Document:

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                                WARRANT AGREEMENT

      THIS AGREEMENT is dated this ____ day of _______________, 2001, by and
among BIODELIVERY SCIENCES INTERNATIONAL, INC., an Indiana corporation, having
its offices at UMDNJ New Jersey Medical School, 185 Orange Avenue,
Administrative Building 4, Newark, New Jersey 07103 (the "Company"), American
Stock Transfer & Trust Company, a ______________ corporation, having its offices
at ______________________, as agent (the "Warrant Agent"), and Roan/Meyers
Associates, L.P., a New York limited partnership as representative of the
several Underwriters listed in the prospectus under Underwriters, having its
offices at 17 State Street, New York, New York 10004.

      WHEREAS, pursuant to a Registration Statement on Form SB-2, registration
no. 333- ______ (the "Registration Statement") filed with the Securities and
Exchange Commission (the "Commission") and pursuant to an underwriting agreement
between the Company and the Underwriter dated __________, 2001 (the
"Underwriting Agreement") relating to the Company=s proposed public offering,
the Company proposes to issue up to 2,300,000 units (the "Units") (inclusive of
300,000 Units subject to the Representative's overallotment option), each Unit
consisting of one (1) share of the Company=s Common Stock, par value $0.01 per
share (the "Common Stock"), one (1) Class A Redeemable Common Stock Purchase
Warrant (the "Class A Warrant"), and one (1) Class B Redeemable Common Stock
Purchase Warrant (the "Class B Warrant"), and further proposes to issue to the
Representative or its designees an Option to purchase 200,000 additional Units
(the "Representative's Purchase Option"); and

      WHEREAS, each Class A Warrant is redeemable by the Company for $0.10 per
Warrant, upon thirty (30) days= prior written notice, if the average closing
price or bid price of the Common Stock, as reported by the principal exchange on
which the Common Stock is traded, NASDAQ, the OTC Bulletin Board or the National
Quotation Bureau Incorporated, as the case may be, equals or exceeds One Hundred
Twenty Percent (120%) of the then applicable Class A Warrant Exercise Price for
ten (10) consecutive trading days ending prior to the date of the notice of
redemption as provided herein; and

      WHEREAS, each Class B Warrant is redeemable by the Company for $0.10 per
Warrant, upon thirty (30) days= prior written notice, if the average closing
price or bid price of the Common Stock, as reported by the principal exchange on
which the Common Stock is traded, NASDAQ, the OTC Bulletin Board or the National
Quotation Bureau Incorporated, as the case may be, equals or exceeds One Hundred
Fifty Percent (150%) of the then applicable Class B Warrant Exercise Price for
ten (10) consecutive trading days ending prior to the date of the notice of
redemption as provided herein; and

      WHEREAS, the Company desires the Warrant Agent, and the Warrant Agent
agrees, to act on behalf of the Company in connection with the issuance,
registration, exercise, division, transfer,

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exchange, replacement, redemption and surrender of the Warrant Certificates for
Class A Warrants and Class B Warrants and the rights of the holders thereof;

      NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, and for the purpose of defining the terms and provisions
of the Class A Warrants, the Class B Warrants, the Class A Warrant Certificates,
the Class B Warrant Certificates and the respective rights and obligations
thereunder of the Company, the Registered Holders, the Representative on behalf
of the Underwriters and the Warrant Agent, the parties hereto agree as follows:

      SECTION 1. DEFINITIONS. As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require:

      (a)   "Business Office" shall mean the office of the Warrant Agent (or its
            successor) at which at any particular time its principal business
            shall be administered, which office is located on the date hereof at
            ___________________________________.

      (b)   "Change of Shares" shall have the meaning ascribed thereto in
            Section 8(a)(i) herein.

      (c)   "Class A Warrant" shall mean one (1) Class A Redeemable Common Stock
            Purchase Warrant of the Company.

      (d)   "Class B Warrant" shall mean one (1) Class B Redeemable Common Stock
            Purchase Warrant of the Company.

      (e)   "Class A Warrant Certificates" shall mean certificates representing
            Class A Warrants.

      (f)   "Class B Warrant Certificates" shall mean certificates representing
            Class B Warrants.

      (g)   "Class A Warrant Exercise Price" shall mean the purchase price to be
            paid upon exercise of each Class A Warrant in accordance with the
            terms hereof, which price shall be $10 per share, subject to
            adjustment as provided in Section 8 herein.

      (h)   "Class B Warrant Exercise Price" shall mean the purchase price to be
            paid upon exercise of each Class B Warrant in accordance with the
            terms hereof, which price shall be $15 per share, subject to
            adjustment as provided in Section 8 herein.

      (i)   "Class A Warrant Redemption Date" shall mean that date, if any, upon
            thirty (30) days' prior written notice, provided that the average
            closing price or bid price of the Common Stock, as reported by the
            principal exchange on which the Common Stock is traded, NASDAQ, the
            OTC Bulletin Board or the National Quotation Bureau Incorporated, as
            the case may be, equals or exceeds One Hundred Twenty Percent

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            (120%) of the then applicable Class A Warrant Exercise Price for ten
            (10) consecutive trading days prior to the date of the notice of
            redemption.

      (j)   "Class B Warrant Redemption Date" shall mean that date, if any, upon
            thirty (30) days' prior written notice, provided that the average
            closing price or bid price of the Common Stock, as reported by the
            principal exchange on which the Common Stock is traded, NASDAQ, the
            OTC Bulletin Board or the National Quotation Bureau Incorporated, as
            the case may be, equals or exceeds One Hundred Fifty Percent (150%)
            of the then applicable Class B Warrant Exercise Price for ten (10)
            consecutive trading days prior to the date of the notice of
            redemption.

      (k)   "Commission" shall mean the United States Securities and Exchange
            Commission or any other federal agency at the time administering the
            Securities Act.

      (l)   "Common Stock" shall mean stock of the Company of any class or
            series, whether now or hereafter authorized, which has the right to
            participate in the distribution of earnings and assets of the
            Company without limit as to amount or percentage, which at the date
            hereof is the __________ authorized shares of Common Stock, par
            value $0.01 per share, of the Company.

      (m)   "Company" shall mean Biodelivery Sciences International, Inc., a
            [Delaware corporation].

      (n)   "Effective Date" shall mean the date a registration statement
            relating to the Common Stock underlying the Warrants is declared
            effective by the Securities and Exchange Commission.

      (o)   "Exchange Act" shall mean the Securities Exchange Act of 1934, as
            amended, or any similar federal statute, and the rules and
            regulations of the Commission thereunder, all as the same shall be
            in effect at the time.

      (p)   "Exercise Date" shall have the meaning ascribed thereto in Section 4
            herein.

      (q)   "Exercise Period" with respect to Class A Warrants and Class B
            Warrants shall mean the period commencing on their respective First
            Exercise Date and terminating on their respective Expiration Date.

      (r)   "Expiration Date" shall mean 5:00 p.m. (New York time) on the date
            which is the earlier of the fourth anniversary of the First Exercise
            Date or the last business day immediately preceding the Class A
            Redemption Date or Class B Redemption Date, as applicable, provided
            however, that if any such date shall be in the State of New York a
            holiday or a day on which banks are authorized to close, then 5:00
            p.m. (New York time) on the next following day which in the State of
            New York is not a holiday

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            or a day on which banks are authorized to close, after which dates
            the respective Class A Warrants or Class B Warrants, as applicable,
            may not be exercised.

      (s)   "First Exercise Date" with respect to the Class A Warrants and the
            Class B Warrants shall mean the first anniversary of the Effective
            Date.

      (t)   "Redemption Date" shall mean Class A Redemption Date or Class B
            Redemption Date, as applicable.

      (u)   "Redemption Price" shall mean the price at which the Company may, at
            its option, redeem the Class A Warrants and/or the Class B Warrants,
            in accordance with the terms hereof, which price shall be $0.10 per
            Warrant.

      (v)   "Registered Holders" shall mean the persons in whose names any Class
            A Warrant Certificates or Class B Warrant Certificates shall be
            registered on the books maintained by the Warrant Agent pursuant to
            Section 6 herein.

      (w)   "Registration Statement" shall have the meaning ascribed thereto in
            the Preamble.

      (x)   "Restricted Stock" shall mean the Warrant Stock, excluding shares of
            Warrant Stock which have been (i) registered under the Securities
            Act pursuant to an effective registration statement filed thereunder
            and disposed of in accordance with the registration statement
            covering them, or (ii) publicly sold pursuant to Rule 144 under the
            Securities Act.

      (y)   "Securities Act" shall mean the Securities Act of 1933, as amended,
            or any similar federal statute, and the rules and regulations of the
            Commission thereunder, all as the same shall be in effect at the
            time.

      (z)   "Representative" shall mean Roan/Meyers Associates, L.P., a New York
            limited partnership.

      (aa)  "Underwriter's Purchase Option" shall have the meaning ascribed
            thereto in the Preamble.

      (bb)  "Underwriting Agreement" shall have the meaning ascribed thereto in
            the Preamble.

      (cc)  "Underwriters" shall be the underwriters listed in the Registration
            Statement in the Underwriter's section.

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      (dd)  "Units" shall have the meaning ascribed thereto in the Preamble.

      (ee)  "Warrant Agent" shall mean American Stock Transfer and Trust Company
            (or its successor), as agent for the issuance, registration,
            transfer, and exchange of the Class A Warrant Certificates, the
            Class B Warrant Certificates, exercise of the Class A Warrants,
            exercise of the Class B Warrants and, thereupon, the issuance of the
            Warrant Stock.

      (ff)  "Warrant Certificates" shall mean, collectively, Class A Warrant
            Certificates and Class B Warrant Certificates.

      (gg)  "Warrant Stock" shall mean and include (i) up to 2,500,000 shares of
            authorized and unissued Common Stock initially reserved for issuance
            upon exercise of the Class A Warrants; (ii) up to 2,500,000 shares
            of authorized and unissued Common Stock initially reserved for
            issuance upon exercise of the Class B Warrants; and (iii) any
            additional shares of Common Stock or other property which may
            hereafter become issuable or deliverable upon exercise of the
            Warrants pursuant to Section 8 herein.

      (hh)  "Warrants" shall mean, collectively, the Class Warrants and the
            Class B Warrants.

      SECTION 2. WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES. Each Class A
Warrant, when signed by the Chairman or President or any Vice President and by
the Secretary, Treasurer or Assistant Secretary of the Company and
counter-signed by the Warrant Agent, shall initially entitle the Registered
Holder of the Class A Warrant Certificate representing such Class A Warrant to
purchase one (1) share of Common Stock upon the exercise thereof and payment of
the Class A Warrant Exercise Price therefor, subject to modification and
adjustment as provided in Section 8 herein and redemption as provided in Section
9 herein. Each Class B Warrant, when signed by the Chairman or President or any
Vice President and by the Secretary, Treasurer or Assistant Secretary of the
Company and counter-signed by the Warrant Agent, shall initially entitle the
Registered Holder of the Class B Warrant Certificate representing such Class B
Warrant to purchase one (1) share of Common Stock upon the exercise thereof and
payment of the Class B Warrant Exercise Price therefor, subject to modification
and adjustment as provided in Section 8 herein and redemption as provided in
Section 9 herein.

      Upon execution of this Agreement, Warrant Certificates representing the
number of Warrants sold pursuant to the Underwriting Agreement shall be executed
by the Company and delivered to the Warrant Agent. Upon written order of the
Company signed by its President or Chairman or a Vice President and by its
Secretary or an Assistant Secretary, the Warrant Certificates shall be
countersigned, issued and delivered by the Warrant Agent as part of the Units.

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      From time to time up to the Expiration Date, the Warrant Agent shall
countersign and deliver stock certificates in required whole number
denominations representing up to an aggregate of 4,600,000 shares of Common
Stock, subject to adjustment as described herein, upon the exercise of Warrants
in accordance with this Agreement.

      From time to time, up to the Expiration Date of the Warrants, the Warrant
Agent shall countersign and deliver Warrant Certificates in required whole
number denominations to the persons entitled thereto in connection with any
transfer or exchange permitted under this Agreement; provided that no Warrant
Certificates shall be issued except (i) those initially issued hereunder, (ii)
those issued on or after the First Exercise Date upon the exercise of fewer than
all Warrants represented by any Warrant Certificate to evidence any unexercised
Warrants held by the exercising Registered Holder, (iii) those issued upon any
transfer or exchange pursuant to Section 6 herein; (iv) those issued in
replacement of lost, stolen, destroyed or mutilated Warrant Certificates
pursuant to Section 7 herein; (v) those issued pursuant to the Representative's
Purchase Option; and (vi) at the option of the Company, in such form as may be
approved by its Board of Directors, to reflect any adjustment or change in the
Class A Warrant Exercise Price and/or Class B Warrant Exercise Price, the number
of shares of Common Stock purchasable upon exercise of the Warrants or the
Redemption Price therefor pursuant to Section 8 herein.

      Pursuant to the terms of the Representative's Purchase Option, the
Representative may purchase up to 200,000 Units, which include up to 200,000
Class A Warrants and up to 200,000 Class B Warrants. The Representative's
Purchase Option (i) shall be exercisable for a four-year period commencing on
the First Exercisable Date, (ii) shall not expire until the fourth anniversary
of the First Exercisable Date, (iii) shall be exercisable at exercise prices
equal to One Hundred Twenty Percent (120%) of the price of the Units, as
applicable, and (iv) shall not be subject to redemption by the Company.
Notwithstanding anything herein to the contrary, the Representative's Purchase
Option shall not be transferable or assignable without the prior written consent
of the Company for a period of one (1) year commencing the date hereof and then
only to officers, directors and employees of the Representative.

      SECTION 3. FORM AND EXECUTION OF THE WARRANT CERTIFICATES. The Class A
Warrant Certificates and the Class B Warrant Certificates shall be substantially
in the form annexed hereto, respectively, as Exhibit A and Exhibit B (the
provisions of which are hereby incorporated herein) and may have such letters,
numbers, or other marks of identification or designation and such legends,
summaries, or endorsements printed, lithographed, or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any law, or with any rule
or regulation made pursuant thereto, or with any rule or regulation of any stock
exchange on which the Warrants may be listed, or to conform to custom or usage.
The Warrant Certificates shall bear the dates of issuance thereof, whether upon
initial issuance, transfer, or exchange or in lieu of mutilated, lost, stolen,
or destroyed Warrant Certificates.

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The Warrant Certificates initially shall be issued only in a number equal to the
number of certificates for shares of Common Stock issuable upon exercise
thereof. Such Class A Warrant Certificates and Class B Warrant Certificates
shall, respectively, be numbered serially with the letters "W-A" on Class A
Warrants of all denominations and the letters "W-B" on Class B Warrants of all
denominations.

      The Warrant Certificates shall be executed on behalf of the Company by its
Chairman, President or any Vice President and by its Secretary or an Assistant
Secretary or Treasurer, by manual or facsimile signatures printed thereon, and
shall have imprinted thereon a facsimile of the Company's seal. The Warrant
Certificates shall be manually countersigned by the Warrant Agent and shall not
be valid for any purpose unless so countersigned. If any officer of the Company
who shall have signed any of the Warrant Certificates shall cease to be such
officer of the Company before the date of issuance of the Warrant Certificates
or before countersignature by the Warrant Agent and issue and delivery thereof,
such Warrant Certificates nevertheless may be countersigned by the Warrant
Agent, issued, and delivered with the same force and effect as though the person
who signed such Warrant Certificates had not ceased to be such officer of the
Company.

      SECTION 4. EXERCISE OF WARRANTS. Each Warrant may be exercised at any time
during its Exercise Period, but not after its Expiration Date, upon the terms
and subject to the conditions set forth herein and in the Warrant Certificate
representing such Warrant. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of the surrender for
exercise (the "Exercise Date") of the Warrant Certificate representing such
Warrant, with the exercise form thereon duly executed by the Registered Holder
thereof or his attorney duly authorized in writing, with signatures guaranteed
by a member firm of a national securities exchange, a commercial bank (not a
savings bank or a savings and loan association) or trust company located in the
United States or a member firm of the National Association of Securities
Dealers, Inc., together with payment made payable and sent to the Warrant Agent
for the account of the Company, in cash or by official bank, certified, or
cashier's check, or by money order or wire transfer of good funds, of an amount
in lawful money of the United States of America equal to the Class A Warrant
Exercise Price and/or Class B Warrant Exercise Price, as applicable, plus all
applicable transfer fees or taxes, and the person entitled to receive the
Warrant Stock deliverable upon such exercise shall be treated for all purposes
as the holder thereof as of the close of business on the Exercise Date,
irrespective of the date of issuance or delivery of such certificate for Warrant
Stock; provided, however, that if, at the date of the surrender of such Warrants
and the payment of the Class A Warrant Exercise Price and/or Class B Warrant
Exercise Price, the transfer books for the Warrant Stock or other class of stock
purchasable upon the exercise of such Warrants shall be closed, the certificates
for the Warrant Stock or for shares of such other class of stock in respect of
which such Warrants are then exercised shall be issuable as of the date on which
such books shall next be opened (whether before or after the Expiration Date)
and until such date the Company shall be under no duty to deliver any
certificate for such Warrant Stock or for shares of such other class of stock;
provided further, that

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the transfer books of record, unless otherwise required by law, shall not be
closed at any time for a period longer than 20 days. Except as otherwise
provided herein, no Warrants presented for exercise after their Expiration Date
will be accepted for exercise and all unexercised Warrants shall be void at
their Expiration Date and the rights of the holders thereof shall cease at such
time. No alternative, conditional, or contingent exercises or over-subscriptions
shall be accepted.

      Any transfer fees and taxes with respect to such exercises shall be paid
by the Company. Other expenses incurred by the Warrant Agent, including expenses
incurred to establish new accounts, to deliver share certificates, and to
reconcile accounts, shall be paid by the Company.

      If the number of shares of Common Stock purchasable upon the exercise of
each Warrant is adjusted pursuant to Section 8 herein, the Company shall
nevertheless not be required to issue fractions of shares upon exercise of the
Warrants or otherwise, or to distribute certificates that evidence fractional
shares. With respect to any fraction of a share called for upon any exercise
hereof, the Company shall pay to the Registered Holder an amount in cash equal
to such fraction multiplied by the current market value of such fractional
share, determined as follows: (1) if the Common Stock is listed on a National
Securities Exchange or admitted to unlisted trading privileges on such exchange
or listed for trading on the NASDAQ Quotation System or the OTC Bulletin Board,
the current value shall be the last reported sale price of the Common Stock on
such exchange on the last business day prior to the date of exercise of the
Warrant or if no such sale is made on such day, the average of the closing bid
and asked prices for such day on such exchange; or (2) if the Common Stock is
not listed or admitted to unlisted trading privileges, the current value shall
be the mean of the last reported bid and asked prices reported by the National
Quotation Bureau, Inc. reported on the last business day prior to the date of
the exercise of the Warrant; or (3) if the Common Stock is not so listed or
admitted to unlisted trading privileges and bid and asked prices are not so
reported, the current value shall be an amount determined in such reasonable
manner and sold in good faith as may be prescribed by the Board of Directors of
the Company.

      As soon as practicable on or after the Exercise Date and in no event more
than three business days thereafter, the Warrant Agent, on behalf of the
Company, shall cause to be issued to the person or persons entitled to receive
the same, a certificate or certificates for the Warrant Stock, and the Warrant
Agent shall deliver the same to the person or persons entitled thereto. No
adjustment shall be made in respect of dividends on Warrant Stock delivered upon
exercise of any Warrant.

      If on or before the Exercise Date of the Warrants, and in no event more
than three business days thereafter the Warrant Agent receives the full exercise
price for any Warrants together with a letter, telegraphic, or facsimile
guaranty from a commercial bank or trust company located in the United States, a
member firm of a national securities exchange, or a registered broker-dealer,
setting forth the Registered Holder's name, the number of Warrants held by him,
and the number of shares of Common Stock he wishes to purchase pursuant to
exercise of the Warrants, and stating that the

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Warrant Certificate representing such Warrants will be delivered to the Warrant
Agent within eight (8) trading days after the date of such letter, telegraphic,
or facsimile guaranty, the Warrants will be accepted for exercise subject to
receipt of the duly executed Warrant Certificate within eight (8) trading days.

      The Company reserves the absolute right to waive any defect or
irregularity, permit a defect or irregularity to be cured or corrected within
such time as it may determine, or reject any exercise of a Warrant which it
determines to have been made improperly or the acceptance of which would, in the
opinion of the Company's counsel, be unlawful. Any irregularities in connection
with presentments for exercise must be cured within such time as the Company
shall determine in its sole and absolute discretion unless waived. The Company
shall notify the Warrant Agent in writing of its waiver of any defect or
irregularity in presentment, its permission to cure or correct such defect or
irregularity and any subsequent cure or correction thereof. Neither the Company
nor the Warrant Agent shall be under any duty to give notification of defects in
presentments for exercise or incur any liability for failure to give such
notification. Any presentments for exercise as to which defects or
irregularities have not been cured or waived and as to which notice of cure or
waiver has not been given to the Warrant Agent as provided herein will be
returned to the Registered Holder by the Warrant Agent, as soon as practicable,
together with all funds held for the Registered Holder's account. No interest
shall be paid on any such funds so returned.

      Subject to the foregoing, once a Registered Holder has presented his
Warrant Certificate and payment for exercise, the exercise is irrevocable.

      If less than all of the Warrants represented by a Warrant Certificate are
exercised, the Warrant Agent shall execute and mail, by first-class mail, within
three (3) business days of the date of exercise, to the Holder of such Warrant
Certificate, or such other person as shall be designated in the election to
purchase, a new Warrant Certificate representing the number of full Warrants not
exercised.

      Upon the exercise, or conversion as provided for in Section 8 herein, of
any Warrant, the Warrant Agent shall promptly deposit the payment therefor into
an interest bearing escrow account established by mutual agreement of the
Company and the Warrant Agent at a federally insured commercial bank. All funds
from the exercise deposited in the escrow account together with interest
thereon, less expenses to be paid by the Company, will be disbursed to the
Company on a weekly basis once determined by the Warrant Agent to be collected
funds. An accounting relating to the number of Warrants exercised and the net
amount of exercise funds remitted will be made by the Warrant Agent to the
Company with each payment to the Company of exercise funds, which will serve as
an interim accounting during the period during which the Warrants may be
exercised. A complete accounting concerning all exercises of Warrants will be
made to the Company at the completion of the period during which the Warrants
may be exercised.

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      SECTION 5. RESERVATION OF SHARES; LISTING; PAYMENT OF TAXES; ETC.

      The Company covenants that it will at all times reserve and keep available
out of its authorized Common Stock, solely for the purpose of issuance upon
exercise of the Warrants as herein provided, such number of shares of Common
Stock as shall then be issuable upon the exercise of all outstanding Warrants.
The Company covenants that all shares of Warrant Stock which shall be so
issuable shall be duly authorized and validly issued and upon full payment
therefor be fully paid and non-assessable and free from all pre-emptive rights,
taxes, claims, liens, encumbrances and charges.

      No Warrants shall be issued to any Registered Holder in any state in which
such exercise would be unlawful.

      The Company shall pay all documentary, stamp, or similar taxes and other
governmental charges that may be imposed with respect of the issuance of the
Warrants, or the issuance, transfer, or delivery of any Warrant Stock upon
exercise of the Warrants; provided, however, that if a certificate for Warrant
Stock is to be delivered in a name other than the name of the Registered Holder
of the Warrant Certificate representing any Warrant being exercised, then no
such delivery shall be made unless the person requesting the same has paid to
the Warrant Agent the amount of any such taxes or charges incident thereto, if
any. Any transfer fees payable to the Warrant Agent for the transfer, exchange,
or exercise of any certificate issued pursuant to this Agreement shall be paid
by the presenter of such certificate.

      The Warrant Agent is hereby irrevocably authorized to requisition the
Company's Transfer Agent from time to time for certificates representing shares
of Common Stock required upon exercise of the Warrants, and the Company will
authorize the Transfer Agent to comply with all such proper requisitions. The
Company will file with the Warrant Agent a statement setting forth the name and
address of the Transfer Agent of the Company for shares of Common Stock issuable
upon exercise of the Warrants.

      SECTION 6. EXCHANGE AND REGISTRATION OR TRANSFER OF WARRANTS. The Warrant
Certificates may be exchanged for other Warrant Certificates representing an
equal aggregate number of the same series of Warrants or may be transferred in
whole or in part. Warrant Certificates to be so exchanged shall be surrendered
to the Warrant Agent at its Business Office, and the Company shall execute and
the Warrant Agent shall countersign, issue, and deliver in exchange therefor the
Warrant Certificates which the Registered Holder making the exchange shall be
entitled to receive.

      The Warrant Agent shall keep, at its Business Office, books in which,
subject to such reasonable regulations as it may prescribe, the Warrant Agent
shall register the Warrants and the

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transfer thereof. Upon due presentment for registration or transfer of any
Warrant Certificate at such office, the Company shall execute and the Warrant
Agent shall issue and deliver to the transferee a new Warrant Certificate
representing an equal aggregate number of Warrants.

      All Warrant Certificates presented for registration or transfer or for
exchange or exercise, and the subscription form on the reverse thereof, shall be
duly endorsed or be accompanied by a written instrument of transfer and
subscription in form satisfactory to the Company and the Warrant Agent duly
executed by the Registered Holder thereof or his attorney duly authorized in
writing.

      A transfer fee shall be charged to the transferee for any exchange or
registration or transfer of a Warrant Certificate. In addition, the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.

      All Warrant Certificates surrendered for transfer or exercise, or for
exchange in the case of mutilated Warrant Certificates, shall be promptly
canceled by the Warrant Agent and thereafter retained by the Warrant Agent for
the duration of the agency. From time to time at such times as the Company may
reasonably request, the Warrant Agent shall provide the Company with a list of
the Registered Holders of the Warrants.

      Prior to due presentment for registration or transfer thereof, the Company
and the Warrant Agent may deem and treat the Registered Holder of any Warrant
Certificate as the absolute owner thereof and of each Warrant represented
thereby (notwithstanding any notations of ownership or writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes, and shall
not be affected by any notice to the contrary.

      SECTION 7. LOSS OR MUTILATION. Upon receipt by the Company and the Warrant
Agent of evidence satisfactory to them of the ownership of and the loss, theft,
destruction, or mutilation of any Warrant Certificate and, in the case of loss,
theft, or destruction, an indemnity satisfactory to them, or, in the case of
mutilation, upon surrender and cancellation thereof, the Company shall execute
and the Warrant Agent shall countersign and deliver in lieu thereof a new
Warrant Certificate representing an equal aggregate number of Warrants.
Applicants for a substitute Warrant Certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.

      SECTION 8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES OF COMMON
STOCK OR WARRANTS.

      (a) Subject to the exceptions referred to in Section 8(g) below, in the
event the Company shall, at any time or from time to time after the date hereof,
sell any shares of Common Stock for a consideration per share less than the
current fair market value of the Common Stock on the date of

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the sale or issue any shares of Common Stock as a stock dividend to the holders
of Common Stock, or subdivide or combine the outstanding shares of Common Stock
into a greater or lesser number of shares (any such sale, issuance, subdivision
or combination being herein called a "Change of Shares"), then, and thereafter
upon each further Change of Shares, the Exercise Price in effect immediately
prior to such Change of Shares shall be changed to a price (including any
applicable fraction of a cent) determined by multiplying the Exercise Price in
effect immediately prior thereto by a fraction, the numerator of which shall be
the sum of the number of shares of Common Stock outstanding immediately prior to
the issuance of such additional shares and the number of shares of Common Stock
which the aggregate consideration received (determined as provided in subsection
8(f)(F) below) for the issuance of such additional shares would purchase at such
current market price per share of Common Stock, and the denominator of which
shall be the sum of the number of shares of Common Stock outstanding immediately
after the issuance of such additional shares. Such adjustment shall be made
successively whenever such an issuance is made.

