
      other capital stock that is of senior or equal rank to the Preferred
      Shares in respect of the preferences as to distributions and payments upon
      the liquidation, dissolution and winding up of the Company provided that
      shares of the Company's Series B Preferred Stock and any shares of the
      Company's preferred stock issued to HMR in the manner described in clause
      (ii) above shall not require the consent of the holders of the Preferred
      Shares in order to rank pari passu to the Preferred Shares. Without the
      prior express written consent of the holders of not less than a majority
      of the then outstanding Preferred Shares, the Company shall not hereafter
      authorize or make any amendment to the Company's Certificate of
      Incorporation or bylaws, or file any resolution of the board of directors
      of the Company with the Delaware Secretary of State containing any
      provisions, which would adversely affect or otherwise impair the rights or
      relative priority of the holders of the Preferred Shares relative to the
      holders of the Common Stock or the holders of any other class of capital
      stock. In the event of the merger or consolidation of the Company with or
      into another corporation pursuant to which the Preferred Shares remain
      outstanding or the rights to acquire Preferred Shares under the Securities
      Purchase Agreement shall not have been terminated, the Preferred Shares
      shall maintain their relative powers, designations and preferences
      provided for herein and no merger shall result inconsistent therewith.

            (b) Subject to the rights of the holders, if any, of the Pari Passu
      Shares, the holders of the Preferred Shares shall, as holders of Preferred
      Stock, be entitled to such dividends paid and distributions made to the
      holders of Common Stock to the same extent as if such holders of Preferred
      Shares had converted the Preferred Shares into Common Stock (without
      regard to any limitations on conversion herein or elsewhere) and had held
      such shares of Common Stock on the record date for such dividends and
      distributions. Payments under the preceding sentence shall be made
      concurrently with the dividend or distribution to the holders of Common
      Stock.

      (12) Restriction on Redemption and Cash Dividends with respect to Other
Capital Stock. Until all of the Preferred Shares have been converted or redeemed
as provided herein, the Company shall not, directly or indirectly, redeem, or
declare or pay any cash dividend or distribution on, its capital stock without
the prior express written consent of the holders of not less than a majority of
the then outstanding Preferred Shares.

      (13) Limitation on Number of Conversion Shares. Notwithstanding any other
provision herein, the Company shall not be obligated to issue any shares of
Common Stock upon conversion of the Preferred Shares if the issuance of such
shares of Common Stock would exceed that number of shares of Common Stock which
the Company may issue upon Conversion of the Preferred Shares (the "EXCHANGE
CAP") without breaching the Company's obligations under the rules or regulations
of the Nasdaq National Market, except that such limitation shall not apply in
the event that the Company (i) obtains the approval of its stockholders as
required by applicable rules and regulations of the Nasdaq National Market for
issuances of Common

                                       53
<PAGE>
Stock in excess of the Exchange Cap, (ii) obtains a written opinion from outside
counsel to the Company that such approval is not required, which opinion shall
be reasonably satisfactory to the holders of a majority of the Preferred Shares
then outstanding or (iii) the required number of holders of the Preferred Shares
have exercised their rights pursuant to Section 3(g) of this Certificate of
Designations to have the Company remove the Common Stock from quotation on the
Nasdaq National Market. Until such approval or written opinion is obtained or
such action has been taken by the required number of holders, no purchaser of
Preferred Shares pursuant to the Securities Purchase Agreement (the
"PURCHASERS") shall be issued, upon conversion of Preferred Shares, shares of
Common Stock in an amount greater than the product of (x) the Exchange Cap
amount multiplied by (y) a fraction, the numerator of which is the number of
Preferred Shares issued to such Purchaser pursuant to the Securities Purchase
Agreement and the denominator of which is the aggregate amount of all the
Preferred Shares issued to the Purchasers pursuant to the Securities Purchase
Agreement (the "CAP ALLOCATION Amount"). In the event that any Purchaser shall
sell or otherwise transfer any of such Purchaser's Preferred Shares, the
transferee shall be allocated a pro rata portion of such Purchaser's Cap
Allocation Amount. In the event that any holder of Preferred Shares shall
convert all of such holder's Preferred Shares into a number of shares of Common
Stock which, in the aggregate, is less than such holder's Cap Allocation Amount,
then the difference between such holder's Cap Allocation Amount and the number
of shares of Common Stock actually issued to such holder shall be allocated to
the respective Cap Allocation Amounts of the remaining holders of Preferred
Shares on a pro rata basis in proportion to the number of Preferred Shares then
held by each such holder.

      (14) Vote to Change the Terms of or Issue Preferred Shares. The
affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting, of the holders of not less than a majority of the
then outstanding Preferred Shares and of the holders of the rights to acquire a
majority of the Preferred Shares which purchasers have the right to acquire
under the Securities Purchase Agreement, shall be required for (a) any change to
this Certificate of Designations or the Company's Certificate of Incorporation
which would amend, alter, change or repeal any of the powers, designations,
preferences and rights of the Preferred Shares, or (b) any issuance of Preferred
Shares other than pursuant to the Securities Purchase Agreement.

      (15) Lost or Stolen Certificates. Upon receipt by the Company of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Preferred Stock Certificates representing the Preferred Shares, and, in the case
of loss, theft or destruction, of an indemnification undertaking by the holder
to the Company in a form reasonably acceptable to the Company and, in the case
of mutilation, upon surrender and cancellation of the Preferred Stock
Certificate(s), the Company shall execute and deliver new preferred stock
certificate(s) of like tenor and date; provided, however, the Company shall not
be obligated to re-issue preferred stock certificates if the holder
contemporaneously requests the Company to convert such Preferred Shares into
Common Stock.

      (16) Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Certificate of Designations
shall be cumulative and in addition to all other remedies available under this
Certificate of Designations, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing

                                       54
<PAGE>
herein shall limit a holder's right to pursue actual damages for any failure by
the Company to comply with the terms of this Certificate of Designations. The
Company covenants to each holder of Preferred Shares that there shall be no
characterization concerning this instrument other than as expressly provided
herein. Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be
received by the holder thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the holders of the Preferred Shares and
that the remedy at law for any such breach may be inadequate. The Company
therefore agrees that, in the event of any such breach or threatened breach, the
holders of the Preferred Shares shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.

      (17) Specific Shall Not Limit General; Construction. No specific provision
contained in this Certificate of Designations shall limit or modify any more
general provision contained herein. This Certificate of Designations shall be
deemed to be jointly drafted by the Company and the initial holders of the
Preferred Shares and shall not be construed against any person as the drafter
hereof.

      (18) Failure or Indulgence Not Waiver. No failure or delay on the part of
a holder of Preferred Shares in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof (except to the extent that such
power, right or privilege must, in accordance with the terms of this Certificate
of Designations, be exercised within a specified period of time and such period
of time has lapsed without such power, right or privilege being exercised), nor
shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege.

      (19) Notices. Any notice required to be delivered pursuant to the terms of
this Certificate of Designations shall be delivered, unless otherwise provided
in this Certificate of Designations, in accordance with the terms, and subject
to the notice provisions of, the Securities Purchase Agreement.

      IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be signed by Harvey J. Berger, M.D. its Chief Executive Officer,
as of the 6th day of November, 1998.

                                    ARIAD PHARMACEUTICALS, INC.

                                    By:       /s/ Harvey Berger
                                           ------------------------------
                                    Name:         Harvey J. Berger
                                    Its:          Chief Executive Officer

                                       55
<PAGE>
                                    EXHIBIT I
                           ARIAD PHARMACEUTICALS, INC.
                                CONVERSION NOTICE

Reference is made to the Certificate of Designations, Preferences and Rights of
Series C Convertible Preferred Stock (the "CERTIFICATE OF DESIGNATIONS"). In
accordance with and pursuant to the Certificate of Designations, the undersigned
hereby elects to convert the number of shares of Series [C] Convertible
Preferred Stock, par value $.01 per share (the "PREFERRED SHARES"), of ARIAD
Pharmaceuticals, Inc., a Delaware corporation (the "COMPANY"), indicated below
into shares of Common Stock, par value $.001 per share (the "COMMON STOCK"), of
the Company, by tendering the stock certificate(s) representing the Preferred
Shares specified below as of the date specified below.

      Date of Conversion:
                                              ----------------------------------

      Number of Preferred Shares to be converted:
                                                  ------------------------------

      Stock certificate no(s). of Preferred Shares to be converted:
                                                                    ------------

Please confirm the following information:

      Conversion Price:
                                              ----------------------------------

      Number of shares of Common Stock to be
      issued:
                                              ----------------------------------

Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:

      Issue to:
                                              ----------------------------------

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

      Facsimile Number:
                                              ----------------------------------

      Authorization:
                                              By:
                                                  ------------------------------

                                              Title:
                                                     ---------------------------

      Dated:
                                              ----------------------------------

      Account Number:
        (if electronic book entry transfer):
                                              ----------------------------------

      Transaction Code Number
        (if electronic book entry transfer):
                                              ----------------------------------

           THIS NOTICE MUST BE DELIVERED TO COMPANY AND TRANSFER AGENT

                                       56
<PAGE>
                       AMENDED CERTIFICATE OF DESIGNATION

                                       of

                            SERIES A PREFERRED STOCK

                                       of

                           ARIAD PHARMACEUTICALS, INC.