      Upon each adjustment of the Exercise Price pursuant to this Section 8, the
total number of shares of Common Stock purchasable upon the exercise of each
Warrant shall (subject to the provisions contained in Section 8(b) hereof) be
such number of shares (calculated to the nearest tenth) purchasable at the
Exercise Price immediately prior to such adjustment multiplied by a fraction,
the numerator of which shall be the Exercise Price in effect immediately prior
to such adjustment and the denominator of which shall be the Exercise Price in
effect immediately after such adjustment.

      (b) The Company may elect, upon any adjustment of the Exercise Price
hereunder, to adjust the number of Warrants outstanding, in lieu of the
adjustment in the number of shares of Common Stock purchasable upon the exercise
of each Warrant as hereinabove provided, so that each Warrant outstanding after
such adjustment shall represent the right to purchase one share of Common Stock.
Each Warrant held of record prior to such adjustment of the number of Warrants
shall become that number of Warrants (calculated to the nearest tenth)
determined by multiplying the number one by a fraction, the numerator of which
shall be the Exercise Price in effect immediately prior to such adjustment and
the denominator of which shall be the Exercise Price in effect immediately after
such adjustment. Upon each adjustment of the number of Warrants pursuant to this
Section 8, the Company shall, as promptly as practicable, cause to be
distributed to each Registered Holder of Warrant Certificates on the date of
such adjustment Warrant Certificates evidencing, subject to not issuing
fractional shares, the number of additional Warrants to which such Registered
Holder shall be entitled as a result of such adjustment or, at the option of the
Company, cause to be distributed to such Registered Holder in substitution and
replacement for the Warrant Certificates held by him prior to the date of
adjustment (and upon surrender thereof, if required by the Company) new Warrant
Certificates evidencing the number of Warrants to which such Registered Holder
shall be entitled after such adjustment.

      (c) In case of any reclassification, capital reorganization or other
change of outstanding

                                       12
<PAGE>
shares of Common Stock, or in case of any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in which
the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock), or in case of any sale or conveyance to another corporation of
the property of the Company as, or substantially as, an entirety (other than a
sale/leaseback, mortgage or other financing transaction), the Company shall
cause effective provision to be made so that each holder of a Warrant then
outstanding shall have the right thereafter, by exercising such Warrant, to
purchase the kind and number of shares of stock or other securities or property
(including cash) receivable upon such reclassification, capital reorganization
or other change, consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock that might have been purchased upon exercise of
such Warrant immediately prior to such reclassification, capital reorganization
or other change, consolidation, merger, sale or conveyance. Any such provision
shall include provision for adjustments that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 8. The
foregoing provisions shall similarly apply to successive reclassifications,
capital reorganizations and other changes of outstanding shares of Common Stock
and to successive consolidations, mergers, sales or conveyances.

      (d) Irrespective of any adjustments or changes in the Exercise Price or
the number of shares of Common Stock purchasable upon exercise of the Warrants,
the Warrant Certificates theretofore and thereafter issued shall, unless the
Company shall exercise its option to issue new Warrant Certificates, continue to
express the Exercise Price per share, the number of shares purchasable
thereunder and the Redemption Price therefor as the Exercise Price per share,
and the number of shares purchasable and the Redemption Price therefore were
expressed in the Warrant Certificates when the same were originally issued.

      (e) After each adjustment of the Exercise Price pursuant to this Section
8, the Company will promptly prepare a certificate signed by the Chairman or
President, and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, of the Company setting forth: (i) the Exercise Price as so
adjusted, (ii) the number of shares of Common Stock purchasable upon exercise of
each Warrant after such adjustment, and, if the Company shall have elected to
adjust the number of Warrants, the number of Warrants to which the Registered
Holder of each Warrant shall then be entitled, and the adjustment in Redemption
Price resulting therefrom, and (iii) a brief statement of the facts accounting
for such adjustment. The Company will promptly file such certificate with the
Warrant Agent and cause a brief summary thereof to be sent by ordinary first
class mail to the Representative and to each Registered Holder of Warrants at
his last address as it shall appear on the registry books of the Warrant Agent.
No failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity thereof except as to the holder to whom the Company
failed to mail such notice, or except as to the holder whose notice was
defective. The affidavit of an officer of the Warrant Agent or the Secretary or
an Assistant Secretary of the Company that such notice has been mailed shall, in
the absence of fraud, be prima facie evidence of the facts stated therein.

                                       13
<PAGE>
      (f) For purposes of Section 8(a) and 8(b) hereof, the following provisions
(A) to (F) shall also be applicable:

            (A) The number of shares of Common Stock outstanding at any given
time shall include shares of Common Stock owned or held by or for the account of
the Company and the sale or issuance of such treasury shares or the distribution
of any such treasury shares shall not be considered a Change of Shares for
purposes of said sections.

            (B) No adjustment of the Exercise Price shall be made unless such
adjustment would require an increase or decrease of at least $.25 in such price;
provided that any adjustments which by reason of this clause (B) are not
required to be made shall be carried forward and shall be made at the time of
and together with the next subsequent adjustment which, together with any
adjustment(s) so carried forward, shall require an increase or decrease of at
least $.25 in the Exercise Price then in effect hereunder.

            (C) In case of (1) the sale by the Company for cash of any rights or
warrants to subscribe for or purchase, or any options for the purchase of,
Common Stock or any securities convertible into or exchangeable for Common Stock
without the payment of any further consideration other than cash, if any (such
convertible or exchangeable securities being herein called "Convertible
Securities"), or (2) the issuance by the Company, without the receipt by the
Company of any consideration therefor, of any rights or warrants to subscribe
for or purchase, or any options for the purchase of, Common Stock or Convertible
Securities, in each case, if (and only if) the consideration payable to the
Company upon the exercise of such rights, warrants or options shall consist of
cash, whether or not such rights, warrants or options, or the right to convert
or exchange such Convertible Securities, are immediately exercisable, and the
price per share for which Common Stock is issuable upon the exercise of such
rights, warrants or options or upon the conversion or exchange of such
Convertible Securities (determined by dividing (x) the minimum aggregate
consideration payable to the Company upon the exercise of such rights, warrants
or options, plus the consideration received by the Company for the issuance or
sale of such rights, warrants or options, plus, in the case of such Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
other than such Convertible Securities, payable upon the conversion or exchange
thereof, by (y) the total maximum number of shares of Common Stock issuable upon
the exercise of such rights, warrants or options or upon the conversion or
exchange of such Convertible Securities issuable upon the exercise of such
rights, warrants or options) is less than the fair market value of the Common
Stock on the date of the issuance or sale of such rights, warrants or options,
then the total maximum number of shares of Common Stock issuable upon the
exercise of such rights, warrants or options or upon the conversion or exchange
of such Convertible Securities (as of the date of the issuance or sale of such
rights, warrants or options) shall be deemed to be outstanding shares of Common
Stock for purposes of Sections 8(a) and 8(b) hereof and shall be deemed to have

                                       14
<PAGE>
been sold for cash in an amount equal to such price per share.

            (D) In case of the sale by the Company for cash of any Convertible
Securities, whether or not the right of conversion or exchange thereunder is
immediately exercisable, and the price per share for which Common Stock is
issuable upon the conversion or exchange of such Convertible Securities
(determined by dividing (x) the total amount of consideration received by the
Company for the sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, other than such Convertible
Securities, payable upon the conversion or exchange thereof, by (y) the total
maximum number of shares of Common Stock issuable upon the conversion or
exchange of such Convertible Securities) is less than the fair market value or
the Common Stock on the date of the sale of such Convertible Securities, then
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of such Convertible Securities (as of the date of the sale of such
Convertible Securities) shall be deemed to be outstanding shares of Common Stock
for purposes of Sections 8(a) and 8(b) hereof and shall be deemed to have been
sold for cash in an amount equal to such price per share.

            (E) If the exercise or Exercise Price provided for in any right,
warrant or option referred to in (C) above, or the rate at which any Convertible
Securities referred to in (C) or (D) above are convertible into or exchangeable
for Common Stock, shall change at any time (other than under or by reason of
provisions designed to protect against dilution), the Exercise Price then in
effect hereunder shall forthwith be readjusted to such Exercise Price as would
have obtained (1) had the adjustments made upon the issuance or sale of such
rights, warrants, options or Convertible Securities been made upon the basis of
the issuance of only the number of shares of Common Stock theretofore actually
delivered (and the total consideration received therefor) upon the exercise of
such rights, warrants or options or upon the conversion or exchange of such
Convertible Securities, (2) had adjustments been made on the basis of the
Exercise Price as adjusted under clause (1) for all transactions (which would
have affected such adjusted Exercise Price) made after the issuance or sale of
such rights, warrants, options or Convertible Securities, and (3) had any such
rights, warrants, options or Convertible Securities then still outstanding been
originally issued or sold at the time of such change. On the expiration of any
such right, warrant or option or the termination of any such right to convert or
exchange any such Convertible Securities, the Exercise Price then in effect
hereunder shall forthwith be readjusted to such Exercise Price as would have
obtained (a) had the adjustments made upon the issuance or sale of such rights,
warrants, options or Convertible Securities been made upon the basis of the
issuance of only the number of shares of Common Stock theretofore actually
delivered (and the total consideration received therefor) upon the exercise of
such rights, warrants or options or upon the conversion or exchange of such
Convertible Securities and (b) had adjustments been made on the basis of the
Exercise Price as adjusted under clause (a) for all transactions (which would
have affected such adjusted Exercise Price) made after the issuance or sale of
such rights, warrants, options or Convertible Securities.

                                       15
<PAGE>
            (F) In case of the sale for cash of any shares of Common Stock, any
Convertible Securities, any rights or warrants to subscribe for or purchase, or
any options for the purchase of, Common Stock or Convertible Securities, the
consideration received by the Company therefore shall be deemed to be the gross
sales price therefor without deducting therefrom any expense paid or incurred by
the Company or any underwriting discounts or commissions or concessions paid or
allowed by the Company in connection therewith.

            (G) No adjustment to the Exercise Price of the Warrants or to the
number of shares of Common Stock purchasable upon the exercise of each Warrant
will be made, however,

                  (i) upon the exercise of any of the options presently
outstanding under the Company's Stock Option Plan (the "Plan"); or

                  (ii) upon the grant or exercise or any other options which may
hereafter be granted or exercised under the Plan or under any other employee
benefit plan of the Company; or

                  (iii) upon the sale or exercise of the Warrants, including
without limitation the sale or exercise of any of the Warrants comprising the
Representative's Purchase Option; or

                  (iv) upon the sale of any shares of Common Stock in this
public offering, including, without limitation, shares sold upon the exercise of
any overallotment option granted to the Underwriters in connection with such
offering; or

                  (v) upon the issuance or sale of Common Stock or Convertible
Securities upon the exercise of the Class C and Class D Warrants or any rights
or warrants to subscribe for or purchase, or any options for the purchase of,
Common Stock or Convertible Securities, whether or not such rights, warrants or
options were outstanding on the date of the original sale of the Warrants or
were thereafter issued or sold; or

                  (vi) upon the issuance or sale of Common Stock upon conversion
or exchange of any Convertible Securities, whether or not any adjustment in the
Exercise Price was made or required to be made upon the issuance or sale of such
Convertible Securities and whether or not such Convertible Securities were
outstanding on the date of the original sale of the Warrants or were thereafter
issued or sold; or

                  (vii) upon any amendment to or change in the terms of any
rights or warrants to subscribe for or purchase, or options for the purchase of,
Common Stock or Convertible Securities or in the terms of any Convertible
Securities, including, but not limited to, any extension of any expiration date
of any such right, warrant or option, any change in any exercise or Exercise
Price provided for in any such right, warrant or option, any extension of any
date through which any

                                       16
<PAGE>
Convertible Securities are convertible into or exchangeable for Common Stock or
any change in the rate at which any Convertible Securities are convertible into
or exchangeable for Common Stock (other than rights, warrants, options or
Convertible Securities issued or sold after the close of business on the date of
the original issuance of the Units (i) for which an adjustment in the Exercise
Price then in effect was theretofore made or required to be made, upon the
issuance or sale thereof, or (ii) for which such an adjustment would have been
required had the exercise or Exercise Price of such rights, warrants or options
at the time of the issuance or sale thereof or the rate of conversion or
exchange of such Convertible Securities, at the time of the sale of such
Convertible Securities, or the issuance or sale of rights or warrants to
subscribe for or purchase, or options for the purchase of, such Convertible
Securities, been the price or rate as changed, in which case the provisions of
Section 8(f)(E) hereof shall be applicable if, but only if, the exercise or
Exercise Price thereof, as changed, or the rate of conversion or exchange
thereof, as changed, consists of cash or requires the payment of additional
consideration, if any, consisting of cash and the Company did not receive any
consideration other than cash, if any, in connection with such change).

            (H) As used in this Section 8, the term "Common Stock" shall mean
and include the Company's Common Stock authorized on the date of the original
issue of the Units and shall also include any capital stock of any class of the
Company thereafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary liquidation,
dissolution or winding up of the Company; provided, however, that the shares
issuable upon exercise of the Warrants shall include only shares of such class
designated in the Company's Certificate of Incorporation as Common Stock on the
date of the original issue of the Units or (i), in the case of any
reclassification, change, consolidation, merger, sale or conveyance of the
character referred to in Section 8(c) hereof, the stock, securities or property
provided for in such section or (ii), in the case of any reclassification or
change in the outstanding shares of Common Stock issuable upon exercise of the
Warrants as a result of a subdivision or combination or consisting or a change
in par value, or from par value to no par value, or from no par value to par
value, such shares of Common Stock as so reclassified or changed.

            (I) Any determination as to whether an adjustment in the Exercise
Price in effect hereunder is required pursuant to Section 8, or as to the amount
of any such adjustment, if required, shall be binding upon the holders of the
Warrants and the Company if made in good faith by the Board of Directors of the
Company.

            (J) If and whenever the Company shall grant to the holders of Common
Stock, as such, rights or warrants to subscribe for or to purchase, or any
options for the purchase of, Common Stock or securities convertible into or
exchangeable for or carrying a right, warrant or option to purchase Common
Stock, the Company shall concurrently therewith grant to each of the then

                                       17
<PAGE>
Registered Holders of the Warrants all of such rights, warrants or options to
which each such holder would have been entitled if, on the date of determination
of stockholders entitled to the rights, warrants or options being granted by the
Company, such holder were the holder of record of the number of whole shares of
Common Stock then issuable upon exercise (assuming, for purposes of this section
8(j), that exercise of Warrants is permissable during periods prior to the First
Exercise Date) of his Warrants. Such grant by the Company to the holders of the
Warrants shall be in lieu of any adjustment which otherwise might be called for
pursuant to this Section 8.

      SECTION 9. REDEMPTION. Provided that adequate provision has been made
therefor and except with respect to the Warrants forming a part of the
Representative's Purchase Option, upon the resolution of its Board of Directors,
the Company may, but shall not be required to, call for redemption all or less
than all of the Class A Warrants and/or the Class B Warrants at any time,
provided: (i) it provides to each Registered Holder of Warrants to be redeemed
thirty (30) days' prior written notice, (ii) if the average closing price or bid
price of the Common Stock, as reported by the principal exchange on which the
Common Stock is traded, NASDAQ, the OTC Bulletin Board or the National Quotation
Bureau Incorporated, as the case may be, equals or exceeds One Hundred Fifty
Percent (150%) of the then applicable Class A Warrant Exercise Price and/or the
Class B Warrant Exercise Price for ten (10) consecutive trading days prior to
the date of delivery of the notice of redemption and (iii) there is then a
current registration statement and prospectus allowing the resale of the Warrant
shares for not less than Ninety (90) days. In such an event, the Company shall
cause to be filed with the Warrant Agent a certified copy of such resolution and
a form of notice of redemption and the Warrant Agent shall mail to each of the
Registered Holders of the Warrant Certificates to be redeemed, by first class
mail, postage prepaid, to his last address appearing on the records of the
Warrant Agent, such written notice of such redemption. Such notice shall
identify the Warrants to be redeemed, state the Redemption Date, the Redemption
Price, and the date upon which the Registered Holder's right to exercise the
Warrants will terminate, and describe the manner in which Warrant Certificates
are to be surrendered. Any notice mailed in the manner provided herein shall be
conclusively presumed to have been duly given whether or not the Registered
Holder receives such notice. Failure to mail notice to any Registered Holder,
shall not affect the validity of any other redemptions for which notice had been
duly provided, only redemptions of persons lacking notice.

      On or before the Redemption Date, each Registered Holder of Warrants to be
redeemed, unless he has previously exercised or will exercise such Warrants on
or before the Redemption Date, shall surrender the Warrant Certificate or
Certificates representing such Warrants to the Warrant Agent. The Warrants to be
redeemed shall be exercisable up to and including the date immediately preceding
the Redemption Date. Upon receipt of such Warrant Certificates, the Warrant
Agent, as

                                       18
<PAGE>
paying agent, shall pay the Redemption Price for such Warrants to the order of
the Registered Holders thereof. Any Warrants so redeemed will be canceled by the
Warrant Agent upon receipt. After the Redemption Date, all rights with respect
to such Warrants shall cease, except for the right to receive the Redemption
Price of the Warrants. If less than all of the Warrants are to be redeemed, the
Warrants to be redeemed shall be chosen, pro rata, from among all Registered
Holders in a proportion to the amount owned by each.

      Upon or prior to the Redemption Date, the Company shall deposit in trust
with the Warrant Agent a sum equal to the Redemption Price of all Warrants
called for redemption, with irrevocable instructions and authority to the
Warrant Agent to pay, on and after the Redemption Date, the Redemption Price to
the Registered Holders upon the surrender of the Warrant Certificates. The
deposit shall constitute full payment of the Warrants to the Registered Holders,
and from and after the date of the deposit, the Warrants shall be deemed to be
no longer outstanding. The balance of the deposit remaining unclaimed at the end
of one year from the Redemption Date shall be released to the Company, after
which the holders of Warrants called for redemption shall be entitled to receive
payment of the redemption price only from the Company.

      SECTION 10. CONCERNING THE WARRANT AGENT. The Warrant Agent acts hereunder
as agent and in a ministerial capacity for the Company, and its duties shall be
determined solely by the provisions hereof. The Warrant Agent shall not, by
issuing and delivering Warrant Certificates or by any other act hereunder, be
deemed to make any representations as to the validity or value or authorization
of the Warrant Certificates or the Warrants represented thereby or of any stock
or other property delivered upon exercise of the Warrants or whether any such
stock is fully paid and non- assessable. The Warrant Agent shall not at any time
be under any duty or responsibility to the holders of the Warrant Certificates
to make or cause to be made any adjustment of the Class A Warrant Exercise Price
or the Class B Warrant Exercise Price provided in this Agreement, or to
determine whether any fact exists which may require any such adjustments, or
with respect to the nature or extent of any such adjustment, when made, or with
respect to the method employed in making the same. It shall not (i) be liable
for any recital or statement of fact contained herein or for any action taken,
suffered, or omitted by it in reliance on any Warrant Certificate or other
document or instrument believed by it in good faith to be genuine and to have
been signed or presented by the proper party or parties, (ii) be responsible for
any failure on the part of the Company to comply with any of its covenants and
obligations contained in this Agreement or the Warrant Certificates, or (iii) be
liable for any act or omission in connection with this Agreement except for its
own negligence or willful misconduct.

      The Warrant Agent may at any time consult with counsel satisfactory to it
(who

                                       19
<PAGE>
may be counsel for the Company) and shall incur no liability or responsibility
for any action taken, suffered, or omitted by it in good faith in accordance
with the opinion or advice of such counsel, other than as specified in clause
(iii) of the preceding paragraph.

      Any notice, statement, instruction, request, direction, order, or demand
of the Company to the Warrant Agent hereunder shall be sufficiently evidenced by
an instrument signed by the President, a Vice President, the Secretary, an
Assistant Secretary, the Treasurer, or an Assistant Treasurer (unless other
evidence in respect thereof is herein specifically prescribed). The Warrant
Agent shall not be liable for any action taken, suffered, or omitted by it in
accordance with such notice, statement, instruction, request, direction, order
or demand reasonably believed by the Warrant Agent to be genuine and to have
been signed, sent or presented by the proper parties or party.

      The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse it for its reasonable expenses
hereunder. The Company further agrees to indemnify the Warrant Agent and save it
harmless against any and all losses, expenses, and liabilities, including
judgments, costs, and reasonable counsel fees, for anything done or omitted by
the Warrant Agent in the execution of its duties and powers hereunder except
losses, expenses, and liabilities arising as a result of the Warrant Agent's own
negligence or willful misconduct.

      The Warrant Agent may resign its duties and be discharged from all further
duties and liabilities hereunder (except liabilities arising as a result of the
Warrant Agent's own negligence or willful misconduct), after giving 30 days'
prior written notice to the Company. At least 15 days prior to the date such
resignation is to become effective, the Warrant Agent shall cause a copy of such
notice of resignation to be mailed, at the Company's expense, to the Registered
Holder of each Warrant Certificate then outstanding. Upon comparable notice to
the Warrant Agent, the Company may remove the Warrant Agent; provided, however,
that in such event the Company shall appoint a new warrant agent (the "New
Warrant Agent"), as hereinafter provided, the removal of the Warrant Agent shall
not be effective until a New Warrant Agent has been appointed and has accepted
such appointment. If the office of Warrant Agent becomes vacant by resignation
or incapacity to act or otherwise, the Company shall appoint in writing a New
Warrant Agent. If the Company shall fail to make an appointment within a period
of 30 days after it has been notified in writing of such resignation or after
such removal by the resigning Warrant Agent, then the Registered Holder of any
Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new warrant agent. Any New Warrant Agent, whether appointed by
the Company or by such a court, shall be a bank or trust company having a
capital and surplus, as shown by its last published report to its stockholders,
of not less that $10,000,000, or shall be a stock transfer company. Any New
Warrant Agent appointed hereunder shall execute, acknowledge and deliver to the
former Warrant Agent last in office, and to the Company, an instrument accepting
such appointment under substantially the same terms and conditions as are
contained herein. After acceptance in writing of such appointment by the New
Warrant Agent is received by the Company, such New Warrant Agent

                                       20
<PAGE>
shall be vested with the same powers, rights, duties, and responsibilities as if
it originally had been named herein as the Warrant Agent, without any further
assurance, conveyance, act, or deed; but if for any reason it shall be necessary
or expedient for the former Warrant Agent to execute and deliver any further
assurance, conveyance, act, or deed the same shall be done at the expense of the
Company and shall be legally and validly executed and delivered by the resigning
Warrant Agent. Not later than the effective date of any such appointment, the
Company shall file notice thereof with the resigning Warrant Agent and shall
forthwith cause a copy of such notice to be mailed to the Registered Holder of
each Warrant Certificate then outstanding. Failure to mail such notice, or any
defect contained therein, shall not affect the legality or validity of the
appointment of the New Warrant Agent.

      Any corporation into which the Warrant Agent or any New Warrant Agent may
be converted or merged, or any corporation resulting from any consolidation to
which the Warrant Agent or any New Warrant Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent
shall be a successor warrant agent under this Agreement without any further act,
provided that such corporation is eligible for appointment as successor to the
Warrant Agent under the provisions of the preceding paragraph. Any such
successor Warrant Agent promptly shall cause notice of its succession as Warrant
Agent to be mailed to the Company and to the Registered Holder of each Warrant
Certificate then outstanding.

      The Warrant Agent, its subsidiaries and affiliates, and any of its or
their officers or directors, may buy and hold or sell the Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effect as though it were not Warrant Agent.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.

      The Company shall have the right, except as limited by law, other
agreement or herein, to purchase or otherwise acquire Warrants at such times, in
such manner and for such consideration as it may deem appropriate.

      SECTION 11. WARRANT HOLDERS NOT DEEMED STOCKHOLDERS. No holder of Warrants
shall, as such, be entitled to vote or to receive dividends or be deemed the
holder of Common Stock that may at any time be issuable upon exercise of such
Warrants for any purpose whatsoever, nor shall anything contained herein be
construed to confer upon the holder of Warrants, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issue or reclassification of stock, change of par value or change of stock to no
par value, consolidation, merger or conveyance or otherwise), or to receive
notice of meetings, or to receive dividends or subscription rights, until such
Holder shall have exercised such Warrants and been issued shares of Common Stock
in accordance with the provisions hereof.

                                       21
<PAGE>
      SECTION 12. RIGHTS OF ACTION. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Warrants, and
any Registered Holder of a Warrant, without consent of the Warrant Agent or of
the holder of any other Warrant, may, in his own behalf and for his own benefit,
enforce against the Company his right to exercise his Warrants for the purchase
of shares of Common Stock in the manner provided in the Warrant Certificate and
this Agreement.

      SECTION 13. AGREEMENT OF WARRANT HOLDERS. Every holder of a Warrant, by
his acceptance thereof, consents and agrees with the Company, the Warrant Agent
and every other holder of a Warrant that:

      (a) The Warrants are transferable only on the registry books of the
Warrant Agent by the Registered Holder thereof in person or by his attorney duly
authorized in writing and only if the Warrant Certificates representing such
Warrants are surrendered at the office of the Warrant Agent, duly endorsed or
accompanied by a proper instrument of transfer satisfactory to the Warrant Agent
and the Company in their sole discretion, together with payment of any
applicable transfer taxes; and

      (b) The Company and the Warrant Agent may deem and treat the person in
whose name the Warrant Certificate is registered as the Registered Holder and as
the absolute, true and lawful owner of the Warrants represented thereby for all
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice or knowledge to the contrary, except as otherwise expressly provided in
Section 7 herein.

      SECTION 14. MODIFICATION OF AGREEMENT. The Warrant Agent, the Underwriter
and the Company by supplemental agreement may make any changes or corrections in
this Agreement, without the consent of any Registered Holder, (i) that they
shall deem appropriate to cure any ambiguity or to correct any defective or
inconsistent provision or manifest mistake or error herein contained; or (ii)
that they may deem necessary or desirable and which shall not adversely affect
the interest of the Registered Holders of Warrant Certificates; provided,
however, that this Agreement shall not otherwise be modified, supplemented, or
altered in any respect except with the consent in writing of the Registered
Holders of Warrant Certificates representing not less than a majority of the
Warrants then outstanding.

      SECTION 15. NOTICES. All notices, requests, consents, and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class, postage prepaid, or delivered to a
telegraph office for transmission:

                  (i) if to the Registered Holder of a Warrant Certificate, at
the address of such Registered Holder as shown on the registry books maintained
by the Warrant Agent; or

                  (ii) if to the Company, at UMDNJ New Jersey Medical School,
185 Orange

                                       22
<PAGE>
Avenue, Administrative Building 4, Newark, New Jersey 07103 to the attention of
the President, or at such other address as may have been furnished to the other
parties hereto in writing by the Company, with a copy to Barry I. Grossman,
Esq., Ellenoff Grossman Schole & Cyruli, LLP, 370 Lexington Avenue, New York,
New York 10017; or

                  (iii) if to the Warrant Agent, at its Business Office; or

                  (iv) if to the Representative, at Roan Meyers Associates,
L.P., 17 State Street, New York, New York 10004, or at such other address as may
have been furnished to the other parties hereto in writing by the Underwriter,
with a copy to ___________________________.

      All written notices required or desired to be given to the Registered
Holders by the Company pursuant to this Agreement shall be effected by the
Company providing to the Warrant Agent a copy of the written notice which the
Company is desirous of giving to the Registered Holders and the Warrant Agent
shall cause same to be delivered to such Registered Holders. The Company hereby
agrees that the Warrant Agent shall not have any liability for, and agrees to
indemnify the Warrant Agent with respect to, any written notice provided by the
Company to the Warrant Agent for delivery to Registered Holders, except with
respect to the Warrant Agent's negligence for failing to deliver said notices.

      SECTION 16. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware.