             Pursuant to Section 151 of the General Corporation Law
                            of the State of Delaware

      ARIAD Pharmaceuticals, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), in
accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:

      1. That by resolution of the Board of Directors of the Company dated
December 15, 1994, and by a Certificate of Designations filed in the office of
the Secretary of State of the State of Delaware on December 16, 1994, the
Company authorized a series of 500,000 shares of Series A Preferred Stock, par
value $.01 per share, of the Company (the "Series A Preferred Stock) and
established the powers, designations, preferences and relative, participating,
optional and other rights of the Series A Preferred and the qualifications,
limitations or restrictions thereof.

      2. As of the date hereof no shares of Series A Preferred Stock are
outstanding and no shares of Series A Preferred Stock have been issued.

      3. That pursuant to the authority conferred on the Board of Directors of
the Company by its Certificate of Incorporation and the provisions of Section
151(g) of the General Corporation Law of the State of Delaware, the Board of
Directors on June 8, 2000 adopted the following resolution amending in their
entireties the powers, designations, preferences, and relative, participating,
optional and other rights of shares of the Series A Preferred Stock, and the
qualifications, limitations or restrictions thereof effective upon the
effectiveness of a new rights agreement between the Company and State Street
Bank and Trust Company, as Rights Agent.

            RESOLVED, that effective upon the effectiveness of a new rights
      agreement between the Company and State Street Bank and Trust Company, as
      Rights Agent, and pursuant to the authority conferred upon the Board of
      Directors of the Company and the Certificate of Incorporation and by the
      provisions of Section 151(g) of the General Corporation Law of the State
      of Delaware, the powers, designations, preferences, and relative,
      participating, optional and other rights of shares of the Series A
      Preferred Stock, par value $.01 per share of the Company, and the
      qualifications, limitations or restrictions thereof be, and the same
      hereby are, amended in their entireties as follows:

                                       57
<PAGE>
                            SERIES A PREFERRED STOCK

      1. Designation and Amount. There shall be a series of Preferred Stock that
shall be designated as "Series A Preferred Stock," and the number of shares
constituting such series shall be 500,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided,
however, that no decrease shall reduce the number of shares of Series A
Preferred Stock to less than the number of shares then issued and outstanding
plus the number of shares issuable upon exercise of outstanding rights, options
or warrants or upon conversion of outstanding securities issued by the
Corporation.

      2. Dividends and Distribution.

            (A) Subject to the prior and superior rights of the holders of any
shares of any class or series of stock of the Corporation ranking prior and
superior to the shares of Series A Preferred Stock with respect to dividends,
the holders of shares of Series A Preferred Stock, in preference to the holders
of shares of any class or series of stock of the Corporation ranking junior to
the Series A Preferred Stock in respect thereof, 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 10th 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 Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $10.00 or (b) the Adjustment Number
(as defined below) times the aggregate per share amount of all cash dividends,
and the Adjustment Number 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, par
value $.001 per share, 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 Preferred Stock. The "Adjustment Number" shall
initially be 1000. In the event the Corporation shall at any time after June 8,
2000 (i) declare and pay 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.

            (B) The Corporation shall declare a dividend or distribution on the
Series A 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 and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A 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

                                       58
<PAGE>
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 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 and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
A 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 Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 60 days
prior to the date fixed for the payment thereof.

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

            (A) Each share of Series A Preferred Stock shall entitle the holder
thereof to a number of votes equal to the Adjustment Number on all matters
submitted to a vote of the stockholders of the Corporation.

            (B) Except as required by law, by Section 3(C) and by Section 10
hereof, holders of Series A 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.

            (C) If, at the time of any annual meeting of stockholders for the
election of directors, the equivalent of six quarterly dividends (whether or not
consecutive) payable on any share or shares of Series A Preferred Stock are in
default, the number of directors constituting the Board of Directors of the
Corporation shall be increased by two. In addition to voting together with the
holders of Common Stock for the election of other directors of the Corporation,
the holders of record of the Series A Preferred Stock, voting separately as a
class to the exclusion of the holders of Common Stock, shall be entitled at said
meeting of stockholders (and at each subsequent annual meeting of stockholders),
unless all dividends in arrears on the Series A Preferred Stock have been paid
or declared and set apart for payment prior thereto, to vote for the election of
two directors of the Corporation, the holders of any Series A Preferred Stock
being entitled to cast a number of votes per share of Series A Preferred Stock
as is specified in paragraph (A) of this Section 3. Each such additional
director shall not be a member of Class I, Class II or Class III of the Board of
Directors of the Corporation, but shall serve until the next annual meeting of
stockholders for the election of directors, or until his successor shall be
elected and shall qualify, or until his right to hold such office terminates
pursuant to the provisions of this Section 3(C). Until the default in payments
of all dividends which permitted the election of said directors shall cease to
exist, any director who shall have been so elected pursuant to the provisions of
this Section 3(C) may be removed at any time, without cause, only by the
affirmative vote of the holders of the shares of Series A Preferred Stock at the
time entitled to cast a majority of the votes entitled to be cast for the
election of any such director at a special meeting of such holders called for
that purpose, and any vacancy thereby created may be filled by the vote of such
holders. If and when such default shall cease to exist, the holders of the
Series A Preferred Stock shall be divested of the foregoing special voting
rights, subject to revesting in the event of each and every subsequent like
default in payments of dividends. Upon