      SECTION 17. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the Company, the Warrant Agent, the Underwriter, and their
respective successors, and the Registered Holders from time to time of the
Warrant Certificates, or any of them. Nothing in this Agreement is intended or
shall be construed to confer upon any other person any right, remedy, or claim
or to impose upon any other person any duty, liability, or obligation.

      SECTION 18. TERMINATION. This Agreement shall terminate at the close of
business on the Expiration Date of all the Warrants or such earlier date upon
which all Warrants have been exercised, except that the Warrant Agent shall
account to the Company for cash held by it and the indemnity provisions of
Section 10(e) and Section 10 herein shall survive such termination.

      SECTION 19. EXECUTION. This Agreement may be executed in several
counterparts which taken together shall constitute a single document.

      SECTION 20. AVAILABILITY OF THE AGREEMENT. The Warrant Agent shall keep
copies of this Agreement available for inspection by Registered Holders during
normal business hours at its Stock Transfer Department. Copies of this Agreement
may be obtained upon written request addressed to the Company at UMDNJ New
Jersey Medical School, 185 Orange Avenue, Administrative Building 4, Newark, New
Jersey 07103.

                                       23
<PAGE>
      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                     BIODELIVERY SCIENCES INTERNATIONAL, INC.

                                     By:_______________________________________

                                     American Stock Transfer & Trust Co., Inc.

                                     By:______________________________________

                                     ROAN/MEYERS ASSOCIATES, L.P.

                                     By:______________________________________

                                       24
<PAGE>
                                    EXHIBIT A

                  [FORM OF FACE OF CLASS A WARRANT CERTIFICATE]

__________ Class A Warrants

                             VOID AFTER _____ , 2006

                    CLASS A WARRANT CERTIFICATE FOR PURCHASE
                                 OF COMMON STOCK

                    BIODELIVERY SCIENCES INTERNATIONAL, INC.

      This certifies that FOR VALUE RECEIVED ____________________________ or
registered assigns (the "Registered Holder") is the owner of the number of Class
A Warrants ("Class A Warrants") specified above. Each Class A Warrant
represented hereby initially entitles the Registered Holder to purchase, subject
to the terms and conditions set forth in this Warrant Certificate and the
Warrant Agreement (as hereinafter defined), one fully paid and nonassessable
share of Common Stock, $.001 value ("Common Stock"), of BioDelivery Sciences
International, Inc. a Delaware corporation (the "Company"), at any time between
_______ , 2002 and the Expiration Date (as hereinafter defined), upon the
presentation and surrender of this Warrant Certificate with the Subscription
Form on the reverse hereof duly executed, at the corporate office of American
Stock Transfer & Trust Company as Warrant Agent, or its successor (the "Warrant
Agent"), accompanied by payment of $10.80(the "Purchase Price") in lawful money
of the United States of America in cash or by official bank or certified check
made payable to BioDelivery Sciences International, Inc., Special Account.

      This Warrant Certificate and each Class A Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms and conditions
set forth in the Warrant Agreement (the "Warrant Agreement"), dated _______ ,
2001 by and among the Company, the Warrant Agent and Roan/Meyers Associates,
L.P.

      In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price or the number of shares of Common Stock subject to
purchase upon the exercise of each Class A Warrant represented hereby are
subject to modification or adjustment. Each Class A Warrant represented hereby
is exercisable at the option of the Registered Holder, but no fractional shares
of Common Stock will be issued. In the case of the exercise of less than all the
Class A Warrants represented hereby, the Company shall cancel this Warrant
Certificate upon the surrender hereof and shall execute and deliver a new
Warrant Certificate or Warrant Certificates of like tenor, which the Warrant
Agent shall countersign, for the balance of such Class A Warrants.

      The term "Expiration Date" shall mean 5:00 P.M. (New York time) on
_________ , 2006 or such earlier date as the Class A Warrants shall be redeemed.
If such date shall in the State of New York be a holiday or a day on which banks
are authorized to close, then the Expiration Date shall mean 5:00 P.M. (New York
time) the next following day which in the State of New York is not a holiday or
a day on which banks are authorized to close.

      The Company shall not be obligated to deliver any securities pursuant to
the exercise of the Class A Warrants represented hereby unless a registration
statement under the Securities Act of 1933, as amended, with respect to such
securities is effective. The Company has covenanted and agreed that it will file
a registration statement and will use its best efforts to cause the same to
become effective and to keep such registration statement current while any of
the Class A Warrants are outstanding. The Class A Warrants represented hereby
shall not be exercisable by a Registered Holder in any state where such exercise
would be unlawful.

      This Warrant Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Class A Warrants, each of such new Warrant Certificates to
represent such number of Class A Warrants as shall be designated by such
Registered Holder at the time of such surrender. Upon due presentment with a $
transfer fee per certificate in addition to any tax or other governmental charge
imposed in connection therewith, for registration of transfer of this Class A
Warrant Certificate at such office, a new Warrant Certificate or Warrant
Certificates representing an equal aggregate number of Class A Warrants will be
issued to the transferee in exchange therefore, subject to the limitations
provided in the Warrant Agreement.

                                      -1-
<PAGE>
      Prior to the exercise of any Class A Warrant represented hereby, the
Registered Holder shall not be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided in the Warrant
Agreement.

      The Class A Warrants represented hereby may be redeemed at the option of
the Company, at a redemption price of $.10 per Class A Warrant at any time after
________ , 2002 provided the market price (as defined in the Warrant Agreement)
for the Common Stock shall exceed $13.50 per share for a consecutive 10 day
period ending prior to the Notice of Redemption. Notice of redemption shall be
given not later than the thirtieth day before the date fixed for redemption, all
as provided in the Warrant Agreement. On and after the date fixed for
redemption, the Registered Holder shall have no rights with respect to the Class
A Warrants represented hereby except to receive the $.10 per Class A Warrant
upon surrender of this Warrant Certificate.

      Prior to due presentment for registration of transfer hereof, the Company
and the Warrant Agent may deem and treat the Registered Holder as the absolute
owner hereof and of each Class A Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary.

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

      This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.

      IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile, by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.

                                       BioDelivery Sciences International, Inc.

Dated: _________________               By: _____________________________________

                                       By: _____________________________________

                                                                     [seal]
Countersigned:

American Stock Transfer & Trust Company
      as Warrant Agent

By: _____________________________________
      Authorized Officer

                                       A-3

                                      -2-
<PAGE>
                    [FORM OF REVERSE OF WARRANT CERTIFICATE]

                   TRANSFER FEE: $____ PER CERTIFICATE ISSUED

                                SUBSCRIPTION FORM

                     To Be Executed by the Registered Holder
                          in Order to Exercise Warrants

      The undersigned Registered Holder hereby irrevocably elects to exercise
_________ Class A Warrants represented by this Warrant Certificate, and to
purchase the securities issuable upon the exercise of such Class A Warrants, and
requests that certificates for such securities shall be issued in the name of

            PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

                      _____________________________________
                      _____________________________________
                      _____________________________________
                      _____________________________________

                     [please print or type name and address]

and be delivered to

                      _____________________________________
                      _____________________________________
                      _____________________________________
                      _____________________________________

                     [please print or type name and address]

and if such number of Class A Warrants shall not be all the Class A Warrants
evidenced by this Warrant Certificate, that a new Class A Warrant Certificate
for the balance of such Class A Warrants be registered in the name of, and
delivered to, the Registered Holder at the address stated below.

                                      -3-
<PAGE>
Dated: _______        X ___________________________________

                      _____________________________________

                      _____________________________________

                      _____________________________________
                      Address

                      _____________________________________
                      Taxpayer Identification Number

                      _____________________________________
                      Signature Guaranteed

                      _____________________________________

                                      -4-
<PAGE>
                                   ASSIGNMENT

                     To Be Executed by the Registered Holder
                           in Order to Assign Warrants

FOR VALUE RECEIVED, _____________ hereby sells, assigns and transfers unto

            PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

                      _____________________________________
                      _____________________________________
                      _____________________________________
                      _____________________________________

                     [please print or type name and address]

_____________ of the Class A Warrants represented by this Warrant Certificate,
and hereby irrevocably constitutes and appoints _______________________________
_________________________________ Attorney to transfer this Warrant Certificate
on the books of the Company, with full power of substitution in the premises.

Dated: ______________                        X ________________________________
                                               Signature Guaranteed

THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.

                                      -5-
<PAGE>
                                    EXHIBIT B

                  [FORM OF FACE OF CLASS B WARRANT CERTIFICATE]

___________ Class B-W Warrants

                         VOID AFTER _____________, 2006

                         CLASS B WARRANT CERTIFICATE FOR
                            PURCHASE OF COMMON STOCK

                    BIODELIVERY SCIENCES INTERNATIONAL, INC.

      This certifies that FOR VALUE RECEIVED ________________________________ or
registered assigns (the "Registered Holder") is the owner of the number of Class
B Warrants specified above. Each Class B Warrant represented hereby initially
entitles the Registered Holder to purchase, subject to the terms and conditions
set forth in this Warrant Certificate and the Warrant Agreement (as hereinafter
defined), one fully paid and nonassessable share of Common Stock, $.001 par
value ("Common Stock"), of BioDelivery Sciences International, Inc., a Delaware
corporation (the "Company"), at any time between ________ , 2002 and the
Expiration Date (as hereinafter defined), upon the presentation and surrender of
this Warrant Certificate with the Subscription Form on the reverse hereof duly
executed, at the corporate office of American Stock Transfer & Trust Company, as
Warrant Agent, or its successor (the "Warrant Agent"), accompanied by payment of
$13.50 (the "Purchase Price") in lawful money of the United States of America in
cash or by official bank or certified check made payable to BioDelivery Sciences
International, Inc., Special Account.

      This Warrant Certificate and each Class B Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms and conditions
set forth in the Warrant Agreement (the "Warrant Agreement"), dated ________ ,
2001 by and among the Company, the Warrant Agent and Roan/Meyers Associates,
L.P.

      In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price or the number of shares of Common Stock subject to
purchase upon the exercise of each Class B Warrant represented hereby are
subject to modification or adjustment.

      Each Class B Warrant represented hereby is exercisable at the option of
the Registered Holder, but no fractional shares of Common Stock will be issued.
In the case of the exercise of less than all the Class B Warrants represented
hereby, the Company shall cancel this Warrant Certificate upon the surrender
hereof and shall execute and deliver a new Warrant Certificate or Warrant
Certificates of like tenor, which the Warrant Agent shall countersign, for the
balance of such Class B Warrants.

      The term "Expiration Date" shall mean 5:00 P.M. (New York time) on
__________ , 2006, or such earlier date as the Class B Warrants shall be
redeemed. If such date shall in the State of New York be a holiday or a day on
which banks are authorized to close, then the Expiration Date shall mean 5:00
P.M. (New York time) the next following day which in the State of New York is
not a holiday or a day on which banks are authorized to close.

      The Company shall not be obligated to deliver any securities pursuant to
the exercise of the Class B Warrants represented hereby unless a registration
statement under the Securities Act of 1933, as amended, with respect to such
securities is effective. The Company has covenanted and agreed that it will file
a registration statement and will use its best efforts to cause the same to
become effective and to keep such registration statement current while any of
the Class B Warrants are outstanding. The Class B Warrants represented hereby
shall not be exercisable by a Registered Holder in any state where such exercise
would be unlawful.

      This Warrant Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Class B Warrants, each of such new Warrant Certificates to
represent such number of Class B Warrants as shall be designated by such
Registered Holder at the time of such surrender. Upon due presentment with any
applicable transfer fee in addition to any tax or other governmental charge
imposed in connection therewith, for registration of transfer of this Warrant
Certificate at such office, a new Warrant Certificate or Warrant Certificates
representing an equal aggregate number of Class B Warrants will be issued to the
transferee in exchange therefore, subject to the limitations provided in the
Warrant Agreement.

                                      -6-
<PAGE>
      Prior to the exercise of any Class B Warrant represented hereby, the
Registered Holder shall not be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided in the Warrant
Agreement.

      The Class B Warrants represented hereby may be redeemed at the option of
the Company, at a redemption price of $.10 per Class B Warrant at any time after
_______ , 2002, provided the market price (as defined in the Warrant Agreement)
for the Common Stock shall exceed $ 18.00 per share for ten (10) consecutive
days ending prior to the Notice of Redemption. Notice of redemption shall be
given not later than the thirtieth day before the date fixed for redemption, all
as provided in the Warrant Agreement. On and after the date fixed for
redemption, the Registered Holder shall have no rights with respect to the Class
B Warrants represented hereby except to receive the $.10 per Class B Warrant
upon surrender of this Warrant Certificate.

      Prior to due presentment for registration of transfer hereof, the Company
and the Warrant Agent may deem and treat the Registered Holder as the absolute
owner hereof and of each Class B Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary.

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

      This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.

      IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile, by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.

                                       BioDelivery Sciences International, Inc.

Dated: _________________               By: _____________________________________

                                       By: _____________________________________

                                                                     [seal]
Countersigned:

American Stock Transfer & Trust Company
as Warrant Agent

By: _____________________________________
      Authorized Officer

                                      -7-
<PAGE>
                    [FORM OF REVERSE OF WARRANT CERTIFICATE]

                                SUBSCRIPTION FORM

                     To Be Executed by the Registered Holder
                          in Order to Exercise Warrants

      The undersigned Registered Holder hereby irrevocably elects to exercise
_________ Class B Warrants represented by this Warrant Certificate, and to
purchase the securities issuable upon the exercise of such Class B Warrants, and
requests that certificates for such securities shall be issued in the name of

            PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

                      _____________________________________
                      _____________________________________
                      _____________________________________
                      _____________________________________

                     [please print or type name and address]

and be delivered to

                      _____________________________________
                      _____________________________________
                      _____________________________________
                      _____________________________________

                     [please print or type name and address]

and if such number of Class B Warrants shall not be all the Class B Warrants
evidenced by this Warrant Certificate, that a new Warrant Certificate for the
balance of such Class A Warrants be registered in the name of, and delivered to,
the Registered Holder at the address stated below.

Dated: _______        X ___________________________________

                      _____________________________________

                      _____________________________________

                      _____________________________________
                      Address

                      _____________________________________
                      Taxpayer Identification Number

                      _____________________________________
                      Signature Guaranteed

                      _____________________________________

                                      -8-
<PAGE>
                                   ASSIGNMENT

                     To Be Executed by the Registered Holder
                           in Order to Assign Warrants

FOR VALUE RECEIVED, _____________ hereby sells, assigns and transfers unto

            PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

                      _____________________________________
                      _____________________________________
                      _____________________________________
                      _____________________________________

                     [please print or type name and address]

_____________ of the Class B Warrants represented by this Warrant Certificate,
and hereby irrevocably constitutes and appoints _______________________________
_________________________________ Attorney to transfer this Warrant Certificate
on the books of the Company, with full power of substitution in the premises.

Dated: ______________                        X ________________________________
                                               Signature Guaranteed

THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.

                                      -9-<PAGE>
                                                                     EXHIBIT 4.1

                       AMERICAN INTERNATIONAL GROUP, INC.

               Zero Coupon Convertible Senior Debentures Due 2031
           ----------------------------------------------------------

                                    INDENTURE

                          Dated as of November  , 2001
           ----------------------------------------------------------

                              THE BANK OF NEW YORK,

                                   AS TRUSTEE
           ----------------------------------------------------------
<PAGE>
           ...........................................................

                 Certain Sections of this Indenture relating to
                         Sections 310 through 318 of the
                          Trust Indenture Act of 1939:

<TABLE>
<CAPTION>
  Trust Indenture
    Act Section                                                                   Indenture Section
    -----------                                                                   -----------------
<S>                                                                               <C>
Section 310 (a) (1)             ........................................                 7.9
        (a) (2)                 ........................................                 7.9
        (a) (3)                 ........................................           Not Applicable
        (a) (4)                 ........................................           Not Applicable
        (b)                     ........................................                 7.9
Section 311(a)                  ........................................                 7.10
        (b)                     ........................................                 7.10
Section 312(a)                  ........................................                 2.5
        (b)                     ........................................                12.3
        (c)                     ........................................                12.3
Section 313(a)                  ........................................                 7.5
        (b)                     ........................................                 7.5
        (c)                     ........................................                 7.5
        (d)                     ........................................                 7.5
Section 314(a)                  ........................................                 4.2
        (a) (4)                 ........................................                 4.3
        (b)                     ........................................           Not Applicable
        (c) (1)                 ........................................                12.4(1)
        (c) (2)                 ........................................                12.4(2)
        (c) (3)                 ........................................           Not Applicable
        (d)                     ........................................           Not Applicable
        (e)                     ........................................                12.5
Section 315(a)                  ........................................                 7.1(b)
        (b)                     ........................................                 6.1
        (c)                     ........................................                 7.1(a)
        (d)                     ........................................                 7.1(c)
        (e)                     ........................................                 6.11
</TABLE>

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

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

                                       i
<PAGE>
<TABLE>
<CAPTION>
  Trust Indenture
    Act Section                                                                   Indenture Section
    -----------                                                                   -----------------
<S>                                                                               <C>
Section 316(a)                  ........................................                 2.8
        (a)(1)(A)               ........................................                 6.5
        (a)(1)(B)               ........................................                 6.4
        (a)(2)                  ........................................           Not Applicable
        (b)                     ........................................                 6.7
        (c)                     ........................................                 1.5(e)
Section 317(a)(1)               ........................................                 6.8
        (a)(2)                  ........................................                 6.9
        (b)                     ........................................                 2.4
Section 318(a)                  ........................................                12.1
</TABLE>

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

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

                                       ii
<PAGE>
                                TABLE OF CONTENTS
                                -----------------
<TABLE>
<CAPTION>
                                                                                                            Page
                                                                                                            ----
<S>                                                                                                       <C>
                                  ARTICLE ONE
                   DEFINITIONS AND INCORPORATION BY REFERENCE

   Section 1.1            Definitions...................................................................    1
   Section 1.2            Other Definitions.............................................................    5
   Section 1.3            Incorporation by Reference of Trust Indenture Act.............................    6
   Section 1.4            Rules of Construction.........................................................    6
   Section 1.5            Acts of Holders...............................................................    7

                                  ARTICLE TWO
                                 THE SECURITIES

   Section 2.1            Form and Dating...............................................................    8
   Section 2.2            Execution and Authentication..................................................    9
   Section 2.3            Registrar, Paying Agent and Conversion Agent .................................    9
   Section 2.4            Paying Agent to Hold Money and Securities in Trust............................   10
   Section 2.5            Securityholder Lists..........................................................   10
   Section 2.6            Transfer and Exchange.........................................................   10
   Section 2.7            Replacement Securities........................................................   11
   Section 2.8            Outstanding Securities; Determinations of Holders' Action.....................   13
   Section 2.9            Temporary Securities..........................................................   13
   Section 2.10           Cancellation..................................................................   14
   Section 2.11           Persons Deemed Owners.........................................................   14
   Section 2.12           Global Securities.............................................................   14
   Section 2.13           Calculations in Respect of Securities.........................................   17
   Section 2.14           CUSIP Numbers.................................................................   17

                                 ARTICLE THREE
                            REDEMPTION AND PURCHASES

   Section 3.1            Company's Right to Redeem; Notices to Trustee.................................   17
   Section 3.2            Selection of Securities to Be Redeemed........................................   17
   Section 3.3            Notice of Redemption..........................................................   18
   Section 3.4            Effect of Notice of Redemption................................................   19
   Section 3.5            Deposit of Redemption Price...................................................   19
   Section 3.6            Securities Redeemed in Part...................................................   19
   Section 3.7            Purchase of Securities by the Company at Option of the Holder.................   19
   Section 3.8            Company's Right to Elect Manner of Payment of Purchase Price for Payment .....   21
   Section 3.9            Effect of Purchase Notice.....................................................   25
   Section 3.10           Deposit of Purchase Price.....................................................   26
   Section 3.11           Securities Purchased in Part..................................................   27
   Section 3.12           Repayment to the Company......................................................   27
</TABLE>

                                       i
<PAGE>
<TABLE>
<S>                                                                                                        <C>
                                    ARTICLE
                                 FOUR COVENANTS

   Section 4.1            Payment of Securities.........................................................   27
   Section 4.2            SEC and Other Reports.........................................................   28
   Section 4.3            Compliance Certificate........................................................   28
   Section 4.4            Maintenance of Office or Agency...............................................   28
   Section 4.5            Tax Treatment of Securities...................................................   28
   Section 4.6            Calculation of accrued Original Issue Discount and Tax Original Issue
                          Discount......................................................................   28

                                  ARTICLE FIVE
                             SUCCESSOR CORPORATION

   Section 5.1            When Company May Merge or Transfer Assets.....................................   29

                                  ARTICLE SIX
                             DEFAULTS AND REMEDIES

   Section 6.1            Events of Default.............................................................   30
   Section 6.2            Acceleration..................................................................   31
   Section 6.3            Other Remedies................................................................   31
   Section 6.4            Waiver of Past Defaults.......................................................   31
   Section 6.5            Control by Majority...........................................................   32
   Section 6.6            Limitation on Suits...........................................................   32
   Section 6.7            Rights of Holders to Receive Payment..........................................   32
   Section 6.8            Collection Suit by Trustee....................................................   33
   Section 6.9            Trustee May File Proofs of Claim..............................................   33
   Section 6.10           Priorities....................................................................   33
   Section 6.11           Undertaking for Costs.........................................................   34
   Section 6.12           Waiver of Stay, Extension or Usury Laws.......................................   34

                                 ARTICLE SEVEN
                                    TRUSTEE

   Section 7.1            Duties of Trustee.............................................................   34
   Section 7.2            Rights of Trustee.............................................................   35
   Section 7.3            Individual Rights of Trustee..................................................   37
   Section 7.4            Trustee's Disclaimer..........................................................   37
   Section 7.5            Reports by Trustee to Holders.................................................   37
   Section 7.6            Compensation and Indemnity....................................................   37
   Section 7.7            Replacement of Trustee........................................................   38
   Section 7.8            Successor Trustee by Merger...................................................   38
   Section 7.9            Eligibility; Disqualification.................................................   38
   Section 7.10           Preferential Collection of Claims Against Company.............................   39

                                 ARTICLE EIGHT
                             DISCHARGE OF INDENTURE

   Section 8.1            Satisfaction and Discharge of Indenture.......................................   39
   Section 8.2            Application of Trust Money....................................................   40
</TABLE>

                                       ii
<PAGE>
<TABLE>
<S>                                                                                                        <C>

                                  ARTICLE NINE
                                   AMENDMENTS

   Section 9.1            Without Consent of Holders....................................................   40
   Section 9.2            With Consent of Holders.......................................................   41
   Section 9.3            Compliance with Trust Indenture Act...........................................   42
   Section 9.4            Revocation and Effect of Consents, Waivers and Actions........................   42
   Section 9.5            Notation on or Exchange of Securities.........................................   42
   Section 9.6            Trustee to Sign Supplemental Indentures.......................................   42
   Section 9.7            Effect of Supplemental Indentures.............................................   43

                                  ARTICLE TEN
                                  CONVERSIONS

   Section 10.1           Conversion Privilege..........................................................   43
   Section 10.2           Conversion Procedure; Conversion Price; Fractional Shares.....................   44
   Section 10.3           Adjustment of Conversion Price for Common Stock...............................   46
   Section 10.4           Consolidation or Merger of the Company........................................   52
   Section 10.5           Notice of Adjustment..........................................................   53
   Section 10.6           Notice in Certain Events......................................................   53
   Section 10.7           Company To Reserve Stock: Registration; Listing...............................   54
   Section 10.8           Taxes on Conversion...........................................................   54
   Section 10.9           Company Determination Final...................................................   55
   Section 10.10          Responsibility of Trustee for Conversion Provisions...........................   55
   Section 10.11          Unconditional Right of Holders to Convert.....................................   55

                                 ARTICLE ELEVEN
                              CONTINGENT INTEREST

   Section 11.1           Contingent Interest...........................................................   55
   Section 11.2           Payment of Contingent Interest; Contingent Interest Rights Preserved..........   58
   Section 11.3           Contingent Interest: Conversion, Redemption or Purchase.......................   58
   Section 11.4           Defaulted Interest ...........................................................   59
   Section 11.5           Contingent Interest Notification .............................................   60

                                 ARTICLE TWELVE
                                 MISCELLANEOUS

   Section 12.1           Trust Indenture Act Controls..................................................   60
   Section 12.2           Notices.......................................................................   60
   Section 12.3           Communication by Holders with Other Holders...................................   61
   Section 12.4           Certificate and Opinion as to Conditions Precedent............................   61
   Section 12.5           Statements Required in Certificate or Opinion.................................   61
   Section 12.6           Separability Clause...........................................................   62
   Section 12.7           Legal Holidays................................................................   62
   Section 12.8           GOVERNING LAW.................................................................   62
   Section 12.9           No Recourse Against Others....................................................   62
   Section 12.10          Successors....................................................................   62
   Section 12.11          Effect of Headings and Table of Contents......................................   62
   Section 12.12          Multiple Originals............................................................   62
</TABLE>

                                      iii
<PAGE>
EXHIBIT A                  Form of Global Security
EXHIBIT B                  Form of Certificated Security

                                       iv
<PAGE>
                  INDENTURE, dated as of November  , 2001, between AMERICAN
INTERNATIONAL GROUP, INC., a Delaware corporation ("Company"), and THE BANK OF
NEW YORK, a New York banking corporation, as Trustee.

                  Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's Zero
Coupon Convertible Senior Debentures Due 2031:

                                  ARTICLE ONE

                   DEFINITIONS AND INCORPORATION BY REFERENCE

                  Section 1.1 Definitions.

                  "accrued" when used with respect to Original Issue Discount
shall mean the amount of Original Issue Discount that has accrued on a Security
from its Issue Price based on a     % per annum interest rate compounded
semi-annually using a 360-day year composed of twelve 30-day months. The
determination of the amount of accrued Original Issue Discount shall be made
without reference to the payment of any contingent interest payable pursuant to
Article Eleven.

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

                  "Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, in each case to the
extent applicable to such transaction and as in effect from time to time.

                  "Board of Directors" means either the board of directors of
the Company or any duly authorized committee of such board.

                  "Board Resolution" means a resolution of the Board of
Directors.

                  "Business Day" means each day of the year, other than a
Saturday or Sunday, on which banking institutions in The City of New York are
not authorized or obligated by law or regulation to close.

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

<PAGE>
                  "Certificated Securities" means Securities that are in the
form of the Securities attached hereto as Exhibit B.

                  "Common Stock" includes any stock of any class of the Company
that has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding-up of
the Company and that is not subject to redemption by the Company. However,
subject to the provisions of Section 10.4, shares issuable on conversion of
Securities shall include only shares of the class designated as Common Stock of
the Company at the date of this instrument or shares of any class or classes
resulting from any reclassification or reclassifications thereof and that have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and that are not subject to redemption by the Company; provided that if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion that the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such
reclassifications.

                  "Company" means the party named as the "Company" in the
preamble to this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor. The foregoing sentence shall likewise apply to any subsequent such
successor or successors.

                  "Company Request" or "Company Order" means a written request
or order signed in the name of the Company by any two Officers.

                  "contingent interest" means interest that accrues and is
payable as provided in Article Eleven.

                  "Conversion Price" means, as of any day, the sum of the Issue
Price and the accrued Original Issue Discount divided by the number of shares of
Common Stock then issuable upon conversion of a Security. Each $1,000 Principal
Amount of Security is initially convertible into - shares of Common Stock.

                  "Corporate Trust Office" means the principal office of the
Trustee at which at any time its corporate trust business shall be administered,
which office at the date hereof is located at 101 Barclay Street, New York, NY
10286, Attention: Corporate Trust Department, or such other address as the
Trustee may designate from time to time by notice to the Holders and the
Company, or the principal corporate trust office of any successor Trustee (or
such other address as a successor Trustee may designate from time to time by
notice to the Holders and the Company).

                  "Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.

                  "Global Securities" means Securities that are in the form of
the Securities attached hereto as Exhibit A, and that are registered in the
register of Securities in the name of a Depositary or a nominee thereof.

                                      -2-
<PAGE>
                  "Holder" or "Securityholder" means a Person in whose name a
Security is registered on the Registrar's books.

                  "Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof, including the provisions
of the TIA that are deemed to be a part hereof.

                  "Issue Date" of any Security means the date on which the
Security was originally issued or deemed issued as set forth on the face of the
Security.

                  "Issue Price" of any Security means, in connection with the
original issuance of such Security, the initial issue price at which the
Security is sold as set forth on the face of the Security.

                  "London Business Day" means each day on which dealings in
United States dollars are transacted in the London interbank market.

                  "NYSE" means The New York Stock Exchange, Inc.

                  "Officer" means the Chairman of the Board, any Vice Chairman,
the Chief Executive Officer, the President, any Executive Vice President, any
Senior Vice President, the Treasurer, the Controller, or the Secretary or any
Assistant Treasurer or Assistant Secretary of the Company.

                  "Officers' Certificate" means a written certificate containing
the information specified in Sections 12.4 and 12.5, signed in the name of the
Company by any two Officers, and delivered to the Trustee. An Officers'
Certificate given pursuant to Section 4.3 shall be signed by the principal
executive, financial or accounting Officer of the Company but need not contain
the information specified in Sections 12.4 and 12.5.

                  "Opinion of Counsel" means a written opinion containing the
information specified in Sections 12.4 and 12.5, from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of, or
counsel to, the Company or the Trustee.

                  "Original Issue Discount" of any Security means the difference
between the Issue Price and the Principal Amount of the Security as set forth on
the face of the Security.

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

                  "Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 2.7 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.

                                      -3-
<PAGE>
                  "Principal," "Principal Amount" or "principal amount" of a
Security means the principal amount due at the final Stated Maturity of the
Security as set forth on the face of the Security.

                  "Redemption Date" or "redemption date" shall mean the date
specified in a notice of redemption on which the Securities may be redeemed in
accordance with the terms of the Securities and this Indenture.

                  "Redemption Price" or "redemption price" shall have the
meaning set forth in Section 6 of the Securities.

                  "Responsible Officer" shall mean, when used with respect to
the Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.

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

                  "Securities" means any of the Company's Zero Coupon
Convertible Senior Debentures Due 2031 issued under this Indenture.

                  "Securities Act" means the Securities Act of 1933, as amended
from time to time.

                  "Securityholder" or "Holder" means a person in whose name a
Security is registered on the Registrar's books.

                  "Stated Maturity", when used with respect to any Security or
any installment of contingent interest thereon, means the date specified in such
Security as the fixed date on which the Principal Amount, Redemption Price or
Purchase Price of such Security or such installment of interest is due and
payable.

                  "Subsidiary" means any corporation, partnership, limited
liability company or business trust of which at least a majority of the
Outstanding Voting Stock shall at the time directly or indirectly be owned or
controlled by the Company or by one or more Subsidiaries or by the Company and
one or more Subsidiaries.

                  "Tax Original Issue Discount" means the amount of ordinary
interest income on a Security that must be accrued as original issue discount
for United States federal income tax purposes pursuant to Treasury Regulation
Section 1.1275-4.

                                      -4-
<PAGE>
                  "TIA" means the Trust Indenture Act of 1939 as in effect on
the date of this Indenture, provided, however, that in the event the TIA is
amended after such date, TIA means, to the extent required by any such
amendment, the TIA as so amended.

                  "Trading Day" means a day during which trading in the shares
of Common Stock occurs regular way on the NYSE or, if the shares of Common Stock
are not listed on the NYSE, on the principal other national or regional
securities exchange on which the shares of Common Stock are then listed or, if
the shares of Common Stock are not listed on a national or regional securities
exchange, as reported on the Nasdaq or, if the shares of Common Stock are not so
quoted, on the principal other market on which the shares of Common Stock are
then traded.

                  "Trustee" means the party named as the "Trustee" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor. The foregoing sentence shall likewise apply to any subsequent such
successor or successors.

                  "Voting Stock" of a Person means Capital Stock of such Person
of the class or classes pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of such Person (irrespective of whether
or not at the time Capital Stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).

                  Section 1.2 Other Definitions.

<TABLE>
<CAPTION>
                  Term Section:                                                    Defined in:
<S>                                                                                <C>
                  "Act"........................................................    1.5
                  "Agent"......................................................    11.1(2)
                  "Agent Members"..............................................    2.12(b)
                  "cash".......................................................    3.8(a)
                  "Common Stock Record Date"...................................    11.1
                  "Company Notice".............................................    3.8(d)
                  "Company Notice Date"........................................    3.8(b)
                  "Contingent Interest Payment Date"...........................    11.2
                  "Contingent Interest Record Date"............................    11.2
                  "Conversion Agent"...........................................    2.3
                  "Current Market Price".......................................    10.3(f)
                  "Defaulted Interest".........................................    11.4
                  "Depositary".................................................    2.1(a)
                  "distributed assets".........................................    10.3(d)
                  "Downside Contingent Interest"...............................    11.1
                  "DTC"........................................................    2.1(a)
                  "Event of Default"...........................................    6.1
                  "Ex-Dividend Time"...........................................    10.1
                  "Fair Market Value"..........................................    10.3(f)
                  "Legal Holiday"..............................................    12.7
                  "LIBOR"......................................................    11.1
                  "Market Price"...............................................    3.8(c)
                  "Non-Electing Share".........................................    10.4
                  "Notice of Default"..........................................    6.1
</TABLE>

                                      -5-
<PAGE>
<TABLE>
<S>                                                                                <C>
                  "Outstanding"................................................    2.8
                  "Paying Agent"...............................................    2.3
                  "Per Share Distribution Amount"..............................    10.3(e)
                  "Protected Purchaser"........................................    3.7
                  "Purchase Date"..............................................    3.7
                  "Purchase Notice"............................................    3.7
                  "Purchase Price".............................................    3.7
                  "Reference Banks"............................................    11.1(2)
                  "Reference Debt Security"....................................    11.1
                  "Registrar"..................................................    2.3
                  "Regular Cash Dividend"......................................    11.1
                  "Relevant Value".............................................    11.1
                  "Representative Amount"......................................    11.1
                  "Sale Price".................................................    3.8(c)
                  "Spread Determination Date"..................................    11.1
                  "Special Record Date"........................................    11.4(a)
                  "Spread".....................................................    11.1(2)
                  "Telerate LIBOR Page"........................................    11.1
                  "Telerate Page"..............................................    11.1
                  "Trigger Event"..............................................    10.3(d)
</TABLE>

                  Section 1.3 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:

                  "indenture securities" means the Securities.

                  "indenture to be qualified" means this Indenture.

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

                  "obligor" on the indenture securities means the Company.

                  All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.

                  Section 1.4 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 generally
                           accepted accounting principles;

                  (3)      "or" is not exclusive;

                  (4)      "including" means including, without limitation; and

                  (5)      words in the singular include the plural, and words
                           in the plural include the singular.

                  Section 1.5 Acts of Holders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken

                                      -6-
<PAGE>
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company, as
described in Section 12.2. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of Holders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section.

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

                  (c) The principal amount and serial number of any Security and
the ownership of Securities shall be proved by the register for the Securities.

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

                  (e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the Holders of record at
the close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six months after the
record date.

                                      -7-
<PAGE>
                                  ARTICLE TWO

                                 THE SECURITIES

                  Section 2.1 Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibits A
and B, which are a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule or usage (provided
that any such notation, legend or endorsement required by usage is in a form
acceptable to the Company). The Company shall provide any such notations,
legends or endorsements to the Trustee in writing. Each Security shall be dated
the date of its authentication.

                  (a) Global Securities. The Securities shall be issued,
initially in the form of one or more Global Securities, which shall be deposited
with the Trustee at its Corporate Trust Office, as custodian for the Depositary
(as defined below) and registered in the name of The Depository Trust Company
("DTC") or the nominee thereof (DTC, or any successor thereto, and any such
nominee being hereinafter referred to as the "Depositary"), duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Global Securities may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
as hereinafter provided but in no event more than the aggregate principal amount
permitted by Section 2.2.

                  Each Global Security shall represent such of the Outstanding
Securities as shall be specified therein and each shall 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, redemptions, repurchases and conversions.

                  (b) Book-Entry Provisions. This Section 2.1(b) shall apply
only to Global Securities deposited with or on behalf of the Depositary.

                  The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(b), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depositary, (b) shall
be held by the Trustee as custodian for the Depositary and (c) shall be
substantially in the form of Exhibit A attached hereto.

                  (c) Certificated Securities. Securities not issued as
interests in the Global Securities will be issued in certificated form
substantially in the form of Exhibit B attached hereto.

                  Section 2.2 Execution and Authentication. The Securities shall
be executed on behalf of the Company by any Officer. The signature of the
Officer on the Securities may be manual or facsimile.

                  Securities bearing the manual or facsimile signatures of
individuals who were at the time of the execution of the Securities Officers
shall bind the Company, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the authentication and

                                      -8-
<PAGE>
delivery of such Securities or did not hold such offices at the date of
authentication of such Securities.

                  No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein duly executed by the Trustee by manual signature of an authorized
signatory, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder.

                  The Trustee shall authenticate and deliver the Securities for
original issue in an aggregate principal amount of $1,519,734,000 (or up to
$1,747,694,000 aggregate principal amount to the extent Morgan Stanley & Co.
Incorporated exercises its option to purchase additional Securities pursuant to
the Underwriting Agreement, dated November 7, 2001, between the Company and
Morgan Stanley & Co. Incorporated) upon one or more Company Orders without any
further action by the Company. The aggregate principal amount of the Securities
due at the final Stated Maturity thereof Outstanding at any time may not exceed
the amount set forth in the foregoing sentence.

                  The Securities shall be issued only in registered form without
coupons and only in denominations of $1,000 of principal amount and any whole
multiple of $1,000.

                  Section 2.3 Registrar, Paying Agent and Conversion Agent. The
Company shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange ("Registrar"), an office or agency
where Securities may be presented for purchase or payment ("Paying Agent") and
an office or agency where Securities may be presented for conversion
("Conversion Agent"). The Registrar shall keep a register of the Securities and
of their transfer and exchange. The Company may have one or more co-registrars,
one or more additional paying agents and one or more additional conversion
agents. The term Paying Agent includes any additional paying agent, including
any named pursuant to Section 4.4. The term Conversion Agent includes any
additional conversion agent, including any named pursuant to Section 4.4.

                  If the Company appoints a Registrar, Paying Agent or
Conversion Agent other than the Trustee, the Company shall notify the Trustee of
the name and address of any such Agent. If the Company fails to maintain a
Registrar, Paying Agent or Conversion Agent, the Trustee shall act as such and
shall be entitled to appropriate compensation therefor pursuant to Section 7.6.
The Company or any Subsidiary or an Affiliate of either of them may act as
Paying Agent, Registrar, Conversion Agent or co-registrar.

                  The Company initially appoints the Trustee as Registrar,
Conversion Agent, Calculation Agent and Paying Agent in connection with the
Securities.

                  Section 2.4 Paying Agent to Hold Money and Securities in
Trust. Except as otherwise provided herein, on or prior to each due date of
payments in respect of any Security, the Company shall deposit with the Paying
Agent a sum of money (in immediately available funds if deposited on the due
date) or shares of Common Stock sufficient to make such payments when so
becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Securityholders or

                                      -9-
<PAGE>
the Trustee all money and shares of Common Stock held by the Paying Agent for
the making of payments in respect of the Securities and shall notify the Trustee
of any default by the Company in making any such payment. At any time during the
continuance of any such default, the Paying Agent shall, upon the written
request of the Trustee, forthwith pay to the Trustee all money and shares of
Common Stock so held in trust. If the Company, a Subsidiary or an Affiliate of
either acts as Paying Agent, it shall segregate the money and shares of Common
Stock held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all money and shares of
Common Stock held by it to the Trustee and to account for any funds and Common
Stock disbursed by it. Upon doing so, the Paying Agent shall have no further
liability for the money or shares of Common Stock.

                  Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the Principal Amount,
Redemption Price, Purchase Price or contingent interest on any Security and
remaining unclaimed for two years after such amount has become due and payable
shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication. Any unclaimed
balance of such money then remaining will be repaid to the Company.

                  Section 2.5 Securityholder 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 Securityholders. If the Trustee is not the
Registrar, the Company shall cause to be furnished to the Trustee at least
semiannually on March 31 and September 30 a listing of Securityholders dated
within 15 days of the date on which the list is furnished 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
Securityholders. The Company may exclude from such list any names and addresses
received by the Trustee in its capacity as Registrar.

                  Section 2.6 Transfer and Exchange. (a) Subject to Section 2.12
hereof, upon surrender for registration of transfer of any Security, together
with a written instrument of transfer satisfactory to the Registrar duly
executed by the Securityholder or such Securityholder's attorney duly authorized
in writing, at the office or agency of the Company designated as Registrar or
co-registrar pursuant to Section 2.3, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denomination or
denominations, of a like aggregate Principal Amount. The Company shall not
charge a service charge for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to pay all taxes, assessments or
other governmental charges that may be imposed in connection with the transfer
or exchange of the Securities from the Securityholder requesting such transfer
or exchange.

                                      -10-
<PAGE>
                  At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denomination or denominations, of a like
aggregate Principal Amount upon surrender of the Securities to be exchanged,
together with a written instrument of transfer satisfactory to the Registrar
duly executed by the Securityholder or such Securityholder's attorney duly
authorized in writing, at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.

                  The Company shall not be required to make, and the Registrar
need not register, transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion thereof
not to be redeemed) or any Securities in respect of which a Purchase Notice has
been given and not withdrawn by the Holder thereof in accordance with the terms
of this Indenture (except, in the case of Securities to be purchased in part,
the portion thereof not to be purchased) or any Securities for a period of 15
days before the mailing of a notice of redemption of Securities to be redeemed.

                  (b)      Notwithstanding any provision to the contrary herein,
so long as a Global Security remains Outstanding and is held by or on behalf of
the Depositary, transfers of a Global Security, in whole or in part, shall be
made only in accordance with Section 2.12 and this Section 2.6(b). Transfers of
a Global Security shall be limited to transfers of such Global Security, in
whole or in part, to the Depositary, to nominees of the Depositary or to a
successor of the Depositary or such successor's nominee.

                  (c)      Successive registrations and registrations of
transfers and exchanges as aforesaid may be made from time to time as desired,
and each such registration shall be noted on the register for the Securities.

                  (d)      Any Registrar appointed pursuant to Section 2.3
hereof shall provide to the Trustee such information as the Trustee may
reasonably require in connection with the delivery by such Registrar of
Securities upon transfer or exchange of Securities.

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

                  Section 2.7 Replacement Securities. If (a) any mutilated
Security is surrendered to the Trustee, or (b) the Company and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a protected purchaser within the meaning of Article 8 of the Uniform
Commercial Code as in effect from time to time in the State of New York (a
"Protected Purchaser"), the Company shall execute and upon its written request
the Trustee shall authenticate and deliver, in exchange for any such mutilated
Security or in lieu of any such destroyed, lost or stolen Security, a new
Security of like tenor and principal amount, bearing a certificate number not
contemporaneously Outstanding.

                                      -11-
<PAGE>
                  In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, or is about to be purchased by
the Company pursuant to Article Three hereof, or such Security has been
surrendered for conversion pursuant to Article Ten, the Company in its
discretion may, instead of issuing a new Security, pay, purchase or convert such
Security, as the case may be.

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

                  Every new Security issued pursuant to this Section 2.7 in lieu
of any mutilated, destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Company, whether or not the
mutilated, destroyed, lost or stolen Security shall be at any time enforceable
by anyone, and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.

                  The provisions of this Section 2.7 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.

                  Section 2.8 Outstanding Securities; Determinations of Holders'
Action. Securities Outstanding at any time are all the Securities authenticated
by the Trustee except for those cancelled by it, those paid pursuant to Section
2.7, those delivered to it for cancellation and those described in this Section
2.8 as not Outstanding. The Securities shall cease to be Outstanding upon the
satisfaction and discharge of the Indenture pursuant to Article Eight. A
Security does not cease to be Outstanding because the Company or an Affiliate
thereof holds the Security; provided, however, that in determining whether the
Holders of the requisite principal amount of Securities have given or concurred
in any request, demand, authorization, direction, notice, consent, waiver, or
other Act hereunder, Securities owned by the Company or any other obligor upon
the Securities or any Affiliate of the Company or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, waiver or other Act, only Securities
which a Responsible Officer of the Trustee actually knows to be so owned shall
be so disregarded. Subject to the foregoing, only Securities Outstanding at the
time of such determination shall be considered in any such determination
(including, without limitation, determinations pursuant to Articles Six and
Nine).

                  If a Security is replaced pursuant to Section 2.7, it ceases
to be Outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a Protected Purchaser.

                  If the Paying Agent holds, in accordance with this Indenture,
on a Redemption Date, or on the Business Day following a Purchase Date, or on
Stated Maturity, money or securities, if permitted hereunder, sufficient to pay
Securities payable on that date, then immediately after such Redemption Date,
Purchase Date or Stated Maturity, as the case may be,

                                      -12-
<PAGE>
such Securities shall cease to be Outstanding and Original Issue Discount and
contingent interest, if any, shall cease to accrue.

                  Securities for whose payment or redemption money, Common Stock
or other securities in the necessary amount has been theretofore deposited with
the Trustee or any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities shall be deemed to be no longer
Outstanding; provided that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefore satisfactory to the Trustee has been made or, if the Securities are to
be purchased, a Purchase Notice shall have been duly given and not be subject to
withdrawal.

                  If a Security is converted in accordance with Article Ten,
then from and after the time of conversion on the date of conversion, such
Security shall cease to be Outstanding and Original Issue Discount and
contingent interest, if any, shall cease to accrue on such Security.

                  Section 2.9 Temporary Securities. Pending the preparation of
definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such Securities.

                  If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 2.3, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Securities of authorized denominations. Until so
exchanged the temporary Securities shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities.

                  Section 2.10 Cancellation. All Securities surrendered for
payment, purchase by the Company pursuant to Article Three, conversion,
redemption or registration of transfer or exchange shall, if surrendered to any
person other than the Trustee, be delivered to the Trustee and shall be promptly
cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder,
which the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly cancelled by the Trustee. The Company may not
issue new Securities to replace Securities it has paid or delivered to the
Trustee for cancellation or that any Holder has converted pursuant to Article
Ten. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Securities held by the Trustee shall be
disposed of by the Trustee in accordance with the Trustee's customary procedure.

                                      -13-
<PAGE>
                  Section 2.11 Persons Deemed Owners. Prior to due presentment
of a Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name such
Security is registered as the owner of such Security for the purpose of
receiving payment of principal of the Security or the payment of any Redemption
Price or Purchase Price in respect thereof, and (subject to Section 11.4)
contingent interest thereon, for the purpose of conversion and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

                  Section 2.12 Global Securities. (a) Notwithstanding any other
provisions of this Indenture or the Securities, (A) transfers of a Global
Security, in whole or in part, shall be made only in accordance with Section 2.6
and Section 2.12(a)(i), (B) transfers of a beneficial interest in a Global
Security for a Certificated Security shall comply with Section 2.6, Section
2.12(a)(ii) below and Section 2.12(b)(1) below, and (C) transfers of a
Certificated Security shall comply with Section 2.6 and Sections 2.12(a)(iii)
and (iv) below.

                  (i)      Transfer of Global Security. A Global Security may
         not be transferred, in whole or in part, to any Person other than the
         Depositary or a nominee of the Depositary or any successor to either of
         them, and no such transfer to any such other Person may be registered.
         No transfer of a Security to any person shall be effective under this
         Indenture or the Securities unless and until such Security has been
         registered in the name of such Person. Nothing in this Section
         2.12(a)(i) shall prohibit or render ineffective any transfer of a
         beneficial interest in a Global Security effected in accordance with
         the other provisions of this Section 2.12(a).

                  (ii)     Restrictions on Transfer of a Beneficial Interest in
         a Global Security for a Certificated Security. A beneficial interest in
         a Global Security may not be exchanged for a Certificated Security
         except upon satisfaction of the requirements set forth below and in
         Section 2.12(b)(1) below. Upon receipt by the Trustee of a transfer of
         a beneficial interest in a Global Security in accordance with
         Applicable Procedures for a Certificated Security, together with
         written instructions to the Trustee to make, or direct the Registrar to
         make, an adjustment on its books and records with respect to such
         Global Security to reflect a decrease in the aggregate principal amount
         of the Securities represented by the Global Security, then the Trustee
         shall cause, or direct the Registrar to cause, in accordance with the
         standing instructions and procedures existing between the Depositary
         and the Registrar, the aggregate principal amount of the Securities
         represented by the Global Security to be decreased by the aggregate
         principal amount of the Certificated Security to be issued, shall issue
         such Certificated Security and shall debit or cause to be debited to
         the account of the Person specified in such instructions a beneficial
         interest in the Global Security equal to the principal amount of the
         Certificated Security so issued.

                  (iii)    Transfer and Exchange of Certificated Securities.
         When Certificated Securities are presented to the Registrar with a
         request:

                  (y)      to register the transfer of such Certificated
         Securities; or

                                      -14-
<PAGE>
                  (z)      to exchange such Certificated Securities for an equal
         principal amount of Certificated Securities of other authorized
         denominations,

                  the Registrar shall register the transfer or make the exchange
         as provided in Section 2.6; provided, however, that the Certificated
         Securities surrendered for transfer or exchange shall be duly endorsed
         or accompanied by a written instrument of transfer in form reasonably
         satisfactory to the Company, duly executed by the Holder thereof or his
         attorney duly authorized in writing.

                  (iv)     Restrictions on Transfer of a Certificated Security
         for a Beneficial Interest in a Global Security. A Certificated Security
         may not be exchanged for a beneficial interest in a Global Security.

                  (b)      The provisions of clauses (1), (2), (3), (4) and (5)
below shall apply only to Global Securities:

                  (1)      Notwithstanding any other provisions of this
                           Indenture or the Securities, a Global Security shall
                           not be exchanged, in whole or in part, for a Security
                           registered in the name of any Person other than the
                           Depositary or one or more nominees of the Depositary
                           or the successor to either of them, provided that a
                           Global Security may be exchanged for Securities
                           registered in the names of any person designated by
                           the Depositary in the event that (i) the Depositary
                           has notified the Company that it is unwilling or
                           unable to continue as Depositary for such Global
                           Security or such Depositary has ceased to be a
                           "clearing agency" registered under the Exchange Act,
                           and a successor Depositary is not appointed by the
                           Company within 90 days, (ii) an Event of Default has
                           occurred and is continuing with respect to the
                           Securities or (iii) the Company delivers to the
                           Trustee a Company Order to that effect. Any Global
                           Security exchanged pursuant to clause (i) or (iii)
                           above shall be so exchanged in whole and not in part,
                           and any Global Security exchanged pursuant to clause
                           (ii) above may be exchanged in whole or from time to
                           time in part as directed by the Depositary.

                  (2)      Certificated Securities issued in exchange for a
                           Global Security or any portion thereof shall be
                           issued in definitive, fully registered form, without
                           interest coupons, shall have an aggregate principal
                           amount equal to that of such Global Security or
                           portion thereof to be so exchanged, shall be
                           registered in such names and be in such authorized
                           denominations as the Depositary shall designate. Any
                           Global Security to be exchanged in whole shall be
                           surrendered by the Depositary to the Trustee, as
                           Registrar. With regard to any Global Security to be
                           exchanged in part, either such Global Security shall
                           be so surrendered for exchange or, if the Trustee is
                           acting as custodian for the Depositary or its nominee
                           with respect to such Global Security, the principal
                           amount thereof shall be reduced, by an amount equal
                           to the portion thereof to be so exchanged, by means
                           of an appropriate adjustment made on the records of
                           the Trustee.

                                      -15-
<PAGE>
                  (3)      Subject to the provisions of clause (5) below, the
                           registered Holder may grant proxies and otherwise
                           authorize any person, including Agent Members (as
                           defined below) and persons that may hold interests
                           through Agent Members, to take any Act of a Holder
                           that a Holder is entitled to take under this
                           Indenture or the Securities.

                  (4)      In the event of the occurrence of any of the events
                           specified in clause (1) above, the Company will
                           promptly make available to the Trustee a reasonable
                           supply of Certificated Securities in definitive,
                           fully registered form, without interest coupons.

                  (5)      Neither any members of, or participants in, the
                           Depositary (collectively, the "Agent Members") nor
                           any other persons on whose behalf Agent Members may
                           act shall have any rights under this Indenture with
                           respect to any Global Security registered in the name
                           of the Depositary or any nominee thereof, or under
                           any such Global Security, and the Depositary or such
                           nominee, as the case may be, may be treated by the
                           Company, the Trustee and any agent of the Company or
                           the Trustee as the absolute owner and holder of such
                           Global Security for all purposes whatsoever.

                  Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or such nominee, as the case may be, or impair, as between the
Depositary, its Agent Members and any other person on whose behalf an Agent
Member may act, the operation of customary practices of such Persons governing
the exercise of the rights of any Person having a beneficial interest in a
Security.

                  Section 2.13 Calculations in Respect of Securities. The
Company or its agents will be responsible for making all calculations and
determinations called for under the Securities including, but not limited to,
the determination of the market prices for the Securities and of the Common
Stock, the Sale Price and the amounts of contingent interest payments, if any,
on the Securities. Any calculations made in good faith and without manifest
error will be final and binding on Holders of the Securities.

                  Section 2.14 CUSIP Numbers. The Company may issue the
Securities with one or more "CUSIP" numbers (if then generally in use), and, if
so, the Trustee shall use CUSIP numbers in notices of redemption and Purchase
Notices as a convenience to Holders; provided that any such redemption notice or
Purchase Notice may state that no representation is made as to the correctness
of such numbers either as printed on the Securities or as contained in any
notice of a redemption or Purchase Notice and that reliance may be placed only
on the other identification numbers printed on the Securities, and any such
redemption or repurchase shall not be affected by any defect in or omission of
such numbers.

                                      -16-
<PAGE>
                                  ARTICLE THREE

                            REDEMPTION AND PURCHASES

                  Section 3.1 Company's Right to Redeem; Notices to Trustee.
Prior to November  , 2006, the Securities will not be redeemable at the
Company's option. Beginning on and including November  , 2006, the Company, at
its option, may redeem the Securities in accordance with the provisions of
Sections 6 and 8 of the Securities for cash at any time as a whole, or from time
to time in part, at the Redemption Price. If the Company elects to redeem
Securities pursuant to Section 6 of the Securities, it shall notify the Trustee
in writing of the Redemption Date, the principal amount of Securities to be
redeemed and the Redemption Price.

                  The Company shall give the notice to the Trustee provided for
in this Section 3.1 by a Company Order, at least 25 days (unless a shorter
notice shall be satisfactory to the Trustee) but not more than 70 days before
the Redemption Date.

                  Section 3.2 Selection of Securities to Be Redeemed. If less
than all the Outstanding Securities are to be redeemed, unless the procedures of
the Depositary provide otherwise, the Trustee shall select the Securities to be
redeemed by lot, on a pro rata basis or by another method the Trustee considers
fair and appropriate (so long as such method is not prohibited by the rules of
any stock exchange on which the Securities are then listed). The Trustee shall,
within five Business Days after it receives the notice provided for in Section
3.1, make the selection from Outstanding Securities not previously called for
redemption.

                  Securities and portions of Securities that the Trustee selects
shall be in principal amounts of $1,000 or whole multiples of $1,000. Provisions
of this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption. The Trustee shall notify the
Company promptly of the Securities or portions of the Securities to be redeemed.

                  Securities and portions of Securities that are to be redeemed
are convertible by the Holder up to, but not including, the third Business Day
prior to the Redemption Date. If any Security selected for partial redemption is
converted in part before termination of the conversion right with respect to the
portion of the Security so selected, the converted portion of such Security
shall be deemed (so far as may be) to be the portion selected for redemption.
Securities that have been converted during a selection of Securities to be
redeemed may be treated by the Trustee as Outstanding for the purpose of such
selection.