                                       59
<PAGE>
the termination of the foregoing special voting rights, the terms of office of
all persons who may have been elected directors pursuant to said special voting
rights shall forthwith terminate, and the number of directors constituting the
Board of Directors shall be reduced by two. The voting rights granted by this
Section 3(C) shall be in addition to any other voting rights granted to the
holders of the Series A Preferred Stock in this Section 3.

      4. Certain Restrictions.

            (A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:

                  (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 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 the Series A Preferred
Stock, except dividends paid ratably on the Series A 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; or

                  (iii) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a parity
with the Series A 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 Series A Preferred Stock, or to such holders and holders of any
such shares ranking on a parity therewith, 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.

            (B) 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 4, purchase or otherwise acquire such shares at such time and in
such manner.

      5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
promptly after the acquisition thereof. All such shares shall upon their
retirement 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 any conditions and
restrictions on issuance set forth herein.

      6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation,
dissolution or winding up of the Corporation, voluntary or otherwise, 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 Preferred Stock unless, prior thereto, the holders of

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shares of Series A Preferred Stock shall have received an amount per share (the
"Series A Liquidation Preference") equal to the greater of (i) $10.00 plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, or (ii) the Adjustment Number
times the per share amount of all cash and other property to be distributed in
respect of the Common Stock upon such liquidation, dissolution or winding up of
the Corporation.

            (B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other classes and series of stock of the
Corporation, if any, that rank on a parity with the Series A Preferred Stock in
respect thereof, then the assets available for such distribution shall be
distributed ratably to the holders of the Series A Preferred Stock and the
holders of such parity shares in proportion to their respective liquidation
preferences.

            (C) Neither the merger or consolidation of the Corporation into or
with another corporation nor the merger or consolidation of any other
corporation into or with the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
6.

      7. Consolidation, Merger, Etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the
outstanding 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 each share
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share equal to the Adjustment Number 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.

      8. No Redemption. Shares of Series A Preferred Stock shall not be subject
to redemption by the Corporation.

      9. Ranking. The Series A Preferred Stock shall rank junior to all other
series of the Preferred Stock as to the payment of dividends and as to the
distribution of assets upon liquidation, dissolution or winding up, unless the
terms of any such series shall provide otherwise, and shall rank senior to the
Common Stock as to such matters.

      10. Amendment. At any time that any shares of Series A Preferred Stock are
outstanding, the Certificate of Incorporation of the Corporation shall not be
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of two-thirds of the
outstanding shares of Series A Preferred Stock, voting separately as a class.

      11. Fractional Shares. Series A Preferred Stock may be issued in fractions
of a share that 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
Preferred Stock.

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      IN WITNESS WHEREOF, the undersigned has executed this Certificate this
19th day of June, 2000.

                                    ARIAD PHARMACEUTICALS, INC.

                                            /s/ Jay R. LaMarche
                                    By:
                                       ------------------------------
                                    Name:       Jay R. LaMarche
                                    Title:      Treasurer

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<PAGE>
                            CERTIFICATE OF AMENDMENT

                                       OF

                          CERTIFICATE OF INCORPORATION

                                       OF

                           ARIAD PHARMACEUTICALS, INC.

      It is hereby certified that:

FIRST:      The name of the corporation is ARIAD Pharmaceuticals, Inc. (the
            "Corporation").

SECOND:     The Certificate of Incorporation of the Corporation filed on April
            12, 1991 under the name ARIAD Corporation, as amended to date, is
            hereby further amended by striking out the first paragraph of
            Section 4 in its entirety and by substituting in lieu thereof the
            following:

            "4.   Number of Shares. The total number of shares of all classes of
                  stock which the Corporation shall have authority to issue is
                  155,000,000 shares, consisting of 145,000,000 shares of common
                  stock, $.001 par value per share (the "Common Stock") and
                  10,000,000 shares of preferred stock, $.01 par value per share
                  (the "Preferred Stock")."

THIRD:      The amendment of the Certificate of Incorporation herein certified
            has been duly adopted in accordance with the provisions of Section
            228 and Section 242 of the General Corporation Law of the State of
            Delaware.

      EXECUTED, effective as of this 23rd day of June, 2004.

                                        ARIAD PHARMACEUTICALS, INC.

                                        By: /s/ Harvey J. Berger, M.D.
                                            ------------------------------------
                                            Harvey J. Berger, M.D.
                                            Chairman and Chief Executive Officer

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