                  Section 3.3 Notice of Redemption. At least 15 days but not
more than 60 days before a Redemption Date, the Company shall mail a notice of
redemption by first-class mail, postage prepaid, to each Holder of Securities to
be redeemed.

                  The notice shall identify the Securities to be redeemed and
shall state:

                  (1)      the Redemption Date;

                  (2)      the Redemption Price;

                                      -17-
<PAGE>
                  (3)      the Conversion Price;

                  (4)      the name and address of the Paying Agent and
                           Conversion Agent;

                  (5)      that Securities called for redemption may be
                           converted at any time up to, but not including, the
                           third Business Day prior to the Redemption Date;

                  (6)      that Holders who want to convert their Securities
                           must satisfy the requirements set forth in Section 9
                           of the Securities;

                  (7)      that Securities called for redemption must be
                           surrendered to the Paying Agent to collect the
                           Redemption Price;

                  (8)      if fewer than all of the Outstanding Securities are
                           to be redeemed, the certificate numbers, if any, and
                           principal amounts of the particular Securities to be
                           redeemed;

                  (9)      that, unless the Company defaults in making payment
                           of such Redemption Price, Original Issue Discount and
                           contingent interest, if any, on Securities called for
                           redemption, Original Issue Discount and contingent
                           interest will cease to accrue on and after the
                           Redemption Date; and

                  (10)     the CUSIP number(s) of the Securities.

                  Notices of redemption may be given by the Company or, at the
Company's request, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense.

                  Section 3.4 Effect of Notice of Redemption. Once notice of
redemption is given, Securities called for redemption become due and payable on
the Redemption Date and at the Redemption Price stated in the notice except for
Securities that are converted in accordance with the terms of this Indenture.
Upon surrender to the Paying Agent, such Securities shall be paid at the
Redemption Price stated in the notice; provided, however, that any contingent
interest that is due and payable on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, as provided in Article Eleven.

                  Section 3.5 Deposit of Redemption Price. Prior to 10:00 a.m.
(New York City time) on the Redemption Date, the Company shall deposit with the
Paying Agent (or if the Company or a Subsidiary or an Affiliate of either of
them is the Paying Agent, shall segregate and hold in trust) money sufficient to
pay the Redemption Price of all Securities to be redeemed on that date other
than Securities or portions of Securities called for redemption that on or prior
thereto have been delivered by the Company to the Trustee for cancellation or
have been converted. The Paying Agent shall as promptly as practicable return to
the Company any money not required for payment of the Redemption Price because
of conversion of Securities pursuant to Article Ten. If such money is then held
by the Company in trust and is not required for payment of the Redemption Price
it shall be discharged from such trust.

                                      -18-
<PAGE>
                  Section 3.6 Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate and deliver to the Holder a new Security in an authorized
denomination equal in principal amount to the unredeemed portion of the Security
surrendered.

                  Section 3.7 Purchase of Securities by the Company at Option of
the Holder. Securities shall be purchased by the Company pursuant to Section 7
of the Securities at the option of the Holder on November  , 2006, November  ,
2011, November  , 2016, November  , 2021 and November  , 2026 (each, a "Purchase
Date"), at a purchase price equal to the Issue Price of those Securities plus
any accrued Original Issue Discount and any accrued and unpaid contingent
interest, in each case, up to but excluding such Purchase Date (the "Purchase
Price"), subject to the provisions of Section 3.8; provided, however, that any
contingent interest that is due and payable on or prior to the Purchase Date
shall be paid to the Holders of the Securities, or one or more Predecessor
Securities, as provided in Article Eleven. Purchases of Securities hereunder
shall be made, at the option of the Holder thereof, upon:

                  (1)      delivery to the Paying Agent by the Holder of a
                           written notice of purchase (a "Purchase Notice")
                           during the period beginning at any time from the
                           opening of business on the date that is 24 Business
                           Days prior to the relevant Purchase Date until the
                           close of business on the fourth Business Day prior to
                           such Purchase Date stating:

                           (A)      the certificate number of the Security which
                           the Holder will deliver to be purchased or the
                           appropriate Depositary procedures if Certificated
                           Securities have not been issued,

                           (B)      the portion of the principal amount of the
                           Security that the Holder will deliver to be
                           purchased, which portion must be in principal amounts
                           of $1,000 or a whole multiple of $1,000,

                           (C)      that such Security shall be purchased by the
                           Company as of the Purchase Date pursuant to the terms
                           and conditions specified in Section 7 of the
                           Securities and in this Indenture, and

                           (D)      in the event the Company elects, pursuant to
                           Section 3.8, to pay the Purchase Price, in whole or
                           in part, in shares of Common Stock but such portion
                           of the Purchase Price shall ultimately be paid to
                           such Holder entirely in cash because any of the
                           conditions to payment of the Purchase Price in shares
                           of Common Stock is not satisfied prior to the close
                           of business on the relevant Purchase Date, as set
                           forth in Section 3.8, whether such Holder elects (i)
                           to withdraw such Purchase Notice as to some or all of
                           the Securities to which such Purchase Notice relates
                           (stating the principal amount and certificate
                           numbers, if any, of the Securities as to which such
                           withdrawal shall relate), or (ii) to receive cash in
                           respect of the entire Purchase Price for all
                           Securities (or portions thereof) to which such
                           Purchase Notice relates; and

                                      -19-
<PAGE>
                  (2)      book-entry transfer or delivery of such Security to
                           the Paying Agent at any time after delivery of the
                           Purchase Notice (together with all necessary
                           endorsements) at the offices of the Paying Agent,
                           such delivery being a condition to receipt by the
                           Holder of the Purchase Price therefor; provided,
                           however, that such Purchase Price shall be so paid
                           pursuant to this Section 3.7 only if the Security so
                           delivered to the Paying Agent shall conform in all
                           respects to the description thereof in the related
                           Purchase Notice.

                  If a Holder, in such Holder's Purchase Notice and in any
written notice of withdrawal delivered by such Holder pursuant to the terms of
Section 3.8, fails to indicate such Holder's choice with respect to the election
set forth in clause (D) of Section 3.7 (1), such Holder shall be deemed to have
elected to receive cash in respect of the entire Purchase Price for all
Securities subject to such Purchase Notice in the circumstances set forth in
such clause (D).

                  The Company shall purchase from the Holder thereof, pursuant
to this Section 3.7, a portion of a Security, if the principal amount of such
portion is $1,000 or a whole multiple of $1,000. Provisions of this Indenture
that apply to the purchase of all of a Security also apply to the purchase of
such portion of such Security.

                  Any purchase by the Company contemplated pursuant to the
provisions of this Section 3.7 shall be consummated by the delivery of the
consideration to be received by the Holder promptly following the later of the
Purchase Date and the time of the book-entry transfer or delivery of the
Security.

                  Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Purchase Notice contemplated by this Section
3.7 shall have the right to withdraw such Purchase Notice at any time up to, but
excluding, the third Business Day prior to the Purchase Date by delivery of a
written notice of withdrawal to the Paying Agent in accordance with Section 3.9.

                  The Paying Agent shall promptly notify the Company of the
receipt by it of any Purchase Notice or written notice of withdrawal thereof.

                  Section 3.8 Company's Right to Elect Manner of Payment of
Purchase Price for Payment. (a) The Securities to be purchased on any Purchase
Date pursuant to Section 3.7(a) may be paid for, in whole or in part, at the
election of the Company, in U.S. legal tender ("cash") or shares of Common
Stock, or in any combination of cash and shares of Common Stock, subject to the
conditions set forth in Sections 3.8(c) and (d). The Company shall designate, in
the Company Notice delivered pursuant to Section 3.8(d), whether the Company
will purchase the Securities for cash or shares of Common Stock, or, if a
combination thereof, the percentages of the Purchase Price of Securities in
respect of which it will pay in cash or shares of Common Stock; provided that
the Company will pay cash for fractional interests in shares of Common Stock.
For purposes of determining the existence of potential fractional interests, all
Securities subject to purchase by the Company held by a Holder shall be
considered together (no matter how many separate certificates are to be
presented). Each Holder whose Securities are purchased pursuant to Section 3.7
shall receive the same percentage of cash or

                                      -20-
<PAGE>
shares of Common Stock in payment of the Purchase Price for such Securities,
except with regard to the payment of cash in lieu of fractional shares of Common
Stock. The Company may not change its election with respect to the consideration
(or components or percentages of components thereof) to be paid once the Company
has given its Company Notice to Holders except pursuant to Section 3.8(c) in the
event of a failure to satisfy, prior to the close of business on the Business
Day immediately preceding the Purchase Date, any condition to the payment of the
Purchase Price, in whole or in part, in shares of Common Stock.

                  At least three Business Days before each Company Notice Date,
the Company shall deliver an Officers' Certificate to the Trustee specifying:

                  (i)      the manner of payment selected by the Company,

                  (ii)     the information required by Section 3.8(d) in the
         Company Notice,

                  (iii)    if the Company elects to pay the Purchase Price, or a
         specified percentage thereof, in shares of Common Stock, that the
         conditions to such manner of payment set forth in Section 3.8(c) have
         been or will be complied with, and

                  (iv)     whether the Company desires the Trustee to give the
         Company Notice required by Section 3.8(d).

                  (b)      At the option of the Company, the Purchase Price of
Securities in respect of which a Purchase Notice pursuant to Section 3.7 has
been given, or a specified percentage thereof, may be paid by the Company with
cash equal to the aggregate Purchase Price of such Securities. The Company
Notice, as provided in Section 3.8(d), shall be sent to Holders not less than 24
Business Days prior to such Purchase Date (the "Company Notice Date").

                  (c)      At the option of the Company, the Purchase Price of
Securities in respect of which a Purchase Notice pursuant to Section 3.7 has
been given, or a specified percentage thereof, may be paid by the Company by the
issuance of a number of shares of Common Stock equal to the quotient obtained by
dividing (i) the portion of the Purchase Price to be paid in shares of Common
Stock by (ii) 100% of the Market Price determined by the Company in the Company
Notice, subject to the next succeeding paragraph.

                  The Company will not issue fractional shares of Common Stock
in payment of the Purchase Price. Instead, the Company will pay cash based on
the current market price for all fractional shares. It is understood that if a
Holder elects to have more than one Security purchased, the number of shares of
Common Stock shall be based on the aggregate amount of Securities to be
purchased.

                  If the Company elects to purchase the Securities by the
issuance of shares of Common Stock or in any combination of cash and Common
Stock, the Company Notice, as provided in Section 3.8(d), shall be sent to the
Holders not later than the Company Notice Date.

                                      -21-
<PAGE>
                  The Company's right to exercise its election to purchase
Securities through the issuance of shares of Common Stock shall be conditioned
upon:

                  (i)      the Company's not having given its Company Notice of
         an election to pay entirely in cash and its giving of timely Company
         Notice of an election to purchase all or a specified percentage of the
         Securities with shares of Common Stock as provided herein;

                  (ii)     the registration of such shares of Common Stock under
         the Securities Act and the Exchange Act, in each case, if required;

                  (iii)    the listing of such shares of Common Stock on a
         United States national securities exchange or the quotation of such
         shares of Common Stock in an inter-dealer quotation system of any
         registered United States national securities association, in each case,
         if the Common Stock is then listed on a national securities exchange or
         quoted in an inter-dealer quotation system;

                  (iv)     any necessary qualification or registration of such
         shares of Common Stock under applicable state securities laws or the
         availability of an exemption from such qualification and registration;
         and

                  (v)      the receipt by the Trustee of (A) an Officers'
         Certificate stating that the terms of the issuance of the shares of
         Common Stock are in conformity with this Indenture, (B) an Opinion of
         Counsel to the effect that the shares of Common Stock to be issued by
         the Company in payment of the Purchase Price in respect of the
         Securities have been duly authorized and, when issued and delivered
         pursuant to the terms of this Indenture in payment of the Purchase
         Price in respect of the Securities, will be validly issued, fully paid
         and non-assessable and (c) an Officers' Certificate, stating that the
         conditions to the issuance of the shares of Common Stock have been
         satisfied.

                  Such Officers' Certificate shall also set forth the number of
shares of Common Stock to be issued for each $1,000 principal amount at Stated
Maturity of Securities and the Sale Price of a share of Common Stock on each
Trading Day during the period commencing on the first Trading Day of the period
during which the Market Price is calculated and ending on but excluding the
third Business Day prior to the applicable Purchase Date. If the foregoing
conditions are not satisfied prior to the close of business on the last day
prior to the Purchase Date and the Company has elected to purchase the
Securities through the issuance of shares of Common Stock, the Company shall pay
the entire Purchase Price of the Securities in cash.

                  The "Market Price" means the average of the Sale Prices of the
shares of Common Stock for the five-Trading Day period immediately preceding but
excluding the third Business Day prior to the applicable Purchase Date (if the
fourth Business Day prior to the applicable Purchase Date is a Trading Day, or
if not, then on the last Trading Day prior to the fourth Business Day),
appropriately adjusted to take into account the occurrence, during the period
commencing on the first of the Trading Days during the five-Trading Day period
and ending on the Purchase Date, of any event described in Sections 10.3 or
10.4.

                  The "Sale Price" of the shares of Common Stock on any date
means the closing per share sale price (or, if no closing sale price is
reported, the average of the closing bid and ask prices

                                      -22-
<PAGE>
or, if more than one in either case, the average of the average closing bid and
the average ask prices) on such date as reported on the NYSE or, if the shares
of Common Stock are not listed on the NYSE, as reported on a national securities
exchange, or if not reported on a national securities exchange, as reported by
the Nasdaq. In the absence of such quotations, the Company shall be entitled to
determine the closing sales price on the basis of such quotations as it
considers appropriate. Sale Prices shall be determined without reference to
extended or after hours trading.

                  Upon determination of the actual number of shares of Common
Stock to be issued upon redemption or repurchase of Securities, the Company
shall be required to disseminate a press release through Dow Jones & Company,
Inc. or Bloomberg Business News containing this information or publish the
information on the Company's web site or through such other public medium as the
Company may use at that time.

                  (d)      In connection with any purchase of Securities
pursuant to Section 7 of the Securities, the Company shall, no less than 24
Business Days prior to each Purchase Date, give notice to Holders setting forth
information specified in this Section 3.8(d) (the "Company Notice").

                  In the event the Company has elected to pay the Purchase Price
(or a specified percentage thereof), with shares of Common Stock, the Company
Notice shall:

                  (1)      state that each Holder will receive a number of
                           shares of Common Stock with a value equal to 100% of
                           the Market Price equal to such specified percentage
                           of the Purchase Price of the Securities to be paid in
                           Common Stock (except any cash amount to be paid in
                           lieu of fractional shares);

                  (2)      set forth the method of calculating the Market Price
                           of the shares of Common Stock; and

                  (3)      state that because the Market Price of shares of
                           Common Stock will be determined prior to the Purchase
                           Date Holders of the Securities will bear the market
                           risk with respect to the value of the shares of
                           Common Stock to be received from the date such Market
                           Price is determined to the Purchase Date.

                  In any case, each Company Notice shall include a form of
Purchase Notice to be completed by a Holder and shall state:

                  (i)      the Purchase Price;

                  (ii)     the name and address of the Paying Agent and the
         Conversion Agent;

                  (iii)    if the Securities are then convertible, that
         Securities as to which a Purchase Notice has been given may be
         converted only if the Purchase Notice is withdrawn in accordance with
         the terms of this Indenture;

                  (iv)     that Securities must be surrendered to the Paying
         Agent to collect the Purchase Price;

                                      -23-
<PAGE>

                  (v)      that the Purchase Price for any security as to which
         a Purchase Notice has been given and not withdrawn will be paid
         promptly following the later of the Purchase Date and the time of
         surrender of such Security;

                  (vi)     that, unless the Company defaults in making payment
         on Securities for which a Purchase Notice has been submitted, Original
         Issue Discount and any contingent interest on such Securities will
         cease to accrue on and after the Purchase Date; provided, however, that
         any contingent interest that is due and payable prior to the Purchase
         Date will be payable to the Holders of Securities, or one or more
         Predecessor Securities, as provided in Article Eleven; and

                  (vii)    the CUSIP number of the Securities.

                  Company Notices may be given by the Company or, at the
Company's request, the Trustee shall give such Company Notice in the Company's
name and at the Company's expense.

                  (e)      All shares of Common Stock delivered upon purchase of
the Securities shall be duly authorized, validly issued, fully paid and
nonassessable.

                  (f)      If a Holder of a purchased Security is paid in shares
of Common Stock, the Company shall pay any documentary, stamp or similar issue
or transfer tax due on such issue of Common Stock. However, the Holder shall pay
any such tax which is due because the Holder requests the Common Stock to be
issued in a name other than the Holder's name. The Paying Agent may refuse to
deliver the certificates representing the shares of Common Stock being issued in
a name other than the Holder's name until the Paying Agent receives a sum
sufficient to pay any tax which will be due because the shares of Common Stock
are to be issued in a name other than the Holder's name. Nothing herein shall
preclude any income tax withholding required by law or regulations.

                  Section 3.9 Effect of Purchase Notice. Upon receipt by the
Paying Agent of the Purchase Notice specified in Section 3.7, the Holder of the
Security in respect of which such Purchase Notice was given shall (unless such
Purchase Notice is validly withdrawn) thereafter be entitled to receive solely
the Purchase Price with respect to such Security. Such Purchase Price shall be
paid to such Holder, subject to receipt of funds and/or securities by the Paying
Agent, promptly following the later of (x) the Purchase Date with respect to
such Security (provided the Holder has satisfied the conditions in Section 3.7)
and (y) the time of delivery of such Security to the Paying Agent by the Holder
thereof in the manner required by Section 3.7. Securities in respect of which a
Purchase Notice has been given by the Holder thereof may not be converted
pursuant to Article Ten hereof on or after the date of the delivery of such
Purchase Notice unless such Purchase Notice has first been validly withdrawn.

                  A Purchase Notice may be withdrawn by means of a written
notice of withdrawal delivered to the office of the Paying Agent in accordance
with the Purchase Notice at any time prior to but excluding the third Business
Day before the Purchase Date, specifying:

                  (1)      the certificate number, if any, of the Security in
                           respect of which such notice of withdrawal is being
                           submitted, or the appropriate Depositary procedures
                           if Certified Securities have not been issued,

                                      -24-
<PAGE>
                  (2)      the principal amount of the Security with respect to
                           which such notice of withdrawal is being submitted,
                           and

                  (3)      the principal amount, if any, of such Security which
                           remains subject to the original Purchase Notice and
                           which has been or will be delivered for purchase by
                           the Company.

                  A written notice of withdrawal of a Purchase Notice may be in
the form set forth in the preceding paragraph or may be in the form of a
conditional withdrawal contained in a Purchase Notice pursuant to the terms of
Section 3.7 (1)(D).

                  The Company may, in its sole and complete discretion, accept a
written notice of withdrawal on or after the third Business Day prior to a
Purchase Date. The decision of the Company to accept or reject such a
withdrawal notice shall be conclusive and binding on the Holder proposing to
make the withdrawal.

                  There shall be no purchase of any Securities pursuant to
Section 3.7 if there has occurred and is continuing an Event of Default on the
Purchase Date (other than a default in the payment of the Purchase Price with
respect to such Securities or a default that is cured by the repurchase). The
Paying Agent will promptly return to the respective Holders thereof any
Securities (x) with respect to which a Purchase Notice has been withdrawn in
compliance with this Indenture, or (y) held by it during the continuance of an
Event of Default (other than a default in the payment of the Purchase Price with
respect to such Securities or a default that is cured by the repurchase) in
which case, upon such return, the Purchase Notice with respect thereto shall be
deemed to have been withdrawn.

                  Section 3.10 Deposit of Purchase Price. Prior to 10:00 a.m.
(New York City Time) on the Business Day following the Purchase Date, the
Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company or a Subsidiary or an Affiliate of either of them is acting as the
Paying Agent, shall segregate and hold in trust as provided in Section 2.4) an
amount of cash (in immediately available funds if deposited on such Business
Day) or Common Stock, if permitted hereunder, sufficient to pay the aggregate
Purchase Price of all the Securities or portions thereof that are to be
purchased as of the Purchase Date.

                  As soon as practicable after the Purchase Date the Company
shall deliver to each Holder entitled to receive shares of Common Stock through
the Paying Agent, a certificate for the number of full shares of Common Stock
issuable in payment of the Purchase Price and cash in lieu of any fractional
interests. The person in whose name the certificate for the shares of Common
Stock is registered shall be treated as a holder of record of Common Stock on
the Business Day following the Purchase Date. No payment or adjustment will be
made for dividends on the shares of Common Stock the record date for which
occurred on or prior to the Purchase Date.

                  Section 3.11 Securities Purchased in Part. Any Certificated
Security that is to be purchased only in part shall be surrendered at the office
of the Paying Agent (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such

                                      -25-
<PAGE>
Holder's attorney duly authorized in writing) and the Company shall execute and
the Trustee shall authenticate and deliver to the Holder of such Security,
without service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to,
and in exchange for, the portion of the principal amount of the Security so
surrendered which is not purchased.

                  Section 3.12 Repayment to the Company. The Trustee and the
Paying Agent shall return to the Company any cash or shares of Common Stock that
remain unclaimed as provided in Section 12 of the Securities, together with
interest or dividends, if any, thereon, held by them for the payment of the
Purchase Price; provided, however, that to the extent that the aggregate amount
of cash or shares of Common Stock deposited by the Company pursuant to Section
3.10 exceeds the aggregate Purchase Price of the Securities or portions thereof
which the Company is obligated to purchase as of the Purchase Date then, unless
otherwise agreed in writing with the Company, promptly after the Business Day
following the Purchase Date, the Trustee shall return any such excess to the
Company together with interest or dividends, if any, thereon.

                                  ARTICLE FOUR

                                    COVENANTS

                  Section 4.1 Payment of Securities. The Company shall promptly
make all payments in respect of the Securities on the dates and in the manner
provided in the Securities or pursuant to this Indenture. The Principal Amount
of the Securities payable at final Stated Maturity shall be deposited with the
Trustee or Paying Agent by 10:00 a.m., New York City time, by the Company.
Principal Amount, Issue Price, accrued Original Issue Discount, Redemption
Price, Purchase Price and contingent interest, if any, shall be considered paid
on the applicable date due if on such date the Trustee or the Paying Agent
holds, in accordance with this Indenture, cash or securities, if permitted
hereunder, sufficient to pay all such amounts then due.

                  The Company shall, to the extent permitted by law, pay
interest on overdue Principal Amount, contingent interest, if any, or the cash
portion of the Repurchase Price at the per annum rate of interest of 1.50%,
compounded semi-annually, which interest (to the extent payment of such interest
shall be legally enforceable) shall accrue from the date such overdue amounts
were originally due and payable until such amount is paid or payment is duly
provided for. Any such interest shall be payable on demand.

                  Section 4.2 SEC and Other Reports. The Company shall file with
the Trustee and the Commission, and transmit to Holders, such information,
documents and other reports, and such summaries thereof, as may be required
pursuant to the TIA at the times and in the manner provided pursuant to the TIA;
provided that any such information, documents or reports required to be filed
with the SEC pursuant to section 13 or 15(d) of the Exchange Act shall be filed
with the Trustee within 15 days after the same is so required to be filed with
the SEC.

                  Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein,

                                      -26-
<PAGE>
including the Company's compliance with any of its covenants hereunder (as to
which the Trustee is entitled to rely exclusively on Officers' Certificates).

                  Section 4.3 Compliance Certificate. The Company shall deliver
to the Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on December 31, 2001) an Officers'
Certificate, stating whether or not to the knowledge of the signers thereof, the
Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.

                  Section 4.4 Maintenance of Office or Agency. The Trustee will
maintain (and the Company, to the extent the Trustee is not also the Registrar,
Paying Agent or Conversion Agent, will ensure that the Registrar, Paying Agent
and Conversion Agent maintain), in the Borough of Manhattan, the City of New
York, an office or agency of the Trustee, Registrar, Paying Agent and Conversion
Agent where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer, exchange, purchase,
redemption or conversion and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The office of The
Bank of New York, 5 Penn Plaza, New York, NY 10001 (Attention: Corporate Trust
Administration), shall initially be such office or agency for all of the
aforesaid purposes.

                  Section 4.5 Tax Treatment of Securities. The Company agrees,
and by acceptance of a beneficial ownership interest in the Securities, each
beneficial holder of Securities will be deemed to have agreed, for United States
federal income tax purposes, to treat the Securities as indebtedness that is
subject to Section 1.1275-4 of the United States Treasury Regulations (the
"Contingent Debt Regulations"). A holder of Securities may obtain the comparable
yield and projected payment schedule by submitting a written request for it to
the Company at the following address: American International Group, Inc., 70
Pine Street, New York, New York 10270, Attention: Vice President and Director
of Taxes or telephoning (212) 770-7000.

                  Section 4.6 Calculation of Accrued Original Issue Discount and
Tax Original Issue Discount. The Company shall file with the Trustee, within 30
days following the end of each calendar year, a written notice specifying (i)
the amount of accrued Original Issue Discount and Tax Original Issue Discount
(including the daily rates and accrual periods) accrued on Outstanding
Securities as of the end of such year and (ii) such other specific information
relating to such accrued Original Issue Discount and Tax Original Issue Discount
as may then be relevant under the Internal Revenue Code of 1986, as amended from
time to time.

                                  ARTICLE FIVE

                              SUCCESSOR CORPORATION

                  Section 5.1 When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into any other Person or
convey, transfer, sell, lease or otherwise dispose of all or substantially all
of its properties and assets to any Person, unless:

                                      -27-
<PAGE>
                  (a)      either (1) the Company shall be the continuing
corporation or (2) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance, transfer or lease all or substantially all of the properties and
assets of the Company substantially as an entirety (i) shall be organized and
validly existing under the laws of the United States or any State thereof or the
District of Columbia and (ii) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, all of the
obligations of the Company under the Securities and this Indenture;

                  (b)      immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing; and

                  (c)      the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture, comply with this Article Five and that all conditions precedent
herein provided for relating to such transaction have been satisfied.

                  The successor Person formed by such consolidation or into
which the Company is merged or the successor Person to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor had been named as the Company herein; and
thereafter, except in the case of a lease and obligations the Company may have
under a supplemental indenture, the Company shall be discharged from all
obligations and covenants under this Indenture and the Securities. Subject to
Section 9.6, the Company, the Trustee and the successor Person shall enter into
a supplemental indenture to evidence the succession and substitution of such
successor Person and such discharge and release of the Company.

                                  ARTICLE SIX

                              DEFAULTS AND REMEDIES

                  Section 6.1 Events of Default. So long as any Securities are
Outstanding, each of the following shall be an "Event of Default":

                  (1)      the Company defaults in the payment of the Principal
         Amount, Redemption Price or Purchase Price on any Security when the
         same becomes due and payable;

                  (2)      the Company defaults in the payment of contingent
         interest when due and payable, and continuance of such default for a
         period of 30 days;

                  (3)      the Company fails to comply with any other term,
         agreement or covenant in the Securities or this Indenture (other than
         those referred to in clause (1) and (2) above) and such failure
         continues for 60 days after receipt by the Company of a Notice of
         Default;

                                      -28-
<PAGE>
                  (4)      the entry by a court having jurisdiction in the
         premises of (i) a decree or order for relief in respect of the Company
         in an involuntary case or proceeding under any applicable bankruptcy,
         insolvency, reorganization or other similar law or (ii) a decree or
         order adjudging the Company a bankrupt or insolvent, or approving as
         properly filed a petition seeking reorganization, arrangement,
         adjustment or composition of or in respect of the Company under any
         applicable law, or appointing a custodian, receiver, liquidator,
         assignee, trustee, sequestrator or other similar official of the
         Company or of any substantial part of its property, or ordering the
         winding up or liquidation of its affairs, and the continuance of any
         such decree or order for relief or any such other decree or order
         unstayed and in effect for a period of 60 consecutive days; or

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

                  A Default under clause (3) above is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
aggregate principal amount of the Securities at the time Outstanding notify the
Company and the Trustee, of the Default and the Company does not cure such
Default (and such Default is not waived) within the time specified in clause (3)
above after actual receipt of such notice. Any such notice must specify the
Default, demand that it be remedied and state that such notice is a "Notice of
Default."

                  The Trustee shall, within 90 days of the occurrence of a
Default, give to the Holders of the Securities notice of all uncured Defaults
known to it, the status of each such Default and what action the Company is
taking or proposes to take with respect thereto; provided, however, the Trustee
shall be protected in withholding such notice if it, in good faith, determines
that the withholding of such notice is in the best interest of such Holders,
except in the case of a Default in the payment of the Principal Amount,
Redemption Price, Purchase Price or any contingent interest on any of the
Securities when due.

                  Section 6.2 Acceleration. If an Event of Default occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in aggregate principal amount of the Securities at the time Outstanding by
notice to the Company and the Trustee, may declare the Issue Price plus accrued
Original Issue Discount, and any accrued and unpaid contingent interest on all
the Securities to be immediately due and payable. Upon such a declaration, such

                                      -29-
<PAGE>
accelerated amount shall be due and payable immediately. The Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding, by notice to the Trustee (and without notice to any other
Securityholder) may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of the amounts
that have become due solely as a result of acceleration and if all amounts due
to the Trustee under Section 7.6 have been paid. No such rescission shall affect
any subsequent Default or impair any right consequent thereto.

                  Section 6.3 Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of the Issue Price plus accrued Original Issue Discount, and any accrued
and unpaid contingent interest on the Securities or to enforce the performance
of any provision of the Securities or this Indenture.

                  The Trustee may maintain a proceeding even if the Trustee does
not possess any of the Securities or does not produce any of the Securities in
the proceeding. A delay or omission by the Trustee or any Holder in exercising
any right or remedy accruing upon an Event of Default shall not impair the right
or remedy or constitute a waiver of, or acquiescence in, the Event of Default.
No remedy is exclusive of any other remedy. All available remedies are
cumulative.

                  Section 6.4 Waiver of Past Defaults. The Holders of a majority
in aggregate principal amount of the Securities at the time Outstanding, by
notice to the Trustee (and without notice to any other Holder), may waive an
existing Default and its consequences except:

                  (1)      an Event of Default described in Section 6.1(1) or
                           (2);

                  (2)      a Default in respect of a provision that under
                           Section 9.2 cannot be amended without the consent of
                           each Holder affected; or

                  (3)      a Default that constitutes a failure to convert any
                           Securities in accordance with the terms of Article
                           Ten.

                  When a Default is waived, it is deemed cured, but no such
waiver shall extend to any subsequent or other Default or impair any consequent
right.

                  This Section 6.4 shall be in lieu of Section 316(a)1(B) of the
TIA and such Section 316(a)1(B) is hereby expressly excluded from this
Indenture, as permitted by the TIA.

                  Section 6.5 Control by Majority. The Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture or that the Trustee determines in good faith is unduly
prejudicial to the rights of other Holders or would involve the Trustee in
personal liability unless the Trustee is offered indemnity satisfactory to it.
This Section 6.5 shall be in lieu of Section 316(a)1(A) of the TIA and such
Section 316(a)1(A) is hereby expressly excluded from this Indenture, as
permitted by the TIA.

                                      -30-
<PAGE>
                  Section 6.6 Limitation on Suits. A Holder may not pursue any
remedy with respect to this Indenture or the Securities unless:

                  (1)      the Holder gives to the Trustee written notice
                           stating that an Event of Default is continuing;

                  (2)      the Holders of at least 25% in aggregate principal
                           amount of the Securities at the time Outstanding make
                           a written request to the Trustee to pursue the
                           remedy;

                  (3)      such Holder or Holders offer to the Trustee security
                           or indemnity 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 such notice, request and
                           offer of security or indemnity; and

                  (5)      the Holders of a majority in aggregate principal
                           amount of the Securities at the time Outstanding do
                           not give the Trustee a direction inconsistent with
                           the request during such 60-day period.

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

                  Section 6.7 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of the Principal Amount, Redemption Price, Purchase Price or
contingent interest, if any, in respect of the Securities held by such Holder,
on or after the respective due dates expressed in the Securities or any
Redemption Date, and to convert the Securities in accordance with Article Ten,
or to bring suit for the enforcement of any such payment on or after such
respective dates or the right to convert, shall not be impaired or affected
adversely without the consent of such Holder.

                  Section 6.8 Collection Suit by Trustee. If an Event of Default
described in Section 6.1(1) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount owing with respect to the Securities and the amounts
provided for in Section 7.6.

                  Section 6.9 Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the Principal Amount, Redemption Price,
Purchase Price or contingent interest, if any, in respect of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of any such amount) shall be entitled and empowered,
by intervention in such proceeding or otherwise,

                  (a)      to file and prove a claim for the whole amount of the
Principal Amount, Redemption Price, Purchase Price, or contingent interest, if
any, and to file such other papers or

                                      -31-
<PAGE>
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel or any other
amounts due the Trustee under Section 7.6) and of the Holders allowed in such
judicial proceeding, and

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.6.

                  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 Six, it shall pay out the money in the following order:

                  FIRST: to the Trustee for amounts due under Section 7.6;

                  SECOND: to Holders for amounts due and unpaid on the
Securities for the Principal Amount, Redemption Price, Purchase Price or
contingent interest, if any, as the case may be, ratably, without preference or
priority of any kind, according to such amounts due and payable on the
Securities; and

                  THIRD: the balance, if any, to the Company.

                  The Trustee may fix a record date and payment date for any
payment to Holders pursuant to this Section 6.10. At least 15 days before such
record date, the Trustee shall mail to each Holder and the Company a notice that
states the record date, the payment date and the amount to be paid.

                  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 Trustee, a court may
require any party litigant in such suit to file an undertaking to pay the costs
of such suit, and may assess costs against any such party litigant, in the
manner and to the extent provided in the TIA; provided, that neither this
Section nor the TIA shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the Company
or the Trustee. This Section 6.11 shall be in lieu of Section 315(e) of the TIA
and such Section 315(e) is hereby expressly excluded from this Indenture, as
permitted by the TIA.

                  Section 6.12  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 upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or

                                      -32-
<PAGE>
extension law or any usury or other law wherever enacted, now or at any time
hereafter in force, which would prohibit or forgive the Company from paying all
or any portion of the Principal Amount, Redemption Price or Purchase Price, or
any contingent interest, as contemplated herein, or which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.

                                 ARTICLE SEVEN

                                     TRUSTEE

                  Section 7.1 Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.

                  (b)      Except during the continuance of an Event of Default:

                  (1)      the Trustee need perform only those duties that are
                           specifically set forth in this Indenture and no
                           others; and

                  (2)      in the absence of bad faith on its part, the Trustee
                           may conclusively rely, as to the truth of the
                           statements and the correctness of the opinions
                           expressed therein, upon certificates or opinions
                           furnished to the Trustee and conforming to the
                           requirements of this Indenture, but in the case of
                           any such certificates or opinions which by any
                           provision hereof are specifically required to be
                           furnished to the Trustee, the Trustee shall examine
                           the certificates and opinions to determine whether or
                           not they conform to the requirements of this
                           Indenture, but need not confirm or investigate the
                           accuracy of mathematical calculations or other facts
                           stated therein.

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

                  (1)      this Section (c) does not limit the effect of Section
                           (b) of this Section 7.1; and

                  (2)      the Trustee shall not be liable for any error of
                           judgment made in good faith by a Responsible 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 6.5.

                                      -33-
<PAGE>
                  (d)      Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b), (c) and (e) of this
Section 7.1.

                  (e)      The Trustee may refuse to perform any duty or
exercise any right or power or extend or risk its own funds or otherwise incur
any financial liability unless it receives indemnity satisfactory to it against
any loss, liability or expense.

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

                  Section 7.2 Rights of Trustee. Subject to its duties and
responsibilities under the TIA,

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

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

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

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

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

                                      -34-
<PAGE>
                  (f)      any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company Order and
any resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;

                  (g)      the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, personally
or by agent or attorney; and

                  (h)      the rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder.

                  Section 7.3 Individual Rights of Trustee. 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 its Affiliates with the same rights
it would have if it were not the Trustee. Any Paying Agent, Registrar,
Conversion Agent or co-registrar may do the same with like rights. However, the
Trustee must comply with Sections 7.9 and 7.10.

                  Section 7.4 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 or application of
the proceeds from the Securities, and it shall not be responsible for any
statement in this Indenture or the Securities (other than its certificate of
authentication).

                  Section 7.5 Reports by Trustee to Holders. The Trustee shall
transmit to Holders such reports concerning the Trustee and its actions under
this Indenture as may be required pursuant to the TIA at the times and in the
manner provided pursuant thereto.

                  A copy of each report at the time of its mailing to Holders
shall be filed with the SEC and each securities exchange, if any, on which the
Securities are listed. The Company agrees to notify the Trustee promptly
whenever the Securities become listed on any securities exchange and of any
delisting thereof.

                  Section 7.6 Compensation and Indemnity. The Company agrees:

                  (a)      to pay to the Trustee from time to time such
compensation as the Company and the Trustee shall from time to time agree in
writing for all services rendered by it hereunder (which compensation shall not
be limited (to the extent permitted by law) by any provision of law in regard to
the compensation of a trustee of an express trust);

                  (b)      except as otherwise provided in this Indenture, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses, advances and disbursements of its agents and counsel), except

                                      -35-
<PAGE>
any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and

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

                  When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 6.1(4) or Section
6.1(5), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or state bankruptcy,
insolvency or other similar law.

                  The provisions of this Section shall survive the termination
of this Indenture and the resignation and removal of the Trustee.

                  Section 7.7 Replacement of Trustee. The Trustee may resign by
so notifying the Company; provided, however, no such resignation shall be
effective until a successor Trustee has accepted its appointment pursuant to
this Section 7.7. The Holders of a majority in aggregate principal amount of the
Securities at the time Outstanding may remove the Trustee by so notifying the
Trustee and the Company. The Company shall remove the Trustee if:

                  (1)      the Trustee fails to comply with Section 7.9;

                  (2)      the Trustee is adjudged bankrupt or insolvent;

                  (3)      a receiver 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, the Company shall promptly appoint, by
resolution of its Board of Directors, a successor Trustee.

                  A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company satisfactory in form and
substance 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 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.

                  If a successor Trustee does not take office within 120 days
after the retiring Trustee resigns or is removed, the Trustee, the Company or
the Holders of a majority in aggregate principal amount of the Securities at the
time Outstanding may petition, in the case of the Trustee, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Trustee.

                  If the Trustee fails to comply with Section 7.9, any Holder
who has been a bona fide Holder for at least six months may petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.

                  Section 7.8 Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation, the
resulting, surviving or transferee corporation without any further act shall be
the successor Trustee, provided such corporation shall be otherwise qualified
and eligible under this Article Seven, without the execution or filing of any
paper or any further act

                                      -36-
<PAGE>
on the part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentification and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.

                  Section 7.9 Eligibility; Disqualification. If the Trustee has
or shall acquire a conflicting interest within the meaning of the TIA, the
Trustee shall either eliminate such interest or resign, to the extent and in the
manner provided by, and subject to the provisions of, the TIA and this
Indenture. To the extent permitted by the TIA, the Trustee shall not be deemed
to have a conflicting interest by virtue of being a trustee under the Indenture,
dated July 15, 1989, between the Company, and the Trustee. The Trustee (or its
parent holding company) shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article Seven.

                  Section 7.10 Preferential Collection of Claims Against
Company. If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the TIA regarding the collection of claims against the Company (or
any such other obligor).

                                 ARTICLE EIGHT

                             DISCHARGE OF INDENTURE

                  Section 8.1 Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect (except as to any surviving rights
of conversion, registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when

                  (1)      either

                           (A)      all Securities theretofore authenticated and
                  delivered (other than (i) Securities which have been
                  mutilated, destroyed, lost or stolen and which have been
                  replaced or paid as provided in Section 2.7 and (ii)
                  Securities for whose payment money, Common Stock or other
                  securities has theretofore been deposited in trust or
                  segregated and held in trust by the Company and thereafter
                  repaid to the Company or discharged from such trust, as
                  provided in Section 2.4) have been delivered to the Trustee
                  for cancellation; or

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

                                    (i)      have become due and payable, or

                                    (ii)     will become due and payable within
                           one year, or

                                      -37-
<PAGE>
                                    (iii)    are to be called for redemption
                           within one year under arrangements satisfactory to
                           the Trustee for the giving of notice of redemption by
                           the Trustee in the name, and at the expense, of the
                           Company,

                  and the Company, in the case of (i), (ii) or (iii) above, has
                  deposited or caused to be deposited with the Trustee as trust
                  funds in trust for the purpose an amount sufficient to pay and
                  discharge the entire indebtedness on such Securities not
                  theretofore delivered to the Trustee for cancellation, for the
                  Principal Amount, Redemption Price and any contingent interest
                  payable to the date of such deposit (in the case of Securities
                  which have become due and payable) or to the final Stated
                  Maturity or Redemption Date, as the case may be;

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

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

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 7.6 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under the last paragraph of Section
2.4 shall survive.

                  Section 8.2 Application of Trust Money

                  Subject to the provisions of the last paragraph of Section
2.4, all money deposited with the Trustee pursuant to Section 8.1 shall be held
in trust and applied by it, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the Principal Amount, Redemption
Price and any contingent interest for whose payment such money has been
deposited with the Trustee. All moneys deposited with the Trustee pursuant to
Section 8.1 (and held by it or any Paying Agent) for the payment of Securities
subsequently converted shall be returned to the Company upon Company Request.

                                  ARTICLE NINE

                                   AMENDMENTS

                  Section 9.1 Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without the consent of any
Securityholder to:

                  (a)      add to the covenants of the Company for the benefit
of the Holders of Securities;

                                      -38-
<PAGE>
                  (b)      surrender any right or power herein conferred upon
the Company;

                  (c)      provide for conversion rights of Holders of
Securities if any reclassification or change of the Common Stock or any
consolidation, merger or sale of all or substantially all of the Company's
assets occurs;

                  (d)      provide for the assumption of the Company's
obligations to the Holders of Securities in the case of a merger, consolidation,
conveyance, transfer or lease pursuant to Article Five hereof;

                  (e)      reduce the Conversion Price; provided, however, that
such reduction must remain in effect for at least 20 days;

                  (f)      comply with the requirements of the SEC in order to
effect or maintain the qualification of this Indenture under the TIA;

                  (g)      secure the Securities;

                  (h)      cure any ambiguity or correct or supplement any
provision herein which may be inconsistent with any other provision herein or
which is otherwise defective, or to make any other provisions with respect to
matters or questions arising under this Indenture which the Company may deem
necessary or desirable and which shall not be inconsistent with the provisions
of this Indenture; provided, however, that such action shall not adversely
affect the interests of the Holders of Securities in any material respect; and

                  (i)      add or modify any other provisions herein with
respect to matters or questions arising hereunder which the Company and the
Trustee may deem necessary or desirable and which will not adversely affect the
interests of the Holders of Securities in any material respect.

                  Section 9.2 With Consent of Holders. Except as provided below
in this Section 9.2, this Indenture or the Securities may be amended, modified
or supplemented, and noncompliance in any particular instance with any provision
of this Indenture or the Securities may be waived, in each case with the written
consent of the Holders of at least a majority of the principal amount of the
Securities at the time Outstanding.

                  Without the written consent or the affirmative vote of each
Holder of Securities affected thereby, an amendment or waiver under this Section
9.2 may not:

                  (a)      alter the manner or rate of accrual of Original Issue
Discount or the rate of contingent interest;

                  (b)      reduce the Principal Amount, accrued Original Issue
Discount, the Redemption Price or Purchase Price of any Security;

                  (c)      change the currency of payment of any amount owed or
owing under the Security;

                                      -39-
<PAGE>
                  (d)      adversely affect the conversion rights of any Holder
of any Security;

                  (e)      adversely affect the purchase right of any Holder of
any Security;

                  (f)      impair the right of any Holder to institute suit for
the enforcement of any payment or with respect to, or conversion of, any
Security;

                  (g)      modify any of the provisions of this Section, or
reduce the principal amount of Outstanding Securities required to waive a
Default, except to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the Holder of each
Outstanding Security affected thereby; or

                  (h)      reduce the percentage of the principal amount of the
Outstanding Securities the consent of whose Holders is required for any
supplemental indenture or the consent of whose Holders is required for any
waiver provided for in this Indenture.

                  It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent approves the substance thereof.

                  After an amendment under this Section 9.2 becomes effective,
the Company shall mail to each Holder a notice briefly describing the amendment.

                  Nothing in this Section 9.2 shall impair the ability of the
Company and the Trustee to amend this Indenture or the Securities without the
consent of any Securityholder to provide for the assumption of the Company's
obligations to the Holders of Securities in the case of a merger, consolidation,
conveyance, transfer or lease pursuant to Article Five hereof.

                  Section 9.3 Compliance with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall comply with the
TIA.

                  Section 9.4 Revocation and Effect of Consents, Waivers and
Actions. Until an amendment, waiver or other action by Holders becomes
effective, a consent thereto by a Holder of a Security hereunder is a continuing
consent by the Holder and every subsequent Holder of that Security or portion of
the Security that evidences the same obligation as the consenting Holder's
Security, even if notation of the consent, waiver or action is not made on the
Security. However, any such Holder or subsequent Holder may revoke the consent,
waiver or action as to such Holder's Security or portion of the Security if the
Trustee receives the notice of revocation before the date the amendment, waiver
or action becomes effective. After an amendment, waiver or action becomes
effective, it shall bind every Securityholder.

                  Section 9.5 Notation on or Exchange of Securities. Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new Securities so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.

                                      -40-
<PAGE>
                  Section 9.6 Trustee to Sign Supplemental Indentures. The
Trustee shall sign any supplemental indenture authorized pursuant to this
Article Nine if the amendment contained therein does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign such supplemental indenture. In signing such
supplemental indenture the Trustee shall receive, and (subject to the provisions
of Section 7.1) shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that such amendment is authorized
or permitted by this Indenture.

                  Section 9.7 Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article, this Indenture shall
be modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.

                                   ARTICLE TEN

                                   CONVERSIONS

                  Section 10.1 Conversion Privilege. (a) Subject to and upon
compliance with the provisions of this Article Ten, a Holder of a Security shall
have the right, at such Holder's option, to convert all or any portion (if the
portion to be converted is $1,000 or a whole multiple of $1,000) of such
Security into shares of Common Stock at the Conversion Price in effect on the
date of conversion. The Securities shall be convertible only upon the occurrence
of one of the following events:

                  (1)      during any fiscal quarter commencing after December
         31, 2001 or on any Business Day commencing after September 30, 2031, if
         the Sale Price of the Common Stock exceeds 120% of the Conversion
         Price for at least (a) 20 Trading Days in the 30 consecutive Trading
         Days ending on the last Trading Day of the immediately preceding fiscal
         quarter (it being understood for purposes of this Section 10.1(a)(1)
         that the Conversion Price in effect on the close of each of the 30
         consecutive Trading Days should be used) or (b) after (but not
         including) September 30, 2031, one Trading Day;

                  (2)      if such Security has been called for redemption
         pursuant to Article Three hereof, at any time on or after the date the
         notice of redemption has been given up to, but not including, the third
         Business Day preceding the Redemption Date; or

                  (3)      as provided in Section (b) of this Section 10.1.

                  The Conversion Agent shall, on behalf of the Company,
determine on a daily basis whether the Securities shall be convertible as a
result of the occurrence of an event specified in clause (1) above and, if the
Securities shall be so convertible, the Conversion Agent shall promptly deliver
to the Company and the Trustee written notice thereof. Whenever the Securities
shall become convertible pursuant to this Section 10.1, the Company or, at the
Company's request, the Trustee in the name and at the expense of the Company,
shall notify the Holders of the event triggering such convertibility in the
manner provided in Section 12.2, and the Company shall also publicly announce
such information and publish it on the Company's

                                      -41-
<PAGE>
Web site. Any notice so given shall be conclusively presumed to have been duly
given, whether or not the Holder receives such notice.

                  (b)      In addition, in the event that:

                  (1)      (A) the Company distributes to all holders of its
         shares of Common Stock rights or warrants entitling them (for a period
         expiring within 45 days of the record date for the determination of the
         stockholders entitled to receive such distribution) to subscribe for or
         purchase shares of Common Stock, at a price per share less than the
         average of the Sale Prices of the Common Stock for the ten Trading Days
         immediately preceding, but not including, the date such distribution is
         first publicly announced by the Company, or (B) the Company distributes
         to all holders of its shares of Common Stock, cash or other assets,
         debt securities or rights or warrants to purchase its securities, where
         the Fair Market Value of such distribution per share of Common Stock
         exceeds 15% of the Sale Price of a share of Common Stock on the Trading
         Day immediately preceding, but not including, the date such
         distribution is first publicly announced by the Company, then, in
         either case, the Securities may be surrendered for conversion at any
         time on and after the date that the Company gives notice to the Holders
         of such right, which shall be not less than 10 days prior to the
         Ex-Dividend Time for such distribution, until the earlier of the close
         of business on the Business Day immediately preceding, but not
         including, the Ex-Dividend Time or the date the Company publicly
         announces that such distribution will not take place; provided that, no
         adjustment to the Conversion Price or the ability of a Holder of a
         Security to convert will be made if the Holder will otherwise
         participate in such distribution without conversion; or

                  (2)      (A) the Company consolidates with or merges with or
         into another Person or conveys, transfers, sells, leases or otherwise
         disposes of all or substantially all of its properties and assets, (B)
         the Company is not the resulting or surviving entity, (C) such
         transaction is not with an Affiliate of the Company and (D) after the
         completion or consummation of such transaction either (i) 50% of the
         beneficial owners of the surviving or resulting entity's Voting Stock
         were not holders of the Company's Capital Stock prior to the
         transaction or (ii) 50% of the surviving or resulting entity's
         directors (or persons performing similar functions) were not directors
         of the Company, or directors approved by the Board of Directors,
         immediately prior to the transaction, then the Securities may be
         surrendered for conversion at any time from and after the date 15 days
         prior to the anticipated effective date of the transaction and ending
         on and including the date 15 days after the consummation of the
         transaction. The Board of Directors shall determine the anticipated
         effective date of the transaction, and such determination shall be
         conclusive and binding on the Holders and shall be publicly announced
         by the Company and posted on its Web site not later than two Business
         Days prior to such 15th day.

                  "Ex-Dividend Time" means, with respect to any issuance or
distribution on shares of Common Stock, the first date on which the shares of
Common Stock trade regular way on the principal securities market on which the
shares of Common Stock are then traded without the right to receive such
issuance or distribution.

                                      -42-
<PAGE>
                  Section 10.2 Conversion Procedure; Conversion Price;
Fractional Shares. (a) Each Security shall be convertible at the office of the
Conversion Agent into fully paid and nonassessable shares (calculated to the
nearest 1/100th of a share) of Common Stock. The Security will be converted into
shares of Common Stock at the Conversion Price therefor. No payment or
adjustment shall be made in respect of dividends on the Common Stock or accrued
Original Issue Discount or contingent interest on a converted Security, except
as described in Section 11.3 hereof. The Company shall not issue any fraction of
a share of Common Stock in connection with any conversion of Securities, but
instead shall make a cash payment (calculated to the nearest cent) equal to such
fraction multiplied by the Sale Price of the Common Stock on the last Trading
Day prior to the date of conversion. Notwithstanding the foregoing, a Security
in respect of which a Holder has delivered a Purchase Notice exercising such
Holder's option to require the Company to repurchase such Security may be
converted only if such notice of exercise is withdrawn in accordance with the
Section 3.9 hereof.

                  (b)      Before any Holder of a Security shall be entitled to
convert the same into Common Stock, such Holder shall, in the case of Securities
issued in global form, comply with the procedures of the Depositary in effect at
that time, and in the case of Certificated Securities, surrender such
Securities, duly endorsed to the Company or in blank, at the office of the
Conversion Agent, and shall give written notice to the Company at said office or
place that such Holder elects to convert the same and shall state in writing
therein the principal amount of Securities to be converted and the name or names
(with addresses) in which such Holder wishes the certificate or certificates for
Common Stock to be issued.

                  Before any such conversion, a Holder also shall pay all funds
required, if any, relating to interest on the Securities, as provided in Section
11.3, and all taxes or duties, if any, as provided in Section 10.8.

                  If more than one Security shall be surrendered for conversion
at one time by the same Holder, the number of full shares of Common Stock which
shall be deliverable upon conversion shall be computed on the basis of the
aggregate principal amount of the Securities (or specified portions thereof to
the extent permitted thereby) so surrendered. Subject to the next succeeding
sentence, the Company will, as soon as practicable thereafter, issue and deliver
at said office or place to such Holder of a Security, or to such Holder's
nominee or nominees, certificates for the number of full shares of Common Stock
to which such Holder shall be entitled as aforesaid, together with cash in lieu
of any fraction of a share to which such Holder would otherwise be entitled. The
Company shall not be required to deliver certificates for shares of Common Stock
while the stock transfer books for such stock or the security register are duly
closed for any purpose, but certificates for shares of Common Stock shall be
issued and delivered as soon as practicable after the opening of such books or
security register.

                  (c)      A Security shall be deemed to have been converted as
of the close of business on the date of the notification of the Conversion Agent
by the Depositary of the due completion of the procedures of the Depository or
the due surrender of such Securities for conversion as provided above, and the
person or persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock as of the close of business on such date.

                                      -43-
<PAGE>
                  (d)      In case any Security shall be surrendered for partial
conversion, the Company shall execute and the Trustee shall authenticate and
deliver to or upon the written order of the Holder of the Security so
surrendered, without charge to such Holder (subject to the provisions of Section
10.8 hereof), a new Security or Securities in authorized denominations in an
aggregate principal amount equal to the unconverted portion of the surrendered
Securities.

                  Section 10.3 Adjustment of Conversion Price for Common Stock.
The Conversion Price shall be adjusted from time to time as follows:

                  (a)      In case the Company shall, at any time or from time
to time while any of the Securities are Outstanding, pay a dividend or make a
distribution in shares of Common Stock to all holders of its outstanding shares
of Common Stock, then the Conversion Price in effect at the opening of business
on the date following the record date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction:

                  (1)      the numerator of which shall be the number of shares
                           of Common Stock outstanding at the close of business
                           on the record date fixed for such determination; and

                  (2)      the denominator of which shall be the sum of such
                           number of shares and the total number of shares
                           constituting such dividend or other distribution.

                  Such reduction shall become effective immediately after the
opening of business on the day following the record date fixed for such
determination. If any dividend or distribution of the type described in this
Section 10.3(a) is declared but not so paid or made, the Conversion Price shall
again be adjusted to the Conversion Price which would then be in effect if such
dividend or distribution had not been declared.

                  (b)      In case the Company shall, at any time or from time
to time while any of the Securities are Outstanding, subdivide its outstanding
shares of Common Stock into a greater number of shares of Common Stock, then the
Conversion Price in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be proportionately
reduced, and conversely, in case the Company shall, at any time or from time to
time while any of the Securities are outstanding, combine its outstanding shares
of Common Stock into a smaller number of shares of Common Stock, then the
Conversion Price in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be proportionately
increased.

                  Such reduction or increase, as the case may be, shall become
effective immediately after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.

                  (c)      In case the Company shall, at any time or from time
to time while any of the Securities are Outstanding, issue rights or warrants to
all holders of its shares of Common Stock entitling them for a period of not
more than 45 days after the record date mentioned below to subscribe for or
purchase shares of Common Stock at a price per share less than the Sale Price on
the Trading Day immediately preceding the date of the announcement of such
issuance, then

                                      -44-
<PAGE>
the Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect at the opening of
business on the date after the record date fixed for the determination of
stockholders entitled to receive such rights or warrants by a fraction:

                  (1)      the numerator of which shall be the number of shares
                           of Common Stock outstanding on the close of business
                           on the record date fixed for the determination of
                           stockholders entitled to receive such rights or
                           warrants, plus the number of shares of Common Stock
                           which the aggregate offering price of the total
                           number of shares of Common Stock so offered for
                           subscription or purchase would purchase at such Sale
                           Price of the Common Stock; and

                  (2)      the denominator of which shall be the number of
                           shares of Common Stock outstanding at the close of
                           business on the record date fixed for the
                           determination of stockholders entitled to receive
                           such rights or warrants, plus the total number of
                           additional shares of Common Stock so offered for
                           subscription or purchase;

provided that no adjustment for a transaction referred to in this Section
10.3(c) shall be made if the Holders of the Securities may participate in the
transaction on a basis and with notice that the Board of Directors determines to
be fair and appropriate in light of the basis and notice on which holders of
shares of the Company's Common Stock may participate in the transaction.

                  Such adjustment shall become effective immediately after the
opening of business on the day following the record date fixed for such
issuance. To the extent that shares of Common Stock are not delivered pursuant
to such rights or warrants, upon the expiration or termination of such rights or
warrants, the Conversion Price shall be readjusted to the Conversion Price which
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of the delivery of only the number of
shares of Common Stock actually delivered. In the event that such rights or
warrants are not so issued, the Conversion Price shall again be adjusted to be
the Conversion Price which would then be in effect if the date fixed for the
determination of stockholders entitled to receive such rights or warrants had
not been fixed. In determining whether any rights or warrants entitle the
holders to subscribe for or purchase shares of Common Stock at less than such
Sale Price, and in determining the aggregate offering price of such shares of
Common Stock, there shall be taken into account any consideration received for
such rights or warrants, the value of such consideration if other than cash, to
be determined by the Board of Directors, whose determination shall be conclusive
and binding.

                  (d)      In case the Company shall, at any time or from time
to time while any of the Securities are Outstanding, by dividend or otherwise,
distribute to all holders of its shares of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation and the Common Stock is not changed or
exchanged), shares of its capital stock (other than any dividends or
distributions to which Section 10.3(a) applies), evidences of its indebtedness
or other assets, including securities, but excluding (i) any rights or warrants
referred to in Section 10.3(c), (ii) dividends or

                                      -45-
<PAGE>
distributions of stock, securities or other property or assets (including cash)
in connection with a transaction to which Section 10.4 applies, (iii) any
reclassification covered by the definition of Common Stock and (iv) dividends
and distributions paid exclusively in cash (such capital stock, evidence of its
indebtedness, other assets or securities being distributed hereinafter in this
Section 10.3(d) called the "distributed assets"), then, in each such case,
subject to other provisions of this Section 10.3(d), the Conversion Price shall
be reduced so that the same shall be equal to the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on the record date fixed for the determination of stockholders entitled
to such distribution by a fraction:

                  (1)      the numerator of which shall be the Current Market
                           Price of the Common Stock, less the Fair Market Value
                           on such date of the portion of the distributed assets
                           so distributed applicable to one share of Common
                           Stock (determined on the basis of the number of
                           shares of Common Stock outstanding on the record date
                           fixed for such distribution) on such date; and

                  (2)      the denominator of which shall be such Current Market
                           Price;

provided that no adjustment for a transaction referred to in this Section
10.3(d) shall be made if all Holders of the Securities may participate in the
transaction on a basis and with notice that the Board of Directors determines to
be fair and appropriate in light of the basis and notice on which holders of
shares of the Company's Common Stock may participate in the transaction.

                  Such reduction shall become effective immediately prior to the
opening of business on the day following the record date fixed for such
distribution. In the event that such dividend or distribution is not so paid or
made, the Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such dividend or distribution had not been
declared.

                  If the Board of Directors determines the Fair Market Value of
any distribution for purposes of this Section 10.3(d) by reference to the actual
or when issued trading market for any distributed assets comprising all or part
of such distribution, it must in doing so consider the prices in such market
over the same period used in computing the Current Market Price pursuant to
Section 10.3(e) to the extent possible.

                  Rights or warrants distributed by the Company to all holders
of its shares of Common Stock entitling them to subscribe for or purchase shares
of the Company's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events ("Trigger Event"), (i) are deemed to be transferred with such
shares of Common Stock, (ii) are not exercisable and (iii) are also issued in
respect of future issuances of shares of Common Stock, shall be deemed not to
have been distributed for purposes of this Section 10.3(d) (and no adjustment to
the Conversion Price under this Section 10.3(d) will be required) until the
occurrence of the earliest Trigger Event. In the case of any such rights or
warrants which shall all have been redeemed or repurchased without exercise by
any holders thereof, the Conversion Price shall be readjusted upon such
redemption or repurchase to give effect to the Trigger Event as though it were a
cash distribution, equal to the per share

                                      -46-
<PAGE>
redemption or repurchase price received by a holder of shares of Common Stock
with respect to such rights or warrants (assuming such holder had retained such
rights or warrants), made to all holders of shares of Common Stock as of the
date of such redemption or repurchase. In the case of any such rights or
warrants that expire or terminate without exercise, the Conversion Price shall
be readjusted as if such rights and warrants had never been issued.

                  For purposes of this Section 10.3(d) and Sections 10.3(a),
10.3(b) and 10.3(c), any dividend or distribution to which this Section 10.3(d)
is applicable that also includes (i) shares of Common Stock, (ii) a subdivision
or combination of shares of Common Stock to which Section 10.3(b) applies or
(iii) rights or warrants to subscribe for or purchase shares of Common Stock to
which Section 10.3(c) applies (or any combination thereof), shall be deemed
instead to be:

                  (1)      a dividend or distribution of the evidences of
         indebtedness, assets, shares of capital stock, rights or warrants,
         other than such shares of Common Stock, such subdivision or combination
         or such rights or warrants to which Sections 10.3(a), 10.3(b) and
         10.3(c) apply, respectively (and any Conversion Price reduction
         required by this Section 10.3(d) with respect to such dividend or
         distribution shall then be made), immediately followed by

                  (2)      a dividend or distribution of such shares of Common
         Stock, such subdivision or combination or such rights or warrants (and
         any further Conversion Price reduction required by Sections 10.3(a),
         10.3(b) and 10.3(c) with respect to such dividend or distribution shall
         then be made), except:

                           (A)      the record date of such dividend or
                  distribution shall be substituted as (i) "the record date
                  fixed for the determination of stockholders entitled to
                  receive such dividend or other distribution" and "record date
                  fixed for such determination" within the meaning of Section
                  10.3(a), (ii) "the day upon which such subdivision becomes
                  effective" and "the day upon which such combination becomes
                  effective" within the meaning of Section 10.3(b), and (ii) as
                  "the date fixed for the determination of stockholders entitled
                  to receive such rights or warrants," "the record date fixed
                  for the determination of the stockholders entitled to receive
                  such rights or warrants" and "record date fixed for such
                  issuance" within the meaning of Section 10.3(c); and

                           (B)      any shares of Common Stock included in such
                  dividend or distribution shall not be deemed "outstanding at
                  the close of business on the record date fixed for such
                  determination" within the meaning of Section 10.3(a) and any
                  reduction or increase in the number of shares of Common Stock
                  resulting from such subdivision or combination shall be
                  disregarded in connection with such dividend or distribution.

                  (e)      In case the Company shall, at any time during any
calendar year while any of the Securities are Outstanding, by dividend or
otherwise, make a distribution to all holders of its shares of Common Stock
payable exclusively in cash in an aggregate amount per share of Common Stock
that, when combined with the aggregate amount paid per share of Common Stock in
respect of all other distributions to all holders of its shares of Common Stock
paid exclusively in cash within that calendar year up to the date fixed for the
determination of stockholders entitled to receive such distribution less the
amount of all Regular Cash Dividends per share of Common Stock declared within
that calendar year up to the record date fixed for such determination, exceeds
15% of the Current Market Price on the date that such dividend or distribution
is first publicly announced (such amount per share of Common Stock in excess of
such 15%, the "Per Share Distribution Amount"), the Conversion Price in effect
immediately prior to the close of business on the date fixed for the
determination of the stockholders entitled to such distribution shall be reduced
by multiplying such Conversion Price by a fraction of which the numerator shall
be the Current Market Price on the date fixed for such payment less the Per
Share Distribution Amount

                                      -47-
<PAGE>
and the denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day following the
date fixed for such payment.

                  No adjustment for a transaction referred to in this Section
10.3(e) shall be made if the cash dividend or distribution is not made or if
all Holders of the Securities may participate in the transaction on a basis and
notice that the Board of Directors determines to be fair and appropriate in
light of the basis and notice which holders of the shares of the Company's
Common Stock may participate in the transaction.

                  (f)      For purposes of this Article Ten, the following terms
shall have the meanings indicated:

                  "Current Market Price" on any date in question means the
average of the daily Sale Prices per share of Common Stock for the ten
consecutive Trading Days selected by the Board of Directors commencing not more
than 20 Trading Days before, and ending not later than, the earlier of the date
in question and the day before the "ex" date (as hereinafter defined) with
respect to the transaction requiring such adjustment; provided, however, that
if:

                  (1)      the "ex" date for any other transaction that requires
         an adjustment to the Conversion Price pursuant to Section 10.3(a), (b),
         (c), (d) or (e) falls after the first of the ten consecutive Trading
         Days so selected by the Board of Directors, the Sale Price for each
         such Trading Day falling prior to the "ex" date for such other
         transaction shall be adjusted by multiplying such Sale Price by the
         same fraction by which the Conversion Price is so required to be
         adjusted as a result of such other transaction;

                  (2)      the "ex" date for any other transaction that requires
         an adjustment to the Conversion Price pursuant to Section 10.3(a), (b),
         (c), (d) or (e) falls on or before the last of the ten consecutive
         Trading Days so selected by the Board of Directors, the Sale Price for
         each such Trading Day falling on and after the "ex" date for such other
         transaction shall be adjusted by dividing such Sale Price by the same
         fraction by which the Conversion Price is so required to be adjusted as
         a result of such other transaction.

                  For purposes of this paragraph, the term "ex" date, when used:

                  (1)      with respect to any dividend, distribution or
         issuance, means the first date on which the shares of Common Stock
         trade regular way on the relevant exchange or in the relevant market
         from which the Sale Price was obtained without the right to receive
         such dividend, distribution or issuance; and

                  (2)      with respect to any subdivision or combination of
         shares of Common Stock, means the first date on which the shares of
         Common Stock trade regular way on such exchange or in such market after
         the time at which such subdivision or combination becomes effective.

Notwithstanding the foregoing, whenever successive adjustments to the Conversion
Price are called for pursuant to this Section 10.3, such adjustments shall be
made to the Current Market Price as may be necessary or appropriate to
effectuate the intent of this Section 10.3 and to avoid unjust or inequitable
results as determined in good faith by the Board of Directors whose good faith
determination shall be conclusive and binding.

                  "Fair Market Value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction (as determined
by the Board of Directors, whose determination shall be conclusive).

                  (g)      The Company shall be entitled to make such additional
reductions in the Conversion Price, in addition to those required by Sections
10.3(a), (b), (c), (d) or (e), as shall be necessary, as determined by the Board
of Directors, in order that any dividend or distribution of Common Stock, any
subdivision or combination of shares of Common Stock or any issuance of rights
or warrants referred to above shall not be taxable to the holders of Common
Stock for United States Federal income tax purposes.

                                      -48-
<PAGE>
                  (h)      The Company may, from time to time, reduce the
Conversion Price by any amount for any period of time, if such period is at
least 20 days and the reduction is irrevocable during the period. Whenever the
Conversion Price is reduced pursuant to the preceding sentence, the Company
shall mail to the Trustee and each Holder at the address of such Holder as it
appears in the register of the Securities maintained by the Registrar, at least
five Business Days prior to the date the reduced Conversion Price takes effect,
a notice of the reduction stating the reduced Conversion Price and the period
during which it will be in effect.

                  (i)      In any case in which this Section 10.3 shall require
that any adjustment be made effective as of or retroactively immediately
following a record date, the Company may elect to defer issuing to the Holder of
any Securities converted after such record date the shares of Common Stock
issuable upon such conversion over and above the shares of Common Stock issuable
upon such conversion on the basis of the Conversion Price prior to adjustment;
provided, however, that the Company shall deliver to such Holder a due bill or
other appropriate instrument evidencing such Holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.

                  (j)      All calculations under this Section 10.3 shall be
made to the nearest cent or one-hundredth of a share, with one-half cent and
0.005 of a share, respectively, being rounded upward. Notwithstanding any other
provision of this Section 10.3, the Company shall not be required to make any
adjustment of the Conversion Price unless such adjustment would require an
increase or decrease of at least 1% of such price. Any lesser adjustment shall
be carried forward and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment or adjustments so
carried forward, shall amount to an increase or decrease of at least 1% in such
price. Any adjustments under this Section 10.3 shall be made successively
whenever an event requiring such an adjustment occurs.

                  (k)      In the event that at any time, as a result of an
adjustment made pursuant to this Section 10.3, the Holder of any Securities
thereafter surrendered for conversion shall become entitled to receive any
shares of stock of the Company other than shares of Common Stock into which the
Securities originally were convertible, the Conversion Price of such other
shares so receivable upon conversion of any such Security shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock contained in
subparagraphs (a) through (d) of this Section 10.3.

                  (l)      No adjustment shall be made pursuant to Section 10.3
(g) if the effect thereof would be to reduce the Conversion Price below the par
value (if any) of the Common Stock or (ii) if the Holders of the Securities may
participate without conversion in the transaction that would otherwise give rise
to an adjustment pursuant to this Section 10.3 on a basis and with notice that
the Board of Directors determines to be fair and appropriate in light of the
basis and notice on which holders of shares of the Company's Common Stock may
participate in the transaction.

                  Section 10.4 Consolidation or Merger of the Company. If any of
the following events occur, namely:

                                      -49-
<PAGE>
                  (1)      any reclassification or change of the outstanding
         Common Stock (other than any reclassification or change covered by the
         definition of Common Stock or a change in par value, or from par value
         to no par value, or from no par value to par value, or as a result of a
         subdivision or combination);

                  (2)      any merger, consolidation, statutory share exchange
         or combination of the Company with another corporation as a result of
         which holders of Common Stock shall be entitled to receive stock,
         securities or other property or assets (including cash) or any
         combination thereof with respect to or in exchange for such Common
         Stock; or

                  (3)      any sale, lease or conveyance of the properties and
         assets of the Company as, or substantially as, an entirety to any other
         corporation as a result of which holders of Common Stock shall be
         entitled to receive stock, securities or other property or assets
         (including cash) or any combination thereof with respect to or in
         exchange for such Common Stock;

the Company or the successor or purchasing corporation, as the case may be,
shall execute with the Trustee a supplemental indenture (which shall comply with
the TIA as in force at the date of execution of such supplemental indenture, if
such supplemental indenture is then required to so comply) providing that such
Securities shall be convertible into the kind and amount of shares of stock and
other securities or property or assets (including cash) or any combination
thereof which such Holder would have been entitled to receive upon such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale, lease or conveyance had such Securities been converted into
Common Stock immediately prior to such reclassification, change, merger,
consolidation, statutory share exchange, combination, sale, lease or conveyance
assuming such holder of Common Stock did not exercise its rights of election, if
any, as to the kind or amount of securities, cash or other property receivable
upon such merger, consolidation, statutory share exchange, sale, lease or
conveyance (provided, that if the kind or amount of securities, cash or other
property receivable upon such merger, consolidation, statutory share exchange,
sale, lease or conveyance is not the same for each share of Common Stock in
respect of which such rights of election shall not have been exercised
("Non-Electing Share"), then for the purposes of this Section 10.4, the kind and
amount of securities, cash or other property receivable upon such merger,
consolidation, statutory share exchange, sale, lease or conveyance for each
Non-Electing Share shall be deemed to be the kind and amount so receivable per
share by a plurality of the Non-Electing Shares). Such supplemental indenture
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article Ten.

                  The Company shall cause notice of the execution of such
supplemental indenture to be mailed to each Holder, at the address of such
Holder as it appears on the register of the Securities maintained by the
Registrar, within 20 days after execution thereof. Failure to deliver such
notice shall not affect the legality or validity of such supplemental indenture.

                  The above provisions of this Section 10.4 shall similarly
apply to successive reclassifications, changes, mergers, consolidations,
statutory share exchanges, combinations, sales, leases and conveyances.

                                      -50-
<PAGE>
                  If this Section 10.4 applies to any event or occurrence,
Section 10.3 shall not apply.

                  Section 10.5 Notice of Adjustment. Whenever an adjustment in
the Conversion Price with respect to the Securities is required:

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

                  (2)      a notice stating that the Conversion Price has been
         adjusted and setting forth the adjusted Conversion Price shall
         forthwith be given by the Company or, at the Company's request, by the
         Trustee in the name and at the expense of the Company, to each Holder
         in the manner provided in Section 12.2. Any notice so given shall be
         conclusively presumed to have been duly given, whether or not the
         Holder receives such notice.

                  Section 10.6 Notice in Certain Events. In case:

                           (1)      of a consolidation, merger to which the
         Company is a party or a sale or conveyance to another Person of all or
         substantially all of the property and assets of the Company, in each
         case, for which approval of the stockholders of the Company is
         required, or

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

                           (3)      of any action triggering an adjustment of
         the Conversion Price referred to in clauses (x) or (y) below;

then, in each case, the Company shall cause to be filed with the Trustee and the
Conversion Agent, and shall cause to be given, to the Holders of the Securities
in the manner provided in Section 12.2, at least 15 days prior to the applicable
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of any distribution or grant of rights or warrants
triggering an adjustment to the Conversion Price pursuant to this Article Ten,
or, if a record date is not to be taken, the date as of which the holders of
record of Common Stock entitled to such distribution, rights or warrants are to
be determined, or (y) the date on which any consolidation, merger, sale,
conveyance, dissolution, liquidation or winding up is expected to become
effective.

                  Failure to give such notice or any defect therein shall not
affect the legality or validity of the proceedings described in clause (1), (2)
or (3) of this Section 10.6.

                  Section 10.7 Company To Reserve Stock: Registration; Listing.

                                      -51-
<PAGE>
                  (a)      The Company shall, in accordance with the laws of the
State of Delaware, at all times reserve and keep available, free from preemptive
rights, out of its authorized but unissued shares of Common Stock, for the
purpose of effecting the conversion of the Securities, such number of its duly
authorized shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all Securities then Outstanding into shares of Common
Stock (assuming that, at the time of the computation, all such Securities would
be held by a single Holder); provided, however, that nothing contained herein
shall preclude the Company from satisfying its obligations in respect of the
conversion of the Securities by delivery of purchased shares of Common Stock
which are then held in the treasury of the Company. The Company covenants that
all shares of Common Stock which may be issued upon conversion of Securities
will upon issue be fully paid and nonassessable.

                  (b)      The Company covenants that so long as the Common
Stock shall be listed on the NYSE, the Company will, if permitted by the rules
of such exchange, list and keep listed all Common Stock issuable upon conversion
of the Securities, and the Company will endeavor to list the shares of Common
Stock required to be delivered upon conversion of the Securities prior to such
delivery upon any other national securities exchange upon which the outstanding
Common Stock is listed at the time of such delivery.

                  Section 10.8 Taxes on Conversion.

                  The issue of stock certificates on conversion of Securities
shall be made without charge to the converting Holder for any documentary, stamp
or similar issue or transfer taxes in respect of the issue thereof, and the
Company shall pay any and all documentary, stamp or similar issue or transfer
taxes that may be payable in respect of the issue or delivery of shares of
Common Stock on conversion of Securities pursuant hereto. The Company shall not,
however, be required to pay any such tax which may be payable in respect of any
transfer involved in the issue or delivery of shares of Common Stock or the
portion, if any, of the Securities which are not so converted in a name other
than that in which the Securities so converted were registered, and no such
issue or delivery shall be made unless and until the Person requesting such
issue has paid to the Company the amount of such tax or has established to the
satisfaction of the Company that such tax has been paid.

                                      -52-
<PAGE>
                  Section 10.9 Company Determination Final.

                  Any determination that the Company or the Board of Directors
must make pursuant to this Article Ten shall be conclusive if made in good faith
and in accordance with the provisions of this Article, absent manifest error.

                  Section 10.10 Responsibility of Trustee for Conversion
Provisions.

                  The Trustee has no duty to determine when an adjustment under
this Article Ten should be made, how it should be made or what it should be. The
Trustee makes no representation as to the validity or value of any securities or
assets issued upon conversion of Securities. The Trustee shall not be
responsible for any failure of the Company to comply with this Article Ten.

                  Section 10.11 Unconditional Right of Holders to Convert.

                  Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to convert its Security in accordance with this Article Ten and
to bring an action for the enforcement of any such right to convert, and such
rights shall not be impaired or affected without the consent of such Holder.

                                 ARTICLE ELEVEN

                               CONTINGENT INTEREST

                  Section 11.1 Contingent Interest. On or after November  ,
2006, the Company will become obligated to make contingent interest payments to
Holders of Securities as provided in Section 11.2, if:

                  (1)      during any six-month period from November   to May
                     and from May   to November    the average Sale Price during
                  the five Trading Days ending on and

                                      -53-
<PAGE>
                  including the third scheduled Trading Day immediately
                  preceding the first day of the applicable six-month period
                  equals 120% or more of the Relevant Value of the Security on
                  the day immediately preceding the first day of the applicable
                  six-month period; provided, however, that if the Company
                  should declare a dividend for which the record date (the
                  "Common Stock Record Date") falls prior to the first day of a
                  six-month period, but the payment date for such dividend falls
                  within such six-month period, then the five Trading Day period
                  shall be calculated by reference to the five Trading Days
                  ending on and including the third Trading Day immediately
                  preceding such Common Stock Record Date. During any six-month
                  period when contingent interest accrues pursuant to this
                  Section 11.1(1), each contingent interest payment due and
                  payable on each $1,000 Principal Amount of Security shall be
                  calculated for each of the first three months and the second
                  three months of the applicable six-month period, and in each
                  instance shall equal the greater of (i) .00125 multiplied by
                  the sum of the Issue Price and accrued Original Issue Discount
                  for such Security on the last day of the relevant three-month
                  period and (ii) the sum of all Regular Cash Dividends paid by
                  the Company per share on the Common Stock during such
                  three-month period multiplied by the number of shares of
                  Common Stock issuable upon conversion of such Security at the
                  Conversion Price applicable on the record date or dates for
                  such cash dividends.

                  (2)      during any six-month period from November   to May
                     and from May   to November    the Sale Price for any 20 out
                  of the last 30 Trading Days ending on but not including the
                  third Business Day prior to the commencement of such six-month
                  period is less than or equal to 95% of the Conversion Price in
                  effect at the close of business on each of those 20 Trading
                  Days (the "Trading Condition").

                           After contingent interest begins to accrue pursuant
                  to this Section 11.1(2), it will continue to accrue until but
                  excluding the first day of the first subsequent six-month
                  period for which the Trading Condition is not satisfied, at
                  which time it shall cease to be payable unless and until the
                  Trading Condition is satisfied for any subsequent six-month
                  period.

                           During any six-month period when contingent interest
                  accrues pursuant to this Section 11.1(2), each contingent
                  interest payment due and payable on each $1,000 Principal
                  Amount of Security shall be calculated by multiplying (i) the
                  Downside Contingent Interest Rate by (ii) the Issue Price and
                  Original Issue Discount of such Security accrued to the day
                  prior to the commencement of the applicable six-month period.

                                      -54-
<PAGE>
                           The Company will appoint a contingent interest rate
                  agent (the "Agent"), which may be any Affiliate of the
                  Company. For the determination of the Contingent Interest
                  Rate, the Agent will, at 11:00 a.m. London time, two London
                  Business Days prior to the applicable Spread Determination
                  Date, seek indicative reference spreads from three
                  nationally-recognized investment banks (the "Reference Banks")
                  that would be applicable to the issuance by the Company of a
                  Reference Debt Security, and the "Spread" shall be the average
                  of such three indicative reference spreads provided that if at
                  least three such indicative references spreads cannot
                  reasonably be obtained by the Agent, but two such indicative
                  reference spreads are obtained, then the average of two
                  indicative reference spreads shall be used, and if only one
                  such indicative reference spread can reasonably be obtained by
                  the Agent, this one indicative references spread shall be
                  used.

                           If the Agent is unable to establish the Spread on a
                  Spread Determination Date, the Spread for that period will be
                  the Spread most recently determined (except if there is no
                  Spread most recently determined, in which case the Spread
                  shall be a spread mutually agreed upon by the Agent and the
                  Company reflecting current market conditions), and such Spread
                  shall remain in effect until the Agent shall determine a new
                  Spread. The Spread determined with respect to any Spread
                  Determination Date shall remain in effect from and including
                  such Spread Determination Date to but excluding the next
                  succeeding Spread Determination Date.

                           The determination of any Downside Contingent Interest
                  will be conclusive and binding upon the Holders of the
                  Securities in the absence of manifest error. The Company may
                  remove the Agent and appoint a successor Agent at any time.

                  "Downside Contingent Interest Rate" means an interest rate per
annum, equal to the difference between (A) LIBOR plus the Spread minus (B)
1.50%, but in no event less than zero. The Downside Contingent Interest Rate
will be calculated by the Agent on the second London Business Day prior to the
commencement of any six-month period for which the Trading Condition has been
satisfied.

                  "LIBOR" means the offered rate appearing on the Telerate LIBOR
Page, as of 11:00 a.m., London time, on the second London Business Day prior to
the applicable six-month period for deposits of United States dollars having a
six-month maturity date. If such rate does not appear on the Telerate LIBOR
Page, then LIBOR will be determined on the basis of the rates, at approximately
11:00 a.m., London time, on the second London Business Day prior to the
applicable six-month period and in a Representative Amount offered to prime
banks in the London interbank market by four major banks in that market selected
by the Agent. The Agent will request the principal London office of each of
these banks to provide a quotation of its rate. If at least two such quotations
are provided, LIBOR will be the arithmetic mean of such quotations. If fewer
than two quotations are provided, LIBOR will be the arithmetic mean of the rates
for loans of United States dollars having a six-month maturity date, and in a
Representative Amount, to leading European banks quoted at approximately 11:00
a.m., in The City of New York, on the second London Business Day prior to the
applicable six-month period, by three major banks selected by the Agent. If
fewer than three banks selected by the Agent are quoting, LIBOR for the
six-month period will be LIBOR in effect for the prior six-month period.

                  "Reference Debt Security" means an unsecured, unsubordinated
debt obligation of the Company that (i) has a five year maturity, (ii) is not
subject to redemption or repayment, or entitled to the benefits of a sinking
fund, prior to such maturity, (iii) bears interest at LIBOR, which is reset
semi-annually and (iv) has the same covenants and events of default as the
Company's Series-F Medium Term Notes being offered on the date of this
Indenture.

                  "Regular Cash Dividend" means quarterly or other periodic cash
dividends paid on the Common Stock as declared by the Board of Directors in
accordance with the Company's cash dividend policy in effect from time to time
and shall exclude any cash dividend determined by the Board of Directors to be
extraordinary, special or nonrecurring, such determination to be conclusive.

                  "Relevant Value" means the sum of the Issue Price and the
accrued Original Issue Discount of one Security having a Principal Amount of
$1,000 divided by the number of shares of Common Stock into which such Security
is convertible.

                 "Representative Amount" means an amount that, in the Agent's
judgment, is representative of a single transaction in the relevant market at
the relevant time.

                 "Spread Determination Date" means each of November  , 2006,
November  , 2011, November  , 2016, November  , 2021 and November  , 2026.

                 "Telerate LIBOR Page" means Telerate Page 3750 or any
replacement page or pages, on which London interbank rates of major banks for
United States dollars are displayed.

                 "Telerate Page" means the display on Bridge Telerate Inc., or
any successor service, on the page or pages specified herein, or any
replacement page or pages on that service.

                  Any contingent interest payable pursuant to this Section 11.1
shall accrue based on a year of twelve 30-day months.

                  The Original Issue Discount of the Securities will continue to
accrue at the yield set forth in paragraph 1 of the Security to Stated Maturity
whether or not contingent interest payments are made.

                                      -55-
<PAGE>

                  Section 11.2 Payment of Contingent Interest; Contingent
Interest Rights Preserved. If payable, contingent interest will be paid (x) in
the case of contingent interest payable pursuant to Section 11.1(1) on the
payment date for the related Regular Cash Dividend or, if the Company does not
pay a Regular Cash Dividend during a six-month period, on the last day of such
six-month period or (y) in the case of contingent interest payable pursuant to
Section 11.1(2), on the last day of such six-month period (any such date, a
"Contingent Interest Payment Date"). Contingent interest payments on any
Security that are payable, and are punctually paid or duly provided for, on any
Contingent Interest Payment Date shall be paid to the Person who is the Holder
of that Security at the close of business on (x) in the case of contingent
interest payable pursuant to Section 11.1(1), the relevant Common Stock Record
Date or, if the Company does not pay a Regular Cash Dividend during a six-month
period, to the Person who is the Holder of that Security on the 15th day
(whether or not a Business Day) preceding the last day of such six-month period
or (y) in the case of the payment of contingent interest pursuant to Section
11.1(2), the 15th day (whether or not a Business Day) preceding the last day of
such six month period (any such date, a "Contingent Interest Record Date"). Each
payment of contingent interest on any Security shall be paid by check mailed to
the Person entitled thereto at such address as shall appear in the Registrar's
books.

                  Section 11.3 Contingent Interest: Conversion, Redemption or
                               Purchase

          (a)     Except as provided below, if any Securities are surrendered
for conversion on any day other than a Contingent Interest Payment Date, the
Holder of such Securities shall not be entitled to receive any contingent
interest that has accrued on such Securities since the prior Contingent
Interest Payment Date. By delivery to the Holder of the number of shares of
Common Stock or other consideration issuable upon conversion in accordance with
Article Ten, any accrued and unpaid contingent interest on such Securities will
be deemed to have been paid in full.

          If any Securities are surrendered for conversion subsequent to the
Contingent Interest Record Date preceding a Contingent Interest Payment Date but
on or prior to such Contingent Interest Payment Date, the Holder of such
Securities at the close of business on such Contingent Interest Record Date
shall (except in the case of a Security redeemed or repurchased prior to the
Contingent Interest Payment Date) receive the contingent interest payable on
such Securities on such Contingent Interest Payment Date notwithstanding the
conversion thereof. Securities surrendered for conversion during the period from
the close of business on any Contingent Interest Record Date preceding any
Contingent Interest Payment Date to the opening of business on such Contingent
Interest Payment Date shall be accompanied by payment by Holders, for the
account of the Company, in New York Clearing House same day funds or other funds
acceptable to the Company of an amount equal to the contingent interest payable
on such Contingent Interest Payment Date on the Securities being surrendered for
conversion (unless such Security has been called for redemption on a Redemption
Date prior to such Contingent Interest Payment Date). Except as provided in this
Section 11.3, no adjustments in respect of payments of contingent interest on
Securities surrendered for conversion or any dividends or distributions or
interest on the Common Stock or securities issued upon conversion shall be made
upon the conversion of any Securities.

          (b)     In the case of a Contingent Interest Record Date occurring
before a Redemption Date or Purchase Date but relating to a Contingent Interest
Payment Date occurring after the Redemption Date or Purchase Date, no
contingent interest shall be paid to the Holders of record on such Contingent
Interest Record Date with respect to any Security redeemed on the Redemption
Date or repurchased on the Purchase Date.

                  Section 11.4 Defaulted Interest. Any contingent interest on
any Security that is payable, but is not punctually paid or duly provided for,
within 30 days following any Contingent Interest Payment Date (herein called
"Defaulted Interest"), shall forthwith cease to be payable to the registered
Holder thereof on the relevant Contingent Interest Record Date by virtue of
having been such Holder, and such Defaulted Interest may be paid by the Company,
at its election in each case, as provided in clause (a) or (b) below:

         (a)      The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a special
record date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and the date
of the proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit on or prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the Persons
entitled as provided in this clause to such Defaulted Interest. Thereupon the
Trustee shall fix a special record date (the "Special Record Date") for the
payment of such Defaulted Interest, which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder at his address as it appears
on the list of Securityholders maintained pursuant to Section 2.5, not less than
10 days prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date thereof having been so
mailed, such Defaulted Interest shall be paid to the persons in whose names the
Securities (or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be payable
pursuant to the following clause (b).

         (b)      The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which such Securities may be listed, and upon such notice as may be
required by such exchange, if, after

                                      -56-
<PAGE>

notice given by the Company to the Trustee of the proposed payment pursuant to
this clause, such manner of payment shall be deemed practicable by the Trustee.

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

                  Section 11.5 Contingent Interest Notification. Upon
determination that Holders of Securities will be entitled to receive contingent
interest during a six-month period, on or prior to the start of such six-month
period, the Company shall be required to disseminate a press release through Dow
Jones & Company, Inc. or Bloomberg Business News containing this information or
publish the information on the Company's Website or through such other public
medium as the Company may use at that time.

                                 ARTICLE TWELVE

                                  MISCELLANEOUS

                  Section 12.1 Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies, or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.

                  Section 12.2 Notices. Any request, demand, authorization,
notice, waiver, consent or communication shall be in writing and delivered in
person or mailed by first-class mail, postage prepaid, addressed as follows or
transmitted by a guaranteed overnight courier service to the following facsimile
numbers:

                  if to the Company:

                  American International Group, Inc.
                  70 Pine Street
                  New York, NY 10270
                  Attention:  Secretary

                  if to the Trustee:

                  The Bank of New York
                  101 Barclay Street
                  New York, NY 10286
                  Telephone No. (212) 896-7200
                  Facsimile No. (212) 896-7298
                  Attention:  Corporate Trust Department

                  The Company or the Trustee by notice given to the other in the
manner provided above may designate additional or different addresses for
subsequent notices or communications.

                  Any notice or communication given to a Securityholder shall be
mailed to the Securityholder, by first-class mail, postage prepaid, at the
Securityholder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.

                                      -57-
<PAGE>
                  Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not received by the addressee.

                  If the Company mails a notice or communication to the
Securityholders, it shall mail a copy to the Trustee and each Registrar, Paying
Agent, Conversion Agent or co-registrar.

                  Section 12.3 Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar, the Paying Agent, the
Conversion Agent and anyone else shall have the protection of TIA Section
312(c).

                  Section 12.4 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 furnish to the Trustee:

                  (1)      an Officers' Certificate stating that, in the opinion
                           of the signers, all conditions precedent, if any,
                           provided for in this Indenture relating to the
                           proposed action have been complied with; and

                  (2)      an Opinion of Counsel stating that, in the opinion of
                           such counsel, all such conditions precedent have been
                           complied with.

                  Section 12.5 Statements Required in Certificate or Opinion.
Each Officers' Certificate or Opinion of Counsel with respect to compliance with
a covenant or condition provided for in this Indenture shall include:

                  (1)      a statement that each person making such Officers'
                           Certificate or Opinion of Counsel has read such
                           covenant or condition;

                  (2)      a brief statement as to the nature and scope of the
                           examination or investigation upon which the
                           statements or opinions contained in such Officers'
                           Certificate or Opinion of Counsel are based;

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

                  (4)      a statement that, in the opinion of such person, such
                           covenant or condition has been complied with.

                  Section 12.6 Separability Clause. In case any provision in
this Indenture or in the Securities shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.

                                      -58-
<PAGE>
                  Section 12.7 Legal Holidays. A "Legal Holiday" is any day
other than a Business Day. If any specified date (including a date for giving
notice) is a Legal Holiday, the action shall be taken on the next succeeding day
that is not a Legal Holiday, and, if the action to be taken on such date is a
payment in respect of the Securities, no interest, if any, shall accrue for the
intervening period.

                  Section 12.8 GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                  Section 12.9 No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.

                  Section 12.10 Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successor. All agreements of
the Trustee in this Indenture shall bind its successor.

                  Section 12.11 Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

                  Section 12.12 Multiple 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. One signed copy is enough to
prove this Indenture.

                                      -59-
<PAGE>
                  IN WITNESS WHEREOF, the undersigned, being duly authorized,
have executed this Indenture on behalf of the respective parties hereto as of
the date first above written.

                                    AMERICAN INTERNATIONAL GROUP, INC.

                                    By: ______________________________________
                                        Name:
                                        Title:

                                    THE BANK OF NEW YORK
                                    As Trustee

                                    By: ______________________________________
                                        Name:
                                        Title:

                                      -60-
<PAGE>
                                    EXHIBIT A

                        [FORM OF FACE OF GLOBAL SECURITY]

                  FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE
CODE, THIS DEBENTURE IS ISSUED WITH AN INDETERMINATE AMOUNT OF ORIGINAL ISSUE
DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE DATE IS
NOVEMBER  , 2001, AND THE YIELD TO MATURITY FOR PURPOSES OF ACCRUING ORIGINAL
ISSUE DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES IS -% PER ANNUM,
COMPOUNDED SEMIANNUALLY.

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

                  TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

                  PURSUANT TO THE INDENTURE, AMERICAN INTERNATIONAL GROUP, INC.
AGREES, AND BY ACCEPTANCE OF A BENEFICIAL OWNERSHIP INTEREST IN THE SECURITY,
EACH BENEFICIAL HOLDER OF THE SECURITIES WILL BE DEEMED TO HAVE AGREED, FOR
UNITED STATES FEDERAL INCOME TAX PURPOSES, TO TREAT THE SECURITIES AS
INDEBTEDNESS THAT IS SUBJECT TO SECTION 1.1275-4 OF THE UNITED STATES TREASURY
REGULATIONS (THE "CONTINGENT DEBT REGULATIONS"). YOU MAY OBTAIN THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT, ISSUE DATE, YIELD TO MATURITY, COMPARABLE YIELD AND
PROJECTED PAYMENT SCHEDULE FOR THE SECURITY BY TELEPHONING AMERICAN
INTERNATIONAL GROUP, INC. AT (212) 770-7000 OR SUBMITTING A WRITTEN
REQUEST FOR SUCH INFORMATION TO:
<PAGE>
AMERICAN INTERNATIONAL GROUP, INC., 70 PINE STREET, NEW YORK, NEW YORK 10270
ATTENTION: VICE PRESIDENT AND DIRECTOR OF TAXES.

                                      A-2
<PAGE>

                       AMERICAN INTERNATIONAL GROUP, INC.

               Zero Coupon Convertible Senior Debentures Due 2031

No.                                 Principal Amount: $
                                    (at final Stated Maturity)
Issue Date: November  , 2001        CUSIP:
Issue Price:                       Original Issue Discount:  $
(for each $1,000 Principal          (for each $1,000 Principal Amount at
Amount at final Stated Maturity)    final Stated Maturity

                  AMERICAN INTERNATIONAL GROUP, INC., a Delaware corporation,
promises to pay to Cede & Co. or registered assigns, the principal amount of
[_____________________ dollars ($__________)] on November  , 2031. Payment of
the Principal Amount, Redemption Price, contingent interest, if any, and, to the
extent payable in cash, the Purchase Price on this Security will be made at the
office or agency of the Company maintained for that purpose in The Borough of
Manhattan, The City of New York, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
contingent interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Registrar's books.

                  This Security shall not bear interest except as specified on
the reverse side of this Security. Original Issue Discount will accrue as
specified on the reverse side of this Security. This Security is convertible as
specified on the reverse side of this Security.

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

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

                                      A-3
<PAGE>
                  IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.

Dated: November  , 2001             AMERICAN INTERNATIONAL GROUP, INC.

                                    By: ______________________________________
                                    Title: ___________________________________

                                      A-4
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION

THE BANK OF NEW YORK
as Trustee, certifies that this is one
of the Securities referred to in the
within-mentioned Indenture.

By__________________________________
         Authorized Signatory

Dated: November  , 2001

                                      A-5
<PAGE>
                      [FORM OF REVERSE OF GLOBAL SECURITY]

               Zero Coupon Convertible Senior Debentures Due 2031

                  This Security is one of a duly authorized issue of Zero Coupon
Convertible Senior Debentures due 2031 (the "Securities") of American
International Group, Inc., a Delaware corporation (including any successor
corporation under the Indenture hereinafter referred to, the "Company"), issued
under an Indenture, dated as of November  , 2001 (the "Indenture"), between the
Company and The Bank of New York, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
Capitalized terms used but not defined herein have the meanings assigned to them
in the Indenture referred to above unless otherwise indicated.

1. Interest.

                  This Security shall not bear interest, except as specified in
this Section or in Section 5 hereof. If the Principal Amount, Redemption Price,
cash portion of any Purchase Price, any amount payable upon acceleration of this
Security or any contingent interest portion of such Principal Amount is not paid
when due, then in each such case the overdue amount shall, to the extent
permitted by law, bear interest at the rate of 1.50% per annum, compounded
semi-annually, which interest shall accrue from the date such overdue amount was
originally due to the date payment of such amount has been made or duly provided
for. All such interest shall be payable on demand. The accrual of such interest
on overdue amounts shall be in addition to, and not in lieu of, the continued
accrual of Original Issue Discount.

                  Original Issue Discount, in the period during which a Security
remains Outstanding, shall accrue based on a  % per annum interest rate
compounded semi annually using a 360-day year composed of twelve 30-day months,
from the Issue Date of this Security.

2. Method of Payment.

                  Subject to the terms and conditions of the Indenture, the
Company will make payments in cash, shares of Common Stock or a combination
thereof, as the case may be, in respect of the Principal Amount, Redemption
Price, and Purchase Price to Holders who surrender Securities to a Paying Agent
to collect such payments in respect of the Securities.

                                      A-6
<PAGE>

3. Paying Agent, Conversion Agent and Registrar.

                  Initially, The Bank of New York will act as Paying Agent,
Conversion Agent and Registrar. The Company may appoint and change any Paying
Agent, Conversion Agent or Registrar without notice, other than notice to the
Trustee; provided that the Company will maintain at least one Paying Agent in
the City of New York, Borough of Manhattan, which shall initially be an office
or agency of the Trustee. The Company or any of its Subsidiaries or any of
their Affiliates may act as Paying Agent, Conversion Agent or Registrar.

4. Indenture.

                  The Securities are general unsecured obligations of the
Company limited to $1,519,734,000 aggregate principal amount (and up to
$1,747,694,000 if Morgan Stanley & Co. Incorporated exercises its option to
purchase additional Securities in full pursuant to the Underwriting Agreement,
dated November 7, 2001, between the Company and Morgan Stanley & Co.
Incorporated). The Indenture does not limit other indebtedness of the Company,
secured or unsecured and does not contain any covenant or restriction on the
business or operation of the Company.

5. Contingent Interest.

                  Contingent interest, if any, will accrue and be payable on
such Contingent Interest Payment Date and to Holders of this Debenture as of
such Contingent Interest Record Dates as provided in the Indenture. Original
Issue Discount will continue to accrue whether or not contingent interest is
paid.

6. Redemption at the Option of the Company.

                  No sinking fund is provided for the Securities. The Securities
are redeemable for cash at the option of the Company, in whole or in part, at
any time or from time to time on, or after November  , 2006 upon not less than
15 nor more than 60 days' notice by mail for a redemption price equal to the
following:

                                      A-7
<PAGE>

Redemption Date
---------------

November  :
2006                                        $
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
At final Stated Maturity
(November  , 2031)

plus any accrued Original Issue Discount from the most recent November  ,
and any accrued and unpaid contingent interest, in each case, up to but
excluding the Redemption Date (the "Redemption Price"), but contingent interest
that is due and payable on or prior to the Redemption Date will be paid to the
Holders of such Securities, or one or more Predecessor Securities, as provided
in the Indenture.

7. Purchase By the Company at the Option of the Holder.

                  Subject to the terms and conditions of the Indenture, the
Company shall become obligated to purchase, at the option of the Holder, all or
any portion of the Securities held by such Holder on November  , 2006 November
, 2011, November  , 2016, November  , 2021 and November  , 2026, in whole
multiples of $1,000 at a Purchase Price equal to the Issue Price of those
Securities plus accrued Original issue

                                      A-8
<PAGE>

Discount and any accrued and unpaid contingent interest on such Security to but
excluding the Purchase Date, but contingent interest that is due and payable
prior to the Purchase Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, as provided in the Indenture. To exercise
such right, a Holder shall deliver to the Company a Purchase Notice containing
the information set forth in the Indenture, at any time from the opening of
business on the date that is 24 Business Days prior to such Purchase Date until
the close of business on the fourth Business Day prior to the Purchase Date, and
shall deliver the Securities to the Paying Agent as set forth in the Indenture.

                  The Purchase Price may be paid, at the option of the Company,
in cash or by the issuance and delivery of shares of Common Stock, or in any
combination thereof, subject to the terms and conditions of the Indenture.

                  Holders have the right to withdraw any Purchase Notice by
delivering to the Paying Agent a written notice of withdrawal up to, but not
including, the third Business Day prior to the Purchase Date, all as provided in
the Indenture.

                  If cash (and/or Common Stock if permitted under the Indenture)
sufficient to pay the Purchase Price of all Securities or portions thereof to be
purchased as of the Purchase Date is deposited with the Paying Agent, on the
Business Day following the Purchase Date, Original Issue Discount and contingent
interest, if any, will cease to accrue on such Securities (or portions thereof)
immediately after such Purchase Date, and the Holder thereof shall have no other
rights as such other than the right to receive the Purchase Price upon surrender
of such Security.

8. Notice of Redemption.

                  Notice of redemption pursuant to Section 6 of this Security
will be mailed at least 15 days but not more than 60 days before the Redemption
Date to each Holder of Securities to be redeemed at the Holder's registered
address. If money sufficient to pay the Redemption Price of all Securities (or
portions thereof) to be redeemed on the Redemption Date is deposited with the
Paying Agent prior to or on the Redemption Date, on and after such Redemption
Date Original Issue Discount and contingent interest, if any, will cease to
accrue on such Securities or portions thereof, and the Holder hereof shall have
no other rights as such other than the right to receive the Redemption Price.
Securities in denominations larger than $1,000 of principal amount may be
redeemed in part but only in whole multiples of $1,000 of principal amount.

9. Conversion.

                  Subject to the occurrence of certain events and in compliance
with the provisions of the Indenture, a Holder is entitled, at such Holder's
option, to convert the Holder's Security (or any portion of the principal amount
thereof that is $1,000 or a whole multiple of $1,000), into fully paid and
nonassessable shares of Common Stock at the Conversion Price in effect at the
time of conversion. The Company will notify

                                      A-9
<PAGE>
Holders of any event triggering the right to convert the Securities as specified
above in accordance with the Indenture.

                  A Security in respect of which a Holder has delivered a
Purchase Notice exercising the option of such Holder to require the Company to
purchase such Security may be converted only if such Purchase Notice is
withdrawn in accordance with the terms of the Indenture.

                  The initial Conversion Price is -, subject to adjustment in
certain events described in the Indenture. A Holder which surrenders Securities
for conversion will receive cash or a check in lieu of any fractional share of
Common Stock.

                  To surrender a Security for conversion, a Holder must (1)
complete and manually sign the conversion notice below (or complete and manually
sign a facsimile of such notice) and deliver such notice to the Conversion
Agent, (2) surrender the Security to the Conversion Agent, (3) furnish
appropriate endorsements and transfer documents and (4) pay any transfer or
similar tax, if required.

                  No payment or adjustment will be made for dividends on the
shares of Common Stock, except as provided in the Indenture.

                  If the Company (i) is a party to a consolidation, merger or
binding share exchange (ii) reclassifies the Common Stock or (iii) conveys,
transfers or leases its properties and assets substantially as an entirety to
any Person, the right to convert a Security into shares of Common Stock may be
changed into a right to convert it into securities, cash or other assets of the
Company or such other Person, in each case in accordance with the Indenture.

10. Denominations; Transfer; Exchange.

                  The Securities are in fully registered form, without coupons,
in denominations of $1,000 of principal amount and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or the Indenture. The Registrar need not transfer or exchange any Securities
selected for redemption (except, in the case of a Security to be redeemed in
part, the portion of the Security not to be redeemed) or any Securities in
respect of which a Purchase Notice has been given and not withdrawn (except, in
the case of a Security to be purchased in part, the portion of the Security not
to be purchased) or any Securities for a period of 15 days before the mailing of
a notice of redemption of Securities to be redeemed.

                                      A-10
<PAGE>

11. Persons Deemed Owners.

                  The registered Holder of this Security may be treated as the
owner of this Security for all purposes.

12. Unclaimed Money or Securities.

                  The Trustee and the Paying Agent shall return to the Company
upon written request any money or securities held by them for the payment of any
amount with respect to the Securities that remains unclaimed for two years.
After return to the Company, Holders entitled to the money or securities must
look to the Company for payment as general creditors.

13. Amendment; Waiver.

                  Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in aggregate principal amount of the Outstanding
Securities and (ii) certain Defaults may be waived with the written consent of
the Holders of a majority in aggregate principal amount of the Outstanding
Securities. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Company and the Trustee may amend the
Indenture or the Securities (i) to add to the covenants of the Company for the
benefit of the Holders of Securities, (ii) to surrender any right or power
conferred upon the Company in the Indenture, (iii) to provide for conversion
rights of Holders of Securities if any reclassification or change of the
Company's Common Stock or any consolidation, merger or sale of all or
substantially all of the Company's assets occurs, (iv) to provide for the
assumption of the Company's obligations to the Holders of Securities in the case
of a merger, consolidation, conveyance, transfer or lease pursuant to Article
Five of the Indenture, (v) to reduce the Conversion Price; provided, however,
that such reduction in the Conversion Price shall remain in effect for at least
20 days, (vi) to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the TIA, (vii) to secure the
Securities, (viii) to cure any ambiguity, or correct or supplement any provision
in the Indenture which may be inconsistent with any other provision therein or
which is otherwise defective, or to make any other provisions with respect to
matters or questions arising under the Indenture which shall not be inconsistent
with the provisions of the Indenture; provided, however, that such action
pursuant to this clause shall not adversely affect the interests of the Holders
of Securities in any material respect, and (ix) to add or modify any other
provisions in the Indenture with respect to matters or questions arising
hereunder which the Company and the Trustee may deem necessary or desirable and
which will not adversely affect the interests of the Holders of Securities in
any material respect.

14. Defaults and Remedies.

                  If any Event of Default with respect to Securities shall occur
and be continuing, the Issue Price of, and accrued Original Issue Discount and
any accrued and

                                      A-11
<PAGE>
unpaid contingent interest on, all the Securities may be declared due and
payable in the manner and with the effect provided in the Indenture.

15. Trustee Dealings with the Company.

                  Subject to certain limitations imposed by the TIA, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.

16. Calculations in Respect of Securities.

                  The Company or its agents will be responsible for making all
calculations called for under the Securities including, but not limited to, the
determination of the market prices for the Securities and of the Common Stock
and the amounts of contingent interest payments, if any, on the Securities. Any
calculations made in good faith and without manifest error will be final and
binding on Holders of the Securities.

17. No Recourse Against Others.

                  A director, officer, employee or shareholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.

18. Authentication.

                  This Security shall not be valid or obligatory for any purpose
until an authorized signatory of the Trustee manually signs the Trustee's
Certificate of Authentication on the front of this Security.

19. Abbreviations.

                  Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with right of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).

20. GOVERNING LAW.

                  THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE
AND THIS SECURITY.

                                      A-12
<PAGE>
ASSIGNMENT FORM                             CONVERSION NOTICE
________________________________________________________________________________

To assign this Security, fill in            To convert this Security into
the form below:                             Common Stock of the Company,
                                            check the box [   ]
________________________________________________________________________________

I or we assign and transfer this            To convert only part of this
Security to                                 Security, state the principal
______________________________              amount to be converted (which
______________________________              must be $1,000 or a whole
(Insert assignee's soc. sec. or             multiple of $1,000):
tax ID no.)
______________________________              If you want the stock certificate
______________________________              made out in another person's name
______________________________              fill in the form below:
(Print or type assignee's name,             ______________________________
address and zip code)                       ______________________________
                                       .    (Insert the other person's soc. sec.
and irrevocably appoint                     tax ID no.)

_________________________ agent to          _______________________________
transfer this Security on the books of      _______________________________
the Company.  The agent may substitute      _______________________________
another to act for him.                     _______________________________
                                            _______________________________
                                            (Print or type other person's name,
                                            address and zip code)
________________________________________________________________________________

Date:  __________ Your Signature:  _________________________________

____________________________________________________________________
   (Sign exactly as your name appears on the other side of this Security)

Signature Guaranteed

_____________________________________
Participant in a Recognized Signature
Guarantee Medallion Program

By:__________________________________
          Authorized Signatory

                                      A-13
<PAGE>
             SCHEDULE OF INCREASES AND DECREASES OF GLOBAL SECURITY

    Initial Principal Amount of Global Security: ____________($___________).

--------------------------------------------------------------------------------
Date         Amount of         Amount of         Principal           Notation by
             Increase in       Decrease in       Amount of           Registrar
             Principal         Principal         Global Security
             Amount of         Amount of         After Increase or
             Global Security   Global Security   Decrease
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                      A-14
<PAGE>
                                    EXHIBIT B

                     [FORM OF FACE OF CERTIFICATED SECURITY]

                  FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE
CODE, THIS DEBENTURE IS ISSUED WITH AN INDETERMINATE AMOUNT OF ORIGINAL ISSUE
DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE DATE IS
NOVEMBER  , 2001, AND THE YIELD TO MATURITY FOR PURPOSES OF ACRUING ORIGINAL
ISSUE DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES IS - PER ANNUM,
COMPOUNDED SEMIANNUALLY.

                                      B-1
<PAGE>

                       AMERICAN INTERNATIONAL GROUP, INC.

               Zero Coupon Convertible Senior Debentures Due 2031

No.                                 Principal Amount: $
                                    (at final Stated Maturity)

Issue Date: November  , 2001        CUSIP:
Issue Price:                        Original Issue Discount:  $
(for each $1,000 Principal          (for each $1,000 Principal Amount at
Amount at final Stated Maturity)    final Stated Maturity)

                  AMERICAN INTERNATIONAL GROUP, INC., a Delaware corporation,
promises to pay to         or registered assigns, the principal amount of
[_____________________ dollars ($__________)] on November  , 2031. Payment of
the Principal Amount, Redemption Price, contingent interest, if any, and, to the
extent payable in cash, the Purchase Price on this Security will be made at the
office or agency of the Company maintained for that purpose in The Borough of
Manhattan, The City of New York, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
contingent interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Registrar's books.

                  This Security shall not bear interest except as specified on
the reverse side of this Security. Original Issue Discount will accrue as
specified on the reverse side of this Security. This Security is convertible as
specified on the reverse side of this Security.

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

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

                                      B-2
<PAGE>
                  IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.

Dated: November  , 2001             AMERICAN INTERNATIONAL GROUP, INC.

                                      By:
                                      Title:

                                      B-3
<PAGE>
TRUSTEE'S CERTIFICATE OF  AUTHENTICATION

THE BANK OF NEW YORK,
as Trustee, certifies that this
is one of the Securities referred
to in the within-mentioned Indenture.

By  _____________________________
        Authorized Signatory

Dated:  November  , 2001

                                      B-4
<PAGE>
      [FORM OF REVERSE OF CERTIFICATED SECURITY IS IDENTICAL TO EXHIBIT A]

                                      B-5

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